Milton Harper et al v. C.R. England, Inc. et al
Filing
86
MEMORANDUM DECISION AND ORDER Denying Class Certification for the Purposes of Settlement: The court DENIES 85 Plaintiffs' Renewed Motion for Final Approval of Class Action Settlement. Signed by Judge Robert J. Shelby on 3/27/19. (dla)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
MILTON HARPER; RONNIE
STEVENSON; JONATHAN MITCHELL,
individuals, on behalf of themselves, and on
behalf of all persons similarly situated,
MEMORANDUM DECISION AND
ORDER DENYING CLASS
CERTIFICATION FOR THE PURPOSES
OF SETTLEMENT
Plaintiffs,
2:16-cv-906
v.
Chief District Judge Robert J. Shelby
C.R. ENGLAND, INC., a corporation,
Magistrate Judge Brooke C. Wells
Defendant.
This case arises from the compensation and training-expense arrangements between
Plaintiff Class Members and Defendant C.R. England, Inc. The court is now called on to
rigorously analyze and determine whether Plaintiffs have satisfied the requirements of Federal
Rule of Civil Procedure 23(a). To conduct its analysis, the court considers the Harper Named
Plaintiffs’ Renewed Motion for Final Approval of Class Action Settlement, 1 other court filings, 2
and a hearing transcript. 3 Because Plaintiffs supply no evidence of an “injury in fact,” the court
concludes Plaintiffs lack standing to assert claims arising from the training-expense
arrangements (i.e., contract claims). The court further finds Rule 23(a)’s typicality requirement
has not been satisfied because Plaintiffs supply no evidence Plaintiffs and Class Members share
the same legal or remedial theory. Accordingly, Plaintiffs’ Renewed Motion for Class
Certification is DENIED.
1
Dkt. 85.
2
Dkts. 1, 34, 37, 45, 46, 65.
3
Dkt. 67.
BACKGROUND
The facts of this case are well-known to the parties and recounted in Harper v. C.R.
England, Inc. 4 The Harper Named Plaintiffs assert various class claims arising from two distinct
interactions with Defendant C.R. England. First, they assert wage claims stemming from the
model C.R. England allegedly used to compensate them. 5 Second, they assert contract claims
relating to training expenses they allegedly incurred while attending C.R. England’s trucking
school. 6
The case is before the court on remand from the Tenth Circuit. 7 Previously, the district
court held a fairness hearing, 8 granted approval of a proposed class settlement, 9 and certified a
class for the purposes of class settlement. 10 That class consisted of all current and former truck
drivers employed by C.R. England in the State of California from March 12, 2014 to October 6,
2016. 11 Objectors to the settlement appealed, arguing among other things that the district court
erred in certifying the settlement class. 12
Specifically, the Objectors challenged the validity and sincerity of Plaintiffs’ contract
claims. As to validity, the Objectors argued Plaintiffs’ contract claims were invalid because the
operative contracts were entered into before the start date of the Class period; covered by a prior
4
No. 17-4008, 2018 WL 3860471 (10th Cir. Aug. 14, 2018).
5
Dkt 1, Ex. 6; Dkt. 85 at 5–6.
6
Dkt 1, Ex. 6; Dkt. 85 at 6.
7
Dkt. 80; see also Harper, 2018 WL 3860471, at *8.
8
Dkt. 66.
9
Dkt. 70 at ¶ 6.
10
Id. at ¶ 5.
11
Id. at ¶ 1 & n.1.
12
Harper, 2018 WL 3860471, at *7.
2
class-action release; outside the statute of limitations; or covered by a contractual release. 13 In
support of this argument, the Objectors directed attention to Plaintiffs’ decision to not submit a
declaration or other admissible evidence showing Plaintiffs actually possess viable claims under
a contract theory of liability. 14 Regarding sincerity (i.e., good-faith), the Objectors argued
Plaintiffs added the contract claims to their Second Amended Complaint “by joint agreement of
the parties in preparation for their settlement.” 15 In essence, the Objectors maintained Plaintiffs’
contract claims were meritless, and therefore atypical of the Class’ meritorious claims.
The Tenth Circuit was unable to address the Objectors’ arguments or otherwise review
the appropriateness of class certification because the accompanying certification analysis was
insufficiently thorough. 16 The Tenth Circuit vacated and remanded “for the district court to
more meaningfully explain its bases for class certification.” 17
ANALYSIS
I.
