Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-16132/USCOURTS-ca9-14-16132-0/pdf.json

Parties Involved:
Lewis Bae
Appellee
Verena Baumgartner
Appellee
Sam Buono
Appellant
Erin Campbell
Appellee
Jay Cohen
Appellant
Dietz Towing Inc.
Appellee
Terry Jordan
Appellee
Just Film, Inc.
Appellee
Sara Krieger
Appellant
MBF Leasing LLC
Appellant
Leonard Mezei
Appellant
Northern Funding, LLC
Appellant
Northern Leasing Systems, Inc.
Appellant
Rainbow Business Services
Appellee
SKS Associates LLC
Appellant
Jerry Su
Appellee
The Rose Dress Inc.
Appellee
Volker Von Glasenapp
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JUST FILM, INC.; RAINBOW

BUSINESS SERVICES, DBA

PRECISION TUNE AUTO CARE;

VOLKER VON GLASENAPP; JERRY

SU; DIETZ TOWING INC.; THE

ROSE DRESS INC.; VERENA

BAUMGARTNER; TERRY JORDAN;

LEWIS BAE; ERIN CAMPBELL,

Plaintiffs-Appellees,

v.

SAM BUONO; JAY COHEN; SARA

KRIEGER; MBF LEASING LLC;

LEONARD MEZEI; NORTHERN

FUNDING, LLC; NORTHERN

LEASING SYSTEMS, INC.; SKS

ASSOCIATES LLC,

Defendants-Appellants.

No. 14-16132

D.C. No.

4:10-cv-01993-CW

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2 JUST FILM V. BUONO

RAINBOW BUSINESS SERVICES,

DBA Precision Tune Auto Care;

VOLKER VON GLASENAPP; JERRY

SU; DIETZ TOWING INC.; THE

ROSE DRESS INC.; VERENA

BAUMGARTNER; TERRY JORDAN;

LEWIS BAE; ERIN CAMPBELL,

Plaintiffs-Appellees,

v.

SAM BUONO; JAY COHEN; SARA

KRIEGER; MBF LEASING LLC;

LEONARD MEZEI; NORTHERN

FUNDING, LLC; NORTHERN

LEASING SYSTEMS, INC.; SKS

ASSOCIATES LLC,

Defendants-Appellants.

No. 14-16133

D.C. No.

4:10-cv-01993-CW

OPINION

Appeal from the United States District Court

for the Northern District of California

Claudia Wilken, District Judge, Presiding

Argued and Submitted September 15, 2016

San Francisco, California

Filed February 7, 2017

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JUST FILM V. BUONO 3

Before: Ronald M. Gould and Marsha S. Berzon, Circuit

Judges, and John R. Tunheim,* Chief District Judge.

Opinion by Judge Gould

SUMMARY**

Class Certification

The panel affirmed the district court’s orders certifying

two national classes pursuant to Federal Rule of Civil

Procedure 23(b)(3) in an action under RICO, the Fair Credit

Reporting Act, and state law.

Small businesses and small business owners who leased

“point of sale” credit and debit card processing equipment

alleged that the “Leasing Defendants,” a group of entities that

financed their acquisition of the equipment, defrauded them

in a scheme that involved equipment leases and credit card

processing services.

The panel held that the district court did not abuse its

discretion in certifying the “SKS Post-Lease Expiration

Class” and the “PropertyTax Equipment Cost Basis Class” to

pursue claims under RICO and California state law. The

panel held that plaintiffs established typicality, commonality,

* The Honorable JohnR. Tunheim, Chief United States District Judge

for the District of Minnesota, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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4 JUST FILM V. BUONO

and predominance for the SKS Post-Lease Expiration Class. 

The plaintiffs established commonality, predominance, and

superiority for the Property Tax Equipment Cost Basis Class.

COUNSEL

Thomas J. Kavaler (argued), Cahill Gordon & Reindel LLP,

New York, New York; Robert D. Lillienstein and Scott E.

Silberfein, Moses & Singer LLP, New York, New York; Rod

Divelbiss, JRA Law Partners LLP, San Francisco, California;

for Defendants-Appellants.

Adam J. Gutride (argued) and Seth A. Safier, Gutride Safier

LLP, San Francisco, California, for Plaintiffs-Appellees.

OPINION

GOULD, Circuit Judge:

Plaintiffs-Appellees are small businesses and small

business owners who leased “point of sale” credit and debit

card processing equipment. They allege that DefendantsAppellants (the “Leasing Defendants”) defrauded them in a

scheme that involved equipment leases and credit card

processing services. Plaintiffs moved to certify five national

classes with California-based subclasses under Federal Rule

of Civil Procedure 23(b)(3). Of the five proposed national

classes, the district court certified two: the “SKS Post-Lease

Expiration Class” and the “Property Tax Equipment Cost

Basis Class.” Leasing Defendants appeal the district court’s

orders certifying these two classes.

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JUST FILM V. BUONO 5

Because we conclude that the district court did not abuse

its discretion in certifying the SKS Post-Lease Expiration

Class and the Property Tax Equipment Cost Basis Class, we

affirm.

I

A. Background

Plaintiffs are small businesses and small business owners

who leased “point of sale” credit and debit card processing

equipment, such as swipe terminals and pinpads. Plaintiffs

allege that Leasing Defendants, a group of entities who

financed their acquisition of the equipment, defrauded them

in a scheme involving equipment leases and credit card

processing services.

