Full opinion text
OPINION OF THE COURT AMBRO, Circuit Judge. Table of Contents I.Factual and Procedural Background........................................279 A. The Alleged Predatory Lending Scheme..................................279 B. The Separate Class Actions and the Initial Settlement......................280 C. The Objectors.........................................................282 D. The Prior Appeal......................................................284 E. The Proceedings on Remand ............................................285 1. The Hobson Action.................................................285 2. The Objectors Withdraw Their Motion to Intervene.....................285 3. The District Court’s Viability Briefing.................................285 4. The Modified Settlement............................................286 5. The District Court Determines the TILA/HOEPA Claims Are Not Viable...........................................................287 6. The District Court Appoints a “Friend of the Court”....................288 7. The District Court Denies the Objectors’ Renewed Motion to Intervene, Conditionally Re-Certifies the Class, and Preliminarily Approves the Modified Settlement..................................289 8. The District Court Certifies the Class and Approves the Modified Settlement ......................................................289 II.Jurisdiction and Standards of Review 290 III.Discussion................................................................290 A. Class Certification .....................................................291 1. Legal Standards....................................................291 2. Statute-of-Limitations Issues at the Class Certification Stage............292 3. The District Court’s Analysis ........................................295 a. The District Court’s Relation-Back Analysis .......................295 b. The District Court’s Equitable Tolling Analysis.....................301 4. Adequacy of Representation.........................................303 a. The Class Representatives ...:...................................303 b. Class Counsel..................................................304 5. The North Carolina Objectors........................................308 B. The Fairness of the Settlement..........................................311 C. The Objectors’ Renewed Motion to Intervene..............................312 D. The Objectors’ Renewed Petition for Mandamus to Recuse the District Judge..............................................................313 IV. Conclusion ...............................................................315 This is the second appeal from the certification of a consolidated “settlement only” nationwide class action that alleged an illegal home equity lending scheme involving two banks and a company that purchased second mortgage loans from them. Certain members of the class (the “Objectors”) contest the District Court’s decisions certifying that class and approving the class settlement. (This shorthand, however, does not include the objecting class members from North Carolina, whose arguments we address separately in Part III.A.5 below.) As it was in the prior appeal, the principal dispute remains the named plaintiffs’ and class counsel’s decision not to make claims against the defendants under the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”), and the Home Ownership and Equity Protection Act (“HOEPA”), id. § 1639. The Objectors contend that the failure to do so renders the named plaintiffs and class counsel inadequate class representatives. We conclude that the District Court — by approaching the adequacy-of-representation questions on remand as though it were ruling on a motion to amend pursuant to Federal Rule of Civil Procedure 15(c) or a motion to dismiss pursuant to Rule 12(b)(6) — applied the wrong legal standard in ruling on class certification under Rule 23. We thus reluctantly vacate again the Court’s certification decision and its approval of the class settlement, and remand for further proceedings. In doing so, we continue to reject (i) the claim that the District Court abused its discretion in denying the Objectors’ renewed motion to intervene, and (ii) their renewed petition for mandamus to recuse the District Judge in this case. I. Factual and Procedural Background A. The Alleged Predatory Lending Scheme The complex factual and procedural history of these matters is set out at length in our prior opinion, and we only summarize it here. See In re Community Bank of N. Va., 418 F.3d 277 (3d Cir.2005) (“Community Bank I”). These class actions involve the alleged predatory lending scheme of the Shumway/Bapst Organization (“Shumway”), a residential mortgage loan business involved in facilitating the making of high-interest, mortgage-backed loans to debt-laden homeowners. Because Shumway is not a depository lender — and thus subject to fee caps and interest ceilings under various state laws — it allegedly formed relationships with defendants Community Bank of Northern Virginia (“CBNV”) and Guarantee National Bank of Tallahassee (“GNBT”), both financially distressed banks, to circumvent those restrictions. This allegedly permitted Shumway to conceal the origin of the loans, thus creating the appearance that fees were paid solely to a depository institution when “[i]n reality ... the overwhelming majority of fees and other charges associated with the loans were funneled to Shumway.” Id. at 284. The class action complaint claimed defendant GMAC Residential Funding Corporation (“RFC”) was a co-conspirator in this scheme, deriving a substantial portion of its business by purchasing “jumbo” and high “loan-to-value” loans from CBNV and GNBT in the secondary market. The named plaintiffs asserted that RFC acted with knowledge that CBNV and GNBT were mere “straw parties” used to funnel origination and title services fees to Shumway. Because these fees were incorporated into the principal on the loan, RFC purportedly benefitted from the practice through increased interest income. In 2001, the federal Comptroller of the Currency investigated and audited GNBT, and imposed tighter restrictions on the bank. Shortly thereafter, RFC announced that it would no longer purchase high interest mortgage loans like those originated by CBNV and GNBT. RFC’s withdrawal, in turn, caused the Shumway organization to shut down in early 2003. B. The Separate Class Actions and the Initial Settlement The consolidated class actions before us began as six separate class actions. The first — Davis v. CBNV, which named CBNV and RFC as defendants — was filed in Pennsylvania state court in May 2001 as a putative state-wide class action and was later removed to federal court (on federal preemption grounds). The first action to name GNBT and RFC as defendants was Ulrich v. GNBT, filed in the District Court for the Western District of Pennsylvania in September 2002 as a putative nationwide class action. The remaining four actions are: Sabo v. CBNV, filed in federal court in September 2002 as a putative nationwide class action; and Picard v. CBNV (October 2002), Mathis v. GNBT (November 2002), and Kessler v. RFC (February 2003), all filed in Pennsylvania state court as putative state-wide class actions and later removed to federal court in the Western District. R. Bruce Carlson of Carlson Lynch Ltd., located in Sewickley, Pennsylvania, was the lead plaintiffs’ attorney in all six actions, and was subsequently appointed as class counsel by the District Court. These actions asserted claims against CBNV, GNBT, and RFC under the Real Estate Settlement Procedures Act (“RES-PA”), 12 U.S.C. § 2601 et seq.; the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.; and the usury, unfair trade practices, and consumer protection laws of Pennsylvania. Section 8(a) of RE SPA prohibits the giving or accepting of any “fee, kickback, or thing of value” in exchange for referrals of federally related mortgage loans. 