Plaintiffs fail to supply evidence they suffered an “injury in fact.”
“It is axiomatic that an uninjured plaintiff cannot bring suit on behalf of an injured
class.” 18 The Objectors argue Plaintiffs lack standing to assert contract claims because Plaintiffs
suffered no contract damages. Specifically, the Objectors argue Plaintiffs signed the contracts
before the start of the Class Period and paid no contract expenses, liquidated damages, or
13
See Dkt. 37 at 12–13; Dkt. 85 at 16–17.
14
Dkt. 37 at 12; Harper, 2018 WL 3860471, at *7.
15
Harper, 2018 WL 3860471, at *7.
16
Id.
17
Id. at *8.
18
Milonas v. Williams, 691 F.2d 931, 937 (10th Cir. 1982) (citing U.S. Const. art. III, § 2, cl. 1; Warth v. Seldin, 422
U.S. 490, 502 (1975); Bailey v. Patterson, 369 U.S. 31, 32–33 (1962)).
3
interest. 19 The Objectors argue Plaintiffs consequently suffered no “injury in fact” as
constitutionally required for standing. 20
Plaintiffs urge the court to find standing based solely on allegations in the pleadings. 21
But a party invoking federal jurisdiction bears the burden of establishing standing, and because it
is not a “mere pleading requirement[] but rather an indispensable part of the plaintiff's case,
[standing] must be supported in the same way as any other matter on which the plaintiff bears the
burden of proof, i.e., with the manner and degree of evidence required at the successive stages of
the litigation.” 22 At the class certification stage, the party asserting standing must supply
sufficient facts to satisfy each element of standing, including “injury in fact.” 23 Because
Plaintiffs supply only unsupported allegations, they fail to shoulder their evidentiary burden at
the class certification stage to establish standing to assert contract claims. For this reason, the
court may not certify Plaintiffs’ contract claims.
II.
Plaintiffs fail to supply evidence supporting a finding of typicality.
Class certification is appropriate only if the moving party satisfies the four requirements
of Federal Rule of Civil Procedure 23(a) and one of the requirements of Rule 23(b). 24 Under
19
Dkt. 85 at 15–16.
20
See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
21
Dkt. 85 at 16 (“Here, Plaintiffs have alleged that they were induced to enter the Contract by Defendant’s
misrepresentations and, pursuant to the Contract and related agreements, paid training-related expenses that
Defendant was legally required to bear, liquidated damages upon terminating the Contract, and interest charged at
usurious rates upon these expenses and damages. [Citations to the Second Amended Complaint]. These allegations
standing alone are sufficient to demonstrate Plaintiffs’ ‘standing’ for purposes of the analysis required by Rule 23.”);
see also id. at 17 (“Although the promissory notes Plaintiffs executed and the Contract Mr. Mitchell signed were
executed before the Class Period, Plaintiffs still have standing to assert Contract-Related Claims that accrued during
the Class Period based on the allegedly unlawful tuition expenses, liquidated damages or usurious interest charged
during the Class Period.”) (emphasis added).
22
Lujan, 504 U.S. at 561.
23
See infra, note 48.
24
DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1194 (10th Cir. 2010).
4
Rule 23(a), class certification is appropriate only if: “(1) the class is so numerous that joinder of
all members 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.”
The party seeking class certification must “affirmatively demonstrate” compliance with Rule
23(a) by proving “that there are in fact sufficiently numerous parties, common questions of law
or fact, etc.” 25 The district court “has an independent obligation to conduct a rigorous analysis
before concluding that Rule 23’s requirements have been satisfied.” 26
The court turns first to typicality because the Objectors forcefully argue it is not
satisfied. 27 The purpose of the typicality requirement is to guarantee there exists enough
similarity between the claims of the named plaintiffs and class members to assure the named
plaintiffs’ pursuit of their own interests will necessarily benefit the class as well. 28 “Via the
typicality requirement, Rule 23 harnesses selfishness as a mean to accomplish altruistic ends.” 29
To satisfy typicality, the named plaintiffs must assert claims or defenses typical of the claims or
defenses of the class. 30 Typicality may be satisfied even when the named plaintiffs and class
members do not share identical claims or identical factual situations. 31 So long as the claims of
25
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011) (emphasis in original); Vallario v. Vandehey, 554 F.3d
1259, 1267 (10th Cir. 2009) (“District courts ensure Rule 23's provisions are satisfied by conducting a rigorous
analysis, through findings, regardless of whether these findings necessarily overlap with issues on the merits.”)