Plaintiffs describe the alleged fraud that swindled them as

follows: Credit and debit card transactions are processed

through financial networks called interchanges that are run by

entities such as Visa and Mastercard. Financial institutions

may become members of the interchange and can then sell

card processing services directly to merchants or indirectly

through entities known as Independent Sales Organizations

andMerchant Service Providers (“ISOs/MSPs”). ISOs/MSPs

must be licensed and registered with the financial institutions

and both Visa and Mastercard. Merchants must acquire

specific equipment necessary to process credit and debit card

transactions and must also pay a fee for each transaction.

Plaintiffs allege that Leasing Defendants conspired with

the ISO/MSP Defendants (the “Merchant Service

Defendants”) to market fraudulent, long-term equipment

leases and credit card processing services to merchants. 

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Merchant Service Defendants sought merchants and induced

them to enroll in such leases through “a series of deceitful

misrepresentations and forged documents,” whereby

merchants paid fees in excess of standard industry rates. The

high lease costs did not pay for the equipment, but instead,

primarily went toward Merchant Service Defendants’

commissions for securing the leases and toward Leasing

Defendants’ profits.

1. The Post-Lease Tax Collection Scheme

More specifically, Plaintiffs allege that in 2011, Leasing

Defendants conspired among themselves to defraud former

lessee merchants by collecting or attempting to collect taxes

that were not actually due or paid to any taxing authority. 

Leasing Defendants calculated property taxes using

inaccurate tax information, such as the wrong property tax

base and incorrect years that lessees were enrolled in the

leases, and compiled the results in a spreadsheet called

Schedule 1. Schedule 1 listed more than 107,000 merchants

owing over $10 million in back property taxes and

administrative fees. Leasing Defendants next instructed a

third party to send a form letter to the former lessees telling

them that Defendant SKS Associates LLC had acquired

collection rights, and deductions would occur based on the

purported back taxes merchants owed. Leasing Defendants

collected the taxes and fees from merchants with expired

leases by making misrepresentations to third party processors

and causing processors to authorize Automated Clearing

House (“ACH”) withdrawals from the merchants’ bank

accounts. Many accounts were actually debited, but Leasing

Defendants could only attempt to debit closed bank accounts

associated with expired leases. Leasing Defendants also

created a network of shell companies to “ensure[] that their

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JUST FILM V. BUONO 7

unlawful acts remain hidden and that victims and the courts

are unable to identify the responsible party.”

Plaintiff Erin Campbell does business as the Silicon

Valley Pet Clinic. Campbell seeks to represent a class of

lessees targeted under this post-lease expiration tax collection

scheme. She entered into a lease for a credit card terminal

with CIT Corporation and provided her bank account

information to make monthly payments of about $86.55. 

GCN Holdings, LLC later acquired Campbell’s lease, and

Defendant Northern Leasing Systems serviced the lease on

behalf of GCN. Campbell began taking steps to terminate her

lease in January 2007 and completed termination in June

2007. Yet, in March 2011, Campbell received a letter (the

“Notice of Debt”) from Defendant SKS Associates, which

Plaintiffs allege was written by Defendant Northern Leasing

Systems. The letter stated that SKS Associates had acquired

the rights and title to her old lease, that she owed $85.50 for

taxes and filing costs associated with her equipment, and that

the amount would be deducted on March 15, 2011. Campbell

called SKS Associates about the charge, and the customer

service representative stated that Leasing Defendants had

paid taxes on Campbell’s behalf and that she now owed them

for that payment. The representative warned Campbell that

if she did not pay, Leasing Defendants would report the

amount owed to credit bureaus and pursue other methods of

collection. Campbell alleges she spent several hours of her

normal work time investigating the claims in the letter and

paid an employee $7.50 to investigate the claims and compute

what Campbell paid during the lease.

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2. The Property Tax Scheme

Plaintiffs also allege that Leasing Defendants collected

property taxes using an inaccurate methodology: rather than

collecting property taxes based on the actual cost of

equipment (the “Equipment Cost”), Leasing Defendants

calculated taxes using a higher base—the stream of income

a lease generated (the “Acquisition Cost”). Plaintiffs contend

that the difference between the two costs is large. For

example, Plaintiff Just Film’s Acquisition Cost was

$5,429.19, and Plaintiff Dietz Towing’s Acquisition Cost was

$3,686. By contrast, the Equipment Cost was only $358.

Leasing Defendants collected property taxes using the

higher Acquisition Cost as the tax base for several years but

later switched to calculatingpropertytax using the Equipment

Cost as the tax base. Plaintiffs allege that after the switch,

Defendant Northern Leasing Systems never told merchants

that it had wrongly overcharged them for property taxes and

did not take any steps to refund merchants for its mistakes.

B. Procedural History

Plaintiffs filed a putative class action in state court, which

Defendants removed to federal court. In their Third

Amended ClassActionComplaint, Plaintiffs allege violations

of Sections 17200 and 17500 of the California Business and

Professions Code; violations of the Racketeer Influenced and

Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962;

violations of the Fair Credit Reporting Act (“FCRA”),

15 U.S.C. § 1681; breach of contract; deceit and/or

misrepresentation; negligent misrepresentation; and

conversion.

