Ticknor et al v. Rouses Enterprises, LLC.
Filing
149
ORDER AND REASONSdenying 86 Motion to Certify Class. Signed by Judge Susie Morgan on 5/2/2014. (Reference: 12-1151)(caa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ROBERT TICKNOR, et al.,
Plaintiffs
CIVIL ACTION
VERSUS
No. 12-1151
c/w 12-2964
ROUSE’S ENTERPRISES, LLC,
Defendant
SECTION “E”
ORDER AND REASONS
Before the Court is a Motion to Certify Class filed by plaintiffs Daniel Cutler,
Matthew Russell, and Robert Ticknor ("Plaintiffs").1 Defendant, Rouse's Enterprises, LLC
("Rouse's") opposes Plaintiffs' motion.2 Plaintiffs filed a reply to Rouse's opposition.3 After
a February 7, 2014 hearing on Plaintiffs' Motion to Certify Class, both parties filed
supplemental briefing.4 For the reasons that follow, it is ordered that the Motion to Certify
Class is DENIED.
BACKGROUND
A. The Class Representatives' Claims
Plaintiffs filed suit against Rouse's on May 7, 2012, alleging that in April and May
2012, they each purchased groceries from Rouse’s, the operator of a chain of local grocery
stores.5 Plaintiffs allege they used their personal credit cards for these transactions and that
1
R. Doc. 86.
2
R. Doc. 114.
3
R. Doc. 121.
4
R. Doc. 132; R. Doc. 133; R. Doc. 147; R. Doc. 148.
5
R. Doc. 1 at pp. 8-9.
1
Rouse’s failed to truncate the cards' expiration dates when issuing receipts for those
transactions.6
In 2003, Congress amended the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §
1681, et seq., by enacting the Fair and Accurate Transaction Act ("FACTA"). FACTA added
certain provisions to FCRA and amended others. See Pub. L. No. 108-159, 117 Stat. 1952
(2003). Plaintiffs seek relief under the “Receipt Provision” of FACTA, 15 U.S.C. §
1681c(g)(3).7 The Receipt Provision provides:
(g) Truncation of credit card and debit card numbers
Except as otherwise provided in this subsection,
no person that accepts credit cards or debit cards
for the transaction of business shall print more
than the last 5 digits of the card number or the
expiration date upon any receipt provided to the
cardholder at the point of the sale or transaction.
15 U.S.C. § 1681c(g)(1).
FACTA imposes civil liability for violations of the law’s provisions, including the
Receipt Provision. A negligent violation of the Receipt Provision entitles a plaintiff to
recover actual damages suffered as a result of the violation. Id. at § 1681o(a)(1). A willful
violation of the Receipt Provision entitles a plaintiff to recover actual damages or opt for
statutory damages, in lieu of actual damages, of between $100 and $1,000 per consumer.
Id. at § 1681n(a)(1)(A). Statutory damages are recoverable even if the plaintiff does not
claim to have suffered actual damage as a result of a willful violation. See, e.g., Ramirez v.
Midwest Airlines, Inc., 537 F. Supp. 2d 1161, 1167-69 (D. Kan. 2008). Punitive damages,
6
Id.
7
Id. at pp. 12-13.
2
costs, and attorneys' fees also are available to the plaintiff if there has been a willful
violation. 15 U.S.C. § 1681n(a)(2)-(3).8
The right to sue for a violation of FACTA's Receipt Provision is provided in 15 U.S.C.
§ 1681n, which provides, "[a]ny person who willfully fails to comply with any requirement
imposed under this subchapter with respect to any consumer is liable to that consumer..."
15 U.S.C. § 1681n(a) (emphasis added). Under FACTA, "the term consumer means an
individual." 15 U.S.C. § 1681a(c). It is clear that only individual consumers, and not business
customers, may obtain relief for violations of FACTA. See Friedman-Katz v. Lindt &
Sprungli (USA), Inc., 270 F.R.D. 150, 156 (S.D.N.Y. 2010)("[A]ny right to sue under
[FACTA] is limited to 'consumers.'"); see also Rowden v. Pacific Parking Systems, Inc., 282
F.R.D. 581, 585 (C.D. Cal. July 2012).
In addition, the "consumer" also must be the "cardholder" to recover under FACTA
as the Receipt Provision prohibits merchants from printing "more than the last 5 digits of
the card number or the expiration date upon any receipt provided to the cardholder at the
point of sale or transaction." 15 § 1681c(g)(1) (emphasis added). The term "cardholder" is
not defined under FACTA. See 15 U.S.C. § 1681a. Rouse's urges this Court to adopt the
definition of "cardholder" provided for in the Truth in Lending Act ("TILA"), 15 U.S.C. §
1602(m).9 The definition of cardholder in TILA expressly states "[t]he definitions ... set
8
The United States Supreme Court in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007)
interpreted "willful violations" under § 1681n to include any violations in reckless disregard of the
provision. As a result, a violation of FACTA in reckless disregard of the law is a willful violation, and a
plaintiff in such a case is entitled to seek statutory or actual damages, as well as punitive damages, costs,
and attorney’s fees.
