BRIAN W. AND CARLA, et al v. RESIDENTIAL FUNDING COMPANY, LLC, et al
Filing
617
MEMORANDUM OPINION granting 607 Motion to Certify Class. Signed by Judge Arthur J. Schwab on 7/31/2013. (lmt) Modified on 7/31/2013. (lck)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
IN RE:
COMMUNITY BANK OF NORTHERN
VIRGINIA MORTGAGE LENDING
PRACTICES LITIGATION
MDL No. 1674
03cv0425 and 05cv0688
ELECTRONICALLY FILED
MEMORANDUM OPINION
This matter is before the Court on Plaintiffs’ Motion for Class Certification (doc no. 607
as amended by doc. no. 611). The Court has thoroughly reviewed all the documents filed in this
case relevant to the issue of whether this putative class, as defined by the Joint Consolidated
Amended Complaint (“JCAC”) (doc. no. 507) and Plaintiffs’ Motion for Class Certification,
meets the requirements of Federal Rule of Civil Procedure 23. For the reasons set forth below,
the Motion will be granted, the class will be certified, and Plaintiffs will be directed to present a
plan to the Court for providing notice of the certification to the class.
I. FACTUAL AND PROCEDURAL BACKGROUND
As the United States Court of Appeals for the Third Circuit has stated, “[t]he complex
factual and procedural history of these matters is set forth at length” in its prior Opinions in this
case, therefore, a brief summary is all that is necessary at this juncture. In re Cmty. Bank of N.
Va., 622 F.3d 275, 279 (3d Cir. 2010) (“Community Bank II”) (citing In re Cmty. Bank of N. Va.,
418 F.3d 277 (3d Cir. 2005) (“Community Bank I”)).
Although the parties do not dispute that the two prior Opinions issued by the United
States Court of Appeals in this matter do not constitute “law of the case,”1 this Court finds that
1
At the Class Certification hearing held before this Court on July 19, 2013, Plaintiffs’ Counsel abandoned
their law of the case argument and readily conceded that law of the case does not apply under these
circumstances.
the Court of Appeals has provided extensive guidance in both Community Bank I and Community
Bank II. The Court will, therefore, rely heavily on the Court of Appeals’ observations.
As the Court of Appeals for the Third Circuit stated, this putative class action “involve[s]
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.” Community Bank II, 622 F.3d at 279. The Court of
Appeals further summarized that “[b]ecause Shumway [was] not a depository lender – and thus
not subject to fee caps and interest ceilings under various state laws – it allegedly formed
relationships with defendant Community Bank of Northern Virginia (“CBNV”) . . . . [a]
financially distressed bank . . . to circumvent these restrictions.” Id.
CBNV’s association with Shumway “allegedly permitted Shumway to conceal the origin
of the loans, thus creating the appearance that fees were paid solely to a depository institution
when, in reality . . . the overwhelming majority of the fees and other charges associated with the
loans were funneled to Shumway.” Id. at 279-80 (citation, internal punctuation, and internal
quotations omitted). CBNV was acquired by Mercantile Bankshares Corp. in 2005. Mercantile
is now owned by PNC Bank, N.A. (“PNC”). There is no dispute that PNC is the successor to
CBNV, through its acquisition of Mercantile. However, for clarity and consistency, and to
reflect that it is solely the conduct of CBNV that is at issue here, the Court will continue to refer
to Defendant PNC as CBNV throughout this Opinion.
The action at issue began as a number of actions filed in this Court and throughout the
country. The Judicial Panel on Multidistrict Litigation (“MDL Panel”) created MDL No. 1674
and transferred the actions that originated elsewhere to this Court. In re Cmty. Bank of N. Va.
Mortgage Lending Practices Litig., 368 F. Supp. 2d 1 354 (J.P.M.L. 2005). There is no reason to
2
set forth the long and convoluted procedural history of this case. Suffice it to say that some
Plaintiffs and Defendants agreed to settle this case on a class-wide basis first, in 2003, and then
again, in 2008. This Court (through Opinions and Orders entered by the late Chief Judge
Lancaster) certified the class and preliminarily approved those settlements after extensive
analysis. After each preliminary approval, this Court directed the parties to provide notice to the
class. The class was informed of the certification and the proposed settlement, twice. After
allowing time for class members to either opt out of the class or object to the terms of the
settlements both times, this Court finally approved the settlements and entered final
judgments. The Court of Appeals for the Third Circuit reversed twice, based upon the objections
of some class members. These class members objected to the certifications and settlements
solely on the basis of the named Representatives’ purported inadequacy under Fed.R.Civ.P.
