Baker v. Autos, Inc.

Decision Date24 March 2015
Docket NumberNo. 20140033.,20140033.
Citation860 N.W.2d 788
PartiesDarilyn BAKER, individually, and on behalf of all other persons similarly situated, Plaintiff and Appellant v. AUTOS, INC., a North Dakota Corporation, d/b/a Global Auto; RW Enterprises, Inc., a North Dakota Corporation; Robert Opperude, an individual; Randy Westby, an individual; and James Hendershot, an individual, Defendants and Appellees.
CourtNorth Dakota Supreme Court

Larry M. Baer (argued), West Des Moines, IA, and Robert G. Ackre (appeared), Cando, ND, for plaintiff and appellant.

Kraig A. Wilson, Grand Forks, ND, for defendants and appellees Autos, Inc., d/b/a Global Auto, Robert Opperude and James Hendershot.

Erich M. Grant (argued) and Bryan L. Van Grinsven (on brief), Minot, ND, for defendants and appellees RW Enterprises, Inc. and Randy Westby.

Opinion

KAPSNER, Justice.

[¶ 1] Darilyn Baker (Baker) appeals from a district court order denying her motion for class action certification under N.D.R.Civ.P. 23. Because we conclude the district court erred in applying the law to the thirteen sub-factors of the fair and efficient adjudication factor, we reverse the district court's order denying certification and remand with instructions to reconsider the sub-factors in light of our holding.

I

[¶ 2] In 2007, Baker purchased a 2003 Pontiac Grand Am automobile from Autos, Inc., d.b.a. Global Auto. Baker financed the purchase of the Grand Am by trading in her old vehicle and by entering into a retail installment sales contract with Global Auto. The total balance of the Grand Am, after the credit Baker received for her vehicle trade-in, was $5,470.94. The total included a “document administration fee” of $195 and a “loan fee” of $200. Baker agreed to repay the loan in thirty monthly payments of $247.08. The retail installment contract also provided that if the payment was late, Baker would be charged $25.

[¶ 3] Baker was late on making some of her required monthly payments, and the vehicle was repossessed. Before Baker defaulted on her loan, Global Auto assigned Baker's contract to RW Enterprises. After the vehicle was repossessed, Baker filed suit in state district court alleging Global Auto and RW Enterprises' sales and lending practices violated state usury law, among other claims. Baker also sued Robert Opperude and James Hendershot, the principal owners of Global Auto, and Randy Westby, the principal owner of RW Enterprises.

[¶ 4] The defendants removed the case to the U.S. District Court for the District of North Dakota based on federal question jurisdiction. In federal court, Baker filed a motion seeking certification of a class action. While the motion was pending, Baker amended her complaint, effectively eliminating her claims under federal law. Thereafter, the federal district court determined only state law issues remained, and remanded the case back to state court without ruling on the motion to certify a class.

[¶ 5] Back in state district court, Baker filed a motion to have the suit certified as a class action for all putative purchasers who, subject to the applicable statute of limitations period, may have suffered an injury as a result of Global Auto and RW Enterprises' business practices. Baker alleged the “loan fee,” the “document administration fee,” and the late payment charge violated North Dakota usury law and the North Dakota Retail Installment Sales Act. Baker argued the defendants' alleged violations of state usury law and the Retail Installment Sales Act were universal and affected approximately five hundred retail installment sales contracts. A hearing was held on the motion for class certification. Following the hearing, the district court entered an order denying the motion for class certification. The court did not rule on the merits of the case.

II

[¶ 6] “An order certifying or refusing to certify an action as a class action is appealable.” N.D.R.Civ.P. 23(d)(3). This Court has previously summarized the appropriate standard of review of orders certifying or denying class status:

The trial court has broad discretion in determining whether to certify a class action under N.D.R.Civ.P. 23. The trial court's decision to certify a class action will not be overturned on appeal unless the court has abused its discretion. A trial court abuses its discretion only when it acts in an unreasonable, arbitrary, or unconscionable manner, when its decision is not the product of a rational mental process leading to a reasoned decision, or when it misinterprets or misapplies the law.

Howe v. Microsoft Corp., 2003 ND 12, ¶ 6, 656 N.W.2d 285.

[¶ 7] Rule 23, N.D.R.Civ.P., is a remedial rule for efficient resolution of the claims or liabilities of many individuals in a single action, eliminating repetitious litigation and possibly inconsistent adjudications involving common questions, related events, or requests for similar relief....” Bice v. Petro–Hunt, L.L.C., 2004 ND 113, ¶ 7, 681 N.W.2d 74. The rule furnishes “an effective procedure for those whose economic position is such that it is unrealistic to expect them to seek to vindicate their rights in separate lawsuits.” Id.

[¶ 8] Rule 23, N.D.R.Civ.P., provides that a trial court may permit class certification if the four following requirements are satisfied:

1. The class is so numerous or so constituted that joinder of all members, whether or not otherwise required or permitted, is impracticable;
2. There is a question of law or fact common to the class;
3. A class action should be permitted for the fair and efficient adjudication of the controversy; and
4. The representative parties fairly and adequately will protect the interests of the class.