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JUST FILM V. BUONO 9

In April 2011, Plaintiffs filed an application for a

temporary restraining order, asking the district court to enjoin

Leasing Defendants’ collection of post-lease expiration taxes

and administrative fees. The district court granted the

application, and in June 2011, issued a preliminary

injunction. We affirmed the preliminary injunction order in

Just Film, Inc. v. Merchant Servs., Inc., 474 F. App’x 493

(9th Cir. 2012).

In December 2013, the district court granted a motion for

final approval of the class action settlement with respect to

the Merchant Service Defendants.

In May 2013, Plaintiffs filed a motion for class

certification, seeking to certify an overarching class and five

separate subclasses under Rule 23(b)(3). Two of the

subclasses were certified and are relevant to this appeal:

(1) the “SKS Post-Lease Expiration Class,” and (2) the

“PropertyTax Equipment Cost Basis Class.”1 The SKS PostLease Expiration Class is defined as “[a]ll persons and

businesses whose lease numbers appeared on Schedule 1”

with a national class pursuing RICO and RICO conspiracy

claims and a California subclass pursuing an Unfair

Competition Law (“UCL”) claim under Section 17200 of the

California Business and Professions Code. The Property Tax

Equipment Cost Basis Class is defined as “[a]ll persons and

businesses who [from March 26, 2006 to the present] paid

any Leasing Defendants property taxes based on a cost

greater than the ‘equipment cost’” with a national class

seeking to bring RICO, RICO conspiracy, fraud, and breach

1 The three non-certified classes—the “Excessive Lease Amount

Subclass,” the “Property Tax Fee Non-Disclosure Class,” and the “Credit

Monitoring Class”—are not at issue on appeal.

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10 JUST FILM V. BUONO

of contract claims, and a California subclass seeking to bring

negligent misrepresentation, breach of the duty of good faith

and fair dealing, and UCL claims.

The district court granted Plaintiffs’ class certification

motion in part on December 20, 2012. The court certified the

California subclass of the proposed SKS Post-Lease

Expiration Class to pursue a UCL claim; the Property Tax

Equipment Cost Basis Class to pursue a breach of contract

claim; and the California subclass of the Property Tax

Equipment Cost Basis Class to pursue a claim for breach of

the duty of good faith and fair dealing and a UCL claim.

Thereafter, Campbell filed a motion requesting leave to

file a motion for reconsideration of that order. The district

court granted Campbell’s motion for reconsideration, and on

March 17, 2014, the court certified the nationwide SKS PostLease Expiration Class to pursue RICO and RICO conspiracy

claims.

Leasing Defendants filed, pursuant to Federal Rule of

Civil Procedure 23(f), a petition for permission to appeal the

orders, which we granted. In this consolidated appeal,

Leasing Defendants challenge the district court’s class

certification orders, arguing that: (1) Plaintiffs did not

establish typicality, commonality, and predominance for the

SKS Post-Lease Expiration Class; and (2) Plaintiffs did not

establish commonality, predominance, and superiorityfor the

Property Tax Equipment Cost Basis Class.

II

We have jurisdiction under 28 U.S.C. § 1292(e). We

review a district court’s decision to certify a class for abuse

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JUST FILM V. BUONO 11

of discretion, and accord the district court “noticeably more

deference” when reviewing a grant of class certification than

when reviewing a denial. Abdullah v. U.S. Sec. Assocs., Inc.,

731 F.3d 952, 956 (9th Cir. 2013) (quoting Wolin v. Jaguar

Land Rover N. Am., LLC, 617 F.3d 1168, 1171 (9th Cir.

2010)). “An abuse of discretion occurs when the district

court, in making a discretionary ruling, relies upon an

improper factor, omits consideration of a factor entitled to

substantial weight, or mulls the correct mix of factors but

makes a clear error of judgment in assaying them.” Parra v.

Bashas’, Inc., 536 F.3d 975, 977–78 (9th Cir. 2008) (internal

quotation marks omitted). Despite the considerable deference

we give to a grant of class certification, it will always be

considered an abuse of discretion if the district court

materially misstates or misunderstands the applicable law. 

Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087,

1091 (9th Cir. 2010) (“[T]his court has oft repeated that an

error of law is an abuse of discretion.”) (emphasis in

original).

III

The district court certified two Rule 23(b)(3) classes. 

Gaining certification under that provision is a two-step

process. A plaintiff must first show that the class meets the

following four requirements of Rule 23(a):

(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;

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12 JUST FILM V. BUONO

(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 interests of the class.

Fed. R. Civ. P. 23(a); see Zinser v. Accufix Research Inst.,

Inc., 253 F.3d 1180, 1186 (9th Cir.), opinion amended on

denial of reh’g, 273 F.3d 1266 (9th Cir. 2001). Next, the

plaintiff must establish “that the questions of law or fact

common to class members predominate over any questions

affecting only individual members, and that a class action is

superior to other available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); see

Zinser, 253 F.3d at 1186. The party seeking class

certification bears the burden of demonstrating that the class

meets the requirements of Federal Rule of Civil Procedure 23. 

Mazza v. Am. Honda Motor Co., 666 F.3d 581, 588 (9th Cir.

2012) (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338,

350 (2011)).

