CARLOS MURGUIA, District Judge.
On May 1, 2012, named-plaintiff Larry Whitton, on behalf of himself and all others similarly situated, brought claims against defendants Deffenbaugh Disposal, Inc. and Deffenbaugh Industries, Inc. (referred to collectively as "Deffenbaugh") for breach of contract, violation of the Kansas Consumer Protection Act ("KCPA"), and unjust enrichment for defendants' practice of charging two types of fees: an "environmental/fuel charge" and an "administrative fee."
Plaintiff first entered into a contract with Deffenbaugh in November 2004 (Doc. 67-2) ("the '04 Contract"). While plaintiff makes no claims on the '04 Contract, the contract is noteworthy because it contains a handwritten term stating "NO FUEL SURCHARGE," which is underlined several times. Plaintiff subsequently entered into a contract with Deffenbaugh in November 2008 ("the '08 Contract") and again in January 2010 ("the '10 Contract").
Each contract contains the following provision, upon which plaintiff relies, entitled "Service of Equipment Changes/Rate Adjustments/Fiber Purchases," which provides:
(Doc. 59-4 at 74.) Deffenbaugh (referred to as "DDS" in the provision above) allegedly charged plaintiff both an "environmental/fuel charge" and "administrative fee" pursuant to that contract provision. While plaintiff acknowledges that the first sentence of that provision allows for increased rates to adjust for increases in Deffenbaugh's fuel costs, plaintiff argues that the provision does not allow the "environmental/fuel" and "administrative" charges. (Doc. 51-2 at 3.) Plaintiff seeks certification of a nationwide class of Deffenbaugh customers because it alleges Deffenbaugh breached its contract for two reasons. First, the fuel fee itself does not "adjust for," or even relate to, Deffenbaugh's actual fuel costs. Second, Deffenbaugh increased the fuel fee for a given diesel price in order to increase its profits.
The court denied class certification. While the fact that plaintiff's proposed class satisfied all of the factors under Rule 23(a), it could not satisfy Rule 23(b)(3)'s predominance factor. The court could not determine whether Deffenbaugh breached the contracts without determining whether each individual class member consented to the "environmental" and "administrative" fees (or portion of the fee). As a result, the class also failed Rule 23(b)(3)'s superiority prong because determining each class member's consent to a specific contract term would require "mini trials"—making the case difficult to manage. (Doc. 70 at 19.)
In light of the court's order, plaintiff filed the motion before the court. Plaintiff proposes a new class definition that includes only the fuel fee. While the new definition excludes the "environmental/fuel" and "administrative" fees, these fees remain relevant for analytical purposes. The only remaining claim before the court is whether Deffenbaugh has breached the contract as to the "fuel [surcharge or fee]" because it does not "adjust for," or even relate to, Deffenbaugh's increased fuel costs.
In plaintiff's Motion to Alter, Amend, Vacate or Reconsider the Court's Order Denying Class Certification (Doc. 72), plaintiff proposes a new, narrower class definition ("new Contract Class"). Deffenbaugh argues that (1) plaintiff's motion is improper, (2) even if the motion is proper, plaintiff's new Contract Class cannot be identified, and (3) even if the new Contract Class is identifiable, it cannot be certified. Deffenbaugh concedes that "[w]hether to grant or deny a motion for reconsideration is committed to the court's discretion." GFF Corp. v. Assoc. Wholesale Grocers, Inc., 130 F.3d 1381, 1386 (10th Cir. 1997); Hancock v. City of Okla. City, 857 F.2d 1394, 1395 (10th Cir. 1988). But it argues that plaintiff's motion for reconsideration is merely a "second bite at the apple" (Doc. 88 at 3) because plaintiff failed to present his strongest case in the first instance, and plaintiff is attempting to reargue arguments that the court previously rejected.
While Deffenbaugh's argument does find support in case law, that case law almost exclusively concerns reconsidering dispositive motions—for example, motions for summary judgment. The present motion before this court is not a dispositive motion, at least not on its face. While it is true that, in the end, a court order decertifying a class may be dispositive because the named-plaintiff may drop his case, that is not always the case, and it is not necessarily the intention of a decertification order. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 467 (1978) ("An order refusing to certify, or decertifying, a class does not of its own force terminate the entire litigation because the plaintiff is free to proceed on his individual claim.").