(internal citations and quotation marks omitted).
26
Wallace B. Roderick Revocable Living Tr. v. XTO Energy, 725 F.3d 1213, 1217 (10th Cir. 2013) (internal quotation
marks omitted).
27
See supra notes 12–15.
28
See Dukes, 564 U.S. at 349 n. 5; 1 William B. Rubenstein, Newberg on Class Action § 3:28 (5th ed. 2018).
29
Newberg on Class Action § 3:28.
30
Fed. R. Civ. P. 23(a)(3).
31
Colorado Cross-Disability Coalition v. Abercrombie & Fitch, 765 F.3d 1205, 1216 (10th Cir. 2010); Devaughn,
594 F.3d at 1198.
5
the named plaintiffs and class members share the same legal or remedial theory, typicality is
satisfied. 32
The Harper Named Plaintiffs advance, and C.R. England does not oppose for purposes of
class settlement, three reasons they maintain why typicality is satisfied here. First, Plaintiffs
contend the relevant inquiry for typicality is whether Plaintiffs and Class Members were
subjected to the same risk of “being obligated to pay training-related expenses that should have
been borne by [C.R. England], liquidated damages upon termination of the contract and interest
charged at usurious rates upon these expenses and damages.” 33 Plaintiffs offer DG ex rel.
Stricklin v. Devaughn as support for that argument. 34
In Devaughn, the Tenth Circuit affirmed a district court’s finding that typicality was
satisfied because: (1) the named plaintiffs and class members—all children in foster care—were
allegedly at risk of being subjected to the same harmful practices, principally the defendant state
officials’ failure to adequately monitor the children’s safety; (2) the interests of the named
plaintiffs and class members were not significantly antagonistic to one another; and (3) the
named plaintiffs alleged the defendants’ “monitoring policies violate[d] their substantive due
process rights to be free from harm while in state custody, the same legal theory that underlie[d]
class members’ corresponding claims.” 35 Unlike in Devaughn, there exists insufficient evidence
in this case from which to find the last two considerations are present, i.e., lack of antagonistic
interests and shared legal theory.
32
Menocal v. GEO Group, 882 F.3d 905, 917 (10th Cir. 2018) (citing Colorado Cross-Disability Coalition, 765 F.3d
at 1216); Devaughn, 594 F.3d at 1198 (citing Adamson v. Bowen, 855 F.2d 668, 676 (10th Cir. 1988)).
33
Dkt. 85 at 15.
34
Id. at 14–15 (citing Devaughn, 594 F.3d 1188, 1199).
35
Devaughn, 594 F.3d at 1199.
6
The absence of evidence forecloses a finding that the interests of Plaintiffs and Class
Members are aligned. If Plaintiffs lack a sincere stake in their asserted contract claims, then
there is a collision of antagonistic interests: for every dime of settlement funds allocated to the
contract claims, there is a concomitant decrease in Plaintiffs’ recovery for the wage claims. 36
Moreover, if Plaintiffs’ stake in the contract claims is imaginary—because their claims are
meritless—it is not necessarily in the interest of the Named Plaintiffs to fully litigate or negotiate
the contract claims. Because the interests of Plaintiffs and Class Members may antagonistically
clash, and because the dearth of evidence regarding the bona fides (i.e., validity and sincerity) of
Plaintiffs’ contract claims makes it impossible to find Plaintiffs and Class Members share the
same legal theory, Devaughn lends no support to a finding of typicality here.
Second, Plaintiffs argue they satisfy typicality even if they did not suffer contract
damages because the “vast majority of the Settlement Class (including most of the Objectors) did
not pay any money to Defendant for any early termination of the Contract.” 37 In other words,
Plaintiffs’ argument is “even if the Named Plaintiffs did not pay any tuition, neither did most
Class Members.” Hence, “rather than being atypical, to the extent Plaintiffs paid nothing in
connection with the Contract, they would be in the exact same position as the vast majority of the
Settlement Class.” 38 But this position ignores the durability of debt, and its potential impact on
Class Members.
