Robinson v. Texas Auto. Dealers Ass'n

• Citation: 387 F.3d 416
• Decision Date: 05 October 2004
• Docket Number: No. 03-40691.,03-40691.
• Parties: Bert A. ROBINSON, on Behalf of Themselves and All Others Similarly Situated; Mary Luman, on Behalf of Themselves and All Others Similarly Situated; Toyia Urbaniak, on Behalf of Themselves and All Others Similarly Situated; Kirk T. Garner, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellees, v. TEXAS AUTOMOBILE DEALERS ASSOCIATION; et al., Defendants, Texas Automobile Dealers Association; Allison Chevrolet, Doing Business as Allison Chevrolet Oldsmobile; Bass Chevrolet, Doing Business as Peters Chevrolet; Mike Pile Autoplex, Doing Business as Mike Pile Jeep-Eagle; Alford Chevrolet-Geo; et al.; Plains Chevrolet, Inc., Doing Business as High Plains Auto Center; Westgate Chevrolet, Doing Business as Westgate Kia, Doing Business as Ray Jones Chevrolet; W.O. Bankston Lincoln-Mercury, Inc., Doing Business as W.O. Bankston Lincoln-Mercury Saab, Inc.; W.O. Bankston Nissan; Bankston Nissan in Irving, Inc.; et al.; Gene Messer Cadillac; Gene Messer Imports; Gene Messer Ford, Inc., Doing Business as Gene Messer Kia, Doing Business as Credit Connection, Doing Business as Ford Esp. SW Reg. Proc. Ctr., Doing Business as Gene Messer Volkswagen; Gene Messer Ford of Amarillo, Inc., Doing Business as Gene Messer Cadillac, Doing Business as Gene Messer Jeep/Eagle; Foyt Motors, Inc., Doing Business as A.J. Foyt Honda; SMC Luxury Cars, Inc., Doing Business as Sterling McCall Lexus; Southwest Toyota, Inc.; Rodeo Chrysler-Plymouth, Inc., Doing Business as Rodeo Dodge, Doing Business as Village Chrysler-Plymouth; Mike Smith Autoplaza, Doing Business as Mike Smith Honda, Doing Business as Mike Smith Mitsubishi, Doing Business as Mike Smith Jeep/Eagle; Town North Imports, Doing Business as Town North Mitsubishi; Town North Nissan; Town North Suzuki, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

387 F.3d 416

Bert A. ROBINSON, on Behalf of Themselves and All Others Similarly Situated; Mary Luman, on Behalf of Themselves and All Others Similarly Situated; Toyia Urbaniak, on Behalf of Themselves and All Others Similarly Situated; Kirk T. Garner, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellees, v. TEXAS AUTOMOBILE DEALERS ASSOCIATION; et al., Defendants,

Texas Automobile Dealers Association; Allison Chevrolet, Doing Business as Allison Chevrolet Oldsmobile; Bass Chevrolet, Doing Business as Peters Chevrolet; Mike Pile Autoplex, Doing Business as Mike Pile Jeep-Eagle; Alford Chevrolet-Geo; et al.; Plains Chevrolet, Inc., Doing Business as High Plains Auto Center; Westgate Chevrolet, Doing Business as Westgate Kia, Doing Business as Ray Jones Chevrolet; W.O. Bankston Lincoln-Mercury, Inc., Doing Business as W.O. Bankston Lincoln-Mercury Saab, Inc.; W.O. Bankston Nissan; Bankston Nissan in Irving, Inc.; et al.; Gene Messer Cadillac; Gene Messer

