UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

Guardian Angel Credit Union

v. Case No. 08-cv-261-PB

Opinion No. 2009 DNH 119

MetaBank et al.

MEMORANDUM AND ORDER

Guardian Angel Credit Union (“Guardian Angel”) has moved to

certify a plaintiffs’ class action against MetaBank and Meta

Financial Group, Inc. (collectively, “MetaBank”) and appoint

Guardian Angel’s attorneys as class counsel. MetaBank objects,

arguing that Guardian Angel cannot meet the requirements of 

Federal Rule of Civil Procedure 23. For the reasons given below,

I deny Guardian Angel’s motion to certify.

I. BACKGROUND

On or about April 15, 2005, Guardian Angel deposited $99,000

with MetaBank through the use of third party broker Jumbo CD

Investments, Inc. (“Jumbo”). Guardian Angel received a

certificate of deposit (“CD”) evidencing the deposit, naming

MetaBank as the obligor, and outlining the terms of the deposit 

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under cover of letter from or signed by Charlene Pickhinke, who

at the time was a branch manager of MetaBank’s Sac City Iowa

branch. Guardian Angel renewed the CD on or about April 17, 2006

and again on or about April 17, 2007. Guardian Angel had no

direct contact with MetaBank and all of its transactions with

MetaBank and Pickhinke were arranged by Jumbo. 

On or about January 25, 2008, MetaBank sent Guardian Angel a

letter stating that MetaBank had “recently become aware of

unauthorized certificates of deposit issued under its logo and

brand name.” (Compl. at 3 ¶ 9, Ex. E, Doc. No. 1.) Pickhinke

allegedly absconded with Guardian Angel’s deposit and other

deposits made with MetaBank totaling approximately $4.2 million

in face value over the course of three years. Pickhinke

maintained the stolen funds in her own account with MetaBank for

a period of time, and MetaBank failed to detect her theft or

protect the interests of any of the affected customers. Guardian

Angel and its counsel have made repeated demands on MetaBank for

return of its deposit, plus accrued interest due, but MetaBank

has refused to pay Guardian Angel and has told Guardian Angel

that the CD was unauthorized. 

Guardian Angel filed this action on behalf of itself and a

putative class comprised of approximately 50 members, charging

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MetaBank with breach of contract and negligence, as well as

alleging that MetaBank is liable for the acts and omissions of

Pickhinke on theories of respondeat superior, agency, and

vicarious liability. The proposed class consists of individuals

and legal entities residing and/or doing business within the

United States of America who satisfy the following criteria: (a)

the class member made a deposit with MetaBank, or any

predecessor-in-interest, parent or subsidiary, or any employee,

representative or agent thereof, with the intention of receiving

a CD from such institution; (b) MetaBank, or any employee,

representative or agent thereof, issued the class member a CD on

account of such deposit; (c) a MetaBank employee, representative

or agent, whether current or former, has absconded with the

deposit made by the class member; and (d) as of the date of

Guardian Angel’s Complaint, MetaBank has failed to repay the

class member the deposit which it made and/or any accrued

interest. Guardian Angel alleges that there are approximately

fifty class members hailing from numerous states including, inter

alia, New Hampshire, California, Hawaii, Pennsylvania, Michigan,

Texas, Connecticut, New York, Kansas, and Ohio. 

Guardian Angel asserts that each class member deposited the

same amount with MetaBank, and the sole question that is unique

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to each class member is the amount owed in interest, depending on

when each deposit was made. Guardian Angel also argues that

“[t]he claims available to each Class member are identical, and

the fact patterns underlying each Class member’s claims are

substantially identical.” (Pl.’s Mot. for Class Certification at

5 ¶ 5, Doc. No. 16.) 

Guardian Angel’s Complaint includes four counts. Count One

alleges that MetaBank’s failure to repay the deposit and each

class member’s accrued interest constitutes a breach of contract. 