23(a)(4).
On remand after the second appeal, Plaintiffs and the former Objectors joined forces to
file all of their potential claims against all Defendants by filing the JCAC. In doing so, Plaintiffs
followed the guidance provided by the Court of Appeals in Community I and Community II, and
jointly asserted claims pursuant to the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.
as amended by the Home Ownership Equity Protection Act (“HOEPA”), 108 Stat. 2190, and the
Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et
seq. Plaintiffs also reasserted their Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C.
§ 2601 et seq., claims.2
The JCAC originally named as Defendants CBNV, Federal Deposit Insurance
Corporation (“FDIC”) as the Receiver for Guaranty National Bank Of Tallahassee (“GNBT”),
2
The Court would note that the Motion for Certification is silent at to any state law claims, and thus, this
Court will not address those potential state law claims and thereby excluding them from the certification
process.
3
PNC Bank as successor to CBNV, and GMAC-Residential Funding Company n/k/a Residential
Funding Company (“RFC”). Doc. No. 507, ¶1. On May 15, 2012, RFC filed a Notice of
Bankruptcy and Effect of Automatic Stay. Doc. No. 564. On September 18, 2012, all claims
against RFC were stayed in relation to this case.3 Doc. No. 584. The FDIC was named as
Defendant solely in its capacity as receiver for GNBT. See doc. no. 507, ¶ 1. This Court granted
FDIC’s Motion to Dismiss for lack of subject matter jurisdiction. Doc. Nos. 605 & 610.
Therefore, the only remaining claims that are currently before the Court are those asserted by
Plaintiffs against CBNV.
Pursuant to Rule 23, Brian W. and Carla M. Kessler, Flora A. Gaskin, Philip F. and
Jeannie C. Kossler, John and Kathy Nixon, John and Rebecca Picard, William and Ellen Sabo,
and Tammy and David Wasem ask this Court to certify each of the claims alleged in the JCAC
for class treatment. Those claims are: (1) at Count I for CBNV’s violations of RESPA; (2) at
Count II for CBNV’s violations of TILA as amended by HOEPA for Inaccurate and Understated
Material Disclosures; (3) at Count III for Other, Multiple Violations of the Substantive
Provisions of TILA and HOEPA; and (4) at Count V for Violations of RICO.
Plaintiffs ask the Court to certify a class defined as “All persons nationwide who obtained
a second or subordinate, residential federally related, non purchase money, mortgage loan from
CBNV that was secured by residential real property used by the Class Members as their principal
dwelling, for the period May 1998 - December 2002.” Doc. No. 607. Plaintiffs also ask this
Court to certify the following subclasses:
Sub-Class 1: (RESPA ABA Disclosure Sub-Class) (Plaintiffs Philip and
Jeannie Kossler) – All persons nationwide who obtained a second or subordinate,
3
As a matter of “housekeeping” JP Morgan Chase had been previously named as a Defendant as trustee
for the trusts and loan pools created by RFC (doc. no. 507, ¶ 48), but the case against JP Morgan Chase
was also effectively stayed by doc. no. 584.
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residential, federally related, non purchase money, mortgage from CBNV that
was secured by residential real property used by the Class Members as their
principal dwelling for the period May 1998 - October 1998.
Sub-Class 2: (RESPA Kickback Sub-Class)(Plaintiffs Brian and Carla
Kessler; and John and Rebecca Picard) – All persons nationwide who obtained
second or subordinate, residential, federally related, non purchase money,
mortgage from CBNV that was secured by residential real property used by the
Class Members as their principal dwelling for the period October 1998 November 1999.
Sub-Class 3: (TILA/HOEPA Non Equitable Tolling Sub-Class)(Plaintiffs
Kathy and John Nixon; Flora Gaskin; and Tammy and David Wasem) – All
persons nationwide whoobtained second or subordinate, residential, federally
related, non purchase money, mortgage from CBNV that was secured by
residential real property used by the Class Members as their principal dwelling for
the period May 1, 2000 - May 1, 2002.
Sub-Class 4: (TILA/HOEPA Equitable Tolling Sub-Class)(Plaintiffs All
Plaintiffs other than the Nixons, the Wasems and Flora Gaskin) – All persons
nationwide who obtained second or subordinate, residential, federally related, non
purchase money, mortgage from CBNV that was secured by residential real
property used by the Class Members as their principal dwelling for the period
May 1998 - April 30, 2000.