Indeed, this oversight appears to be reflected in the method of distribution for settlement
funds. At oral argument, the Named Plaintiffs’ counsel intimated he did not consider any debt
36
Of course, this analysis bears on the likely fairness of the settlement too. But that does not make the analysis
irrelevant to typicality. The court’s role in ensuring a settlement is fair, reasonable, and adequate is no substitute for
the recovery-maximizing role played by Named Plaintiffs and their zealous counsel.
37
Dkt. 85 at 17.
38
Id.
7
owed by Class Members relevant for settlement purposes because debt is “not damages.” 39 He
stated that if class members “have some sort of litigation over [] debt or something like that, that
is what the opt-out procedure is for and people avail themselves of that.” 40 But the ability to optout is no substitute for the recovery-maximizing role played by named plaintiffs and their
counsel. When considered alongside the terms for paying out settlement funds, 41 the remarks of
the Named Plaintiffs’ counsel raises legitimate concerns that, absent the safeguards provided by
typicality, the interests of Class Members who owe debt were not fairly represented. However,
the court need not reach the issue of the fairness of the settlement today because to the extent the
Named Plaintiffs did not pay and do not currently owe anything in connection with a contract,
they are in a different position than Class Members who paid money or currently owe debt in
connection with a contract. Plaintiffs’ second argument in support of typicality fails.
Third, Plaintiffs argue they share the same legal theory as the Class Members because
Plaintiffs’ contract “claims are identical to those of the Settlement Class members.” 42 They
maintain, “it is immaterial that Plaintiffs’ claims may be subject to unique defenses or that
Plaintiffs may not have suffered damages.” 43 The Objectors counter that Plaintiffs made up the
contract claims in coordination with C.R. England. 44 Given the Objectors’ collusion argument, it
is material whether Plaintiffs are subject to defenses and whether they suffered damages. Yet
Plaintiffs finesse arguments in support of typicality without taking any stance on the bona fides
39
Dkt. 67 at 70.
40
Id.
41
See Dkt. 85 at 8–9 (allocating funds based on the number of weeks worked regardless of the amount paid for
tuition or debt incurred).
42
Dkt. 85 at 18.
43
Id.
44
Harper, 2018 WL 3860471, at *7.
8
of their contract claims. 45 At bottom, Plaintiffs hope mere allegations are sufficient to establish
typicality, even in the face of challenges to the validity and sincerity of those allegations. 46
But typicality “demand[s] undiluted, even heightened, attention in the settlement context.
Such attention is of vital importance, for a court asked to certify a settlement class will lack the
opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as
they unfold.” 47 Hence, at least under the current circumstances, where the Objectors challenge
the validity and sincerity of the contract claims, typicality cannot be satisfied on mere pleadings.
To satisfy typicality, the Harper Named Plaintiffs were required to submit evidence they and the
Class Members in fact share the same legal theory. 48 Because Plaintiffs fail to submit such
evidence, the court cannot find typicality present. 49
45
See supra pp. 6–8.
46
See supra note 21.
47
Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 620 (1997).
48
See Dukes, 564 U.S. at 350 (“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.); Tennille v. Western Union Co., 785 F.3d 422, 433 n.12 (10th Cir. 2015) (citing Dukes
as holding a “party seeking class certification must be prepared to prove he meet all of Rule 23(a)’s class
certification requirements”); Vallario v. Vandehey, 554 F.3d 1259, 1266 (10th Cir. 2009) (observing a district court
may consider factors touching upon the merits of a case, so long as the merits of a movant's claims are not the focal
point of the court’s class certification analysis); Newberg on Class Action § 3:45 (“Most courts are both reluctant to
certify a class where the case's merits seem implausible and reluctant to deny certification on the basis of a unique
defense that seems implausible.”).
49
For the benefit of the parties, the court further notes the Tenth Circuit’s analysis in Tennille v. Western Union, Co.
suggests the Harper Named Plaintiffs could not satisfy Rule 23(a)’s adequacy requirement because the Named
Plaintiffs likely face a procedural obstacle potentially preventing them from participating in a class action, whereas
certain Class Members who did not sign arbitration agreements do not face the same or similar procedural obstacles.
See 785 F.3d at 431–32.
9
CONCLUSION
In light of the foregoing, the court DENIES Plaintiffs’ Renewed Motion for Final
Approval of Class Action Settlement. 50
SO ORDERED this 27th day of March, 2019.
BY THE COURT:
________________________________________
ROBERT J. SHELBY
United States Chief District Judge
50
Dkt. 85.
10
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