Howe, 2003 ND 12, ¶ 8, 656 N.W.2d 285; N.D.R.Civ.P. 23(a) and (b). The four factors are often simply referred to as numerosity, commonality, fair and efficient adjudication, and adequate representation. See, e.g., Werlinger v. Champion Healthcare Corp., 1999 ND 173, 598 N.W.2d 820.

[¶ 9] “If the court finds the first two requirements have been met, it must decide whether a class action should be permitted for a fair and efficient adjudication of the controversy, and in doing so N.D.R.Civ.P. 23(c) lists thirteen factors for the court to consider.” Mann v. N.D. Tax Comm'r, 2007 ND 119, ¶ 33, 736 N.W.2d 464. “The trial court must weigh the competing factors, and no one factor predominates over the others.” Rose v. United Equitable Ins. Co., 2002 ND 148, ¶ 9, 651 N.W.2d 683. We have previously elaborated:

In most cases some of the thirteen factors will weigh against certification and some will weigh in favor. It is for the trial court, employing its broad discretion, to weigh the competing factors and determine whether a class action will provide a fair and efficient adjudication of the controversy. Thus, even if [some] of the factors weigh against certification, that does not preclude the court from certifying the class action if, in its opinion, those factors are outweighed by other factors supporting certification.

Id. Weighing the various factors is separate and independent from the ultimate inquiry whether a class can prove its claim. See Werlinger, 1999 ND 173, ¶ 18, 598 N.W.2d 820. “It is well settled that a district court must make a determination of class certification without delving into the merits of the case. The question is whether the requirements to certify a class action have been met, not whether the plaintiffs will prevail on the merits.” Id. (citation omitted).

[¶ 10] This Court has previously addressed class certification where the underlying cause of action is usury. In Rogelstad v. Farmers Union Grain Terminal Ass'n Inc., 226 N.W.2d 370, 376 (N.D.1975), this Court held that the district court abused its discretion in denying certification to a group of farmers who were allegedly charged usurious interest rates by a grain elevator association. The district court determined common questions of law or fact did not exist, as there were some putative class members with implied agreements, some with promissory notes, and others with “some other type [of agreement].” Id. at 373. The district court also reasoned, “If existence of usury is dependent upon promissory note or other written agreement, then interpretation of those express contracts becomes all important to the resolution of the case.” Id.

[¶ 11] On appeal, this Court reversed the district court's order denying certification and remanded with instructions that the class be certified. Rogelstad, 226 N.W.2d at 378–79. This Court held commonality existed because there were common questions of fact: all the plaintiffs could “offer the same evidence as to the interest rate charged, the computer bookkeeping methods of GTA [grain elevator association], the relationship between GTA headquarters and local elevators, and billing methods, among other things.” Id. at 378. We also noted the case presented a common legal question: ‘Did GTA, for “numerous” patrons with grain purchase contracts, utilize an accounting procedure for billing interest on advances that entailed a usurious rate of interest, resulting in a charge or collection of usury?’ Id. Finally, once the evidence was presented as to the common questions of fact, and a disposition was made as to the question of law, we concluded that “either GTA would be entitled to a decision in its favor or the class action plaintiffs would need only to prove their individual damages.” Id.

[¶ 12] There are several similarities between the instant case and Rogelstad. Most significantly, both cases involve the underlying claim of usury, and whether miscellaneous contracts and terms provide sufficient common questions of law or fact. Although the Rogelstad Court was applying a class action rule that has since been amended, the substance of the rule has not changed to such an extent that Rogelstad is no longer good law. See Saba v. Counties of Barnes, Benson, Burleigh, Eddy, Foster, Griggs, Kidder, Nelson, & Wells, 307 N.W.2d 590, 593 (N.D.1981). Rogelstad remains good law and...

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3 cases
  • Baker v. Autos Inc.
    • United States
    • North Dakota Supreme Court
    • September 20, 2017
    ...court denied her motion for class certification, a majority of this Court reversed and remanded for reconsideration. Baker v. Autos, Inc. , 2015 ND 57, 860 N.W.2d 788.[¶3] The district court subsequently granted Baker's motion for class certification and thereafter partially granted and par......
  • Baker v. Autos, Inc.
    • United States
    • North Dakota Supreme Court
    • February 18, 2022
    ...of usury, partnership, and acting in concert. We affirm.I[¶2] This case has been before this Court three times. Baker v. Autos, Inc. , 2015 ND 57, 860 N.W.2d 788 (" Baker I ") ; Baker v. Autos, Inc. , 2017 ND 229, 902 N.W.2d 508 (" Baker II "); and Baker v. Autos, Inc. , 2019 ND 82, 924 N.W......
  • Baker v. Autos, Inc., 20180238
    • United States
    • North Dakota Supreme Court
    • March 15, 2019
    ...class certification, and a majority of this Court reversed the denial and remanded for reconsideration of her motion. Baker v. Autos, Inc. , 2015 ND 57, 860 N.W.2d 788.[¶6] The district court subsequently granted class certification consisting of more than 500 retail installment buyers, and......

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