12 U.S.C. § 2607(a). Section 8(b) prohibits the giving or accepting of “any portion, split, or percentage” of unearned fees. Id. § 2607(b). Plaintiffs alleged that defendants violated RESPA in both ways: (1) by charging excessive origination fees (often as high as 10% of the loan principal) and paying them as “kickbacks” to Shumway in exchange for its mortgage-solieitation services; and (2) by charging title services fees for services that were never performed. Plaintiffs alleged that RFC, as the assignee of the closed loans, was derivatively liable for the banks’ conduct. See 15 U.S.C. § 1641(d)(1). In July 2003, the named plaintiffs and the defendants (collectively, the “Settling Parties”) moved for preliminary approval of a proposed nationwide class action settlement (the “Initial Settlement”). The settlement class was defined to include all persons (1) who entered into a loan agreement with CBNV or GNBT, (2) whose loan was secured by a second mortgage or deed of trust on property located in the United States, and (3) whose loan was purchased by RFC. There was no time restriction on the class, which encompassed approximately 44,000 loans (dating back to as early as 1998). In reaching the Initial Settlement, the Settling Parties agreed that the “realistic best-case scenario for RESPA damages on a per-loan basis” was $4,765 ($3,675 for origination fees and $1,090 for title service fees). With a class of approximately 44,-000 members, the Settling Parties concluded that the total “best-case” recovery for the class (after averaging the amount of individual fees charged) was approximately $200 million. The Initial Settlement committed defendants to pay up to $33 million, with class members receiving between $250 and $925 each. The settlement fund would be allocated among class members based on two core factors: (1) when the class member’s loan closed; and (2) the class member’s state of residence when the loan closed. First, $23.2 million would be distributed automatically based on the date the loans closed. The approximately 14,000 class members whose loans closed within one year of the “relevant complaints” — ie., the earliest class action complaint filed against the bank that made the loan to the class member, the Davis Complaint (for CBNV borrowers) and the Ulrich Complaint (for GNBT borrowers) — would receive $600 automatically. This structure reflected the hurdle posed by RE SPA’s one-year statute of limitations, which begins to run “from the date of the occurrence of the violation,” 12 U.S.C. § 2614, ie., the date the loan closed, see, e.g., Snow v. First Am. Title Ins. Co., 332 F.3d 356, 359-61 (5th Cir.2003). As the Settling Parties explain, “[t]his was a negotiated compromise of a vigorously disputed issue”: whether the named plaintiffs in the other four actions, as well as the absent class members, could rely on the filing dates of the Davis and Ulrich complaints to make their RE SPA claims timely. (Settling Parties’ Br. at 71.) Class members whose loans closed more than one year before the Davis or Ulrich complaints were filed would automatically receive $250 (less than half of the automatic payment to class members with timely claims). However, these class members were eligible to receive an additional $302 (for a total of $552) based on their answers to questions in a claims submission form designed to determine whether they could rely on equitable tolling as a defense to the expiration of the one-year limitations period. Finally, class members could receive an additional $825 if they resided in one of 21 “Qualifying States” where class counsel determined that class members could have pursued state law claims against CBNV, GNBT, and/or RFC. The Initial Settlement provided for “an extremely generous fee” of $8.1 million to class counsel, Community Bank I, 418 F.3d at 315, and incentive fee payments to the named plaintiffs of $1,500 each. It also included a broad release of all claims that were (or could have been) asserted in the litigation. The release specifically included claims that could have been brought under TILA and HOEPA, including claims for actual damages, statutory damages, and rescission. Less than a week after the Settling Parties’ filed their motion, the District Court entered an order (1) consolidating these six actions into the Kessler action; (2) “conditionally” certifying a class for settlement purposes; and (3) preliminarily approving the Initial Settlement. The Court also directed that notice be sent to members of the class advising them of the settlement and of their right to opt out. Later that year (in November 2003), the Court approved the filing of an amended consolidated class action complaint action for all six actions (the “Consolidated Amended Complaint”) to cure what the Court viewed as a potential jurisdictional problem regarding the Kessler action (as noted, the action into which the six class actions had been consolidated). C. The Objectors As noted, none of the named plaintiffs brought claims against the defendants under TILA or HOEPA. This prompted several plaintiffs’ firms — whom we shall refer to collectively as “counsel for the Objectors” — to mail letters to members of the putative class urging them to communicate with those law firms regarding the settlement, and, in some instances, urging them to opt out of the class. 418 F.3d at 287-88. A principal reason given was the allegedly inadequate consideration paid by the defendants for release of the class members’ TILA and HOEPA claims. TILA is a federal consumer protection statute, intended to promote the informed use of credit by requiring certain uniform disclosures from lenders. The statute is implemented by Regulation Z, 12 C.F.R. §§ 226.1 et seq., which requires creditors who make loans secured by a borrower’s principal dwelling to provide those borrowers with certain material disclosures, id. § 226.18. HOEPA, enacted as an amendment to TILA, applies to a special class of regulated loans that are made at higher interest rates and are subject to special disclosure requirements. See 15 U.S.C. § 1639. In particular, HOEPA requires lenders to disclose to their borrowers the annual percentage rate (“APR”) of sums due for the use of monies loaned and the amount of regular monthly payments. Id. § 1639(a)(2). According to the Objectors, the vast majority, of class members’ loans are subject to HOEPA. Like claims for damages under RESPA, TILA/HOEPA damages claims are subject to a one-year statute of limitations. Id. § 1640(e). The Objectors allege that defendants violated TILA and HOEPA by understating materially the APR in the disclosure forms they were required to give borrowers when the loans closed. The calculation of the APR must incorporate “finance charges,” as defined in Regulation Z, 12 C.F.R. § 226.4. See also 15 U.S.C. § 1605(a). Although fees for title abstracts and title examinations ordinarily are excluded from the definition of “finance charges,” id. § 226.4(c)(7)(i), and therefore not incorporated into the calculation of the APR, the Objectors contended that the fees charged by CNBV and GNBT were neither “bona fide” nor “reasonable” — and thus should have been factored into the calculation of the APR, id. § 226.4(c)(7) — because (1) no title examinations were performed, and (2) no true abstracts of title were obtained. Instead, the Objectors alleged that borrowers were charged for “property reports” (which allegedly are neither “true” title examinations nor abstracts) by entities affiliated with Shumway, and that this charge was illegally marked up and passed on to the borrower. The Objectors contend that each class member’s claims under TILA/HOEPA are worth as much as $52,000 per loan, which figure includes actual, statutory, and rescission damages. Together with the defendant’s potential liability under RE SPA (including trebled damages), the Objectors contend that the actual value of the claims being released is almost $3 billion (approximately $67,000 per class member). By October 2003, 435 class members had opted out of the class settlement. Two weeks later, the District Court — “without conducting a hearing, setting a briefing schedule or otherwise allowing [the Objectors] any practical opportunity to be heard”' — granted the Settling Parties’ joint motion to invalidate those opt-outs. Community Bank I, 418 F.3d at 288. The Court entered an order that “followed verbatim the Order proposed by the [S]ettling [P]arties” extending the opt-out period to November 2003. Id. Finally, the Court entered an order barring the objecting law firms from communicating with any member of the class, and denied the Objectors’ motion to intervene “without explanation.” Id. at 289, 291. D. The Prior Appeal The District Court held a hearing on the fairness of the Initial Settlement on November 14, 2003, and heard argument from the Settling Parties and the Objectors. On December 4, 2003, the Court entered a final order approving the settlement. The Objectors timely appealed. In Community Bank I, we vacated the District Court’s certification of the class and approval of the settlement, concluding that the Court had erred in several ways, including by: (1) failing to make an independent inquiry as to whether the Rule 23 class action requirements were satisfied; (2) improperly enjoining counsel for the Objectors from communicating with absent class members; and (3) denying the Objectors’ motion to intervene without “reasoning or discussion.” Id. at 314. As a result, we declined “to address definitively the substantive nature of the settlement.” Id. at 318. With respect to the District Court’s certification decision, we concluded that three of the four Rule 23(a) requirements — numerosity, typicality, and commonality— were met, as well as the Rule 23(b)(3) predominance and superiority requirements. Id. at 303-10. We expressed serious concerns, however, as to whether the adequacy requirement of Rule 23(a) could be met, specifically in the context of whether the named plaintiffs and class counsel were adequate representatives in light of their failure to assert colorable TILA/HOEPA claims. We were particularly concerned in Community Bank I with the Settling Parties’ invoking the statute-of-limitations defense to justify declining to bring TILA/HOEPA claims. We noted that the Settling Parties themselves had represented to our Court and the District Court that “approximately 14,000 members of the class have loans that ... closed ‘within one year of the date of filing of the relevant complaint.’ ” Id. at 305. Accordingly, it “appeared] that one-third of the class may have affirmative TILA and HOEPA claims that are not time barred.” Id. We doubted whether the named plaintiffs’ interests were “sufficiently aligned with those of the absent class members” if the District Court determined that the TILA/HOEPA claims were “viable,” noting that, “[b]ecause the one-year statutory period for filing an affirmative TILA or HOEPA claim has lapsed for all named plaintiffs, [they] appear to have no incentive to maximize such claims for the approximately 14,000 class members who may still retain this valuable cause of action.” Id. at 306-07. In that light, “[a]t the very least ... consideration should have been given to the feasibility of dividing the class into sub-classes so that a court examining the proposed settlement, could have judged the fairness of the settlement as it applied to similarly situated class members.” Id. at 307. We thus directed that, should the District Court find on remand that class certification is appropriate, it also “should determine whether subclasses are necessary or appropriate.” Id. at 310. We also expressed concern over whether “the absent class members’ interests were sufficiently pursued by class counsel”: We have already noted that class counsel never asserted colorable TILA and HOEPA claims. However, those claims were part of the settlement release. Failure to pursue such claims may suggest that class counsel [abdicated] their duty to the class in favor of the enormous class-action fee offered by defendants. Id. at 307-08. Though we emphasized that we were not “precluding] the possibility that the adequacy of class representation c[ould] be established on a more developed record,” we “instructed [the Court] to examine carefully this matter on remand.” Id. at 308. E. The Proceedings on Remand 1.The Hobson Action To begin, we note another putative nationwide class action relevant to (though not a part of) these appeals. While the appeal in Community Bank I was pending, counsel for the Objectors filed a putative nationwide class action — captioned Hobson v. Irwin Union Bank and Trust Co., et al. — in the federal District Court for the Northern District of Alabama. According to the Objectors, Hobson “was filed to address the inadequacy of the Settling Plaintiffs and their failure to pursue, but nonetheless release, TILA/HOEPA claims,” as well as to represent persons who (1) were victims of the Shumway predatory lending scheme, but (2) whose loans were not purchased by RFC (and thus did not fall within the class). (Objectors’ Br., No. 08-3621, at 22.) In May 2005, the Judicial Panel for Multidistrict Litigation transferred Hobson to the Western District of Pennsylvania. After our remand in Community Bank I, the attorneys for the Hobson plaintiffs filed (1) a motion for class certification (in Hobson), (2) a motion to appoint one of the law firms representing the Objectors— Walters, Bender, Strohbehn & Vaughn— as interim lead class counsel (in the Hob-son action, as well as the consolidated Kessler action), and (3) a motion to file a Proposed Second Amended Class Action Complaint (in the consolidated Kessler action). 2.The Objectors Withdraw Their Motion to Intervene In November 2005, the District Court held a conference call with counsel for the Settling Parties and the Objectors to discuss how to proceed on remand. Class counsel advised the Court that it intended to continue to pursue approval of the Initial Settlement. The Court then asked Michael Vaughn, Esq. (of the Walters, Bender firm) whether he still wished to pursue intervention. Mr. Vaughn responded no, explaining that he believed the transfer of Hobson to the MDL proceeding was an adequate way to seek the assertion of the potential TILA/HOEPA claims, and that the intervention issue had essentially been “moot[ed] by the MDL transfer” of Hobson. 