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Client Alert
March 25, 2016
Supreme Court Affirmation of Hawkins Case Raises
More Questions Than It Answers
By Oliver Ireland, Leonard Chanin, and Amanda Mollo
On March 22, 2016, the Supreme Court of the United States issued an order in Hawkins v. Community Bank of
Raymore.0F1 An evenly divided Court affirmed the Eighth Circuit decision without issuing an opinion, thereby
resolving the Hawkins case but leaving open the proper interpretation of the Equal Credit Opportunity Act
(ECOA), failing to resolve a circuit split between the Sixth and Eighth Circuits, and raising questions as to how the
Court will approach future cases involving statutory interpretation.
At issue in the case is whether the Board of Governors of the Federal Reserve System (“Board”) interpretation of
the ECOA, stating that a guarantor is an “applicant,” is consistent with the ECOA. The Eighth Circuit held that the
Board’s definition was contrary to the ECOA statutory definition of “applicant.”
AN “APPLICANT” UNDER THE ECOA
The ECOA makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of
a credit transaction” on a number of bases, including marital status.1F 2 The ECOA defines “applicant,” in relevant
part, as “any person who applies to a creditor directly for an extension, renewal, or continuation of credit.” 2F3 As
originally enacted, the statute aimed to protect women from being denied loans on the basis of their marital
status, or being required to add their husbands as guarantors to their loans, among other things. Early on, by
regulation, the Board prohibited a creditor from denying credit to a married woman if her husband did not
guarantee the loan. In 1985, the Board expanded the ECOA definition of “applicant” in Regulation B to include
“guarantors, sureties, endorsers, and similar parties.” 3F4 The effect of the expansion was to enable a guarantor to
bring a private action if a creditor illegally requires the guarantor to be the spouse of an applicant.
HAWKINS FACTS AND DISTRICT COURT RULING
In Hawkins, Community Bank made over $2 million in loans to a limited liability company with two members: Mr.
Hawkins and Mr. Patterson. As a condition of making the loan, the bank required Hawkins and Patterson, as well
as their wives Valerie Hawkins and Janice Patterson, to execute personal guarantees. The company eventually
stopped making its loan payments, and the bank declared the company to be in default and sought payment from
the guarantors.
1 761 F.3d 937 (8th Cir. 2014), cert. granted, No. 14- 520, 2015 U.S. LEXIS 1635 (Mar. 2, 2015).
2 15 U.S.C. § 1691(a)(1).
3 15 U.S.C. § 1691a(b).
4 Previously 12 C.F.R. § 202.2(e); now 12 C.F.R. § 1002.2(e) under CFPB authority.
