National Cash, Inc. v. Loveless

• Decision Date: 10 March 2005
• Docket Number: No. 04-565.,04-565.
• Citation: 205 S.W.3d 127
• Parties: NATIONAL CASH, INC., Charles A. Hawbaker and Paul Mather, Appellants, v. Regayla LOVELESS, Appellee.
• Court: Arkansas Supreme Court

205 S.W.3d 127

NATIONAL CASH, INC., Charles A. Hawbaker and Paul Mather, Appellants, v. Regayla LOVELESS, Appellee.

No. 04-565.

Supreme Court of Arkansas.

March 10, 2005.

COPYRIGHT MATERIAL OMITTED

Ralph C. Williams, Bentonville, for appellants.

The Nixon Law Firm, by: David G. Nixon and Theresa L. Pockrus, Fayetteville, for appellee.

JIM HANNAH, Chief Justice.

Appellants National Cash, Inc., Paul Mather, and Charles Hawbaker appeal the Benton County Circuit Court's certification of a class of plaintiffs, including appellee class representative Regayla Loveless, in this class-action lawsuit. The appellants further appeal the circuit court's denial of their motion to compel arbitration. We find no error and, accordingly, we affirm.

Regayla Loveless and Deborah Ratliff¹ filed a complaint, on behalf of themselves and on behalf of a class of similarly situated persons who have done business with National Cash, Paul Mather, individually, and Charles Hawbaker, individually, who engage in the check-cashing business. In a typical transaction, the customer would use the services of National Cash by presenting a check to National Cash in the amount of $177.78, for which the customer received $150 in return. The interest or fee of $27.78 allowed the customer to keep the $150 for two weeks. At the end of the two-week deferment period, the customer could then redeem the check by presenting cash to National Cash in the amount of $177.78, write another check for deferred deposit after paying additional fees, or allow the check to be deposited.

In the complaint, Loveless argued that the deferred presentment was, in fact, a loan, and that the service fees charged in connection with the check-cashing transactions are usurious, as provided in Article 19, Section 13 of the Arkansas Constitution. In addition, Loveless argued that she and others similarly situated should be allowed to pierce the corporate veil and sue Mather and Hawbaker individually, as the two were the only shareholders of National Cash.

On September 19, 2002, Loveless filed a motion for class certification. In its response, National Cash argued that a class action was not proper because some of the members of the proposed class "would be subject to different defenses, such as estoppel or laches." Further, National Cash filed a "Motion for Transfer and Stay Pending Arbitration." Citing its "Additional Terms and Conditions" agreement, National Cash contended that all parties mutually agreed to seek adjudication of any disputes in small claims court or, in the event that the small claims court did not have jurisdiction of a matter, the parties agreed to resolve disputes by arbitration.

Following a hearing, the circuit court granted the motion for class certification. In addition, the circuit court denied National Cash's motion to compel arbitration.

Class Certification

This court reviews a circuit court's grant of class certification under an abuse-of-discretion standard. Tay-Tay, Inc. v. Young, 349 Ark. 675, 80 S.W.3d 365 (2002); The Money Place, LLC v. Barnes, 349 Ark. 518, 78 S.W.3d 730 (2002). In reviewing a class-certification order, this court focuses on the evidence in the record to determine whether it supports the circuit court's conclusion regarding certification. Arkansas Blue Cross & Blue Shield v. Hicks, 349 Ark. 269, 78 S.W.3d 58 (2002). However, this court will not delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met. Id.

The six criteria for class certification are set out in Ark. R. Civ. P. 23(a) and (b): (1) numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (6) superiority. See USA Check Cashers of Little Rock, Inc. v. Island, 349 Ark. 71, 79, 76 S.W.3d 243, 247 (2002). In this appeal, National Cash challenges the circuit court's finding that the superiority requirement is met in this action. This court has held with respect to superiority that the requirement is satisfied if class certification is the more "efficient" way of handling the case and if it is fair to both sides. USA Check Cashers, 349 Ark. at 82, 76 S.W.3d at 248-49. Real efficiency can be had if common, predominating questions of law or fact are first decided, with cases then splintering for the trial of individual issues, if necessary. Id. at 82, 76 S.W.3d at 249.

