Case No. 1:01CV133.
January 23, 2002
In accordance with an Opinion filed this day,
IT IS HEREBY ORDERED that Plaintiff's Motion for Class Certification (Dkt. No. 62) is GRANTED.
IT IS FURTHER ORDERED that the Court certifies this matter as a class action pursuant to Federal Rule of
Civil Procedure 23(b)(3). The class action is certified as to the following two classes:
(1) All consumers who signed a retail installment sales contract in connection with the purchase and financing of a motor vehicle through Wayland Ford, Inc., where Wayland Ford, Inc. was identified on the face of the contract as the entity to whom the debt arising from the contract is or was initially payable, and where the consumer was not given a copy of the contract to keep prior to signing the contract.
(2) All consumers who signed a retail installment sales contract in connection with the purchase and finance of a motor vehicle through Wayland Ford, Inc., where Wayland Ford, Inc. was identified on the face of the contract as the entity to whom the debt arising from the contract is or was initially payable, and where the consumer was not given a copy of the contract to keep prior to leaving the dealership on the day the consumer signed the contract.
IT IS FURTHER ORDERED that the first class is to be known as "the TILA Class." The second class is to be known as "the State Law Class."
This matter is before the Court on Plaintiff's Motion for Class Certification. The Court will grant Plaintiff's Motion.
I. Standard of Review and Applicable Federal Rules
Review of a decision on class certification is for abuse of discretion. Watkins v. Simmons Clark, Inc., 618 F.2d 398, 402 (6th Cir. 1980). The certification of class actions is governed by Federal Rule of Civil Procedure 23. The Court must conduct a "rigorous analysis" to decide whether the prerequisites of Rule 23 are met before certifying a class action. General Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). Based on the parties' briefing, the issues are plain, and the Court does not find that a hearing is necessary for a determination on this matter. Cf. id. at 160 (finding that issues can be plain enough from the pleadings to determine whether the interests of absent parties are fairly encompassed within named plaintiff's claim without a hearing); In re American Medical Systems, Inc., 75 F.3d 1069, 1079 (6th Cir. 1996).
Rule 23 places the burden of class certification on Plaintiff. In re American Medical Systems, Inc., 75 F.3d at 1079. Under Rule 23, Plaintiff must prove the four prerequisites of Rule 23(a), commonly referred to as (A) Numerosity, (B) Commonality, (C) Typicality, and (D) Adequacy of Representation. See Fed.R.Civ.P. 23(a).
Plaintiff must also meet the requirements of Rule 23(b)(2) or (3), since her complaint asks for both monetary and equitable relief. Rule 23(b)(3)'s requirements are commonly referred to as (A) Predominance and (B) Superiority. See Fed.R.Civ.P. 23(b)(3). Rule 23(b)(2) requires that "the party opposing the class has acted or refused to act on grounds generally applicable to the class . . . ." Fed.R.Civ.P. 23(b)(2).
After reviewing these factors as described below, the Court finds that Plaintiff Christine Daenzer has met her burden to certify this lawsuit as a class action. The Court also notes that another Court in this District also certified a class action in another lawsuit against another defendant that was factually and legally indistinguishable from this case. See Lozada v. Dale Baker Oldsmobile, Inc., 197 F.R.D. 321 (W.D.Mich. 2000) (Hillman, J.).
The Truth in Lending Act (TILA) requires that creditors deliver cost of credit disclosures, in some form that the consumer may keep, prior to when a customer enters into a sales contract. 15 U.S.C. § 1638(a); 12 C.F.R. § 226.18. Plaintiff claims that Defendant Wayland Ford, a car dealership, violated TILA when it failed to give her copies of certain paperwork containing cost of credit disclosures prior to entering into a sales contract. Plaintiff claims that it is or was the dealership's practice to purposely refuse to give consumers this information prior to the extension of credit, and thus, Plaintiff seeks class certification with respect to her TILA claim.
Plaintiff also claims that Defendant's alleged conduct and practice violates Michigan law, specifically the Michigan Motor Vehicle Installment Sales Contract (MVISCA), Mich. Comp. Laws § 566.302; the Michigan Motor Vehicle Sales Finance Act (MVSFA), Mich. Comp. Laws § 492.112 et seq.; the Michigan Consumer Protection Act (MCPA), Mich. Comp. Laws § 445.903; and the Michigan Credit Reform Act (MCRA), Mich. Comp. Laws § 445.1852(f). Again, Plaintiff seeks class certification with respect to her state law claims.
Plaintiff proposes the certification of two different classes, one with TILA claims and one with Michigan law claims. The TILA class would include those individuals who allegedly did not receive cost of credit disclosure pre-sale in the year immediately preceding the filing of Plaintiff's claim, since the statute of limitations in TILA is one year. The state law class would include those individuals whose rights under Michigan law were allegedly violated by Defendant in the past six years, since one of the Michigan laws at issue has an applicable six-year statute of limitations.