In this count Guardian Angel argues that Pickhinke had actual

and/or apparent authority to bind MetaBank with respect to such

contracts. Count Two alleges that MetaBank was negligent in the

hiring, retention, and supervision of Pickhinke. Count Three

alleges that MetaBank is vicariously liable for Pickhinke’s acts

and omissions, including conversion, fraud, theft, and

negligence. Count Four seeks attorney’s fees and costs. 

II. CLASS CERTIFICATION STANDARD

Federal Rule of Civil Procedure 23 sets out the requirements

for class certification. The proposed class representative must

demonstrate that each of Rule 23's requirements has been

satisfied. Makuc v. Am. Honda Motor Co., Inc., 835 F.2d 389, 394

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(1st Cir. 1987). The class certification inquiry has two steps. 

First, the class representative must show that the proposed class

satisfies all four of Rule 23(a)’s threshold requirements, which

are commonly known as numerosity, commonality, typicality, and

adequacy. Fed. R. Civ. P. 23(a)(1)-(4); see also Berenson v.

Nat’l Fin. Servs. LLC, 485 F.3d 35, 38 (1st Cir. 2007). Second,

the class representative must demonstrate that the lawsuit may be

maintained as a class action under one of the three subsections

of Rule 23(b), which allow class actions where: (1) separate

actions by or against individual class members would risk

imposing inconsistent obligations on the party opposing the

class; (2) “the party opposing the class has acted or refused to

act on grounds that apply generally to the class” and injunctive

relief is appropriate; or (3) common questions of law or fact

predominate and a class action would be the superior method of

proceeding. Fed. R. Civ. P. 23(b)(1)-(3). 

Although the Supreme Court has stated that a court should

not decide the merits of a case at the certification stage, Eisen

v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974), a motion to

certify “generally involves considerations that are ‘enmeshed in

the factual and legal issues comprising the plaintiff’s cause of

action.’” Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978)

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(quoting Mercantile Nat’l Bank v. Langdeau, 371 U.S. 555, 558

(1963)). The First Circuit has determined that “[a] district

court must conduct a rigorous analysis of the prerequisites

established by Rule 23 before certifying a class.” Smilow v.

Southwestern Bell Mobile Sys., Inc., 323 F.3d 32, 38 (1st Cir.

2003). In doing so, a district court may resolve disputed

factual issues that arise in the course of class certification by

considering materials beyond the pleadings. In re PolyMedica

Corp. Sec. Litig., 432 F.3d 1, 6 (1st Cir. 2005).

III. ANALYSIS

Guardian Angel asserts that its Complaint satisfies all of

the Rule 23(a) prerequisites and is eligible for certification

under either Rule 23(b)(1) or Rule 23(b)(3). MetaBank challenges

both contentions. For the reasons set forth below, I determine

that certification is not warranted under either prong of Rule

23(b). Accordingly, I deny Guardian Angel’s motion to certify

without taking up MetaBank’s Rule 23(a) challenges.

A. Rule 23(b)(1)

Rule 23(b)(1) encompasses two types of cases. Rule

23(b)(1)(A) covers cases in which a party opposing certification

could be subject to “incompatible standards of conduct” if the

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claims of individual class members are tried separately. Rule

23(b)(1)(B) applies where the prospect of separate trials for

some or all class members could prove to be dispositive of other

class members’ claims. Neither subsection applies in this case. 

This is not a case in which MetaBank may be subject to

incompatible standards of conduct if the cases are tried

separately. Guardian Angel seeks damages rather than injunctive

relief. Thus, there is little risk that MetaBank could be

subject to inconsistent court orders if the cases are tried

separately. Certification under Rule 23(b)(1)(A) ordinarily is

not warranted in such cases. See In re Tyco Int’l, Ltd., 2006 WL

2349338, at *3 n.1 (D.N.H. Aug. 15, 2006).

Rule 23(b)(1)(B) is also inapplicable because this is not a

“common fund” action in which the claimants are attempting to

recover against a defendant with insufficient assets to satisfy

all possible claimants. Further, earlier decisions if the class

members’ claims are tried separately will have, at most, a stare

decisis effect in later actions, and the First Circuit has held

that “the effect of stare decisis, standing alone, will not

justify class certification under Rule 23(b)(1)(B).” Tilley v.