A. The SKS Post-Lease Expiration Class

Campbell representstheSKS Post-Lease Expiration Class

in pursuing RICO, RICO conspiracy, and UCL claims. She

alleges that Leasing Defendants debited or attempted to debit

bank accounts of former lessees in a spurious tax collection

scheme. Leasing Defendants argue that Campbell’s RICO

claim is not typical of the class, and that Plaintiffs did not

establish commonality and predominance. To establish a

civil RICO claim, a plaintiff must establish: “(1) conduct

(2) of an enterprise (3) through a pattern (4) of racketeering

activity (known as predicate acts) (5) causing injury to

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JUST FILM V. BUONO 13

plaintiff’s business or property.” Living Designs, Inc. v. E.I.

DuPont de Nemours &Co., 431 F.3d 353, 361 (9th Cir. 2005)

(internal quotation marks omitted).

We address the challenges to class certification raised on

this appeal.

1. Typicality

Typicality focuses on the class representative’s

claim—but not the specific facts from which the claim

arose—and ensures that the interest of the class representative

“aligns with the interests of the class.” Hanon v.

Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). The

requirement is permissive, such that “representative claims

are ‘typical’ if they are reasonably coextensive with those of

absent class members; they need not be substantially

identical.” Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir.

2014) (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011,

1020 (9th Cir. 1998)). “Measures of typicality include

‘whether other members have the same or similar injury,

whether the action is based on conduct which is not unique to

the named plaintiffs, and whether other class members have

been injured by the same course of conduct.’” Torres v.

Mercer Canyons Inc., 835 F.3d 1125, 1141 (9th Cir. 2016)

(quoting Hanon, 976 F.2d at 508). A court should not certify

a class if “there is a danger that absent class members will

suffer if their representative is preoccupied with defenses

unique to it.” Hanon, 976 F.2d at 508 (internal quotation

marks omitted).

Leasing Defendants argue Campbell’s claim is not typical

of the class because (1) Campbell’s legal theory is different

from that of the class, (2) her injuries are based on a different

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14 JUST FILM V. BUONO

predicate act than the injuries of the class, (3) her damages

are different from those of the class, and (4) she faces unique

defenses. We reject each argument and conclude that the

district court did not err in finding Campbell’s claim typical

of the class.

First, LeasingDefendantsmischaracterize Plaintiffs’ legal

theory. Leasing Defendants describe it as follows: they made

misrepresentations to two third-party ACH processors, and

the ACH processors relied on the misrepresentations and

debited class members’ bank accounts without authorization. 

Therefore, Leasing Defendants assert the class’s injuries are

attributable to third-party reliance on Leasing Defendants’

alleged misrepresentations, and Leasing Defendants assert

that Campbell’s own legal theory necessarilydiffers from that

of the class because her bank account was not actually

debited.

Plaintiffs actually allege a broader fraudulent scheme in

which Leasing Defendants conspired to defraud former

lessees through a course of conduct which injured Campbell

as well as other class members. Plaintiffs allege that Leasing

Defendants planned to collect from former lessees past taxes

that were not due, and that as part of the fraudulent scheme,

Leasing Defendants ran a faulty simulation to calculate the

taxes and fees of more than 107,000 merchants with expired

leases, with the results compiled on Schedule 1; sent letters

to merchants that inaccurately stated that an audit had

revealed that the merchants owed property taxes and

administrative fees; created another entity to ensure that ACH

regulators would not learn that Leasing Defendants were

collecting payments; applied to new banks to access the ACH

system to debit the bank accounts associated with the expired

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JUST FILM V. BUONO 15

leases; sent collections letters to third party bank processors;

and sent electronic notices to merchants’ banks.

Campbell is one of the merchants from whom Leasing

Defendants made or attempted to make unauthorized ACH

deductions. Plaintiffs presented evidence showing that

Campbell was the personal guarantor of an expired lease; that

she received a letter from SKS advising her that an audit was

conducted and that she owed $85.50 for certain taxes and

related fees; that she called Defendants and they informed her

that she owed money; and that Defendants subsequently

admitted that the amount they sought to collect from

Campbell was inaccurate. Campbell’s claim is reasonably

coextensive with that of the class because she alleges Leasing

Defendants committed the same overall course of misconduct

against other members of the class—seeking to collect

alleged past taxes and fees through subterfuge and

misrepresentation—and the class’s alleged injuries also

resulted from that course of misconduct. See Parsons,

754 F.3d at 686 (concluding that the named plaintiffs met the

typicality requirement because their injury “is a result of a

course of conduct that is not unique to any of them; and they

allege that the injury follows from the course of conduct at

the center of the class claims”) (citing Hanon, 976 F.2d at

508). Her claim is typical of the class because it shares

“some common question of law and fact with class members’

claims.” Newberg on Class Actions § 3:31 (5th ed.).

Leasing Defendants next make the closely related

argument that Campbell’s claims are not typical because they

do not focus on the same injurious conduct as that of the

class. They contend that Campbell was harmed by the Notice

of Debt sent directly to her, whereas the class alleges injury

based on the misrepresentations made to the ACH processors. 

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Plaintiffs stress that all class members need not have suffered

an identical injury; instead, they need to prove that Leasing

Defendants engaged in a pattern of racketeering, and that at

least one of the acts within the pattern caused the class injury. 

According to Plaintiffs, all class members, including

Campbell, have been injured by Leasing Defendants’ course

of conduct.