Rule 23 also provides textual support for this proposition. "An order that grants or denies class certification may be altered or amended before final judgment." Fed. R. Civ. P. 23(c)(1)(C). The committee's notes on Rule 23(c)(1)(C) provide that "[a] court that is not satisfied that the requirements of Rule 23 have been met should refuse certification until they have been met." Id. As the committee makes clear, neither the Rule nor its comments limit the number of times a court may reconsider the definition of a class. The initial certification should be no different. The Tenth Circuit agrees with this proposition:
Plaintiff's new Contract Class is defined as:
(Doc. 75 at 4.) Plaintiff's new Contract Class narrows the putative class in two ways. First, only class members who paid a "fuel fee or surcharge" are included; the original definition included class members who paid any "environmental/fuel charges," "fuel surcharges," and/or "administrative fees." Second, only class members who entered into written contracts with Deffenbaugh between May 1, 2007 and January 31, 2011 are included; whereas the original definition included contracts entered into as of the date of class notice. The same class exclusions apply.
For the same reasons outlined in its previous order, the court finds that plaintiff's new Contract Class satisfies Rule 23's other class-certification requirements. Thus, the remaining question is whether the new Contract Class satisfies Rule 23(b)(3). Plaintiff argues this new definition addresses many of the court's concerns regarding predominance (Doc. 70). Deffenbaugh argues that this new definition still requires individualized inquiries, which predominate over the common issues of the class. After another careful review of the entire record, the court finds that plaintiff's new Contract Class satisfies Rule 23(b)(3).
It is the district court's "`duty to take a close look at whether common questions predominate over individual ones.'" Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1219 (10th Cir. 2013) (quoting Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013) (quotation omitted)). The predominance factor is "`far more demanding'" than the commonality requirement of Rule 23(a). Id. at 1220 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623-24 (1997)). Predominance is satisfied "if there is a common nucleus of operative facts relevant to the dispute and those common questions represent a significant aspect of the case which can be resolved for all members of the class in a single adjudication." Eatinger v. BP Am. Prod. Co., 271 F.R.D. 253, 261 (D. Kan. 2010) (citations omitted). "The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Anchem Prods., Inc., 521 U.S. at 623.
Further, "[t]he nature of the evidence that will suffice to resolve a question determines whether the question is common or individual." In re Urethane Antitrust Litig., 251 F.R.D. 629, 633-34 (D. Kan. 2008) (quoting Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005)). If the putative class members must present evidence that will vary from member to member in order to establish a prima facie case, then it is an individual question. Garcia v. Tyson Foods, Inc., 255 F.R.D. 678, 690 (D. Kan. 2009) (citing Blades, 400 F.3d at 566; Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311 (3d Cir. 2008)). But if the same evidence will establish a prima facie case for all class members, then the question is a common one. See id.
A class definition must be "precise, objective, and presently ascertainable." Sibley v. Sprint Nextel Corp., 254 F.R.D. 662, 670 (D. Kan. 2008). And the class definition is of great import because it "identifies the persons (1) entitled to relief, (2) bound by a final judgment and (3) entitled under Rule 23(c)(2) to the best notice practicable in a Rule 23(b)(3) action." In re Motor Fuel Temperature Sales Practices Litig., 279 F.R.D. 598, 604 (D. Kan. 2012) (citing Manual for Complex Litigation § 21.222 (4th ed. 2005)).
In its previous order, the court found that plaintiff's Contract Class satisfied the majority of Rule 23's requirements. But the court also found that plaintiff's Contract Class failed the predominance factor.
The court therefore concluded this weighed against a finding of predominance.
In order to assess predominance, courts often must assess the merits of a particular claim or defense. See Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011)); see also Coopers, 437 U.S. 463, 469 at n.12 (1978) ("Evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims. The typicality of the representative's claims or defenses, the adequacy of the representative, and the presence of common questions of law or fact are obvious examples. The more complex determinations required in Rule 23(b)(3) class actions entail even greater entanglement with the merits. ...") (citation omitted)). The court therefore may need to make findings related to the merits of plaintiff's claims or Deffenbaugh's defenses. Any findings in the following analysis by the court are therefore inherently tentative. See Coopers, 437 U.S. 463, 469 (citing Fed. R. Civ. P. 23(c)(1)(C)).