9
Under TILA, a "cardholder" is "any person to whom a credit card is issued or any person who has
agreed with the card issuer to pay obligations arising from the issuance of a credit card to another person."
15 U.S.C. § 1602(m).
3
forth in this section are applicable for purposes of this subchapter," i.e. 15 U.S.C. §§16011667. It is unclear whether the definition of "cardholder"under TILA also applies to
FACTA.10 Regardless of the exact definition of the term, for purposes of this motion it is
sufficient to note the Receipt Provision requires the offending receipt be provided to the
"cardholder."
Plaintiffs do not claim to have suffered any actual damage as a result of the alleged
violations. Instead, plaintiffs claim the fact that Rouse’s “knowingly, willfully, intentionally,
and reckless violated and continues to violate” the Receipt Provision entitles them to
statutory damages under 15 U.S.C. § 1681n, as well as punitive damages, costs, and
attorneys' fees.11 Finally, plaintiffs seek an order enjoining Rouse’s from violating the
Receipt Provision and directing Rouse’s to comply with the provision going forward.12
A hearing was held on February 7, 2014 during which the parties presented evidence
for and against class certification. At the conclusion of the hearing, the Court ordered each
party to submit a supplemental memorandum to the Court addressing how the case would
be tried if the Motion to Certify Class were granted. The Court now considers Plaintiffs'
Motion to Certify Class.
B. The Proposed Class
Plaintiffs seek to represent other individuals who have had the same experience at
10
Some district courts have adopted TILA's definition of "cardholder" in FACTA cases. See
Shurland v. Bacci Café & Pizzeria on Ogden, Inc., 259 F.R.D. 151, 160 (N.D. Ill. 2009); Pezl v. Amore Mio,
Inc., 259 F.R.D. 344, 348 n. 7 (N.D. Ill. 2009). However, others have declined to adopt this definition. See
Aeschbacher v. California Pizza Kitchen, Inc., 2007 WL 1500853 (C.D. Cal. April 3, 2007).
11
R. Doc. 1 at p. 13.
12
Id. at p. 14.
4
Rouse’s stores across Louisiana and Mississippi by certifying this case as a class action.13
Plaintiffs define the putative class as follows:
All persons who made in-store purchases from the Defendant using a debit
or credit card, in a transaction from May 8, 2010, through May 10, 2012, at
one of the following Rouse's stores: Nos. 24-41 and 44-47 ("Non-Compliant
Stores").
Plaintiffs specifically exclude from the class: (1) all federal court judges who preside
over this case and their spouses; (b) all persons who elect to exclude themselves from the
Class; (3) all commercial entities; (4) all persons who have previously executed and
delivered to Rouse's releases for all of their Class claims; and (5) Rouse's employees,
officers, directors, agents, and representatives as well as their family members.14
LAW
A. Burden of Proof
The party seeking to certify a class bears the burden of demonstrating the case is
appropriate for class treatment. Berger v. Compaq Computer Corp. 257 F.3d 475, 479, n.
4 (5th Cir. 2001); see also Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct 2541, 2551, 180 L.Ed.2d
374 (2011)("Rule 23 does not set forth a mere pleading standard. A party seeking class
certification must affirmatively demonstrate his compliance with the Rule - that is, he must
be prepared to prove that there are in fact sufficiently numerous parties, common questions
of law or fact, etc."). Class certification is within the district court's discretion, and the
decision is essentially a factual inquiry. Vizena v. Union Pac. R.R. Co. 360 F.3d 496, 502-03
(5th Cir. 2004). The class certification decision should not reach the merits of plaintiffs'
13
R. Doc. 86.
14
Id. at pp. 11-12.
5
claims. Castano v. Am. Tobacco Co. 84 F.3d 734, 744 (5th Cir. 1996). However, it may be
necessary for a district court to look beyond the pleadings to understand the claims,
defenses, substantive law, and relevant facts in order to make a meaningful certification
decision. Id. The district court must "conduct a rigorous analysis" under Rule 23 before
certifying a class and must make specific findings regarding how the case satisfies or fails
to satisfy the requirements of Rule 23. Id. at 740.
B. Rule 23
In order to certify a class, the court must first consider whether the prerequisites of
Rule 23(a) have been met. If all four prerequisites of Rule 23(a) are satisfied, a district court
may permit the action to be maintained as a class so long as the action falls within any one
or more of the three categories established by Rule 23(b). Plaintiffs seek to certify a class
under Rule 23(b)(3).15 Rule 23 provides in pertinent part:
(a) Prerequisites to a Class Action. One or more members of a class may
sue or be sued as representative parties on behalf of all only if (1) the class is
so numerous that joinder of all parties is impracticable, (2) there are
questions of law or fact common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or defenses of the class, and
(4) the representative parties will fairly and adequately protect the interests
of the class.
(b) Class Actions Maintainable. An action may be maintained as a class
action if the prerequisites of subdivision (a) are satisfied, and in addition...
15
Although Plaintiffs pray for injunctive and declaratory relief in their complaint (see R. Doc. 1, p.