Again, Leasing Defendants construe Plaintiffs’ claim too

narrowly. The proposed SKS Post-Lease Expiration class’s

RICO and RICO conspiracy claims are based on a broader

scheme that Leasing Defendants crafted to collect purported

back taxes and administrative fees. The pattern of

racketeering includes Leasing Defendants’ alleged

misrepresentations to ACH processors, but also include the

letters Leasing Defendants sent to class members claiming an

audit revealed additional property taxes and fees were owed

and concealing their identity to banks and merchants while

pursuing collection.

Campbell’s injuries stem from the same scheme, although

the specific predicate act that caused her injury may differ

from the acts that caused injury to other class members. 

Substantively, Campbell’s allegation of harm based on some

of the activities comprising the RICO violation is sufficient. 

See Deppe v. Tripp, 863 F.2d 1356, 1366 (7th Cir. 1988)

(“[N]o requirement exists that the plaintiff must suffer an

injury from two or more predicate acts, or from all of the

predicate acts. Thus, a RICO verdict can be sustained when

a pattern of racketeering acts existed, but when only one act

caused injury.”) (internal citation omitted); Town of Kearny

v. Hudson Meadows Urban Renewal Corp., 829 F.2d 1263,

1268 (3d Cir.1987) (holding that the RICO statute required

only injury from “any predicate act,” not from an entire

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JUST FILM V. BUONO 17

pattern of racketeering). Given the nature of RICO liability,

the typicality requirement necessarily focuses on whether

Campbell was injured by the same pattern of racketeering as

the other class members.

Defendants next contend that Campbell’s injury is

different from the rest of the class because ACH processors

did not actually debit her account. It is true that Campbell’s

account was not actually debited because it was closed, while

members of the class did have funds debited from their bank

accounts without authorization. Instead, Campbell alleges

damages in the form of time taken off from work and

payment to an assistant to research her financial records upon

receiving the Notice of Debt. Plaintiffs describe the class’s

injuries as: (1) the amounts Defendants debited from their

bank accounts; and (2) costs class members incurred as a

result of Defendants’ bogus collection efforts. Plaintiffs

maintain that Campbell and the class were injured by the

same course of conduct, and argue that the differences in the

nature of the injuries are relevant only to the extent, and

calculation, of damages.

The district court cited to this court’s decision in Lozano

v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007),

to support its conclusion that differing injuries do not defeat

typicality in this action. The district court was correct in its

analysis. The relevant portion of Lozano holds, “it is not

necessary that all class members suffer the same injury as the

class representative” to satisfy Rule 23(a)(3). Id. at 734.2

2

In Lozano, the plaintiff sought to represent a class of California

customers who were charged for calls made in a different billing period

than the billing period in which the calls were made. Id. at 721–22. The

plaintiff was charged an overage fee and received a one-time

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18 JUST FILM V. BUONO

The requirement of typicality is not primarily concerned with

whether each person in a proposed class suffers the same type

of damages; rather, it is sufficient for typicality if the plaintiff

endured a course of conduct directed against the class. 

Although Campbell was able to fend off the attempted fraud

before it reached into and diminished her bank account, there

is no reason why she cannot prove the nature of the

fraudulent scheme for benefit of all class members, whether

or not their precise injuries are identical.

The district court did not misapply Lozano, as Leasing

Defendants contend. The district court did not abuse its

discretion in concluding that Campbell’s RICO claims are the

same as those of the class and the claim is based on

Defendants’ conduct not unique to Campbell. Even if

Campbell’s damages differ from the damages of some class

members, typicality is not defeated. The class includes

merchants whose accounts were actually debited, as well as

merchants who spent resources to investigate the Notice of

Debt or other representations of the debt owed and so

frustrated the fraudulent scheme before it directly impacted

their bank accounts.

reimbursement after complaining about the fee. Id. at 722. The phone

carrier defendant argued that the plaintiff’s claimed damages of reserving

minutes, where a certain number of minutes were saved to compensate for

late-charged calls from the previous billing cycle, was unique. Id. at 734. 

Although some customers were charged overage fees and other customers

reserved their minutes, this court affirmed the district court’s finding that

the plaintiff’s injuries were typical of the class. Id. A plaintiff who

reserved his minutes had a typical claim as the class, which included

customers charged an overage fee and customers who reserved their

minutes. Id.

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JUST FILM V. BUONO 19

Leasing Defendants next argue that Campbell is subject

to a unique defense—lack of standing to pursue the RICO

claim—such that certification of the SKS Post-Lease

Expiration Class was wrong. To establish standing, “a civil

RICO plaintiff must show: (1) that his alleged harm qualifies

as injury to his business or property; and (2) that his harm

was by reason of the RICO violation, which requires the

plaintiff to establish proximate causation.” Canyon Cty. v.

Syngenta Seeds, Inc., 519 F.3d 969, 972 (9th Cir. 2008)

(internal quotation marks omitted). Leasing Defendants

contend that the district court did not address the second

element. They again stress that the wrongful conduct alleged

by the SKS Post-Lease Expiration Class is predicated on

Defendants’ misrepresentations toward two third-party ACH

processors. These two processors then relied on the

misrepresentations and went on to improperly debit class

members’ bank accounts without permission. By contrast,

Leasing Defendants argue that Campbell’s injury is not a

direct or indirect result of this conduct. Because Campbell’s

account was not debited, the argument goes, the

misrepresentations were not the proximate cause of

Campbell’s injuries.

