Judge Claudia Wilken, of California’s Northern District, has certified a class of consumers alleging that Experian, one of the leading credit-reporting agencies, improperly disclosed their credit reports to third parties.  See Holman v. Experian, Inc., No. 11-cv-00180 (N.D. Cal. Apr. 27, 2012) (Order Granting Plaintiffs Motion for Class Certification) (available here).  The plaintiffs contend that Experian disclosed class members’ credit reports to Finex Group, LLC (“Finex”), in violation of the Fair Credit Reporting Act (FCRA).  See Order at 1.  Plaintiffs’ claims arose from disparate experiences in which their cars were towed.  Finex, a company specializing in the collection of towing-related obligations, was then contracted to collect the resulting debts, and Experian provided Finex with the plaintiffs’ credit reports, allegedly without ascertaining whether Finex had a permissible purpose.  See id. at 2-3.

Experian attacked plaintiffs’ certification motion on several fronts, first arguing that the class definition, encompassing all consumers whose reports were provided to Finex, was overly broad, since some of those records would necessarily have been furnished in compliance with FCRA.  Id. at 15-16.  Although Judge Wilken agreed that the proposed class definition was overbroad, rather than denying certification on that ground, she followed the abundant precedent holding that modifications to class definitions are within a district court’s permissible discretion in ruling on a class certification motion, and modified the class definition accordingly.  See id. at 17-18.

Experian also argued that plaintiffs’ counsel should not be appointed counsel for the class, since they invaded class members’ privacy by not seeking the court’s intervention and authority before obtaining the class list from Finex (the records custodian).  The court rejected this argument, with reference to Pioneer Electronics, Inc. v. Super. Ct., 40 Cal. 4th 360 (2007), a leading California case concerning prospective class member contact information.  Order at 34-35.  Judge Wilken made it clear that Pioneer Electronics does not require plaintiffs’ counsel to affirmatively ask the court’s permission to receive the class records, since Finex provided the information voluntarily and without objection.  She went on to note, “Experian provides no case law that supports the proposition that a recipient of confidential information can be held liable for the supplier’s improper disclosure.”  Order at 35.

The numerosity, typicality, adequacy and superiority requirements were fairly easily satisfied by plaintiffs.  Id. at 24-32.  As to commonality, Experian offered the relatively weak argument that, having issued a sequence of several different directives during the class period, the inquiry into the reasonableness of its FCRA compliance procedures would be fragmented according to those different directives.  Id. at 19.  Thus, no determination could be made as to the class period as a whole.  Id.  However, during oral argument, Experian’s counsel conceded that this impediment could be overcome by dividing the class into subclasses according to time period.  Id.  As such, Judge Wilken found that the plaintiffs satisfied the commonality element, and the class was certified.  Id. at 24, 35.  The action now moves to the merits phase.

An Alabama federal court has certified a class of investors who allege that they were defrauded by the defendant’s misleading statements regarding the performance of a real estate portfolio.  See Local 703 v. Regions Fin. Corp., No. 10-cv-02847 (N.D. Ala. June 14, 2012) (Memorandum Opinion re certification) (available here).  The plaintiffs claim that the defendant artificially inflated the value of its real estate holdings by misrepresenting tens of millions of dollars in non-accrual loans.  Memorandum Opinion at 21.  The at-issue stock was trading at $23.22 at the beginning of the class period, but plummeted to $4.60 per share by the end of the class period.  Id. at 2. 

Defendant Regions mounted a strong challenge to Rule 23’s “typicality” requirement, arguing that the named plaintiffs did not have claims typical of the rest of the class, since they actually benefited from the alleged fraud by holding some shares for only a short period and then selling them at a profit.  Id. at 8-9.  However, the court found that, since the named plaintiffs did not divest themselves of all holdings during the class period, the typicality requirement was met, notwithstanding plaintiffs’ profits.  Id. at 9.

As to the predominance requirement, Regions argued (1) that plaintiffs failed to establish a presumption of class-wide reliance based on a “fraud-on-the-market” theory, and (2) even if plaintiffs had established such a presumption, Regions rebutted it.  Id. at 19-20.  The defendant reasoned that, since plaintiffs had not proven a link between defendant’s alleged misrepresentations and the drop in stock price, there could be no presumption of reliance.  In a sprawling analysis, Judge Inge Prytz Johnson found loss causation to be a trial issue, agreeing with the plaintiffs and numerous other courts that it was “not a relevant consideration for a court at this juncture.”  Id. at 34.  In so ruling, the court relied considerably on Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179, 2185 (2011).  Judge Johnson concluded that plaintiffs had, in fact, established the presumption of reliance, and that defendants failed to rebut it.  Memorandum Opinion at 31-33, 38-39.  She consequently granted plaintiffs’ certification motion, finding all of the class action prerequisites to be satisfied. The certified action now proceeds to the merits phase.