14), Plaintiffs do not seek to certify the class under Rule 12(b)(2), which provides: "[a] class action may be
maintained if Rule 23(a) is satisfied and if ... (2) the party opposing the class has acted or refused to act on
grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief
is appropriate respecting the class as a whole." Fed. R. Civ. P. 23(b)(2). After the filing of Plaintiffs'
lawsuit, Rouse's changed its point of sale systems at the non-compliant stores to prevent printing
expiration dates on receipts. See R. Doc. 137 (Deposition of Rouse's Enterprises, LLC, pp. 42-44). Rule
12(b)(2) certification is improper when the class does not face future harm. See Bolin v. Sears, Roebuck &
Co., 231 F.3d 970, 978 (5th Cir. 2000). Accordingly, the Court need not determine whether class
certification is appropriate under Rule 12(b)(2).
6
(3) the court finds that the questions of law or fact common to the members
of the class predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for
the fair and efficient adjudication of the controversy. The matters pertinent
to these findings include: (A) the interest of the members of the class in
individually controlling the prosecution or defense of separate actions; (B)
the extent and nature of any litigation concerning the controversy already
commenced by or against members of the class; (C) the desirability or
undesirability of concentrating the litigation of the claims in the particular
forum; (D) the difficulties likely to be encountered in management of a class
action.
Thus, when read together, Rule 23(a) and 23(b)(3) provide six requirements for a
group of claims to be certified as a class action: numerosity, commonality, typicality,
adequacy, predominance, and superiority. Turner v. Murphy Oil USA, Inc. 234 F.R.D. 597,
603 (E.D. La. 2006). The Court will address each requirement in turn.
ANALYSIS
A. Rule 23(a) Prerequisites
1. Numerosity
To certify a class, Rule 23(a)(1) requires a plaintiff to show "the class is so numerous
that joinder of all members is impracticable. Fed. R. Civ. P. 23(a)(1). "To demonstrate
numerosity, Plaintiffs must establish that joinder is impracticable through some evidence
or reasonable estimate of the number of purported class members." Turner, 234 F.R.D. at
604."Although the number of members of any proposed class is not determinative of
whether joinder is impracticable," the Fifth Circuit has generally set the threshold of 100
to 150 people as satisfying the numerosity requirement. Mullen v. Treasure Chest Casino,
186 F.3d 620, 624 (5th Cir. 1999). Plaintiffs argue numerosity is met because Rouse's
allegedly printed over 14 million receipts that violated the FACTA Receipt Provision during
the class period. The number of putative class members very likely is less than 14 million
7
because claims under the Receipt Provision are made on a per consumer basis and not on
a per receipt basis.16 Regardless, Rouse's does not contest the issue of numerosity. The
Court finds Plaintiffs have met their burden of showing numerosity as the individuals
included in the proposed class are so numerous that joinder is impractical.
2. Commonality
Rule 23(a)(2) requires there be issues of law or fact common to the class. The
commonality requirement is satisfied if the class members' claims depend on a common
issue of law or fact whose resolution will "resolve an issue that is central to the validity of
each one of the [class members'] claims in one stroke." M.D. ex rel Stukenberg v. Perry, 675
F.3d 832, 840 (5th Cir. 2012)(citing Wal-Mart, 131 S.Ct. at 2557).
As Plaintiffs point out, common legal issues exist with respect to Rouse's liability whether Rouse's violated FACTA and whether those alleged violations were willful. Rouse's
printed identical receipts at all of its Non-Compliant Stores because its point-of-sale
systems were controlled centrally and Rouse's stores use identical software and hardware
for the printing of receipts.17 Whether Rouse's practice of printing expiration dates on
receipts violated FACTA is an issue that may be resolved uniformly as to all class members.
The issue of Rouse's willfulness also may be resolved as to the entire class because that issue
does not require the resolution of individualized inquiries unique to each class member.
The commonality requirement demands that the claims of every class member
"depend on a common contention ... of such a nature that is capable of class-wide
16
Statutory damages under FACTA are to be awarded on a per consumer basis. Stillmock v. Weis
Markets, Inc., 385 Fed. Appx. 267, 272 (4th Cir. 2010).
17
R. Doc. 86-9, p. 10 (Exhibit 5 to Plaintiff's Motion to Certify Class).
8
resolution." Id. (citations omitted). The claims of the proposed class depend upon the
common contention that Rouse's had a regular business practice of providing receipts
containing the credit or debit card's expiration date in violation of FACTA. Although the
issue has not been extensively examined in this circuit, courts in other circuits "have
routinely found that FACTA cases meet the commonality requirement." Rogers v. Khatra
Petro, Inc., 2010 WL 3894100, *4 (N.D. Ind. Sept. 29, 2010); see also Stillmock, 385 Fed.
Appx. 267 ("While there may be some issues not common to all putative class members, for
example whether a particular claimant was a 'consumer' under the statute, there is no doubt
that there are questions of law and fact pertinent to liability to all members of the proposed
class.")(internal citations omitted). The determination of Rouse's liability is central to the
validity of each class members' claim and can be resolved in "one stroke." M.D. ex rel
Stukenberg, 675 F.3d at 840 (citations omitted). The Court finds Plaintiffs have met their
burden of showing issues of law or fact common to the class. The more stringent
requirement of predominance under Rule 23(b) will be addressed separately, infra.