We once more reject Leasing Defendants’ repeated

attempt to narrow the scope of activities that comprise the

alleged RICO violation. Campbell alleges she suffered an

injury to her “business or property” because of Leasing

Defendants’ misconduct. The district court properly

concluded that Campbell had standing to pursue the RICO

claim because, although Defendants did not deduct money

from her bank account, she spent time away from her usual

work and paid an assistant to help her research and compile

records responding to a fraudulent allegation. This amounted

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to a loss to business or property sufficient to confer standing. 

See Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005).

Finally, Leasing Defendants argue that Campbell would

be a poor advocate for the SKS Post-Lease Expiration Lease

class members. They cite to In re Payment Card Interchange

Fee and Merch. Disc. Antitrust Litig., 827 F.3d 223 (2d Cir.

2016) (“Payment Card Interchange”), to support their

argument that Campbell could not zealously advocate for

class members with accounts actually debited. In Payment

Card Interchange, the Second Circuit vacated the final

approval of a class action settlement between merchants and

Visa, Mastercard, and other banks. See id. at 227. The court

concluded that class counsel’s unitary representation of the

plaintiffs was inadequate, as class counsel represented both

merchants in a Rule 23(b)(3) class, pursuing solely monetary

relief, and merchants in a Rule 23(b)(2) class, pursuing solely

injunctive relief. Id. at 233. The court reasoned that in this

settlement, “[u]nitary representation of separate classes that

claim distinct, competing, and conflicting relief create

unacceptable incentives for counsel to trade benefits to one

class for benefits to the other in order somehow to reach a

settlement.” Id. at 234. The court was concerned with

problems that arise when “(b)(2) and (b)(3) classes do not

have independent counsel, seek distinct relief, have nonoverlapping membership, and . . . are certified as settlementonly.” Id. at 235.

None of the issues identified by Payment Card

Interchange is presented in this case. Campbell represents a

23(b)(3) class pursuing monetary damages only and the class

was not certified for settlement purposes only. Leasing

Defendants do not identify how Campbell’s status as class

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representative creates an unacceptable incentive as she

advocates for the SKS Post-Lease Expiration Class.

Campbell, like the proposed class, is a merchant who

appeared on Schedule 1. She asserts that Leasing Defendants

collected or tried to collect taxes that were not due or paid to

any taxing authority and alleges injury based on a course of

conduct that is not unique to her.

The district court did not commit a clear error of

judgment in concluding that Campbell had standing to assert

a RICO claim and that she would not be subject to unique

defenses such that typicality would be defeated, nor did it so

err in ultimately determining that Campbell met the typicality

requirement. We conclude that the nature of Campbell’s

individual claim is reasonably coextensive with that of the

class merchants found on Schedule 1. See Hanlon, 150 F.3d

at 1020; Parsons, 754 F.3d at 686.

2. Commonality and Predominance

“The predominance analysis under Rule 23(b)(3) focuses

on ‘the relationship between the common and individual

issues’ in the case, and ‘tests whether proposed classes are

sufficiently cohesive to warrant adjudication by

representation.’” Wang v. Chinese Daily News, Inc.,

737 F.3d 538, 545 (9th Cir. 2013) (quoting Hanlon, 150 F.3d

at 1022). “If anything, Rule 23(b)(3)’s predominance

criterion is even more demanding than Rule 23(a).” Comcast

Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013).

Leasing Defendants argue that the district court erred in

certifying the SKS Post-Lease Expiration Class because

damages are not capable of measurement on a classwide basis

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and because individualized issues regarding Campbell’s

reliance predominate.

Rule 23(b)(3)’s predominance requirement takes into

account questions of damages. “[P]laintiffs must be able to

show that their damages stemmed from the defendant’s

actions that created the legal liability.” Pulaski &

Middleman, LLC v. Google, Inc., 802 F.3d 979, 987–88 (9th

Cir. 2015) (quoting Leyva v. Medline Industries Inc.,

716 F.3d 510, 514 (9th Cir. 2013)). To satisfy this

requirement, plaintiffs must show that “damages are capable

of measurement on a classwide basis,” in the sense that the

whole class suffered damages traceable to the same injurious

course of conduct underlying the plaintiffs’ legal theory. 

Comcast, 133 S. Ct. at 1433–35. However, “damage

calculations alone cannot defeat certification.” Yokoyama,

594 F.3d at 1094. “[T]he presence of individualized damages

cannot, by itself, defeat class certification under Rule

23(b)(3).” Leyva, 716 F.3d at 514. In a civil RICO action,

the measure of damages “is the harm caused by the predicate

acts constituting the illegal pattern.” Ticor Title Ins. Co. v.

Florida, 937 F.2d 447, 451 (9th Cir. 1991). To gain class

certification, Plaintiffs need to be able to allege that their

damages arise from a course of conduct that impacted the

class. But they need not show that each members’ damages

from that conduct are identical.

Leasing Defendants contend that Plaintiffs cannot

establish predominance because the damages model advanced

by Campbell is not capable of classwide proof. Leasing

Defendants stress that the economic impact of the

unauthorized ACH debits can be calculated, but Campbell’s

harm requires a completely different measurement.