3.The District Court’s Viability Briefing During the same conference call, the District Court also appointed a Steering Committee — composed of various lawyers from the law firms representing the class, the defendants, and the Objectors — to establish a briefing schedule to address the merits of the potential TILA/HOEPA claims. The Court explained that it envisioned a bifurcated analysis on remand: (1) it would first address the viability of potential TILA/HOEPA claims; and (2) then address adequacy and the other Rule 23 elements. Mr. Vaughn agreed with this structure: The Court: I think the first thing we have to do is determine the viability of these claims. If I determine that they are viable, then I think the argument as to whether or not the named representative you have can adequately represent those members of your class who have such claims ... is Question No. 2. Mr. Vaughn: We agree with that, Your Honor. The Court: If I say they’re not viable because of statute of limitations, or the elements can’t be met, or something like that, then I think that the wind might be out of your sails here. Mr. Vaughn: Your Honor, I think you’re right. The Steering Committee negotiated a briefing schedule allowing all interested parties to submit briefs on the viability issue. The scheduling order also provided for an exchange of certain loan files, and stipulated that no other formal discovery would occur. Counsel for the Objectors and the defendants submitted extensive briefing dealing with the TILA/HOEPA issues. Class counsel, however, did not brief the issue. Instead, they submitted a filing to the District Court stating that they (i) “expect[ed] that counsel for the Defendants group will file with the Court an initial ‘viability’ brief that thoroughly discusses the legal backdrop of the class-based TILA/HOEPA claims that are in dispute,” and (ii) concluded, “after much reflection, that [the] Court would not benefit from a brief by [the named plaintiffs] that would discuss much of the same authority set forth in the initial brief filed by the Defendants.” Counsel “elected to wait and see which arguments ... are advanced in the initial submission” by the Objectors, and thereafter file a brief with a comprehensive recitation of relevant facts that demonstrates: 1) what [counsel] learned through their investigation into the underlying conduct in dispute; 2) how that factual information bears upon the class-based TILA/HOEPA theories at issue; and[ ] 3) the strategy underlying the specific legal claims that they elected to pursue in this litigation, given the facts that they learned in their investigation. Though class counsel in fact submitted this brief, the District Court, as we discuss below, did not discuss it in ruling on the viability question. 4. The Modified Settlement As the parties were briefing the viability issue, the Settling Parties entered into new settlement negotiations to “explore a possible enhancement to the [Initial] Settlement.” (Settling Parties’ Br. at 24.) Counsel for the Objectors initially participated in those negotiations, including unsuccessful mediation before retired District Court Judge Nicholas Politan of the District of New Jersey. During the summer of 2006, the Settling Parties (who were not joined by counsel for the Objectors) negotiated an “enhanced” settlement (the “Modified Settlement”) with the assistance of former Third Circuit Judge Timothy Lewis. According to the Settling Parties, “[t]he renewed settlement ' negotiations considered the alleged monetary damages Class members ostensibly could have sought assuming ... that the posited TILA/HOEPA claims had been pleaded and could potentially survive a Rule 12(b) motion.” (Settling Parties’ Br. at 25.) The Settling Parties determined that the potential “actual” (ie., compensatory) damages the Objectors were claiming under TILA/HOEPA amounted to, on average, approximately $415 per loan. (Id.) However, because of “Defendants’ perception of the strength of them statute of limitations ... defenses,” they refused to make any additional payments to any member of the Class in exchange for the release of their potential TILA/HOEPA liability without first determining whether a given Class Member had some basis for relying on equitable tolling. Accordingly, the Settling Parties proposed a claim form containing the following questions for class members to answer: 1. Did you read your Settlement Statement (Form HUD-1) prior to obtaining your loan? 2. At the time that you obtained your ... loan, did you believe that the Statement of Settlement Charges listed on your HUD-1 was accurate? 3. At the time that you obtained your ... loan, did you believe that the Settlement Charges listed on your HUD-1 were for services actually performed? 4. At the time that you obtained your CBNV [or GNBT] loan, did you believe that the Settlement Charges listed on your HUD-1 were reasonable and appropriate? The Modified Settlement provided that if a class member responds to these questions “appropriately,” he or she is entitled to an additional $332, representing approximately 80% of the class member’s potential actual damages under TILA and HOE-PA. The defendants agreed to pay up to an additional $14.6 million to those persons, for a total of $47.6 million. In addition, the Modified Settlement reduced the amount of attorneys’ fees that class counsel would petition the Court to approve from $8.1 million to $7.5 million. Defendants also agreed to pay “up to an additional $2 [million] in attorneys’ fees and costs” — presumably, to counsel for the Objectors — “if so ordered by the Court.” The Modified Settlement followed the terms of the Initial Settlement in all other material respects. 5.The District Court Determines the TILA/HOEPA Claims Are Not Viable The District Court held oral argument on the viability issues in July 2006. It asked Counsel for the Objectors what “standard” it should use to determine the viability of the TILA/HOEPA claims. Counsel for the Objectors agreed with the District Court that our Court had intended for it to apply a Rule 12(b)(6) standard, as did class counsel. At the same time, Counsel for the Objectors argued that the statute-of-limitations defense could not be determined using such a standard, as it presented factual questions that “[r]arely can ... be disposed of by ... a motion to dismiss.” By contrast, counsel for the defendants argued that a Rule 12(b)(6) standard was inappropriate, arguing that our Court “did not contemplate that this viability standard ... could be satisfied just by showing the 12(b)(6) standard was satisfied.” The District Court disagreed with the defendants’ counsel, explaining that the question should be whether, “taking [the Objectors’] allegations as true, does a claim exist under TILA or HOEPA?” The Court stated that it believed such a cause of action could be adequately stated under Rule 12(b)(6), but characterized the merits of the statute-of-limitations defense as a “tough one.” In October 2006, the District Court issued a 33-page “Memorandum” (the “2006 Memorandum”) in which it determined that the proposed TILA/HOEPA claims for damages and rescission were not viable. At the outset, the Court explained that it had interpreted our decision in Community Bank I as directing it to apply a hybrid standard of review. Namely, the court of appeals directed this court to examine whether the Class Plaintiffs were inadequate representatives under Rule 23. The court of appeals questioned whether the Class Plaintiffs were inadequate if they failed to assert TILA/HOEPA claims that were “viable.” Thus, it appears that the court of appeals intended this court to examine whether the Class Plaintiffs were inadequate representatives under Rule 23 because they failed to assert TILA/HOEPA claims which could have survived a Rule 12(b)(6) motion to dismiss. In the end, the Court agreed with the defendants’ “principal argument” regarding the viability question: “that the TILA/HOEPA claims for damages are not viable because they are time barred.” We discuss the District Court’s viability conclusions at length below. To summarize, it first agreed with the defendants that no class member could bring a timely claim under TILA or HOEPA for damages or rescission, as no such amended pleading could satisfy the requirements of Federal Rule of Procedure 15(c), and thus could not relate back to any earlier complaint in the consolidated Kessler action. In addition, the Court determined (while applying a Rule 12(b)(6) standard) that no class member could rely on equitable tolling to save their otherwise time-barred claims. The Objectors filed a motion asking the District Court to reconsider its 2006 Memorandum, and alternatively asked it to certify the Memorandum for an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The Court denied both motions. 6. The District Court Appoints a “Friend of the Court” The District Court held a conference call with counsel for the Settling Parties and the Objectors on December 1, 2006, and expressed its intent to appoint an “independent body” to evaluate the fairness of the Modified Settlement. The Court made clear that it would not ask this “independent body” to “evaluate the case in terms of whether the requirements of Rule 23 have been met or not.” Counsel for the Objectors raised no objection to the Court’s proposal at this time. The Court later chose retired Chief Judge Donald Ziegler of the District Court for the Western District of Pennsylvania to serve as a “friend of the court,” and to provide a “non-binding advisory opinion” as to whether the Modified Settlement was “fair and reasonable” under Rule 23. In March 2007, the Settling Parties and the Objectors presented oral arguments to Judge Ziegler regarding the fairness of the Modified Settlement. However, counsel for some of the Objectors objected to the process, arguing to Judge Ziegler that his appointment was improper. Judge Ziegler issued his advisory opinion in July 2007, and concluded that the Modified Settlement was fair, reasonable, and adequate. He reasoned that the named plaintiffs faced significant obstacles to their RESPA and RICO claims if the case proceeded to trial, including the possibility that they would be unable to prove that defendants had charged them fees (e.g., title fees and origination fees) for services that were not actually performed. However, Judge Ziegler did not consider whether the Modified Settlement was fair in the context of the Objectors’ arguments that the class members’ TILA/HOEPA claims were significantly more valuable, noting that the District Court “ha[d] already concluded that there are no viable TILA/HOEPA claims” and that he was not authorized to “revisit that issue.” 7. The District Court Denies the Objectors’ Renewed Motion to Intervene, Conditionally Re-Certifies the Class, and Preliminarily Approves the Modified Settlement By the Fall of 2007, the Settling Parties and the Objectors had fully briefed the Settling Parties’ motion for conditional re-certification of the class and preliminary approval of the Modified Settlement. After a hearing on those motions, on November 9, 2007, the Walters, Bender firm filed a “renewed” motion to intervene in the consolidated Kessler action, arguing that the Modified Settlement was the product of collusion between class counsel and counsel for defendants. In January 2008, the District Court conditionally re-certified the Class, preliminarily approved the Modified Settlement, re-appointed class counsel, and re-appointed the named plaintiffs as class representatives. The Court also denied the Objecting Class Member’s Renewed Motion to Intervene as untimely, stating that the Objectors orally withdrew their motion to intervene in November of 2005. Although the court will direct the Settling Parties to submit a revised notice plan and provide the class with an additional period to opt out, under the unique circumstances of this case, the Objectors!’] renewed motion is untimely.... They have identified no persuasive reason why they failed to pursue intervention in the interim other than their dissatisfaction with the court’s rulings to date. The Settling Parties then filed a proposed plan for disseminating notice to the class, which the District Court approved. Only 55 members submitted timely opt-outs. Among the class members who chose not to opt out were the named plaintiffs in the Hobson action. 8. The District Court Certifies the Class and Approves the Modified Settlement The District Court held a final fairness hearing on June 30, 2008, during which it heard at length from class counsel and counsel for the Objectors. The Objectors argued, among other things, that (1) the Court erred when it appointed Judge Ziegler to issue an advisory opinion on the fairness of the Modified Settlement; (2) the Modified Settlement did not extract sufficient consideration for the class members’ TILA/HOEPA claims (or the RES-PA, RICO, and state law claims the named plaintiffs had pled); and (3) the defendants — in particular RFC and PNC Bank (the successor to CBNV) — could withstand a far greater judgment. On August 14, 2008, the Court issued a Memorandum and Order certifying the class and approving the modified settlement. With respect to the adequacy requirement, it relied solely on its 2006 Memorandum, in which it had concluded that the [proposed TILA/HOEPA] claims were time-barred. Thus, Class Counsel’s strategic decision to pursue other legal theories in this case in no way renders them inadequate. In any event, ... the proposed settlement accounts for the risk that some members of the class could have established sustainable TILA/HOEPA claims and provides for an award where appropriate. As a result of these determinations, the Court never considered the creation of a subclass. The Court then examined the fairness of the Modified Settlement in light of the factors announced in Girsh v. Jepson, 521 F.2d 153 (3d Cir.1975), and concluded that they counseled in favor of approving the Modified Settlement as fair, reasonable, and adequate. It further concluded that, notwithstanding the named plaintiffs’ failure to bring TILA/HOEPA claims, the Modified Settlement was fair, reasonable, and adequate because it provided “class members with additional relief for such claims, even though th[e] court found them to be time-barred.” The Objectors timely appealed to our Court. II. Jurisdiction and Standards of Review The District Court had jurisdiction under 28 U.S.C. § 1331 because the Consolidated Amended Complaint asserted claims under federal law (ie., RESPA and RICO). See Community Bank I, 418 F.3d at 293-98. The Court had supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367(a). We have appellate jurisdiction under 28 U.S.C. § 1291. We review a district court’s certification of a class for abuse of discretion. In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 595 (3d Cir.2009); Community Bank I, 418 F.3d at 298. A district court abuses its discretion if its “decision rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper application of law to fact.