Imports; Gene Messer Ford, Inc., Doing Business as Gene Messer Kia, Doing Business as Credit Connection, Doing Business as Ford Esp. SW Reg. Proc. Ctr., Doing Business as Gene Messer Volkswagen; Gene Messer Ford of Amarillo, Inc., Doing Business as Gene Messer Cadillac, Doing Business as Gene Messer Jeep/Eagle; Foyt Motors, Inc., Doing Business as A.J. Foyt Honda; SMC Luxury Cars, Inc., Doing Business as Sterling McCall Lexus; Southwest Toyota, Inc.; Rodeo Chrysler-Plymouth, Inc., Doing Business as Rodeo Dodge, Doing Business as Village Chrysler-Plymouth; Mike Smith Autoplaza, Doing Business as Mike Smith Honda, Doing Business as Mike Smith Mitsubishi, Doing Business as Mike Smith Jeep/Eagle; Town North Imports, Doing Business as Town North Mitsubishi; Town North Nissan; Town North Suzuki, Defendants-Appellants.

No. 03-40691.

United States Court of Appeals, Fifth Circuit.

October 5, 2004.

John True Smithee (argued), Robert L. Templeton, Joe W. Hayes, Templeton, Smithee, Hayes, Fields, Young & Heinrich, Amarillo, TX, Keith M. Welch, Simon Fitzgerald, Cooke, Reed & Welch, J. Patrick Hennessy, Peters, Ward, Bright & Hennessy, Shreveport, LA, Mark L.D. Wawro, Geoffrey L. Harrison, Susman Godfrey, Houston, TX, Mary Nicole Strimel, Cohen, Milstein, Hausfeld & Toll, Washington, DC, W. Franklin Jones, Jr., Jones & Jones, Mike C. Miller, Law Office of Mike Miller, Marshall, TX, Damon Michael Young, Sr., Young, Pickett & Lee, Texarkana, TX, for Plaintiffs-Appellees.

Robert T. Mowrey (argued), Cynthia Keely Timms, Thomas George Yoxall, Locke Liddell & Sapp, Dallas, TX, Michael C. Holmes, Walter B. Stuart, IV, Penelope E. Nicholson, Jason Michael Powers, Vinson & Elkins, Houston, TX, Daniel F. Katz, Beth A. Levene, Williams & Connolly, Washington, DC, for all Defendants-Appellants.

Appeal from the United States District Court for the Eastern District of Texas.

Before SMITH, EMILIO M. GARZA and PICKERING, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The Texas Automobile Dealers Association ("TADA") and some of its members appeal,¹ pursuant to Fed.R.Civ.P. 23(f), the conditional certification of a plaintiff class of millions of consumers who have purchased a car in Texas since 1994. Because the proposed class does not meet the requirements of Fed.R.Civ.P. 23(b)(3), we reverse the certification and remand.

I.

Effective January 1, 1994, Texas altered the manner in which it calculated and assessed the Vehicle Inventory Tax ("VIT") imposed on automobile dealers. Before the alteration, the tax was just another overhead expense to be absorbed as part of the sales price. As a result of the amendments, the state began calculating the VIT as a percentage of the sales price of each car sold.

Based on the recommendations of the Commissioner of the Office of Consumer Credit and of the Texas Comptroller of Public Accounts, and on a statement from a sponsor of the legislation, the TADA advised² its members to itemize the VIT as a separate item on each sales contract and to charge it in addition to the regular "sales" or "cash" price. Although dealerships could pursue the previous approach of including the VIT as an undisclosed part of the listed sales price, a large number of dealerships followed the TADA protocol and listed the VIT³ separately.

Alleging violations of section 4 of the Clayton Act⁴ and section 1 of the Sherman Act,⁵ plaintiffs sued the TADA and most dealerships⁶ that adopted the TADA plan. Specifically, plaintiffs allege that, by uniformly imposing the VIT as a line item, defendants are engaged in horizontal price-fixing, conspired to create a horizontal price-fixing regime, and have been unjustly enriched.

Plaintiffs moved to certify plaintiff and defendant classes based on Fed.R.Civ.P. 23(b)(2)⁷ and (3),⁸ proposing a class consisting of

all persons and entities who purchased a new or used motor vehicle in Texas during the period of January 1, 1994 through the date of class certification herein, from a motor vehicle dealership which was a member of the [TADA] at the date of sale, and who were charged a "vehicle inventory tax," "inventory tax," "Texas vehicle inventory tax," "ad valorem tax," "personal property tax fee," "P/P tax fee," "VIT," or similarly identified "fee or charge" as an addition to the sales price or cash price of the vehicle....