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In Plaintiffs’ motion for class certification, Plaintiffs gave

examples of methods for calculating damages. Plaintiffs

stressed that it would be easy to identify amounts associated

with wrongful ACH withdrawals because Defendants

maintained searchable computer records of each lease and

each transaction, and because the disputed transactions used

common descriptors. Plaintiffs also offered that class

members could calculate other damages using their own

records. At the hearing on Plaintiffs’ motion for class

certification, Plaintiffs again proposed these methods for

measuring damages: either class members could establish the

unauthorized ACH debits or show the “time and effort

preventing them from getting money.”

Certainly some individual issues may arise in calculating

damages, particularly for class members whose funds were

never debited from their bank accounts. However, Plaintiffs

generally will be able to “show that their damages stemmed

from the [Leasing Defendants’] actions that created the legal

liability.” Pulaski, 802 F.3d 987–88. That some

individualized calculations may be necessary does not defeat

finding predominance. Id. This case is unlike Comcast,

where the Court noted that the courts below did not probe

whether the damages model proposed in the antitrust class

action measured damages attributable to the plaintiffs’ theory

of harm. See 133 S. Ct. at 1435. There, because the model

proposed did not “even attempt to” measure only damages

attributable to the legal theory, “it [could not] possibly

establish that damages are susceptible of measurement across

the entire class for purposes of Rule 23(b)(3).” Id. at 1433.

This case presents no issue similar to the one in Comcast. 

Plaintiffs propose measuring damages that are directly

attributable to their legal theory of the harm. If class

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members establish Leasing Defendants’ liability, damages

can be calculated based on (1) the amount of fees, if any,

deducted from their bank accounts after their leases were

terminated using Leasing Defendants’ own records, and

(2) expenses, if any, spent by class members in investigating

the scheme using their own records. At this stage, Plaintiffs

need only show that such damages can be determined without

excessive difficulty and attributed to their theory of liability,

and have proposed as much here.

Leasing Defendants also contend that Plaintiffs did not

establish commonality and predominance because issues of

reliance are highly individualized. Leasing Defendants

contend that for Campbell to succeed on her RICO claim, she

“must prove that she received and read a Notice of Debt, that

she decided to investigate, and that she incurred monetary

damage as a result of that decision. If these issues applied to

the entire class, they could not be proved on a classwide

basis.” Leasing Defendants argue this individual issue

predominates over any common issues.

The district court properly identified several common

questions and determined they predominate in Plaintiffs’

RICO claim. These questions include the propriety of

Leasing Defendants’ simulation to determine whether taxes

were due, whether class members’ ACH form agreements

authorized the deductions after their leases had expired, and

whether ACH processors relied on fraudulent

misrepresentations by Leasing Defendants when they

processed the debits. These issues are “of such a nature that

[they are] capable of classwide resolution.” Wal-Mart,

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564 U.S. at 350.3 Although there are individualized issues

related to Campbell’s injury, common questions exist and

predominate for the alleged RICO violation. The district

court did not abuse its discretion in so concluding.

B. The Property Tax Equipment Class

Leasing Defendants also appeal the district court’s

certification of the Property Tax Equipment Class—the class

of persons and businesses who paid property taxes based on

the Acquisition Cost rather than the Equipment Cost. Leasing

Defendants argue that Plaintiffs did not establish

commonality, predominance, or superiority.

1. Commonality and Predominance

In certifying the Property Tax Equipment Cost Class, the

district court identified the following common questions that

predominate: whether Leasing Defendants’ use of the

Acquisition Cost to calculate taxes was improper, whether

3 Other common questions exist in this action. To prove Leasing

Defendants committed a RICO violation under 18 U.S.C. § 1962(c),

Plaintiffs will need to show: (1) Leasing Defendants are persons as

defined in 18 U.S.C. § 1961(3); (2) Leasing Defendants conducted or

participated in the complained of conduct; (3) Leasing Defendants

participation in the conduct is part of an enterprise as defined in 18 U.S.C.

§ 1961(4); and (4) Leasing Defendants participation in the enterprise was

performed through a pattern of racketeering activity as defined in

18 U.S.C. § 1961(5). These issues are appropriate for classwide litigation

because they focus on Leasing Defendants’ conduct. Whether Leasing

Defendants were part of an enterprise operating an alleged scheme to

defraud class members can be resolved on a classwide basis. See, e.g.,

Bias v. Wells Fargo & Co., 312 F.R.D. 528, 541 (N.D. Cal. 2015); In re

United Energy Corp. Solar Power Modules Tax Shelter Investments Sec.

Litig., 122 F.R.D. 251, 255 (C.D. Cal. 1988).

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Leasing Defendants had a fiduciary duty to Plaintiffs to

calculate their taxes properly when they assumed the duty to

assess and pay taxes on Plaintiffs’ behalf, and whether

Leasing Defendants breached their fiduciary duty by using

the Acquisition Cost to calculate taxes.