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d Cir.2008) (internal quotation marks and citation omitted). However, “whether an incorrect legal standard has been used [in ruling on class certification] is an issue of law to be reviewed de novo.” Id. (internal quotation marks and citation omitted); accord Regents of Univ. of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372, 380 (5th Cir.2007). III. Discussion We begin by noting that several of the Objectors’ claims of error underwhelm. In particular, we see nothing to support their attacks on the District Court’s impartiality, or their repeated insinuations that the Court intentionally disregarded our mandate in Community Bank I. From our independent review of the record, the Court made great efforts to address the concerns we expressed in our prior opinion, and attempted to follow an orderly procedure on remand in ruling on class certification and the fairness, adequacy, and reasonableness of the settlement. That said, we nonetheless conclude that the proceedings on remand went off course. To provide needed context, we first discuss the legal standards that apply to the Rule 23 requirements at issue in this case, as well as the extent to which the merits of statute-of-limitations defenses may become relevant to a district court’s evaluation of those requirements. We then turn to the District Court’s certification decision here, and conclude that the Court — by approaching the adequacy of representation requirement as though it were ruling on a motion to amend a pleading under Rule 15(c), or a motion to dismiss under Rule 12(b)(6) — engaged in an analysis that was neither required nor contemplated by Rule 23. From there, we discuss our continuing concerns regarding whether the named plaintiffs and class counsel are adequate class representatives, paying particular attention to: (a) the statute-of-limitations problems faced by the named plaintiffs’ claims (whether under RESPA, TILA, or HOEPA); and (b) class counsel’s decision not to bring TILA/HOEPA claims on behalf of the class. We address finally the Objectors’ argument that the Court abused its discretion in denying their renewed motion to intervene, as well as their request that we reassign this matter to a different District Court Judge on remand, both of which we reject. A. Class Certification 1. Legal Standards “Rule 23 is designed to assure that courts will identify the common interests of class members and evaluate [ (1) ] the named plaintiffs’ and [ (2) ] counsel’s ability to fairly and adequately protect class interests.” In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 799 (3d Cir.1995). Every putative class must satisfy the four requirements of Rule 23(a): (1) the class must be “so numerous that joinder of all members is impracticable” (numerosity); (2) there must be “questions of law or fact common to the class” (commonality); (3) “the claims or defenses of the representative parties” must be “typical of the claims or defenses of the class” (typicality); and (4) the named plaintiffs must “fairly and adequately protect the interests of the class” (adequacy of representation, or simply adequacy). Fed.R.Civ.P. 23(a)(1)-(4). If those requirements are met, a district court must then find that the class fits within one of the three categories of class actions in Rule 23(b). The District Court certified this class action under Rule 23(b)(3), which requires that (i) common questions of law or fact predominate (predominance), and (ii) the class action is the superior method for adjudication (superiority). “Confronted with a request for a settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (internal citation omitted). However, the “other specifications of [Rule 23] — those designed to protect absentees by blocking unwarranted or overbroad class definitions — demand undiluted, even heightened, attention in the settlement context.” Id. The sole disputed Rule 23 requirement in this case, as it was in Community Bank I, is adequacy of representation, both as to the named plaintiffs and their counsel. “The inquiry that a court should make regarding the adequacy of representation requisite of Rule 23(a)(4) is to determine that the putative named plaintiff has the ability and the incentive to represent the claims of the class vigorously, ... and that there is no conflict between the individual’s claims and those asserted on behalf of the class.” Hassine v. Jeffes, 846 F.2d 169, 179 (3d Cir.1988). This inquiry is vital, as “class members with divergent or conflicting interests [from the named plaintiffs and class counsel] cannot be adequately represented.... ” In re Diet Drugs Prods. Liab. Litig., 385 F.3d 386, 395 (3d Cir.2004). “Although questions concerning the adequacy of class counsel were traditionally analyzed under the aegis of the adequate representation requirement of Rule 23(a)(4) ... those questions have, since 2003, been governed by Rule 23(g).” Sheinberg v. Sorensen, 606 F.3d 130, 132 (3d Cir.2010). That subsection lists several non-exclusive factors that a district court must consider in determining “counsel’s ability to fairly and adequately represent the interests of the class,” Fed.R.Civ.P. 23(g)(1)(B), including: (1) “the work counsel has done in identifying or investigating potential claims in the action,” (2) “counsel’s experience in handling class actions, other complex litigation, and the types of claims asserted in the action,” (3) “counsel’s knowledge of the applicable law,” and (4) “the resources that counsel will commit to representing the class.” Fed.R.Civ.P. 23(g)(1)(A). “Realistically, for purposes of determining adequate representation, the performance of class counsel is intertwined with that of the class representative.” Pelt v. Utah, 539 F.3d 1271, 1288 (10th Cir.2008). As our own Judge Aldisert has explained, “[e]xperience teaches that it is counsel for the class representative and not the named parties ... who direct and manage [class] actions. Every experienced federal judge knows that any statements to the contrary [are] sheer sophistry.” Greenfield v. Villager Indus., Inc., 483 F.2d 824, 832 n. 9 (3d Cir.1973). 2. Statute-of-Limitations Issues at the Class Certification Stage Objectors argue that the District Court erred in considering the merits of the defendants’ statute-of-limitations defenses to the potential TILA/HOEPA claims in ruling on class certification. As noted, the Court determined that any potential claims possessed by the class under TILA/HOEPA were not viable because they were time-barred; thus the named plaintiffs and class counsel were not inadequate for failing to bring them. Relying on the Supreme Court’s decision in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), the Objectors contend that “the [District [C]ourt’s inquiry into the merits of the TILA/HOEPA claims ... was unnecessary for purposes of a Rule 23 analysis and cannot be sustained as permissible.” (Objectors’ Br., No. 08-3261, at 73.) In Eisen, the Supreme Court stated that there is “nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.” 