Asbury Automotive Group, Inc. v. Palasack

• Decision Date: 22 June 2006
• Docket Number: No. 06-215.,06-215.
• Citation: 237 S.W.3d 462
• Parties: ASBURY AUTOMOTIVE GROUP, INC., Asbury Automotive Arkansas, L.L.C., North Point Auto Group, North Point Ford, Inc., NP FLM, L.L.C., Prestige Toy, L.L.C., Prestige Bay, L.L.C., Premier NSN, L.L.C., NP VKW, L.L.C., Premier Pon, L.L.C., and NP MZD, L.L.C., Appellants, v. Charles and Carol PALASACK; and Otis Campbell, Appellees.
• Court: Arkansas Supreme Court

237 S.W.3d 462

ASBURY AUTOMOTIVE GROUP, INC., Asbury Automotive Arkansas, L.L.C., North Point Auto Group, North Point Ford, Inc., NP FLM, L.L.C., Prestige Toy, L.L.C., Prestige Bay, L.L.C., Premier NSN, L.L.C., NP VKW, L.L.C., Premier Pon, L.L.C., and NP MZD, L.L.C., Appellants, v. Charles and Carol PALASACK; and Otis Campbell, Appellees.

No. 06-215.

Supreme Court of Arkansas.

June 22, 2006.

Watts, Donovan & Tilley, P.A., by: David M. Donovan and Staci Dumas Carson, Little Rock, AR, for appellants.

Nichols & Campbell, P.A., by: H. Gregory Campbell; Roberts Law Firm, P.A., by: Michael L. Roberts and Richard Quintus, Little Rock, AR; and Varnell & Warwick, P.A., by: Brian W. Warwick, The Villages, FL, for appellees.

ROBERT L. BROWN, Justice.

Appellants, the Asbury Automotive Group, Inc., and others (hereinafter referred to collectively as Asbury Automotive), appeal from the circuit court's certification of the appellees' class-action lawsuit. On December 1, 1999, Charles and Carol Palasack purchased a Ford F-150 truck from appellant North Point Ford, Inc. On December 31, 2002, the Palasacks filed a class-action lawsuit to contest a $99.85 documentary fee charged by North Point Ford. The Palasacks asserted in their complaint that the charge of that documentary fee was a violation of the Arkansas Deceptive Trade Practices Act. First, they asserted that the Deceptive Trade Practices Act was violated because the defendants "fraudulently and deceptively attempted to mislead the buyers or lessees . . . into believing that the document preparation fee was a valid charge tied to the actual preparation of the legal documents." They further alleged that the fee charged for preparing legal documents by non-lawyers "constitutes the illegal practice of law in Arkansas." The Palasacks claimed that the "[d]efendants should not be permitted to unjustly enrich themselves at the expense of the Plaintiffs and the Class, but should be required to make restitution for all funds illegally received and retained."

It subsequently was determined that the charge to the Palasacks was not a documentary fee but was a charge for a service package. Because the Palasacks no longer qualified as members of the class, the appellees' complaint was amended on July 22, 2003, to name appellee Otis Campbell as the new class representative.¹ Campbell had purchased a 2000 Ford Focus from North Point Ford on March 5, 2001, at which time he paid a $98 documentary fee. After two hearings in the spring of 2005, the circuit court entered an order on November 14, 2005, in which it granted the appellees' motion for class certification.

In its order, the circuit court found that since November 2000, the appellants had sold 10,000 or more vehicles, in which the documentary fee had been charged. Because the court concluded that thousands of customers had potential claims regarding the documentary fee, it found that the numerosity requirement for class certification was satisfied, and the appellants did not contest that point. The circuit court further found that the typicality, adequacy, predominance, and superiority criteria of Arkansas Rule of Civil Procedure 23 (2006) had been satisfied.

The circuit court defined the class as follows:

All persons that paid Defendants in Arkansas a documentary fee or administrative fee since December 31, 1997. Excluded from this class are: (1) present and former employees, officers, and directors of Defendants, and (2) any class member who timely elects to be excluded from the class pending further orders of the Court.

Asbury Automotive now appeals from the circuit court's order certifying the class.

The certification of a class action is governed by Arkansas Rule of Civil Procedure 23. See Ark. R. Civ. P. 23 (2006). This court has held that "[t]he determination that the class-certification criteria have been satisfied is a matter within the broad discretion of the trial court, and this court will not reverse the trial court's decision absent an abuse of that discretion." Lenders Title Co. v. Chandler, 358 Ark. 66, 71-72, 186 S.W.3d 695, 698 (2004). When reviewing a class-certification order, we focus on the evidence contained in the record to determine whether it supports the circuit court's conclusion regarding certification. See id. We have also said that "[we] will not delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met." Id. at 72, 186 S.W.3d at 698.