In the order certifying the class, the circuit court found that the certification of the action as a class action is superior to handling each cause of action individually for the following reasons:

(1) It is more efficient;

(2) It is judicially inefficient to require in excess of 2,200 potential litigants to individually litigate their claims, considering the pervasiveness of the overarching issue of Defendant National Cash's uniform practice of requiring a fee in exchange for an agreement to defer presentment of the customer's check for payment and whether that fee is usurious interest;

(3) It is fair to both sides; and

(4) The potential recovery to each class member is expected to be relatively small and would not justify contingency fee cases nor cases in which attorneys charge on an hourly basis.

* * *

National Cash argues that class certification is not the more efficient way to handle disputes when the benefits to the class members are less than each class member could obtain in an individual lawsuit. To support its proposition, National Cash argues that settlement agreements in two recent cases show that class members "were to receive a maximum of 80% of what they could prove themselves to be entitled to." This argument is unpersuasive. As Loveless points out, National Cash cites no authority in support of its assertion that a comparison of settlements achieved in other class actions is a criterion for determining whether a class should be certified. When a party cites no authority or convincing argument on an issue, and the result is not apparent without further research, the appellate court will not address the issue. Raley v. Wagner, 346 Ark. 234, 57 S.W.3d 683 (2001). Because National Cash has failed to provide this court with a convincing argument on the issue, we will not address this argument on appeal.

National Cash also argues that pursuing a class-action lawsuit is not in Loveless's best interest because if she prevails in this lawsuit as a part of a class, she and other class members will receive only a fraction of what they could individually recover in small claims court. National Cash asserts that if all of the disputed transactions are found to be loans and the fees charged are found to be usurious, it will not have the assets to pay the full amount of all claims. Whether Loveless and others will receive the full amount of recovery due or whether National Cash will have assets to satisfy all the claims remains to be seen. Again, we will not delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met. Hicks, supra.

National Cash next argues that due process requires that prior to class certification, defendants should be entitled to question each member of the proposed class and determine if any defenses are available for each member. Indeed, National Cash may have defenses available to it as to various individual members, but this is no reason to deny certification. See USA Check Cashers, supra. The mere fact that individual issues and defenses may be raised by the company regarding the recovery of individual members cannot defeat class certification where there are common questions concerning the defendant's alleged wrongdoing which must be resolved for all class members. USA Check Cashers, 349 Ark. at 83, 76 S.W.3d at 249-50; see also Tay-Tay, supra; The Money Place, supra. In the instant case, the circuit court found that the predominant issue is whether the fees assessed by National Cash in exchange for deferring presentment of checks were usurious. An attempt to raise defenses at this stage is an attempt to delve into the merits of the case. This we will not do. See, e.g., THE/FRE, Inc. v. Martin, 349 Ark. 507, 78 S.W.3d 723 (2002); USA Check Cashers, supra;. We hold that the circuit court did not abuse its discretion in finding that a class action is the superior method for adjudicating class members' claims.

We now turn to the appellants' argument that the circuit court erred in certifying the class action against individual defendants Mather and Hawbaker under the theory of piercing the corporate veil. We have previously held that the issue of whether individual defendants should remain in a class-action lawsuit on the theory of piercing the corporate veil is inappropriate in an appeal of an order certifying a class action. See THE/FRE, 349 Ark. at 515, 78 S.W.3d at 728. That is an issue to be resolved at a trial on the merits. Id. The subject of this appeal deals strictly with whether a class was properly certified. Id. We will not delve into the merits of a case when reviewing an order denying or granting class certification. Id.; USA Check Cashers, supra.

Arbitration

An order denying a motion to compel arbitration is an immediately appealable order. Ark. R.App. P.-Civ. 2(a)(12); E-Z Cash Advance, Inc. v. Harris, 347 Ark. 132, 60 S.W.3d 436 (2001). We review a circuit court's order denying a motion to compel de novo on the record. E-Z Cash, supra. We note that the arbitration agreement in this case is identical to the arbitration agreement we found invalid and unenforceable in E-Z Cash due to the agreement's lack of mutuality. National Cash concedes that the arbitration agreements are identical; however, National Cash contends that this court may not have had enough facts in E-Z Cash to determine the mutuality of the agreement. The agreement provides in relevant part:

ADDITIONAL TERMS AND CONDITIONS OF THIS AGREEMENT

1. RETURNED CHECK CHARGE AND COLLECTION COSTS. If the Check is returned to us from your financial institution...