417 U.S. at 177, 94 S.Ct. 2140. As we explained in Hydrogen Peroxide, this statement in Eisen led to “uncertainty” as to whether district courts are categorically prohibited from evaluating the merits of a class claim at the certification stage, even where merits questions overlap with a Rule 23 requirement. 552 F.3d at 316. This tension — between a district court’s obligation to make findings regarding the Rule 23 requirements, and the apparent bar on “conducting] a preliminary inquiry into the merits of’ a class claim — is reflected in how courts have confronted statute of limitations at the class certification stage. In general, a “statute of limitations is an affirmative defense, and the burden of establishing its applicability to a particular claim rests with the defendant.” Bradford-White Corp. v. Ernst & Whinney, 872 F.2d 1153, 1161 (3d Cir.1989) (internal quotation marks and citations omitted); see also Fed.R.Civ.P. 8(c). Thus, many courts have refused to consider statute-of-limitations issues at the class certification stage, reasoning that such an inquiry veers impermissibly into whether the named plaintiffs and the class can prevail on their claims. However, our Court and other circuit courts have since rejected the proposition that Eisen categorically prohibits the evaluation of the merits of class claims at the certification stage. In Hydrogen Peroxide, we interpreted Eisen to mean only that a merits inquiry is precluded at the class certification stage where it “is not necessary to determine a Rule 23 requirement.” 552 F.3d at 317. Indeed, as the Supreme Court recognized a few years after it decided Eisen, [evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims. The typicality of the representative’s claims or defenses, the adequacy of the representative, and the presence of common questions of law or fact are obvious examples. Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n. 12, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978) (internal quotation marks and citation omitted). Thus, “[i]n reviewing a motion for class certification, a preliminary inquiry into the merits is sometimes necessary to determine whether the alleged claims can be properly resolved as a class action.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 168 (3d Cir.2001); accord Hydrogen Peroxide, 552 F.3d at 320 (“[B]ecause each requirement of Rule 23 must be met, a district court errs as a matter of law when it fails to resolve a genuine legal or factual dispute relevant to determining the requirements.”). Situations abound where statute-of-limitations issues overlap with certain of the Rule 23 requirements. For example, defendants may contend that statute-of-limitations defenses preclude a finding of typicality under Rule 23(a), either because the named plaintiffs’ claims are untimely (and thus not typical of the class), see, e.g., Franze v. Equitable Assurance, 296 F.3d 1250, 1254 (11th Cir.2002), or because the proposed class includes numerous class members with untimely claims (rendering the named plaintiffs’ timely claims atypical), see, e.g., Doe v. Chao, 306 F.3d 170, 184 (4th Cir.2002). Relatedly, defendants may oppose class certification on the ground that class members with untimely claims must rely on equitable tolling to save their claims, which presents an individual question of law and fact that could predominate over common questions under Rule 23(b)(3), see, e.g., In re Linerboard Antitrust Litig., 305 F.3d 145, 160-62 (3d Cir.2002), or challenge the predominance requirement in light of the “presence of idiosyncratic statute-of-limitations issues” among the laws of various states in a nationwide class action, see Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 295-96 (1st Cir.2000). Statute-of-limitations issues also touch the adequacy requirement. See, e.g., Goodman v. Lukens Steel Co., 777 F.2d 113, 124 (3d Cir.1985) (named plaintiffs were inadequate representatives in class action challenging discriminatory practices in the initial assignment of newly hired employees, because “[a]ll of the named plaintiffs ... were originally hired outside the [statute-of-] limitations period, and therefore, none ha[d] a viable complaint about discrimination in initial assignment”). Indeed, the merits of a statute-of-limitations defense to the named plaintiffs’ claims may be relevant to evaluating their adequacy as class representatives in the same way any type of defense may be relevant to that inquiry, i.e., named plaintiffs may be inadequate representatives if their claims are extremely weak as compared to the rest of the class. As Judge Posner explained, if when class certification is sought it is already apparent ... that the class representative’s claim is extremely weak, this is an independent reason to doubt the adequacy of his representation.... One whose own claim is a loser from the start knows that he has nothing to gain from the victory of the class, and so he has little incentive to assist or cooperate in the litigation; the case is then a pure class action lawyer’s suit. Robinson v. Sheriff of Cook County, 167 F.3d 1155, 1157 (7th Cir.1999) (internal citations omitted). Thus, to the extent the claims of the named plaintiffs — as compared with the rest of the class — are subject to fatal statute-of-limitations defenses, that inquiry may be relevant to whether they can adequately represent absent class members whose claims do not suffer from timeliness problems. Cf. Beck v. Maximus, Inc., 457 F.3d 291, 297 (3d Cir.2006) (“the challenge presented by a defense unique to a class representative” is that “the representative’s interest might not be aligned with those of the class, and the representative might devote time and effort to the defense at the expense of issues that are common and controlling for the class”). However, the extent to which a district court may consider the merits of claims in ruling on a class-certification motion has limits. “When a district court properly considers an issue overlapping the merits in the course of determining whether a Rule 23 requirement is met, it does not do so in order to predict which party will prevail on the merits.” Hydrogen Peroxide, 552 F.3d at 317 n. 17; see also Hassine, 846 F.2d at 178 (“The ability of a named plaintiff to succeed on his or her individual claims has never been a prerequisite to certification of the class.”). Thus, merits inquiry is not permissible “when [the] merits issue is unrelated to a Rule 23 requirement.” In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24, 41 (2d Cir.2006); see also Vallario v. Vandehey, 554 F.3d 1259, 1266 (10th Cir.2009) (the merits of the class claims “may not serve as the focal point of [the] class certification analysis”). Stated another way, it remains true that “[i]n determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action ... but rather whether the requirements of Rule 23 are met.” Eisen, 417 U.S. at 178, 94 S.Ct. 2140 (emphasis added) (internal quotation marks and citation omitted). In the context of this precedent, we cannot agree with the Objectors that the District Court was categorically prohibited from evaluating the merits of defendants’ statute-of-limitations defenses to potential TILA/HOEPA claims in ruling on class certification. We must determine, however, whether the District Court’s analysis of the merits of those defenses was necessary to make findings on Rule 23 requirements — specifically here the adequacy-of-representation requirements under Rules 23(a)(4) and 23(g). 