3. Typicality
Typicality is a requirement that"the claims or defenses of the representative parties
are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "The test for
typicality, like the test for commonality, is not demanding [and] focuses on the similarity
between the named plaintiffs' legal and remedial theories and the legal and remedial
theories of those whom they purport to represent." Lightbourn v. City of El Paso 118 F.3d
421, 426 (5th Cir. 1997)(citations omitted). "The critical inquiry is whether the class
representative's claims have the same essential characteristics of the putative class. If the
claims arise from a similar course of conduct and share the same legal theory, factual
9
differences will not defeat typicality." James v. City of Dallas, Tex., 254 F.3d 551, 571 (5th
Cir. 2001). It is Plaintiffs' burden to show the claims or defenses applicable to the class
representatives are typical of the class representatives. Berger, 257 F.3d at 479, n. 4.
Rouse's argues only that plaintiff Daniel Cutler does not satisfy the typicality
requirement. Rouse's asserts Cutler was not a "cardholder" as required by the statute
because he used his mother's credit card to purchase groceries.18 Thus, Rouse's argues that
it has a "unique defense" to Cutler's claims that is not typical of the class as a whole. The
Court need not reach this issue. Rule 23 allows "one or more members of a class" to sue as
representative parties. Thus, even if Cutler is subject to a unique defense that is not typical
of the class as a whole, the claims of Russell and Ticknor are typical of the claims and
defenses of the putative class and they are sufficient to satisfy the typicality requirement
even if Cutler is disqualified as a class representative.19
4. Adequacy
The final Rule 23(a) prerequisite is that "the representative parties will fairly and
adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). In evaluating
18
Rouse's bases this argument on the definition of "cardholder" under TILA, which defines a
"cardholder" as "any person to whom a credit card is issued or any person who has agreed with the card
issuer to pay obligations arising from the issuance of a credit card to another person." Shurland v. Bacci
Café & Pizzeria on Ogden, Inc., 259 F.R.D. 151, 160 (quoting 15 U.S.C. § 1602(m)).
19
The Court also notes that this defense may not be necessarily "unique" to Cutler. A defense will
not defeat typicality if it applies to all members of the proposed class. See Ewart v. eBay, Inc., 2010 WL
4269259 (N.D. Cal. 2010). In its supplemental memorandum, Rouse's specifically argues it seeks to
challenge each putative class members' status as a "cardholder." Thus, the defense applicable to Cutler
may be applicable to the entire class. The Court also declines to evaluate the merits of Rouse's defense or
determine whether or not Cutler is a "cardholder" entitled to recover under FACTA. "In determining the
propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of
action or will prevail on the merits, but rather whether the requirements of Rule 23 have been met." Eisen
v. Carlisle Jacquelin, 417 U.S. 156, 178, 94 S.Ct. 2140, 2153 (1973); see also Kennedy v. Tallant, 710 F.2d
711, 718 (11th Cir. 1983). Furthermore, because the Court must not delve into the merits, the Court makes
no determination regarding the definition of "cardholder" under FACTA.
10
adequacy, a district court should determine whether the class representatives have a
sufficient stake in the outcome of the litigation, and whether the class representatives have
any interests antagonistic to the unnamed class members. Mullen, 186 F.3d at 626 (citing
Jenkins v. Raymark Indus. Inc. 782 F.2d 468, 472 (5th Cir. 1986)). The Fifth Circuit has
determined that "the adequacy requirement mandates an inquiry into (1) the zeal and
competence of the representatives' counsel and (2) the willingness and ability of the
representatives to take an active role in and control the litigation and to protect the
interests of absentees." Berger, 257 F.3d at 479 (internal citations omitted). Overall, the
adequacy requirement ensures the named plaintiffs at all times adequately represent the
interests of the absent class members. Id. at 480. Accordingly, courts are wary of
relationships between representative plaintiffs and their counsel because "courts fear that
a class representative who is closely associated with the class attorney would allow
settlement on terms less favorable to the interests of absent class members." Susman v.
Lincoln American Corp., 561 F.2d 86, 91 (7th Cir. 1977).
Rouse's points to various relationships between Plaintiffs and their counsel outside
of counsel's representation in this matter to argue that Plaintiffs and their counsel are
inadequate.20 Generally, courts refuse to permit class attorneys, their relatives, or business
associates from acting as a class representative. Id. at 90. (citing Seiden v. Nicholson, 69
F.R.D. 681 (N.D. Ill. 1976); Stull v. Pool, 63 F.R.D. 702 (S.D.N.Y. 1974); Turoff v. May Co.,
531 F.2d 1357 (6th Cir. 1976)). Further, the Fifth Circuit declines to allow a named
plaintiff's partner or spouse to serve as counsel for a class. See Phillips v. Joint Legislative
20
For example, Rouse's contends plaintiff Matthew Russell is friends with plaintiffs' counsel
Andrew Bizer.