Upon a new review of the record, the court finds that plaintiff's newly proposed class satisfies Rule 23(b)'s predominance factor. This is primarily because there is sufficient evidence in the record that explains the relationship between "environmental" and "fuel" portions of the fee. The court determines that Deffenbaugh's "environmental/fuel" surcharge, which appears on various contracts and invoices, is actually two separate surcharges: an environmental surcharge and a fuel surcharge. The court's survey of other Deffenbaugh customers' contracts in the record supports this finding. (See Docs. 59-4 and 59-5.)
Since approximately 2003, Deffenbaugh utilized a form, pre-printed contract, typically consisting of two pages: (1) a front-side, which contains blank spaces to enter the customer's name, address, type of service, and other information, and (2) a backside, which contains a standard, uniform "Terms and Conditions" section ("the T&Cs").
At some point in 2011, Deffenbaugh began using a contract with a different backside. Thus, the record contains two form contracts: (1) the 2005-2011 Form ("2005 Form"), and (2) the 2011-Present Form ("2011 Form").
The front-side of each contract varies from contract to contract. This is why Deffenbaugh argues that it is not using a form contract and that these variations necessitate individualized inquiries, which weighs against a finding of predominance. The front side of each contract is a standard form, at its base. But Deffenbaugh's salespeople may fill in the blanks or space with handwritten or typed notations, as will be described below. The relevant notations in this case are typically found in the areas outlined with a blue dotted-line box:
In those dotted areas, the contracts contain the following handwritten or typed terms, which are relevant to this case:
The court makes the following observations regarding the contracts, particularly those terms:
The survey revealed facts and inferences that point to the same conclusion: the "administrative," "environmental," and "fuel" charges are separate, distinct charges, regardless of how the charges are notated. Additionally, Deffenbaugh's own spreadsheet, which surveys its customer contracts in a similar manner, never lists (or keeps track of) any "environmental" charge to its customers. But it does track—separately—the fuel and administrative charges. (Doc. 59-5 at 65-75.) For these reasons, if the court finds that plaintiff's new Contract Class satisfies Rule 23(b)'s predominance and superiority factors, the court can expand plaintiff's newly-proposed class to include any individual who paid an "environmental/fuel surcharge" because that term necessarily includes a "fuel surcharge."
Deffenbaugh argues class certification is improper because its defenses of consent and the voluntary payment doctrine necessitate individual inquiries that predominate over the class's common issues. In its previous order, the court found that, because the first sentence of the disputed provision only mentions a fuel charge, the "environmental/fuel" and "administrative" fees fall into the provision's second sentence, which would require the court to conduct individual inquiries as to whether each class member consented to those two fees (or component of the fees). (Doc. 70 at 16-17.) Now, however, plaintiff has withdrawn the claim involving the "environmental" fee (or portion of the fee), which means that the second sentence—the consent provision—is arguably no longer triggered. To the extent the defense applies at all, the court finds that Deffenbaugh's defense of consent does not bar class certification. The court will therefore evaluate Deffenbaugh's other defense, the voluntary payment doctrine.
Deffenbaugh also argues that the voluntary payment doctrine, as recognized by Kansas, bars plaintiff's claim. The doctrine must be examined because it may necessitate individual inquiries, which would weigh against a finding of predominance. The court is persuaded by the discussion of the voluntary payment doctrine vis-à-vis class action certification in Dupler v. Costco Wholesale Corp., 249 F.R.D. 29, 45 (E.D.N.Y. 2008). The court finds this analysis particularly applicable:
Id. at 45. For these reasons, the court finds the voluntary payment doctrine does not bar certification of the class. Before, it gave the court pause in conjunction with the other predominance considerations. Now that those predominance concerns have been alleviated, however, this defense alone does not defeat predomination.
Ultimately, neither the defenses of consent nor the voluntary payment doctrine prevent class certification because, as the First Circuit put it:
Smilow v. SW. Bell Mobile Sys., Inc., 323 F.3d 32, 39-40 (1st Cir. 2003) (citations omitted). This is consistent with the Tenth Circuit's statement that the court possesses the discretion under Rule 23(C)(1)(c) to "amend its certification order to reflect its findings or decertify the class altogether prior to final judgment." Devaughn, 594 F.3d at 1201.
