Fogie v. Rent-A-Center, Inc.
| Decision Date | 02 March 1993 |
| Docket Number | Civ. No. 4-92-533. |
| Citation | 867 F. Supp. 1398 |
| Parties | Vickie FOGIE and Joan Leonard, on behalf of themselves and all others similarly situated, Plaintiffs, v. RENT-A-CENTER, INC., a Kansas Corporation, TEUSA Holdings, Inc., a Delaware corporation, Thorn EMI (USA) Inc., a Delaware corporation, and Thorn EMI North America Holdings, Inc., a Delaware corporation, Defendants. |
| Court | U.S. District Court — District of Minnesota |
COPYRIGHT MATERIAL OMITTED
Seymour J. Mansfield, Richard Johnathon Fuller, Mansfield & Tanick, David L. Ramp, Legal Aid Society, Phillip Allen Cole, Mark Stageberg, Lommen Nelson Cole & Stageberg, Timothy Lee Thompson, Legal Aid Soc. of Mpls., Minneapolis, MN, Joel W. Lavintman, Goggins & Lavintman, Mendota Heights, MN, for Vickie Fogie, Joan Leonard, on behalf of themselves and all others similarly situated, Angela Adams,.
J. Patrick McDavitt, John G. Troyer, Briggs & Morgan, Minneapolis, MN, Kelly W. Schemenauer, Peter E. Strand, Shannon L. Spangler, John C. Dods, Shook Hardy & Bacon, Kansas City, MO, for Rent-A-Center, Inc.
J. Patrick McDavitt, Briggs & Morgan, Minneapolis, MN, Peter E. Strand, Shannon L. Spangler, John C. Dods, Shook Hardy & Bacon, Kansas City, MO, for TEUSA Holdings, Inc., Thorn EMI (USA) Inc., Thorn EMI North America Holdings, Inc., Thorn EMI, PLC, a United Kingdom ltd. liability co.
Plaintiffs brought this action against Rent-A-Center, Inc., TEUSA Holdings, Inc., Thorn EMI (USA) Inc., and Thorn EMI North America Holdings, Inc. (collectively RAC) alleging that RAC's rent to own contracts are consumer credit sales within the meaning of the Consumer Credit Sales Act (CCSA), Minn.Stat. § 325G.15, and violate the Minnesota deceptive and unlawful trade practices statutes, Minn.Stat. §§ 325F.69 and 325D.44, consumer protection statutes, Minn. Stat. § 325G.16, subd. 4, 336.2-201, .2-207, .9-503, and .9-504, the Truth in Lending Act, 15 U.S.C. § 1601, et seq. and Racketeer Influenced and Corrupt Organization (RICO), 18 U.S.C. § 1961, et seq. Plaintiffs also allege that the standard RAC contract is unconscionable and usurious. They move for class certification and summary judgment declaring that the CCSA, Minn.Stat. § 325G.15 applies to the standard RAC contract.1
Little discovery has been conducted in this case and these motions rest primarily on the pleadings. RAC rents consumer goods through renewable leases. The leases allow the customer to become the owner of the rented property upon payment of a specified number of installments. RAC normally discloses the fair market value of its goods as 55% of the total price charged to the consumer, including the sales tax.
On September 19, 1990, Vickie Fogie visited RAC's West Broadway store to look for living room furniture and selected a five piece wicker living room set. Before she executed the rent to own contract, a RAC employee asked her to provide her address, length of residence, landlord, employment, income, source of income, and the names and addresses of four friends and two relatives in the Minneapolis area. After RAC verified this information, Fogie and RAC executed the contract for the used furniture. Under the contract, Fogie was required to pay $17.03 per week for 87 weeks or $73.79 per month for 20 months before she owned the furniture. RAC disclosed the furniture's fair market value as $814.89.
Plaintiffs seek to certify the following class:
All persons who have entered into so-called "rent-to-own" contracts in Minnesota with the Defendants, or any of their predecessors or successor in interest in a written form substantially similar to that contained in Appendix No. 1, from or after August 1, 1990.2
Plaintiffs argue that class certification is appropriate under Federal Rule of Civil Procedure 23. They maintain that class certification requirements are met under Rule 23(b)(1) because there is a risk of inconsistent adjudication, under Rule 23(b)(2) because they seek equitable relief, and under Rule 23(b)(3) because common questions of law and fact predominate over individual questions and a class action is the best method for fair and efficient adjudication.