Sub-Class 5: (RICO Sub-Class)(Plaintiffs John and Rebecca
Picard; Brian and Carla Kessler) – All persons nationwide who obtained second
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or subordinate, residential, federally related, non purchase money, mortgage from
CBNV that was secured by residential real property used by the Class Members
as their principal dwelling for the period May 1998 - November 1999.
Doc Nos. 607 & 611. Defendant CBNV opposes the Motion for Class Certification.
II. STANDARD OF REVIEW
This Court has federal question jurisdiction over the claims remaining in this case
pursuant to 28 U.S.C. §1331. Venue is proper in this District pursuant to 28 U.S.C. § 1407.
“When a transferee court receives a case from the MDL Panel, the transferee court applies the
law of the circuit in which it is located to issues of federal law.” In re Gen. Am. Life Ins. Co.
Sales Practices Litig., 391 F.3d 907, 911 (8th Cir. 2004); Murphy v. F.D.I.C., 208 F.3d 959, 965
(11th Cir. 2000); Newton v. Thomason, 22 F.3d 1455, 1460 (9th Cir. 1994); Menowitz v. Brown,
991 F.2d 36, 40-41 (2d Cir. 1993). Rule 23 is a federal law. Accordingly, this Court will apply
the law of the United States Court of Appeals for the Third Circuit to this Motion for Class
Certification.
As the Court of Appeals for the Third Circuit has instructed, in order to certify a class
under Fed.R.Civ.P. 23, this Court must determine whether, in its sound discretion, the four
requirements of Rule 23(a) are met and, if so, the Court must then determine whether the “class
fits within one of the three categories of class actions in Rule 23(b).” Community Bank II, 622
F.3d at 291.
Rule 23 is “an exception to the usual rule that litigation is conducted by and on behalf of
the individual named parties only.” Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct 2541, 2550 (2011)
(citation omitted). As the United States Supreme Court explained, “Rule 23 does not set forth a
mere pleading standard . . .” but rather “[a] party seeking class certification must affirmatively
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demonstrate his compliance with the Rule . . . .” Id at 2551. Further, as the Supreme Court
recently explained, Plaintiffs “must also satisfy through evidentiary proof at least one of the
provisions of Rule 23(b).” Comcast Corp. v. Beherend, 133 S.Ct. 1426, 1428 (2013). The
Supreme Court has directed the Court to undertake a “rigorous analysis” to determine whether
Plaintiffs have established each element of Rule 23 at the time of certification. Wal-Mart, 131
S.Ct. at 2551.
Rule 23(a), which “[e]very putative class must satisfy,” requires that:
(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 defense of the class
(typicality); and (4) the named plaintiffs must fairly and adequately
protect the interests of the class (adequacy of representation . . . .)
Community Bank II, 622 F.3d at 291 (citations and internal quotations omitted). If these
requirements are met, the Court must then analyze whether the putative class satisfies at least one
section of Rule 23(b).
Plaintiffs seek certification pursuant to 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 of adjudication (superiority).” Id. The factors the Court must consider include:
(A)
the class members’ interests in individually controlling the prosecution or
defense of separate actions;
(B)
the extent and nature of any litigation concerning the controversy already
begun by or against class members;
(C)
the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and
(D)
the likely difficulties in managing a class action.
Fed.R.Civ.P. 23(b)(3)(A-D).
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In addition, since Plaintiffs propose to certify this class for trial, the Court must determine
“whether the case, if tried, would present intractable management problems . . . .” Community
Bank II, 622 F.3d at 291; In re LifeUSA Holding Inc., 242 F.3d 136, 148 (3d Cir. 2001) (Court
must determine “if tried as a class action, [this case] could be efficiently and fairly managed,
which is the polestar of Rule 23(b)(3)”). In addition, since this is not a settlement class, but
rather a class for trial, the Court must analyze “the likely difficulties of managing a class
action.” Fed.R.Civ.P. 23(b)(3)(D).