11
Committee on Performance & Expenditure Review, 637 F.2d 1014, 1023 (5th Cir.
1981)(citing Zylstra v. Safeway Stores, Inc., 578 F.2d 102 (5th Cir. 1978)).
The Court finds the relationship between Plaintiffs and their counsel is not
sufficiently close to render the Plaintiffs inadequate class representatives. Although
Plaintiffs' counsel have had interaction with the Plaintiffs outside their representation in
this matter, the Court does not find that the relationship would cause the class attorneys
to agree to a settlement on terms less favorable to the absent class members or otherwise
impede the absent class members' interests.
Rouse's also asserts Plaintiffs' lack of knowledge at their depositions regarding
certain details of the case demonstrates their inadequacy.21 Indeed, to meet the adequacy
requirement, the Court must be satisfied that the class representatives, and not their
counsel, are directing the litigation. Unger v. Amedisys 401 F.3d 316, 321 (5th Cir. 2005).
As a result, plaintiffs must also show they are "sufficiently informed about the litigation to
manage the litigation effort." Id.
At their depositions, each of the representative Plaintiffs demonstrated an
understanding of their claims, the remedy available, the status of the case, the motions
already decided in the case and their outcome, as well as the other depositions which had
taken place.22 Plaintiffs also testified about their responsibilities as class representatives and
meetings with their attorneys.23 Thus, Plaintiffs have demonstrated they are sufficiently
21
For example, plaintiff Matthew Russell testified that he read the complaint for the first time the
weekend before his deposition. See R. Doc. 142, pp. 23-25 (Deposition of Matthew Russell).
22
See R. Doc. 140, pp. 28-36 (Deposition of Robert Ticknor); R. Doc. 141, pp. 30-33 (Deposition of
Daniel Cutler); R. Doc. 142, pp. 26-32 (Deposition of Matthew Russell).
23
See R. Doc. 140, p. 61 (Deposition of Robert Ticknor); R. Doc. 141, p. 34 (Deposition of Daniel
Cutler); R. Doc. 142, pp. 52-54 (Deposition of Matthew Russell).
12
informed about their case to manage the litigation effort. Further, Rouse's has not shown
Plaintiffs have any interests antagonistic to those of the class representatives, nor has
Rouse's shown Plaintiffs' counsel lacks the competence or zeal to litigate the case.
Accordingly, the Court finds Plaintiffs have met the adequacy requirement of Rule 23(a).
B. Rule 23(b)(3) Requirements
To certify a class under Rule 23(b)(3), the class representatives must show "the
questions of law or fact common to the members of the class predominate over any
questions affecting only individual members and that a class action is superior to other
available methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P.
23(b)(3). Rule 23(b)(3) includes both a "predominance" and "superiority" requirement. If
the purported class lacks either requirement, class certification must be denied.
1. Predominance
The predominance inquiry evaluates whether questions of law or fact common to the
members of the class "predominate over any questions affecting only individual members."
Unger, 401 F.3d at 320 (quoting Berger, 257 F.3d at 479-80). The cause of action as a
whole must satisfy Rule 23(b)'s predominance requirement. Castano 84 F.3d at 745 n. 21.
Although similar to commonality, predominance is "far more demanding" because it "tests
whether proposed classes are sufficiently cohesive to warrant adjudication by
representation." Unger, 401 F.3d at 320. In determining whether questions of law or fact
common to the members of the class predominate, the Court must consider "how a trial on
the merits would be conducted if a class were certified." Bell Atl. Corp. v. AT&T Corp. 339
F.3d 294, 302 (5th Cir. 2003)(citing Sandwich Chef of Texas, Inc. v. Nat'l Ins. Indem. Co.,
319 F.3d 205, 218 (5th Cir. 2003); Castano, 84 F.3d at 740). The Fifth Circuit instructs a
13
district court to "identify the substantive issues that will control the outcome, assessing
which issues will predominate, and then determining whether the issues are common to the
class, a process that ultimately prevents the class from degenerating into a series of
individual trials." Id., see also Gene and Gene LLC v. BioPay LLC 541 F.3d 318, 326 (5th
Cir. 2008).
The following substantive issues will control the outcome of this case: (1) whether
Rouse's violated FACTA; (2) whether Rouse's alleged violation was willful; (3) whether each
class member is a "cardholder"; (4) whether each class member is a "consumer"; (5)
whether each class member received a receipt that violates FACTA; and (6) the amount of
statutory damages to be awarded to each class member. Plaintiffs argue the issues involving
Rouse's liability (whether Rouse's violated FACTA and whether those alleged violations
were willful) and the amount of statutory damages to be awarded each class member are
common issues which predominate over any issues involving individualized inquiry.24
Rouse's disagrees, and argues the predominate issues require individualized proof (whether
the class members are "cardholders" and "consumers", and whether they received a
receipt).25 For the reasons that follow, the Court finds that the Plaintiffs have not satisfied
their burden of establishing that common issues predominate.