III. Analysis A. Numerosity
Rule 23(a)(1) requires the class of potential plaintiffs to be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). The Sixth Circuit has found an estimated class of 35 to be sufficiently numerous. See Afro Am. Patrolmen's League v. Duck, 503 F.2d 294, 298 (6th Cir. 1974). Defendant does not contest that Plaintiff has shown numerosity of class members such that joinder would be impossible. The Court agrees.
Plaintiff estimates that up to 1200 consumers could be potential TILA claimants in the year preceding the filing of Plaintiff's action and has provided sufficient basis from discovery to support that estimate. As for the potential state law claimants against Defendant, Plaintiff estimates 100 or more members and has justified this estimate from facts gleaned from discovery.
A common question of either law or fact must be present to certify a class action. Fed.R.Civ.P. 23(a)(2). This element does not require that all factual or legal questions raised in the litigation be common, as long as at least one issue is the same for all class members. In re American Medical Systems, 75 F.3d at 1080.
The legal questions alone clearly qualify this lawsuit for class status. Plaintiff has identified common questions of law, namely, whether Defendant violated TILA and Michigan law by an alleged failure to provide cost-of-credit disclosure at certain times in sales contracts. These questions will be the same and will merely be applied as to each identified plaintiff.
Moreover, the main factual question is the same for each potential class member. The common question of fact is whether Defendant failed to provide each class member with cost-of-credit disclosure prior to sale. Because this is a question of fact, some individual inquiry will have to be done as to each class member, but that does not destroy the commonality of the question of fact. It is the same question for each class member, even if the answer may be different.
Claims of the named plaintiff must be typical of claims of the class members. Fed.R.Civ.P. 23(a)(3). "A claim is typical if it arises from the same event or course of conduct giving rise to the claims of other class members and is based on the same legal theory." Eddleman v. Jefferson County, 96 F.3d 1448, at *4 (6th Cir. Aug. 29, 1996) (citing Senter v. General Motors Corp., 532 F.2d 511, 525 (6th Cir. 1976), cert. denied, 429 U.S. 870).
Defendant challenges that Plaintiff's claim is typical of potential class members on the basis that while Defendant admits that it did not provide Plaintiff with the required pre-sale disclosures, Defendant asserts that it was its general practice to provide such disclosures when the consumer signed a contract. However, Plaintiff's allegations are that Defendant had a practice of not providing the disclosures, which is what Defendant has admitted it did with respect to Plaintiff. Defendant cannot defeat typicality with unproven assertions that the facts are not present to support claims. This is particularly true where, as here, Plaintiff has provided sufficient evidence for the purposes of certification to suggest that numerous individuals have experienced the same factual situation as Plaintiff. Anyone in the same factual position as Plaintiff has the same claim against Defendant, and thus Plaintiff's claim is typical of the potential class members. Typicality has been met.
D. Adequacy of Representation
The requirement for adequacy has two parts. First, the class representative must have common interests with the unnamed class members. Eddleman, 96 F.3d at *5 (citing Senter, 532 F.2d at 525). Second, it must appear that the class representative will vigorously prosecute the class action through qualified counsel. Id.
Defendant does not contest that Plaintiff has shown adequacy of representation, and the Court also so finds. Plaintiff has similar interests with the unnamed class members, since the facts of any individual case will be similar and uncomplicated: either Defendant's customers received the required information or they did not. Moreover, from the Court's review of the briefing, Plaintiff and her counsel have thus far vigorously and more than competently prosecuted this action. There is no reason to believe that they will not continue to do so.
Questions of law or fact common to the members of the class must predominate over any questions affecting only individual members. Fed.R.Civ.P. 23(b)(3). Common questions of fact and law strongly predominate in this civil action.
Any truly individual questions of fact or law are very few. As discussed infra, the central question of fact is common to all class members, namely, when and/or if Defendant provided the disclosures required by either TILA or state law. Even though the question will have to be asked of each individual, the question will be the same as to each potential plaintiff. The two central questions of law are also the same as to each claim, as discussed infra. Namely, given when it is discovered that each class member was given the disclosures, it must be determined whether each disclosure was timely for compliance with TILA and timely for state law. Identifying individual class members and statutory damages, if Plaintiff's claims are proven, should be routine, given discoverable documents of Defendant.