It is important to note that the Court of Appeals for the Third Circuit “and other circuit
courts have . . . rejected the proposition that [Rule 23] categorically prohibits the evaluation of
the merits of class claims at the certification stage.” Community Bank II, 622 F.3d at 293. “[A]
merits inquiry is precluded at the class certification stage where it is not necessary to determine a
Rule 23 requirement.” Id. (citation and internal quotation omitted). The Court of Appeals noted
that “in reviewing a motion for class certification, a preliminary inquiry into the merits is
sometimes necessary to determine whether the alleged claims can properly be resolved as a class
action.” Id. (citation omitted). Moreover, “[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.” Id. (citation and internal quotation omitted).
However, the Court must be mindful that “the extent to which a district court may
consider the merits of claims in ruling on a class certification motion has limits.” Community
Bank II, 622 F.3d at 294. The Court of Appeals for the Third Circuit has instructed that “[w]hen
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.” Id. (citation and internal quotation omitted). Therefore, “merits inquiry is
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not permissible when the merits issue is unrelated to a Rule 23 requirement.” Id. (citation and
internal quotation omitted). Thus, “it remains true that in 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.” Id. (citation and internal quotation omitted)
(emphasis and ellipsis in original).
III. DISCUSSION
In accordance with the guidance the Court of Appeals for the Third Circuit has provided
with respect to this case, the Court turns its attention to whether Plaintiffs, in the JCAC, have met
the requirements of Rule 23.
A. Rule 23(a)
As the Court of Appeals for the Third Circuit instructed, “Rule 23 is designed to assure
that courts will identify the common interests of class members and evaluate the named
plaintiffs’ and counsel’s ability to fairly and adequately protect class interests.” Community
Bank I, 418 F.3d at 302.
As noted above, Plaintiffs must establish the four (4) requirements of Rule
23(a): numerosity, commonality, typicality and adequacy. “Because . . . commonality and
typicality, are similar to (but less rigorous than) Rule 23(b)(3)’s predominance inquiry, Courts
often discuss them together.” Opperman v. Allstate N.J. Ins. Co., 2009 WL 3818063, *7 (D.N.J.
Nov. 13, 2009) (citing Georgine v. Amchem Prods., Inc., 83 F.3d 610, 626 (3d Cir. 1996)). As
the Court of Appeals for the Third Circuit has instructed, “commonality, like numerosity,
evaluates the sufficiency of the class itself, and typicality like adequacy of representation,
evaluates the named plaintiff(s) . . . .” Community Bank I, 418 F.3d at 302 (citation and internal
quotation omitted).
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Plaintiffs must also establish that the class fits within one of the three categories set forth
in Rule 23(b). Here, Plaintiffs seek certification under Rule 23(b), which requires the Court to
“determine that common questions of law or fact predominate and that the class action
mechanism is the superior method for adjudicating the case.” Id.
1. Numerosity
There is no dispute that there are approximately 22,000 members of the putative
class. This number meets and, in fact far exceeds, the requirements of Rule 23(a)(1). See
Community Bank II, 622 F.3d at 284 (citing Community Bank I, 418 F.3d at 303-10); see also In
re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 273 (3d Cir. 2009) (“numbers in excess of forty,
particularly those exceeding one hundred or one thousand have sustained the [numerosity]
requirement”). On the record before the Court at this time, the sub-classes are also sufficiently
numerous.
2. Commonality and Typicality
Rule 23(a)(2) requires Plaintiffs to show that “there are questions of law or fact common
to the class.” Fed.R.Civ.P. 23(a)(2). The United States Supreme Court has noted that
“[c]ommonality requires the plaintiff to demonstrate that the class members have suffered the
same injury.” Wal-Mart, 131 S.Ct. at 2551 (citation and internal quotation omitted). Moreover,
“[w]hat matters to class certification . . . is not the raising of common questions . . . but, rather
the capacity of a classwide proceeding to generate common answers apt to drive the resolution of
the litigation.” Id. (citation and internal quotation omitted).
The Court of Appeals opined in Community Bank I, that “the named plaintiffs share at
least one question of fact or law with the grievances of the prospective class.” Community Bank
I, 418 F.3d at 303; see also Community Bank II, 622 F.3d at 284. Granted, the Court of Appeals
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was providing instruction to this Court on remand regarding the Plaintiffs’ RESPA claims, and
was analyzing a Complaint that has been superseded by the JCAC. That being said, Plaintiffs
merely followed the Court of Appeals for the Third Circuit’s direction by adding the
TILA/HOEPA and RICO claims. The viability of these claims is ascertainable by examining
identical loan documents.
