PHOENIX – A Latino civil rights organization is appealing a district court decision to compel arbitration in a class-action lawsuit against a Texas credit union. The lawsuit challenged GECU Federal Credit Union’s (GECU) policy of unlawfully refusing to consider loans and financial services to certain immigrants because of their status rather than their credit-worthiness.
MALDEF (Mexican American Legal Defense and Educational Fund) and Arizona attorney Daniel Ortega of the Ortega Law Firm filed the lawsuit in February on behalf of Carlos Barraza Trevino, a recipient of Deferred Action for Childhood Arrivals (DACA), who lives in Phoenix, Arizona. On Oct. 27, Judge Susan M. Brnovich of the U.S. District Court for the District of Arizona granted GECU’s Motion to Compel Arbitration and dismissed the case. On Wednesday, MALDEF filed a notice of appeal.
“The court here wrongly forced the plaintiff to seek relief through arbitration, based on a flawed contractual clause forced by the credit union on all of its members,” said Thomas A. Saenz, MALDEF president and general counsel. “We challenge this decision because it denies adequate relief to all of those harmed by unlawful discrimination at the credit union.”
Attorneys say the credit union refused Barraza Trevino an auto loan because he is not a United States citizen or a legal permanent resident, in violation of Section 1981 of the federal Civil Rights Act of 1866, which prohibits discrimination based on citizenship or alienage.
In May 2024, Barraza Trevino, a member of GECU, applied for an auto loan from the credit union but was denied. He called GECU to inquire about the reason for the denial; he was told it was because his Social Security number is solely for work purposes and because of his “legal status.” Soon after, he received an “adverse action” letter indicating that one reason he was not eligible to receive a loan was “temporary residence.”
“Allowing this case to proceed to arbitration would deprive individuals of the opportunity to collectively bring an action challenging GECU’s discriminatory policy,” said MALDEF staff attorney Luis Lozada. “When financial institutions use arbitration to force unfair policies it harms individuals and reinforces economic inequity.”
The lawsuit, filed in the Phoenix Division of the U.S. District Court for the District of Arizona, seeks class certification. The appeal will be filed in the U.S. Court of Appeals for the Ninth Circuit.
GECU, based in El Paso, is the largest credit union in Texas and has $4.4 billion in assets. It serves 431,000 members in Texas and New Mexico.
Since 2017, MALDEF has filed 24 lawsuits challenging the policies of financial institutions that discriminate against DACA recipients and other immigrants. More than 16 of those have resulted in settlements.
Read the original complaint HERE.
Read the judge’s order HERE.