Plaintiffs are correct that the issues concerning Rouse's liability may be resolved on
a class-wide basis. As explained above, the software and hardware used by Rouse's to
generate receipts is identical for all Non-Compliant Stores, allowing the question of whether
or not Rouse's violated FACTA to be resolved as to all class members. Further, the issue of
24
R. Doc. 86, pp. 18-19.
25
R. Doc. 114, p. 21.
14
whether or not Rouse's alleged FACTA violations were willful turns on Rouse's conduct and
thus may similarly be resolved as to all class members without the need for individualized
inquiry. See Gist v. Pilot Travel Centers, LLC, 2013 WL 4068788, at *7 (E.D. Ky. Aug. 12,
2013).
Nevertheless, in the Fifth Circuit the identification of a common course of conduct
and the ability of class-wide resolution of some issues does not necessarily satisfy the
predominance requirement. Gene and Gene, LLC, 541 F.3d at 326 ("[C]ommonalities
among class members will sometimes, but not necessarily always, allow for a class-wide
basis for deciding predominant issues. Here, the district court simply noted a common
course of conduct ... but did not determine ... whether the common course of conduct
provided a class-wide basis for deciding the predominant issues of fact and law."). To
determine whether a common issue predominates, the Court must "consider[] what value
the resolution of the class-wide issues will have in each class member's underlying cause of
action." Rutstein v. Avis Rent-A-Car Sys., 211 F.3d 1228, 1234 (11th Cir. 2000). Common
issues of fact and law predominate if they "ha[ve] a direct impact on every class member's
effort to establish liability and on every class member's entitlement to injunctive and
monetary relief." Klay v. Humana, Inc., 382 F.3d 1241, 1255 (11th Cir. 2004)(citations
omitted)(emphasis added). The predominance requirement is met if the common issues are
"more substantial than the issues subject only to individualized proof." UFCW Local 1776
v. Eli Lilly and Co., 620 F.3d 121, 131 (2d Cir. 2010). Further, common issues predominate
"where individual factual determinations can be accomplished using computer records,
clerical assistance, and objective criteria - thus rendering unnecessary an evidentiary
hearing on each claim." Smilow v. Southwestern Bell Mobile Systems, Inc., 232 F.3d 32,
15
41 (1st Cir. 2003)(citing Roper v. Consurve, Inc., 578 F.2d 1106, 1112 (5th Cir. 1978)).
In the present case, the issue of Rouse's liability may be resolved on a class-wide
basis, but there are other substantive issues requiring individualized inquiry. After
adjudication of the class-wide issues concerning liability, to recover under FACTA each
individual class member still must show he or she is a "consumer," a "cardholder," and
received a receipt. Each of these issues is one of individual inquiry, and none may be
resolved on a class-wide basis. Thus, "any efficiency gained by deciding the common
elements [of liability] will be lost when separate trials are required ... to determine each
member's entitlement to the requested relief." Perez v. Metabolife Int'l, Inc., 218 F.R.D.
262, 273 (S.D. Fla. 2003). Accordingly, the issue capable of class-wide proof, Rouse's
liability, cannot be said to predominate over the issues governing each individual class
members' ability to recover under FACTA.26 Moreover, as explained infra, these individual
factual determinations cannot be accomplished by reference to Rouse's business records.
Instead, evidence would have to be presented on each putative class members' claim.
Plaintiffs have not carried their burden of showing that common issues predominate and
warrant "adjudication through representation." Unger, 401 F.3d at 320.
Plaintiffs argue the issues requiring individualized inquiry involve "extremely rare
instances" when: (1) an individual may have used another person's credit card; (2) business
customers did not also shop at Rouse's for personal reasons; and (3) persons shopped at
Rouse's but did not receive receipts.27 However, Plaintiffs have not offered any proof to
show these instances are infrequent, other than to highlight Rouse's training manuals which
26
27
R. Doc. 133, p. 6.
16
instruct employees to provide customers with receipts.28 More importantly, even if these
instances are indeed infrequent, the Court is unwilling to assume all putative class members
received a receipt, are "cardholders," and are "consumers." The frequency or infrequency
with which class members prove these elements of the right to recovery does not lessen
Plaintiffs' burden of proof as to these individualized issues.
The Court finds the common issues involving Rouse's liability for its alleged FACTA
violations do not predominate over the individual questions of whether each class member
is a "cardholder", a "consumer", and received a receipt.
2. Superiority
a. Factors to Consider
Rule 23(b)(3) also requires that a class action be "superior to other available
methods for the fair and efficient adjudication of the controversy." Fed. R. Civ. P. 23(b)(3).
In evaluating superiority, the Court must consider the likely difficulties in managing the
case, specifically "the whole range of practical problems that may render the class action
format inappropriate for a particular suit." Eisen v. Carlisle and Jacquelin 417 U.S. 156,
164, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1972). A finding that there is not a predomination of
common issues of law and fact weighs against the superiority requirement. Lewis v. Riddle,
1998 U.S. Dist. LEXIS 20465 at *10 (W.D. La. Nov. 18, 1998).
Rule 12(b)(3) also lists four factors to be considered in determining whether class
action procedure is superior: "(A) the interest of members of the class in individually
controlling the prosecution or defense of separate actions; (B) the extent and nature of any
28
At the hearing for class certification, Rouse's put forth testimony that it markets to professional
chefs and has business customers who shop at its stores and that some purchases made at Rouse's are by
individuals who are not "consumers." Neither party introduced evidence indicating what proportion of
transactions at Rouse's stores were initiated by business customers.