TJX Co., Inc., 345 F.3d 34, 42 (1st Cir. 2003). 

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B. Rule 23(b)(3)

Guardian Angel also asserts that a class can proceed under

Rule 23(b)(3). “[T]he (b)(3) class action was intended to

dispose of all other cases in which a class action would be

‘convenient and desirable,’ including those involving largescale, complex litigation for money damages.” Allison v. Citgo

Petroleum Corp., 151 F.3d 402, 412 (5th Cir. 1998)(quoting Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997)). Unlike

(b)(1) and (b)(2) class actions, participation in a (b)(3) class

is not mandatory; the court is obliged to notify putative class

members that they may opt out of the class and seek relief as

individuals. See Fed. R. Civ. P. 23(c)(2)(B); Amchem, 521 U.S.

at 617. A class should proceed under Rule 23(b)(3) if two

criteria are met. First, common questions of law or fact must

predominate over any questions affecting only individual members. 

Fed. R. Civ. P. 23(b)(3). Second, a class action must be

“superior to other available methods for fairly and efficiently

adjudicating the controversy.” Id. These two requirements

ensure that class certification is granted “only where the

adjudication of common issues in a single action will achieve

judicial economies and practical advantages without jeopardizing

procedural fairness.” Rothwell v. Chubb Life Ins. Co. of

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America, 191 F.R.D. 25, 29 (D.N.H. 1998) (citations omitted).

To determine whether common issues predominate in a proposed

class action, courts often look for “an essential common link

among class members” that can be remedied through litigation. 2

Newberg § 4.25 (4th ed.). Thus, common issues are deemed to

predominate when the class shares issues of “overriding

significance,” such as a determination of defendant’s liability,

so that separate adjudication of individual liability claims

would be unnecessary. See 7AA Charles Alan Wright, Arthur R.

Miller & Mary Kay Kane, Federal Practice and Procedure § 1778. 

Guardian Angel claims that all proposed class members were

victim of the same common course of conduct. Although the class

members purchased their CDs separately and on different dates,

Guardian Angel claims that the trial will focus on MetaBank’s

receipt of deposits from the class members, its hiring and

management of employees such as Pickhinke, its responsibility for

Pickhinke’s actions, and its failure to return deposits and

interest that were made to MetaBank by the plaintiffs. Such

common issues, Guardian Angel argues, will predominate over any

issues peculiar to individual plaintiffs. Furthermore, Guardian

Angel argues that, since discovering the issue, MetaBank has

treated the plaintiffs as a putative class through the mailing of

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form letters to the plaintiffs and the lumping of the conduct

against the plaintiffs together as a singular fraud in its SEC

filings. (See Pl.’s Ex. 2, 3, and 4, Doc. No. 17.) Guardian

Angel argues that this treatment by MetaBank is “tantamount to an

admission of the appropriateness of class adjudication.” (Pl.’s

Mot. for Class Certification at 7-8 ¶ 8, Doc. No. 16.)

MetaBank responds by arguing that the class members’ claims

involve an overwhelming number of individual issues of law and

fact that preclude the certification of a class. First, MetaBank

contends that certification of Guardian Angel’s claims into a

class action would be problematic because of the potential for

variations in the law governing its claims. See e.g., Castano v.

Am. Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996) (“In a multistate class action, variations in state law may swamp any common

issues and defeat predominance.”). MetaBank argues that Guardian

Angel has failed to meet its burden of assisting the court in

determining how the laws of different states affect the

litigation. 

In a diversity case, the forum state’s choice of law rules

apply. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496

(1941); Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 5

(1st Cir. 2004). New Hampshire’s choice of law rules provide

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that a court should consider “(1) the predictability of results;

(2) the maintenance of reasonable orderliness and good

relationships among the States in the federal system; (3)

simplification of the judicial task; (4) advancement of the

governmental interest of the forum; (5) and the court’s

preference for what it regards as the sounder rule of law.” 