As the district court noted, "Potentially, millions of consumers are included in the proposed class."

Although declining to certify a defendant class,⁹ the court conditionally certified the proposed plaintiff class, finding that common issues — including the common presence of the VIT in all sales contracts — predominate over individual issues¹⁰ and opining that, despite the court's "concerns over the manageability of a suit against over a thousand defendants[,] this class action is the superior method for adjudicating this controversy."

II.

The district court erroneously certified the plaintiff class. Facts necessary to sustain a possible horizontal price-fixing injury do not predominate. Additionally, the district court did not conduct sufficient inquiry into the management of this complex, multiparty action.

"We review the certification of a class for abuse of discretion." O'Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 737 (5th Cir.2003). To make a determination on class certification, a district court must conduct an intense factual investigation. "There are no `hard and fast rules ... regarding the suitability of a particular type of antitrust case for class action treatment.' Rather, `the unique facts of each case will generally be the determining factor governing certification.'" Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 301 (5th Cir.2003) (quoting Alabama v. Blue Bird Body Co., 573 F.2d 309, 316 (5th Cir.1978)).

Although we review the certification decision using a deferential standard, "[a] district court must conduct a rigorous analysis of the rule 23 prerequisites before certifying a class." Castano v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir.1996). Additionally, the district court's "`decision must be exercised within the framework of Rule 23.'" McManus v. Fleetwood Enters., 320 F.3d 545, 548 (5th Cir.2003) (quoting Castano, 84 F.3d at 740). We review a district court's conclusions of law de novo.¹¹

"The party seeking certification bears the burden of demonstrating that the requirements of rule 23 have been met."¹² Such requirements include both the four factors of rule 23(a) — numerosity, commonality, typicality, and adequacy — and the two requirements of rule 23(b)(3). Because defendants do not contest the plaintiffs' satisfaction of the rule 23(a) requirements, we address only whether they satisfied rule 23(b)(3).

"Rule 23(b)(3) demands of a party seeking class certification ... the burden of demonstrating (1) that questions common to the class members predominate over questions affecting only individual members and (2) that class resolution is superior to alternative methods of adjudication of the controversy." Bell Atl., 339 F.3d at 297. Although such language may resemble the words of rule 23(a), "[t]he predominance and superiority requirements are `far more demanding' than is [R]ule 23(a)(2)'s commonality requirement."¹³ Despite the fact that the district court granted certification only conditionally, "it does not follow that the rule's requirements are lessened when the class is conditional."¹⁴ Castano, 84 F.3d at 741.

III.

A.

In evaluating the predominance requirement, we take care to inquire into the substance and structure of the underlying claims without passing judgment on their merits. "Although `the strength of a plaintiff's claim should not affect the certification decision,' the district court must look beyond the pleadings to `understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues.'"¹⁵

Despite the fact that such an inquiry "does not resolve the case on its merits," it helps "prevent[] the class from degenerating into a series of individual trials." O'Sullivan, 319 F.3d at 738. Making a meaningful determination of the certification issues "entails identifying the substantive issues that will control the outcome, assessing which issues will predominate, and then determining whether the issues are common to the class." Id.

Plaintiffs assert three separate claims,¹⁶ but we need consider only whether they have defined a class whose members suffered an antitrust injury. One common factor links all aspects of the suit — namely, payment of the VIT. If the proposed class contains too broad a sample of consumers for something actionable under the Clayton Act to predominate, the conspiracy claim will fail as well.¹⁷ If the mere payment of a VIT does not adequately tie the interests of the class members together for purposes of any Clayton Act violations, the class will similarly fail for any purported claim of unjust enrichment.

B.

"Private...