Defendant has asserted six additional areas of inquiry that it claims will be relevant to this litigation, but Plaintiff has more than sufficiently refuted the relevance of any of those areas of inquiry to this action, with the exception of the inquiry into whether each transaction was of a personal or business nature. As to that inquiry, the answer could be determined by a simple questionnaire completed by class members. Moreover, another court in this District has similarly rejected the argument that individual inquiries into whether transactions were consumer or business transactions prevents class certification. Gradisher v. Check Enforcement Unit, Inc., 203 F.R.D. 271, 277, 279 (W.D.Mich. 2001) (Quist, J.). Thus, nothing predominates over the common questions of fact and law.
There must also be a finding that "a class action is superior to other available methods of adjudication of the controversy." Fed.R.Civ.P. 23(b)(3). Four factors are to be considered in determining whether a class action is the superior method of adjudication: (A) the interest of class members in individually controlling prosecution of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by class members; (C) the desirability of concentrating the litigation of claims in the particular forum; and (D) the difficulties likely to be encountered in the management of a class action. The Court finds that consideration of these factors leads to the conclusion that a class action is a superior method of adjudication in this matter.
As this is a consumer-related action, where one's individual claim might be too small to merit individual action, this case seems particularly appropriate for a class action. Lozada, 197 F.R.D. at 332 (citing Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)) (other citations omitted). Thus, the class members' interest in controlling individual prosecution would be very little.
Plaintiff has represented to the Court that she is unaware of any other litigation involving this Defendant. Moreover, Defendant did not refute this.
Plaintiff is also correct that the filing of multiple lawsuits against this Defendant would waste the Court's resources. Defendant made no argument as to this factor.
Finally, Defendant argues that this action will be impossible to manage, since Defendant argues that the unwieldy individual inquiries that need to be made. But Plaintiff need not inquire about reliance nor actual damages, since actual damages are not sought. Defendant has not made any credible assertion that existence of arbitration clauses will be an issue in this case. Inquiries about waiver of the disclosure or the exact time of disclosure will be largely determined on the basis of discoverable documents. Defendant's argument fails.
The Court is similarly unconvinced by Defendant's argument that its violations of TILA were "merely technical," and thus a class action is not appropriate. First and foremost, the Court has no discretion whether to impose liability on Defendant if a TILA violation is found. Purtle v. Eldridge Auto Sales, Inc., 91 F.3d 797, 801 (6th Cir. 1996).
Second, the Sixth Circuit case that Defendant cites for the proposition that claims involving "technical" violations of TILA should not be class certified was inappropriately and incompletely presented to the Court. (See Defendant's Brief Opposing Plaintiff's Class Certification, at 1013, discussing Watkins, 618 F.2d at 402). As Plaintiff points out, the Sixth Circuit was constrained in that case by the abuse of discretion standard and noted that were the case before it de novo, the panel might have certified a class action. Watkins, 618 F.2d at 404. But the facts there were "extreme . . .," and had the Sixth Circuit ordered class certification in that case, "as a practical matter, class certification would be required in all cases." Id.
In Watkins, a small jewelry store used a form contract using wording that did not conform with the required wording of the TILA. Watkins, 618 F.2d at 403 n. 10. The Sixth Circuit noted that no actual damages were claimed by the plaintiff and that the store moved quickly after the suit was filed to bring its installment payment contract into compliance with the TILA. Id. at 404. The ring that the plaintiff bought from the jewelry store was also a $249 purchase. Id. at 398.
The Sixth Circuit left it clear that "technical" violations can still warrant class certification, given clear Congressional intent:
A Report of the Senate Committee which issued the amending bill makes clear that Congress intended that the threat of "class liability" should serve to induce compliance with the Act even in cases where the violations are merely technical, involving no actual damages. The Committee noted that "`Most Truth-in-Lending violations do not involve actual damages and some meaningful penalty provisions are therefore needed to insure compliance.'" We are also aware that the technical nature of the violations may well argue in favor of the appropriateness of the class action here.Watkins, 618 F.2d at 403 (emphasis added). Here, Plaintiff alleges that Defendant did not provide her with cost of credit information when she purchased a car, a much larger purchase than a ring. In addition, cost of credit disclosures are designed to help consumers shop for credit, whereas the wording in the Watkins contract was apparently prescribed to make sure creditors used understandable wording. While understanding a contract is certainly important, giving notice of the cost of credit, particularly for consumers not eligible for the most favorable rates, seems more likely to affect the decision to purchase. Moreover, Plaintiff alleges facts to suggest that the failure to disclose by Defendant here was willful, in that she alleges that she requested the information and it was refused until a later time. These facts make this matter highly distinguishable from Watkins and argue for the class action as a superior method in which to litigate.
Thus, the Court finds that a class action can be certified under Rule 23(b)(3). It is then unnecessary to consider whether a class action could be certified under Rule 23(b)(2).
The Court finds that Plaintiff has clearly met all requirements for certification of a class action in this matter. Therefore, the Court will grant Plaintiff's Motion. An order consistent with this opinion will be entered.