LaBounty v. Am. Ins. Co., 122 N.H. 738, 741 (N.H. 1982)

(citations omitted). With respect to contracts, New Hampshire’s

choice of law rules require the application of the law of the

jurisdiction with the most significant relationship to the

contract. See Glowski v. Allstate Ins. Co., 134 N.H. 196, 197-98

(N.H. 1991). Thus, for each of the class members, MetaBank

contends that this court would be required to determine which

state’s substantive law applies using the factors described

above. Guardian Angel has not responded to this contention.

MetaBank has also provided charts of the law governing

apparent authority, negligence, and vicarious liability claims

under the law of several of the states mentioned in Guardian

Angel’s motion for class certification to show that material

differences exist that will require individual adjudication and

defeat any efficiency achieved by the class action mechanism. 

Further, MetaBank contends that the court will have to engage in

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individualized factual inquiries into the circumstances of each

class member’s purported transaction. MetaBank alleges that

Guardian Angel’s claims are premised upon highly specific facts

and will be subject to unique defenses. Specifically, MetaBank

argues that the fact that Guardian Angel communicated exclusively

with third party broker Jumbo (Dumoulin Tr. at 81-82, 95 (Doc.

No. 22-5); Gilbert Tr. at 46-48, Doc. No. 22-4), had no direct

contact with Pickhinke or MetaBank (Dumoulin Tr. at 84-85 (Doc.

No. 22-5); Gilbert Tr. at 79, Doc. No. 22-4), conducted no due

diligence with respect to the CD, its issuance or MetaBank itself

(Dumoulin Tr. at 78,84-85, 94-97, Doc. No. 22-5; Gilbert Tr. at

70, Doc. No. 22-4), and failed to ask for or obtain an executed

copy of the CD (Gilbert Tr. at 156-57, Doc. No. 22-4), raises

individual and unique questions which will predominate the

court’s analysis of Guardian Angel’s claims. 

Again, Metabank has failed to present an effective response. 

Accordingly, I accept the premises on which MetaBank’s arguments

are based and turn to a more detailed analysis of Guardian

Angel’s specific claims.

1. Count One: Breach of Contract

As to Guardian Angel’s breach of contract claim, the

evidence as to whether MetaBank entered into a contract with each

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of the putative class members will likely vary from case to case. 

MetaBank asserts that it neither issued any CDs for the putative

class members nor authorized Pickhinke to issue any of the CDs 

(Reynolds Aff. at ¶¶ 7, 10, 12, Doc. No. 23.) Rather, MetaBank

asserts that Pickhinke acted in her own interest, unknown to

MetaBank, and outside the scope of her employment by creating

accounts for the putative class members and issuing CDs. To bind

a principal to a contract entered into by its agent, the agent

must have had either actual or apparent authority to enter into

the contract on the principal’s behalf. See, e.g., Commercial

Assocs. v. Tilcon Gammino, Inc., 998 F.2d 1092, 1099 (1st Cir.

1993). 

If, as MetaBank asserts, Pickhinke did not have actual

authority to sell these CDs, the court will need to determine

whether she had apparent authority to sell the CDs and bind

MetaBank. “Apparent authority is the power held by an agent or

other actor to affect a principal’s legal relations with third

parties when a third party reasonably believes the actor has

authority to act on behalf of the principal and that belief is

traceable to the principal’s manifestations.” Restatement

(Third) of Agency § 2.03 (2006). The standards for finding

apparent authority, however, vary significantly under the laws of

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the states mentioned in Guardian Angel’s motion. See e.g., Dent

v. Exeter Hosp., Inc., 155 N.H. 787, 792 (N.H. 2007) (holding

that apparent authority “exists where the principal so conducts

itself as to cause a third party to reasonably believe that the

agent is authorized to act”); Associated Creditors’ Agency v.

Davis, 530 P.2d 1084, 1100 (Cal. 1975) (“[T]hree requirements

[are] necessary before recovery may be had against a principal

for the act of an ostensible agent. The person dealing with the

agent must do so with belief in the agent’s authority and this

belief must be a reasonable one; such belief must be generated by

some act or neglect of the principal sought to be charged; and

the third person in relying on the agent’s apparent authority

must not be guilty of negligence.”). The distinctions in the law

of apparent authority of the various states implicated by this

action appear to preclude class-wide analysis.