17
litigation concerning the controversy already commenced by or against members of the
class; (C) the desirability or undesirability of concentrating the litigation of the claims in the
particular forum; and (D) the difficulties likely to be encountered in the management of a
class action." Fed. Rule Civ. P. 23(b)(3).
The first three of the above-mentioned factors do not weigh in favor of or against
class treatment in this case. The parties have not pointed to any special interests of the
members of the class in individually controlling the prosecution of separate actions, the
Court is unaware of any other lawsuits against Rouse's for FACTA violations, and the
parties have not argued there is any desirability or undesirability of concentrating litigation
in this forum. However, as highlighted by the Court's discussion of the predominance
requirement, class treatment presents serious manageability concerns in this case.
b. Manageability
Rule 12(b)(3) requires the court to determine how a trial on the merits would be
conducted if a class were certified. Gene and Gene LLC, 541 F.3d at 326.The issues with
respect to Rouse's liability (whether Rouse's violated FACTA and whether or not those
alleged violations were willful) may be resolved through class-wide proof, but Rouse's has
pointed to a number of issues requiring individualized factual findings. To prove
entitlement to damages, each class member will have to prove he or she: (1) received a
receipt in violation of FACTA, (2) is a "cardholder", and (3) is a "consumer." These issues
require individualized proof and present serious manageability problems with certifying the
class. Considering Plaintiffs allege over 14 million transactions, individual trials on these
issues are not feasible without wasting judicial resources.
In some cases class membership is based on objective criteria and may be ascertained
18
utilizing a defendant's business records.29 See e.g., Engel v. Scully & Scully, Inc., 279 F.R.D.
117, 128 (S.D.N.Y. 2011); Akaosugi v. Benihana Nat. Corp., 282 F.R.D. 241, 255 (N.D. Cal.
2012). Plaintiffs argue individual class members in this case may identify themselves by
signing a declaration regarding receiving a receipt from Rouse's from one of the NonCompliant Stores during the class period.30 Plaintiffs contend Rouse's business records will
confirm each class members' entitlement to recovery and, as a result, individual trials would
not be necessary.31
Contrary to the Plaintiffs' assertions, Rouse's business records cannot be used to
confirm membership in this class. Plaintiffs concede Rouse's records contain only the
following information: "(1) whether the card was a debit or credit card, (2) the date of the
transaction, (3) the time of the transaction, (4) the amount of the transaction (dollars and
cents), (5) the store number at which the transaction occurred, (6) the type of credit card
(VISA, Mastercard, etc.), (7) the last four digits of the card number, and (8) first and last
names for approximately ninety percent of the transactions."32 Plaintiffs' concede Rouse's
29
The inability to identify the class based on objective criteria also impacts ascertainability of the
class, which is universally recognized as the "first essential ingredient to class treatment." See, e.g. Bush v.
Calloway Consolidated Consulting Group River City, Inc., 2012 WL 1016871, at *4 (M.D. Fla. March 26,
2012)("Class members need not actually be ascertained prior to certification, but each individual's class
membership must be ascertainable at some stage in the proceeding.")(citations omitted).Thus, Courts
have denied class certification or decertified a class in FACTA cases because the issues requiring
individualized proof render the court unable to ascertain the contours of the class. See, e.g. Rowden v.
Pacific Parking Systems, Inc., 282 F.R.D. 581, 585 (C.D. Cal. 2012); Hammer v. JP's Southwestern Foods,
LLC, 2012 U.S. Dist. LEXIS 102713 (W.D. Mo. July 24, 2012)(decertifying a class on the basis that claim
forms could not be used to determine who was entitled to collect damages because the use of such forms
would be "unwieldy"). Regardless of whether problems associated with individualized proof are analyzed
under "ascertainability" or "superiority," these issues also render the proposed class unsuitable for
certification in this case.
30
R. Doc. 133, p. 8.
31
R. Doc. 133, p. 8.
32
R. Doc. 86-1, p. 22, citing Rouse's Corporate Deposition at 84-86.
19
records cannot be used to confirm even the names involved in approximately ten percent
of the transactions.33 In fact, the evidence reflects 795,834 of the transactions at the NonCompliant Stores recorded during the class period are not associated with a name. 34
Rouse's business records do not confirm whether a putative class member is entitled
to relief. Based on the Rouse's records alone, it is impossible to determine whether a
putative class member is a "cardholder," a "consumer" or received a receipt as required
under the statute. Further, Rouse's business records do not indicate whether a specific
purchase was made for a consumer or business purchase or whether the purchase was made
by a "cardholder."
In sum, it is not self evident from Rouse's records the business/consumer nature of
the transactions, whether the individual purchaser was a "cardholder," or whether the
individual received a receipt. Because Rouse's business records do not contain the
information needed to determine which putative class members meet the requirements for
asserting a claim under FACTA, these individualized issues would have to be resolved at
trial. Short of individual factual determinations at trial, the Plaintiffs have not identified a
manageable method for resolving these issues.