There are six criteria that must be met before a suit may be certified as a class action under Rule 23:(1) numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (6) superiority. See Ark. R. Civ. P. 23 (2006). In this case, Asbury Automotive contests the circuit court's findings regarding adequacy, typicality, predominance, and superiority. Alternatively, Asbury Automotive asserts that the circuit court erred in defining the class.

I. Adequacy

Asbury Automotive first contends that Otis Campbell is not an adequate class representative. The requirement of adequacy under Rule 23 specifically states that the "representative parties will fairly and adequately protect the interests of the class." Ark. R. Civ. P. 23(a)(4) (2006).² This court has previously interpreted Rule 23(a)(4) as requiring the following three elements:

(1) the representative counsel must be qualified, experienced and generally able to conduct the litigation; (2) that there be no evidence of collusion or conflicting interest between the representative and the class; and (3) the representative must display some minimal level of interest in the action, familiarity with the practices challenged, and ability to assist in decision making as to the conduct of the litigation.

Amer. Abstract & Title Co. v. Rice, 358 Ark. 1, 12, 186 S.W.3d 705, 712 (2004); see also Mega Life & Health Ins. Co. v. Jacola, 330 Ark. 261, 954 S.W.2d 898 (1997).

Asbury Automotive challenges whether Campbell is an adequate representative for two reasons. First, it asserts that Campbell does not qualify because he was solicited by class counsel to be a class representative after the lawsuit was filed. According to Asbury Automotive, until Campbell received a solicitation letter from the class's counsel, he was not aware of any potential claim he might have relating to the documentary fee, he had no interest in pursuing a claim regarding the documentary fee, and he had no concerns or complaints regarding his vehicle purchase from the appellants. Asbury Automotive adds that this solicitation violates Rule 7.3 of the Arkansas Rules of Professional Conduct as well as the rules governing class actions.³

The second reason Campbell does not qualify, according to Asbury Automotive, is that he lacks familiarity with the facts of the case and that he refused to answer certain questions at his deposition and was evasive. It contends that Campbell barely could recall the details of the transaction that gave rise to his being named as a plaintiff in this class-action suit. In addition, it maintains that Campbell's late entrance into the case is not indicative of an informed representative. It adds that whatever Campbell's understanding of the case may be, it is clear from his deposition testimony that he had no disagreement with the purchase of his vehicle until well after the suit was filed and shortly after the class counsel discovered their need for him.

In Direct General Insurance Co. v. Lane, 328 Ark. 476, 944 S.W.2d 528 (1997), this court said that the "`adequacy of representation' element is satisfied if the representative displays a minimal level of interest in the action, familiarity with the challenged practices, and ability to assist in litigation decisions." 328 Ark. at 485, 944 S.W.2d at 532 (emphasis added); see also Amer. Abstract and Title Co., supra; Mega Life, supra; Union Nat'l Bank v. Barnhart, 308 Ark. 190, 823 S.W.2d 878 (1992). In Lane, the class representative testified at the certification hearing that she understood the responsibility she was undertaking by agreeing to represent the class. She additionally said that she had discussed the matter with her mother, that she had visited with her attorney several times to discuss the case, and that she had reviewed the relevant documents. She testified that she decided to become a class representative out of her desire to prevent Direct General Insurance from continuing to charge excessive interest and fees and that she hoped to recover any amount found to be an overcharge. Additionally, we noted that the class counsel in that case had extensive experience in conducting class-action litigation.

In Barnhart, supra, the appellants advanced an argument similar to that of Asbury Automotive. Like Campbell, Ms. Barnhart became the class representative after other former class representatives withdrew from the case. The appellants in Barnhart argued that "the action [was] propelled not by Ms. Barnhart, but by `a loose band of lawyers who want to be in court. . . .'" Barnhart, 308 Ark. at 194, 823 S.W.2d at 880. They cited two violations of the Arkansas Rules of Professional Conduct, including Model Rule 7.3, and further maintained that several factors indicated that Ms. Barnhart was "a mere `pawn in an action being maintained by counsel.'" Id. at 194-95, 823 S.W.2d at 880.

This court first noted in Barnhart that it was not convinced that the appellants' evidence supported their assertion that Ms. Barnhart was actively recruited as part of her attorneys' attempts to litigate for their own interests. We further held that "absent more egregious conduct on the part of the class attorneys, we do not believe the rights of the plaintiffs should be prejudiced by denying them class status." Id. at 195, 823 S.W.2d at 880. This court also added that "[w]hen it otherwise appears that the representative plaintiff will `fairly and adequately protect the interests of the class,' allegations of attorney...