The Court of Appeals further opined, with regard to typicality, that “the concepts of
commonality and typicality are broadly defined and tend to merge.” Community Bank I, 418
F.3d at 303 (citation and internal quotation omitted). The Court of Appeals, in providing
guidance to this Court on remand, observed that “[c]ases challenging the same unlawful conduct
which affects both the named plaintiffs and the putative class usually satisfy the typicality
requirement irrespective of the varying fact patterns underlying the individual claims.” Id.
(citation and internal quotation omitted). Thus, “[b]ecause the claims of all class members here
depend on the existence of the Shumway scheme, their interests are sufficiently aligned such that
the class representatives can be expected to adequately pursue the interests of the absentee class
members.” Id. (citation, internal quotation, and internal punctuation omitted). Accordingly,
although the Court expresses no opinion on the merits of these claims at this juncture, the Court
finds that Plaintiffs have satisfied their burden under Rule 23. The Court also finds that any
further inquiry into the merits at this stage of the litigation would be impermissible, as that
inquiry is “unrelated to a Rule 23 requirement.” Community Bank II, 622 F.3d at 294 (citation
and internal quotation omitted).
3. Adequacy
To observe that much ink has been spilled on this issue, both in this Court and the Court
of Appeals for the Third Circuit, on this issue would be an understatement. As the Court of
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Appeals stated, the Rule 23(a)(4) adequacy requirement “encompasses two distinct inquiries
designed to protect the interests of the absent class members: it considers whether the named
plaintiffs’ interests are sufficiently aligned with the absentees’, and it tests the qualifications of
the counsel to represent the class.” Community Bank I, 418 F.3d at 303. In Community II, the
Court of Appeals noted that “[it] continue[d] to have concerns – essentially the same as those []
identified in Community Bank I – regarding whether the named plaintiffs and their counsel are
adequate representatives.” Community Bank II, 622 F.3d at 303.
Fortunately, the Court of Appeals for the Third Circuit, in order “to aid the Court on
remand,” provided an explanation of:
[its] concerns . . . focusing specifically on (a) the apparent intra-class conflict with
respect to the statute-of-limitations problem, which may raise questions regarding
the named plaintiffs’ adequacy under Rule 23(a)(4); and (b) class counsel’s
justifications for the decision not to assert TILA/HOEPA claims on behalf of the
class, which may raise questions regarding counsel’s adequacy under Rule 23(g).
Id.
As to the intra-class conflict, the Court of Appeals for the Third Circuit stated its view
that the potential “intra-class conflict is by no means fatal to whether these cases can be
maintained as a class action . . . [t]he most obvious remedy is to create subclasses as [it]
suggested in [Community Bank I].” Id. at 304. Plaintiffs are seeking certification of sub-classes.
According the Court of Appeals for the Third Circuit in Community Bank I and Community Bank
II, although admittedly dicta, sub-classes could satisfy Rule 23(a)(4), if they are deemed to be
“necessary and appropriate.” Id., citing Community Bank I, 418 F.3d at 310. Given the Court of
Appeals’ statements in Community Bank I and Community Bank II, this Court finds that the
subclasses, as identified and described by Plaintiffs (see Section I., infra.), are in fact, necessary
and appropriate.
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As to the second concern relating to counsel’s adequacy under Rule 23(g), the Court of
Appeals acknowledged that:
[it] did not elaborate in Community Bank I on the type of inquiry a district court
should engage in when addressing class counsel’s adequacy in light of the
decision to bring some, but not other, potentially colorable claims on behalf of the
class and [] need not do so definitively here.
Community Bank II, 622 F.3d at 305. However, the Court of Appeals emphasized that “the
determination of whether class counsel is adequate is committed to a district court’s sound
discretion, as it is in a better position than [the Court of Appeals] to evaluate class counsel’s
performance.” Id. at 308.
CBNV challenges the adequacy of interim class counsel on the basis that they have
changed their position, joined forces, and filed a JCAC which asserts all potentially colorable
claims, including those pursuant to TILA/HOEPA. This does not appear to the Court to be a
sign of inadequacy of counsel. Rather, interim class counsel simply agrees with the Court of
Appeals for the Third Circuit. Further, the Court, although not as familiar with the conduct of
interim class counsel in other cases, was favorably impressed by their advocacy during the Rule
12(b)(6) briefing and oral argument, as well as with the quality of the all other relevant
documents filed by interim class counsel in this case.