For the foregoing reasons, the court finds that the new Contract Class satisfies Rule 23(b)'s predominance factor. The court will now determine if the new Contract Class satisfies the superiority factor.
Rule 23(b)(3) requires that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b). The rule provides four factors to be considered in making this determination:
There is no evidence in the record that would weigh against certifying plaintiff's class under factors (A) and (B); there is no evidence that class members would prefer to individually control the prosecution of this claim and the court is unaware of any other litigation concerning this controversy.
As for factor (C), plaintiff argues that the potentially low damage award and high costs of litigation may deter individual class members from bringing individual claims and that the court would likely conserve its judicial resources by handling the claims as a class action in a single forum. The court agrees. Class members would be unlikely to bring their claims individually given that the cost of legal representation alone outweighs the cost of disputing a $15 per month charge. Additionally, it is desirable to concentrate the litigation in Kansas because Deffenbaugh is located in Kansas and it likely possesses the necessary records about every class member.
Finally, with respect to factor (D), Deffenbaugh argues that the class action would be difficult to manage because it necessitates individual inquiries. As explained throughout this opinion, the court does not see any individual inquiries that overwhelm the class' common issues and thus does not view this case as unmanageable. For now, a class action is superior to other available methods for the fair and efficient adjudication of this litigation.
Once again, Deffenbaugh argues that plaintiff cannot adequately represent the newly-proposed class because he has paid an "environmental/fuel surcharge"—not a "fuel surcharge." In other words, because plaintiff's contract states "Plus Fuel" but plaintiff was invoiced for an "Environmental/Fuel surcharge" and paid it, plaintiff is not a member of the new Contract Class. The court remains unpersuaded. Because the court finds that the "environmental/fuel surcharge" is actually two separate charges (an environmental surcharge and a fuel surcharge), plaintiff Whitton has necessarily paid a "fuel surcharge."
Given the court's determination that the "environmental/fuel" surcharge is actually shorthand for two separate and distinct charges, the court will expand plaintiff's new Contract Class to include individuals or entities who paid an "environmental/fuel" charge to Deffenbaugh. This does not implicate the defense of consent because, as discussed earlier, the inclusion of that term is merely evidence that such an individual or entity has, in fact, paid a "fuel surcharge." The defense of consent only applies to terms that fall into the disputed provision's second sentence, such as the "environmental" or "administrative" fees. Plaintiff's claim involves only the fuel surcharge and its relation to Deffenbaugh's actual fuel costs.
The survey of other Deffenbaugh customers' contracts also allows the court to also expand the time frame plaintiff proposed. The court will redefine the class to include contracts entered into up until the date of class notice. The reason for this is that while Deffenbaugh allegedly switched to the 2011 Form contract in 2011, the record shows multiple 2005 Form contracts that were executed after 2011. Though the record does indicate a trend away from the 2005 Form contract, it is possible a 2005 Form contract could have been executed yesterday and it would be unfair to exclude such a class member. Accordingly, the court certifies the following class under Fed. R. Civ. P. 23(b)(3):
Rule 23(g) requires that "a court that certifies a class must appoint class counsel." Fed. R. Civ. P. 23(g). When appointing counsel, the court must consider counsel's (1) work in identifying or investigating potential claims, (2) experience in handling class actions or other complex litigation, (3) knowledge of the applicable law, and (4) resources. Fed. R. Civ. P. 23(g)(1)(A). Plaintiff requests that its present counsel, the law firms of McCallum, Methvin & Terrell, PC and Wagstaff & Cartmell LLP be appointed as class counsel.
The court is satisfied that both firms meet the criteria of Rule 23(g). Both firms have (1) previously litigated multiple class actions, (2) diligently and continuously pursued this litigation for more than a year, including conducting extensive written and electronic discovery and taking or defending more than seven depositions, and (3) have signed all the briefs throughout this case. The court is unaware of any conflicts of interests that would render them inadequate to represent the putative class in this case. Accordingly, the court appoints McCallum, Methvin & Terrell, PC and Wagstaff & Cartmell LLP as counsel for this class.
For the reasons set forth above, the court finds that its slightly modified version of plaintiff's new Contract Class satisfies Rule 23(a) and (b)(3).