3. The District Court’s Analysis As noted, the District Court interpreted our decision in Community Bank I as instructing it to evaluate the viability of potential TILA/HOEPA class claims before evaluating the adequacy of the named plaintiffs and their counsel. Compare 418 F.3d at 306 (“If the Court determines that the TILA and HOEPA claims [of class members] are viable, there may be serious questions whether the named plaintiffs’ interests are sufficiently aligned with those of absent class members as required by Rule 23(a).”). The District Court’s reasoning appears to be that, if these claims could not survive a Rule 12(b)(6) motion to dismiss (and thus were not viable), neither the named plaintiffs nor their counsel were inadequate for failing to bring them. a. The District Court’s Relation-Back Analysis Though the District Court purported to approach this question using a Rule 12(b)(6) standard, its analysis actually dealt with Rule 15(c), which governs the circumstances where an amended pleading “relates back to the date of the original pleading.” Fed.R.Civ.P. 15(c). The Court focused on Rule 15(c)(1)(C), which governs the circumstances in which an amended pleading that “changes the party or the naming of the party against whom a claim is asserted” relates back to the date of the initial pleading. Fed.R.Civ.P. 15(c)(1)(C). Such an amended pleading only relates back if (1) it “asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading”; and (2) the “party to be brought in by amendment ... knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.” Id. The Court approached the relation-back question — i.e., whether an amended pleading asserting TILA/HOEPA claims could relate back to any earlier complaint — not by reference to a hypothetical amended complaint that the existing named plaintiffs could file, but by reference to an amended complaint filed by absent members of the class. In particular, the Court focused on the complaint (and the proposed second amended consolidated complaint) filed by Counsel for the Objectors in the Hobson action. The Court concluded that those complaints could not possibly relate back to any complaint in the consolidated Kessler action for several reasons, including that: (1) they named new defendants in addition to CNBV, GNBT, and RFC, and thus could not relate back under Rule 15(c)(1)(C) (because the named plaintiffs had not failed to sue those defendants as a result of any “mistake”); and (2) no complaint in the Hobson action could relate back to the Davis or Ulrich complaints in any event because “Rule 15(c), by its terms, only applies to amended pleadings in the same action as the original, timely pleading,” Bailey v. N. Ind. Public Serv. Co., 910 F.2d 406, 413 (7th Cir.1990). This approach appears to assume that the reasons why the existing class members chose not to plead TILA/HOEPA claims in their initial complaints, and later refused to amend their complaints to assert those claims, were irrelevant. The Court approached the adequacy question from a perspective that in effect asked whether, assuming the existing named plaintiffs were inadequate representatives for failing to bring those claims, that failure could be remedied by any other member of the class. Answering that question in the negative, the Court’s analysis comes to the conclusion that the existing named plaintiffs are made adequate because there is no remedy for their inadequate representation. The Settling Parties advance a similar argument before us on appeal: they contend that the only way TILA/HOEPA claims could be asserted in this litigation is if “Class Counsel or the Objectors ... s[ought] leave from the district court to add a new named plaintiff whose TILA/HOEPA claims had not expired.” (Settling Parties’ Br. at 79 (emphasis in original).) Moreover, because the existing named plaintiffs obviously did not fail to name any other class member as a named plaintiff as the result of a “mistake concerning the proper party’s identity,” Fed.R.Civ.P. 15(c)(1)(C), the Settling Parties contend that an amended pleading adding a new named plaintiff to assert TILA/HOEPA claims could not possibly relate back to any complaint in the consolidated Kessler action. In sum, the Settling Parties contend that every class member’s potential TILA/HOEPA claim is fatally time-barred. We need not definitively resolve here this Rule 15(c) question. As we explain further below, see infra Part III.A.4, the District Court — by approaching the adequacy requirements from this perspective — did not consider the serious remaining questions regarding whether (a) the named plaintiffs’ interests are aligned with those of the absent class members, and (b) class counsel has “vigorously prosecuted the action” on behalf of the class. General Motors, 55 F.3d at 801. However, because the Parties have devoted so much of then-arguments to the Rule 15(c) issue (both before us and before the District Court), we think it appropriate to take a detour to explain our serious doubts regarding the Settling Parties’ argument. Rule 15(c)(1)(C) does not expressly refer to the addition of a new plaintiff; it facially applies only to an amendment that “changes the party or the naming of the party against lohom a claim is asserted.” Fed.R.Civ.P. 15(c)(1)(C) (emphasis added). However, our Court (and other courts) have also applied its requirements to the addition of new plaintiffs. See Nelson v. Allegheny County, 60 F.3d 1010, 1014 n. 7 (3d Cir.1995); see also Advisory Committee Notes on the 1996 Amendments to Fed.R.Civ.P. 15 (“The relation back of amendments changing plaintiffs is not expressly treated in revised rule 15(c) since the problem is generally easier [than that of amendments changing defendants]. Again the chief consideration of policy is that of the statute of limitations, and the attitude taken in ... Rule 15(c) toward change of defendants extends by analogy to amendments changing plaintiffs.”). The Settling Parties contend that Nelson is dispositive here, and would bar any new-named plaintiff in these actions from filing an amended pleading that could relate back to an earlier-filed complaint. We disagree. In Nelson, anti-abortion protestors filed a class action against the City of Pittsburgh after they were arrested for protesting on the grounds of a private clinic. Id. at 1011. After the District Court denied class certification, the named plaintiffs filed an amended complaint asserting individual claims. Id. After two more years passed, the plaintiffs filed a fourth amended complaint adding two new plaintiffs. Id. at 1011-12. We affirmed the District Court’s dismissal of these new plaintiffs’ claims as time-barred: though it was undisputed that the statute of limitations was tolled for these individu