The only issue regarding adequacy of counsel that has given this Court pause is whether
or not each sub-class should be given its own counsel. Fortunately, the Court of Appeals for the
Third Circuit has recently provided substantial direction on this issue as well. In Dewey v.
Volkswagen Akteingesellshaft, 681 F.3d 170 (3d Cir. 2012), the Court of Appeals discussed the
circumstances under which a class and sub-classes may be represented by the same counsel. In
summary, the Court of Appeals has instructed the Court to analyze whether there is a
“fundamental” conflict under the circumstances presented. Id. at 183-84. “A fundamental
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conflict exists where some class members claim to have been harmed by the same conduct that
benefitted other members of the class.” Id. at 184. Here, Plaintiffs’ proposed five sub-classes in
order to ameliorate the statute of limitations problems identified by the Court of Appeals in
Community Bank I and Community Bank II. The conduct of CBNV was the same as to all class
members. The only real distinction is a temporal one, that is, when this conduct occurred.
Accordingly, there is no fundamental conflict here, and Class Counsel can represent both the
class and the sub-classes.
In the exercise of its sound discretion, the Court concludes that there is no fundamental
conflict here that would preclude Interim Co-Lead Counsel from representing both the class and
all of the sub-classes.
On the record before the Court at this time, Plaintiffs have satisfied the requirements of
Rule 23(a)(4).
B. Rule 23(b)(3)
1. Predominance and Superiority
The Court of Appeals for the Third Circuit has instructed that “[t]o meet the requirements
of Rule 23(b)(3),” this Court “must find that questions of law or fact common to 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.” Community Bank I, 418 F.3d at 308. Further, “[t]he predominance inquiry tests
whether the proposed class is sufficiently cohesive to warrant adjudication by
representation.” Id. at 308-09. In addition, although this is not now a settlement class, “a
predominance analysis is similar to the requirement of Rule 23(a)(3) that claims or defense of the
named representatives must be typical of the claims [or] defenses of the class.” Id. at 309. The
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Court of Appeals concluded in Community Bank I that “just as the record below supports a
finding of typicality it also supports a finding of predominance.” Id; see also Community Bank
II, 622 F.3d at 284. In summary, the Court of Appeals noted that “[a]ll plaintiffs’ claims arise
from the same alleged fraudulent scheme.” Community Bank I, 418 F.3d at 309.
As to superiority, this “requirement asks a district court to balance, in terms of fairness
and efficiency, the merits of a class action against those of alternative available methods of
adjudication.” Community Bank I, 418 F.3d at 309 (citation and internal quotation omitted). On
the record developed before the first remand, the Court of Appeals for the Third Circuit “[found]
no reason, and [CBNV] fail[s] to offer any, why a Rule 23(b)(3) class action is not the superior
means to adjudicate this matter.” Id. This Court also observes, as an aside, that at this point,
individual class members would face some difficult, if not insurmountable, tolling issues if they
were required to file suit on their own behalf at this time which, in many cases, is almost a
decade after they first received notice that this case had been prosecuted and settled for them.
Accordingly, again, while the Court expresses no opinion on the merits of these claims on
a more fully developed record, Plaintiffs have satisfied their burden under Rule 23. Any further
inquiry into the merits at this stage would be impermissible, as that inquiry is “unrelated to a
Rule 23 requirement.” Community Bank II, 622 F.3d at 291 (citation and internal quotation
omitted).
2. Manageability
This is the first instance in which a Rule 23(b)(3)(D) inquiry, i.e., whether there are
“likely to be difficulties in managing the class action,” is at issue in this case. The Court notes
that Rule 23(d) vests in the Court substantial discretion to enter orders, subsequent to the Order
Certifying the Class that will follow, to manage the class. The United States Court of Appeals
15
for the Seventh Circuit has identified a number of “imaginative solutions to problems created by
the presence in a class action litigation of individual damages.” Carnegie v. Household Int’l, 376
F.3d 656, 661 (7th Cir. 2004) (citations omitted). This Court expresses no opinion at this
juncture which of those solutions, save the creation of sub-classes, which has been crucial here,
may be necessary. This Court finds that speculative, and premature, analysis is not necessary to
resolve the question of manageability. This class action is manageable to try as to liability, even
if damages issues may require some inquiry into facts specific to individual class members.
IV. CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion for Class Certification (doc. no. 607)
will be GRANTED. An appropriate Order follows.
s/ Arthur J. Schwab
Arthur J. Schwab
United States District Court Judge
cc:
All Registered ECF Counsel
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