Again, Plaintiffs argue the instances of transactions involving businesses or those
involving individuals who are not the "cardholder" are rare. Although these instances may
be rare and there may be a logical basis for inferring most of the transactions at the NonCompliant Stores during the class period were executed by a cardholder for consumer
purposes, the Court will not substitute a mere inference for Plaintiffs' requirement of
33
R. Doc. 86-1, p. 22.
34
Joint Exhibit 39.
20
proving these two elements. See Lewis, 1998 U.S. Dist. LEXIS 20465, at *16.
Because individual mini-trials would be impracticable and a waste of judicial
resources, the Court finds that Plaintiffs have not carried their burden of showing a class
action is a superior method for adjudicating this case.
c. Effective Alternatives
Additionally, the remedies available for FACTA violations demonstrate there is an
effective method superior to a class action for resolving this dispute. Generally, the most
compelling rationale for finding superiority in a class action is the existence of negative
value claims when the high cost of litigation outweighs the amount of recoverable damages.
Castano, 84 F.3d at 748; see also 2 Newberg on Class Actions § 4:27 (4th ed.)("When the
claims of class members are small, denial of a class action would effectively exclude them
from judicial redress."); Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231.
138 L.Ed.2d 689(1997)("The policy at the very core of the class action mechanism is to
overcome the problem that small recoveries do not provide the incentive for any individual
to bring a solo action prosecuting his or her rights.").
However, the remedies available for FACTA violations provide a sufficient incentive
for individual suits. Willful violations of FACTA allow an individual to recover between
$100 and $1000 as well as attorneys' fees, costs, and punitive damages. The possibility of
recovering attorneys' fees removes a FACTA case from the negative value suit category. See,
e.g. Castano, 84 F.3d at 748 (citing Boggs v. Alto Trailer Sales, 511 F.2d 114, 118 (5th Cir.
1975)). Other district courts have similarly found that the availability of attorneys' fees in
FACTA cases renders individual suits superior to a class action. See e.g., Rowden, 282
F.R.D. at 586; Hammer, 2012 U.S. Dist. LEXIS 102713 at *4; Grimes v. Rave Motion
21
Pictures Birmingham, LLC 264 F.R.D. 659, 669 (N.D. Ala. 2010).
C. Jurisprudence in Other Circuits
The Court is aware that some district courts outside this Circuit have certified similar
FACTA claims as class actions.35 The Court is also aware that a number of district courts
have more recently declined to certify classes or decertified classes in FACTA cases because
of the problems associated with predominance, superiority, and manageability.36 In this
Circuit, the court must determine how a trial on the merits would be conducted before a
class may be certified. As highlighted by Rouse's, none of the cases certified in other Circuits
has gone to trial. Because the overwhelming majority of FACTA class actions have settled
after certification, Plaintiffs have been unable to provide concrete examples of how the
problems associated with the manageability of the case have been cured in practice and
have otherwise failed to carry their burden of showing that a class action is "superior to
other available methods for the fair and efficient adjudication of the controversy." Fed. R.
Civ. P. 23(b)(3).
CONCLUSION
Because common issues do not predominate and a class action is not a superior
method to adjudicate the case, the Court finds the requirements of Rule 23(b)(3) have not
35
The vast majority of courts certifying classes in FACTA cases are located in the Seventh Circuit.
See, e.g., Armes v. Sogro, Inc., 2011 WL 1197537 (E.D. Wisc. March 29, 2011); Beringer, 2008 WL
4390626 (N.D. Ill. Sept. 24, 2008); Halperin v. Interpark Inc., 2007 WL 4219419 (N.D. Ill. Nov. 29,
2007); Sanders v. W & W Wholesale, Inc., 2012 WL 3987629 (N.D. Ill. Sept. 11, 2012). Those cases all
settled after being certified as class actions, thus, the Seventh Circuit Court has not opined on the
appropriateness of class certification for FACTA cases.
36
See, e.g., Ehren v. Moon, Inc., 2010 WL 5014712 (S.D. Fla. Dec. 3, 2012); Leysoto v. Mama Mia
I, Inc., 255 F.R.D. 693 (S.D. Fla. 2009); Grimes v. Rave Motion Pictures Birmingham, LLC, 264 F.R.D.
659 (N.D. Ala. 2010); Gist v. Pilot Travel Centers, LLC, 2013 WL 4068788 (E.D. Ky. Aug. 12, 2013);
Hammer v. JP's Southwestern Foods, LLC, 2012 U.S. Dist. LEXIS 102713 (W.D. Mo. Jul. 24, 2012);
Rowden v. Pacific City Parking Systems, Inc., 282 F.R.D. 581 (C.D. Cal. 2012).
22
been met. Accordingly, IT IS ORDERED that Plaintiffs' Motion to Certify Class be and
hereby is DENIED.
New Orleans, Louisiana, this 2nd day of May, 2014.
_____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE
23
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?