Leasing Defendants argue that the district court

incorrectly assumed that the Acquisition Cost is an “inflated

figure,” and this assumption has no factual support in the

record. We disagree that this argument is pertinent at this

stage. Plaintiffs have alleged that the Acquisition Cost

amounted to thousands of dollars for a piece of equipment

only worth a few hundred dollars, and that Leasing

Defendants assessed property taxes on the total commission

paid to the ISO rather than the true equipment cost. In their

motion for class certification, Plaintiffs gave examples from

two class members seeking to represent the Property Tax

Equipment Class: Plaintiff Just Film’s Acquisition Cost was

listed at $5,429.19 and Plaintiff Dietz Towing at $3,686. The

Equipment Cost was listed at $358. Plaintiffs stress that the

“difference between the two tax bases is significant” and that

by switching from the Acquisition Cost to the Equipment

Cost as the tax base, the property tax liability lowered

significantly. Plaintiffs also offered the deposition testimony

of Defendant Northern Leasing’s Rule 30(b)(6) witness who

conceded that using the Acquisition Cost was a mistake, and

that Defendants should have used Equipment Cost as the tax

base. The witness also stated that by switching from the

Acquisition Cost to the Equipment Cost, the property tax

liability would be “much less.” Plaintiffs’ position in this

regard may or may not prevail, but that is a merits question

not appropriately addressed at the class certification stage. 

See Amgen Inc. v. Conn. Ret. Plans &Trust Funds, 133 S. Ct.

1184, 1191 (2013) (“Rule 23(b)(3) requires a showing that

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JUST FILM V. BUONO 27

questions common to the class predominate, not that those

questions will be answered, on the merits, in favor of the

class.”); Stockwell v. City & Cty. of San Francisco, 749 F.3d

1107, 1112 (9th Cir. 2014) (stating that “demonstrating

commonality does not require proof that the putative class

will prevail on whatever common questions it identifies”).

Next, Leasing Defendants argue that Plaintiffs presented

no evidence regarding the variation in tax rates, and that

because of the variation, certifying a national class is

inappropriate. Leasing Defendants misconstrue Plaintiffs’

legal theory for their breach of contract claim. Plaintiffs

contend that Defendants MBF Leasing and Northern Leasing

breached their contracts by using the Acquisition Cost instead

of the Equipment Cost to assess property taxes and charging

those assessment amounts to the class. As the district court

reasoned, no matter the tax rate in the various jurisdictions,

using the Acquisition Cost would amount to an incorrect tax

assessment. Whether Leasing Defendants’ conduct breached

any contractual obligation turns on whether use of the

Acquisition Cost, rather than the Equipment Cost, was

improper under the contract. Because interpretation of the

leasing contracts would predominate, the district court did not

err in finding that Plaintiffs established commonality and

predominance as to the PropertyTax Equipment Class Lease.

Leasing Defendants also argue that determining whether

it was improper to calculate property taxes using the

Acquisition Cost requires one to assemble the laws of 3,500

taxing jurisdictions. But Plaintiffs do not argue that using the

Acquisition Cost is wrong based on the laws of each taxing

jurisdiction. Rather, they contend that Leasing Defendants

breached their contracts by choosing to calculate taxes using

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28 JUST FILM V. BUONO

the Acquisition Cost, rather than the Equipment Cost, as the

base.4

The district court did not abuse its discretion in

concluding that common questions—including whether

Leasing Defendants’ use of the Acquisition Cost to calculate

property taxes breached the parties’ lease contracts—

predominate.

2. Superiority

In addition to establishing predominance of a common

question, a class proponent must also demonstrate that the

class action is superior to other methods of adjudicating the

controversy. Fed. R. Civ. P. 23(b)(3); see Valentino v.

Carter-Wallace, Inc., 97 F.3d 1227, 1235 (9th Cir. 1996).

Leasing Defendants argue that Plaintiffs did not establish

superiority because the number of taxing jurisdictions

involved in this case makes adjudication unmanageable.

Again, Leasing Defendants’ argument manufactures a

manageability issue that does not exist. The factfinder will

determine as a matter of contract whether Leasing Defendants

improperly calculated property taxes using the Acquisition

4 Both parties discuss whether use of the Acquisition Cost as the tax

basis breached contractual obligations and whether use of this tax base

was arbitrary or irrational under New York law. These discussions,

however, encompass the merits of Plaintiffs’ claim, which we decline to

address as it is not relevant to determining whether Plaintiffs met the

requirements for class certification. See Amgen, 133 S. Ct. at 1194–95

(“Rule 23 grants courts no license to engage in free-ranging merits

inquiries at the certification stage. Merits questions may be considered to

the extent—but only to the extent—that they are relevant to determining

whether the Rule 23 prerequisites for class certification are satisfied.”).

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Cost. Calculating the differences in the taxed amounts

between the Acquisition Cost and the Equipment Cost, as it

pertains to measuring damages, would then require applying

the laws of the various taxing jurisdictions.

The district court did not err in determining that Plaintiffs

satisfied the superiority requirement. If a class action is not

superior, then individual actions must carry the day. The

court concluded that the “risks, small recovery, and relatively

high costs of litigation” make it unlikely that plaintiffs would

individually pursue their claims. These considerations are at

the heart of why the Federal Rules of Civil Procedure allow

class actions in cases where Rule 23's requirements are

satisfied. This case vividly points to the need for class

treatment. The individual damages of each merchant are too

small to make litigation cost effective in a case against

funded defenses and with a likely need for expert testimony. 

The district court also found that class action was superior

because litigation on a classwide basis would promote greater

efficiency in resolving the classes’ claims. See Valentino,

97 F.3d at 1234.

IV

The district court did not abuse its discretion in certifying

the SKS Post-Lease Expiration Class and the Property Tax

Equipment Cost Basis Class. We affirm the district court’s

class certification orders.

AFFIRMED.

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