Defendants do not oppose conditional certification of a class under Rule 23(b)(2) for claims alleging violations of Minnesota consumer protection statutes, violations of the Truth in Lending Act, usury, illegal contract, and collection of unlawful debt in violation of RICO. They consent to certification, however, only if the class is limited to customers who actually purchased goods. Defendants oppose certification for claims alleging deceptive and unlawful trade practices, unconscionability, and RICO violations predicated on mail or wire fraud because they involve issues of individual fact. They argue that class certification under either 23(b)(1) and (b)(3) would be inappropriate, but that a test case approach should be used if one were certified under the latter section.
Plaintiffs reply that any class should include all customers who entered into rental purchase agreements regardless of whether they actually purchased the leased products. They also argue that claims for deceptive and unlawful trade practices, unconscionability, and RICO violations predicated on mail or wire fraud are appropriate for class certification because they involve common questions of law and fact. They oppose a test case approach because it would unnecessarily limit discovery.
The party seeking class certification bears the burden of establishing that the case is certifiable as a class action. Bishop v. Committee on Professional Ethics and Conduct of the Iowa State Bar Ass'n., 686 F.2d 1278, 1288 (8th Cir.1982). If the moving party does not conclusively demonstrate that the Rule 23 requirements are satisfied on the pleadings alone, then the court should allow the parties to conduct discovery and present further evidence. Walker v. World Tire Corp., 563 F.2d 918, 921 (8th Cir.1977). The record for this motion consists of the pleadings and a few affidavits regarding the Rule 23(a) requirements. The defendants argue that the issue of class certification should be deferred until a more substantial record is developed through discovery, but they have not articulated any specific facts which are necessary before the court decides the class certification issue. The record before the court is adequate to decide whether a class should be certified and plaintiffs have established that they are entitled to class certification.
There are four threshold requirements for a class action:
(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interest of the class.
Plaintiffs have established that this case satisfies all four preliminary requirements. First, joinder is impracticable because there are potentially thousands of plaintiffs. See, e.g., Arkansas Educ. Ass'n. v. Board of Educ., 446 F.2d 763, 765-66 (8th Cir.1971). Second, there are common issues of both law and fact. All class members signed the same contract and one of the issues presented is whether Minn.Stat. § 325G.15 applies to this form contract. Third, the named plaintiffs signed the same contract as other class members, and their claims are typical of those of the entire class. Finally, the named plaintiffs are adequate class representatives. To be adequate the plaintiffs and their attorneys must vigorously prosecute the action. Herbst v. Able, 47 F.R.D. 11, 15 (S.D.N.Y.1969). The attorneys for the plaintiffs have vigorously prosecuted this action and there is no reason to believe that the named plaintiffs will not fairly and adequately protect the interests of the class.
Plaintiffs must also establish that the proposed class satisfies at least one of the three sets of requirements presented in Fed. R.Civ.P. 23(b). Certification is permissible under (b)(1) if the prosecution of separate actions by individual members of the class would create a risk of:
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or (B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests.
This case does not fit under 23(b)(1)(A) because plaintiffs are not suing for different and incompatible relief. See Trecker v. Manning Implement, Inc., 73 F.R.D. 554, 560 (N.D.Iowa 1976). Moreover, Rule 23(b)(1)(A) was designed to protect the party opposing the class and the defendant may waive it by opposing certification. Chmieleski v. City Products Corp., 71 F.R.D. 118, 155 (W.D.Mo.1976).
Rule 23(b)(1)(B) was designed to protect plaintiffs when there is a limited fund to satisfy judgment, and in this case plaintiffs have not produced evidence that there is a limited fund to satisfy judgment. The class may therefore not be certified under Rule 23(b)(1)(B).
Certification under Rule 23(b)(2) requires that:
the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.
RAC's standard form contract is generally applicable to the class and defendants agree that the class should be certified for claims alleging violations of Minnesota consumer protection statutes, violations of the Truth in Lending Act, usury, illegal contract, and collection of unlawful debt in violation of RICO under 23(b)(2). They argue,...
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