Judge Margaret M. Morrow of California’s Central District has certified two classes of Honda Civic owners and lessees alleging that certain model years of the vehicles have a rear-suspension defect that could cause uneven and premature wear on the rear tires.  See Keegan v. American Honda Motor Co., No. 10-cv-09508 (C.D. Cal. June 12, 2012) (Order Granting in Part and Denying in Part Plaintiffs’ Motion for Class Certification) (available here).  Plaintiffs are seeking relief pursuant to California’s Consumer Legal Remedies Act (CLRA), Unfair Competition Law (UCL), Song-Beverly Act, and Commercial Code § 2313, as well as the federal Magnuson-Moss Warranty Act and consumer protection and implied warranty statutes of various other states.  Order at 1.

The certification ruling is notable in that a full Daubert analysis of the plaintiffs’ and defendant’s proffered experts was conducted, and expert testimony that failed to satisfy the Daubert threshold was excluded.  See id. at 9-19.  Though such decisions by a federal district court do not have binding precedential effect, Judge Morrow’s choice to conduct a full Daubert analysis is likely to become more the rule than the exception, particularly after the U.S. Supreme Court, in Wal-Mart v. Dukes, expressed skepticism of a district court’s finding that Daubert does not apply to class certification proceedings. See Wal-Mart v. Dukes, 131 S. Ct. 2541, 2554 (2011).

The Keegan court extensively considered the parties’ opposing views of commonality, concluding that the defendant’s arguments were “based on a misapprehension of what commonality demands.”  Order at 25.  Honda had argued (as many defendants opposing class certification do) that particular differences between class members’ experiences resulted in the predominance of individual issues, and that “proving liability will require determining whether the tire wear each class vehicle suffered was premature or excessive.”  Id. at 25-26.  Judge Morrow disagreed, however, explaining that commonality requires only that class members’ allegations share common issues of law or fact such that all claims for relief will be sufficiently presented, and “[t]he fact that some vehicles have not yet manifested premature or excessive tire wear is not sufficient, standing alone, to defeat commonality.”  Id. at 26.

Keegan is viewed as a major victory for plaintiffs, and will likely be invoked to support certification in other consumer class actions, whether involving automobile defects or otherwise.

A federal court has certified a class of Arkansas drivers alleging that the defendant purchased their personal information from a database maintained by the state, in violation of the Driver’s Privacy Protection Act (DPPA).  See Haney v. Recall Center, No. 10-cv-04003 (W.D. Ark. May 9, 2012) (order on motion to certify class) (available here).  Particularly significant is the size of the certified class, estimated to be two million members.  Order at 5.  This decision runs contrary to widespread speculation that classes with millions of members would be difficult (if not impossible) to certify  post-Wal-Mart v. Dukes.

Haney stands to be a notable case not only due to its sheer size and potentially monumental damages (plaintiffs are seeking $2500 for each violation), but also because the underlying privacy issues have considerable resonance with the mass public, as technology increasingly puts private information at risk.  Further, in redefining the class to comport with the applicable statute of limitations, the court underscored that courts should use their discretion to do so rather than denying class certification on an easily remedied ground.  See id. at 2-3.  The Haney certification order also reasserted the division between consideration of class certification criteria and the underlying merits.  Id. at 3, quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (“In determining whether to certify 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 are met.’”).

As to the often-decisive Rule 23 “commonality” requirement, the defendant argued that each transaction in which private data was obtained would require an intrinsically individualized inquiry, in particular as to the affirmative defense that information was acquired for a permissible purpose.  See id. at 6.  The defendant also argued that the DPPA requires that a violation cause actual injury, which would likewise require individual analysis.  Id.  The court rejected both of defendant’s arguments, finding that the DPPA does not require proof of actual damages, and that, although individual answers to questions regarding the data transactions might vary as to each class member, “Rule 23(a) requires common questions, not common answers.” Id. at 6-7.