Furthermore, even if there were no variations in state laws

to be applied, whether Pickhinke had apparent authority is an

individualized, fact specific question. The determination of

whether apparent authority exists focuses in large part on

whether each individual plaintiff had a reasonable belief that

Pickhinke was authorized to act for MetaBank. This reasonable

belief element is not readily susceptible to class-wide proof. 

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An individualized inquiry will be necessary in part because

MetaBank’s course of conduct in relation to the putative class

members differed in that it allegedly communicated directly with

some of the putative class members, but had no contact with

others. For example, Guardian Angel’s use of third party broker

Jumbo, lack of any direct contact with Pickhinke or MetaBank, and

alleged failure to engage in any due diligence with respect to

MetaBank all raise individual and unique questions as to whether

Guardian Angel’s belief in Pickhinke’s authority to bind MetaBank

was reasonable.

In sum, I conclude that Guardian Angel has not met its

burden of demonstrating common issues will predominate over

individual legal and factual issues in its breach of contract

claim.

2. Count Two: Negligence

As to Guardian Angel’s negligence claim, the laws governing

claims of negligent hiring, retention, and supervision also vary. 

For example, under Ohio law

[t]he elements of a claim for negligent hiring,

supervision, and retention are (1) the existence of an

employment relationship, (2) the employee’s

incompetence, (3) the employer’s knowledge of the

employee’s incompetence, (4) the employee’s act or

omission causing the plaintiff’s injuries, and (5) a

causal link between the employer’s negligence in

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hiring, supervising, and retaining and the plaintiff’s

injuries.

Lehrner v. Safeco Ins./Am. States Ins. Co., 872 N.E.2d 295, 305

(Ohio Ct. App. 2007)(citation omitted). Under Texas law, an

employer “is liable for negligent hiring, retention, or

supervision if it hires an incompetent or unfit employee whom it

knows, or by exercise of reasonable care should have known, was

incompetent or unfit, thereby creating an unreasonable risk of

harm to others.” Dangerfield v. Ormsby, 264 S.W.3d 904, 912

(Tex. Ct. App. 2008). 

Thus, if MetaBank is correct in its argument regarding the 

governing law, individualized analysis will predominate with

respect to this claim as well. Because Guardian Angel has done

nothing to rebut MetaBank’s argument and demonstrate that these

variances in state law will not apply in this case, I conclude

that Guardian Angel has not met its burden of showing that common

issues predominate with respect to this claim.

3. Count Three: Vicarious Liability

In count three, Guardian Angel seeks to hold MetaBank

vicariously liable for various torts allegedly committed by

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 Vicarious liability is a theory of recovery, not a claim 1

unto itself. Further, Guardian Angel states that Pickhinke’s

acts and omissions include “conversion, fraud, theft, and

negligence.” (Compl. at 10 ¶ 45, Doc. No. 1). Guardian Angel,

however, has pled only a claim of negligence in its Complaint. 

Because I deny Guardian Angel’s motion to certify on other

grounds, I decline to address these deficiencies at this time.

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Pickhinke. Differences in state laws governing vicarious 1

liability could affect the disposition of class claims and

preclude class-wide analysis. For example, under California law,

vicarious liability can be imposed upon an employer even if “an

employee is not engaged in the ultimate object of his employment

at the time of his wrongful act,” and an “employee’s tortious act

may be within the scope of employment even if it contravenes an

express company rule and confers no benefit to the employer.” 

Farmer Ins. Group v. County of Santa Clara, 906 P.2d 440, 448-49

(Cal. 1995) (citations omitted). Under Texas law, an employer is

vicariously liable for its employee’s tort “only when the

tortious act falls within the scope of the employee’s general

authority in furtherance of the employer’s business and for the

accomplishment of the object for which the employee was hired.” 

Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 757 (Tex.

2007)(quoting Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d

573, 577 (Tex. 2002)). Under New York law, an employer may be

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liable for the acts of its employee where the employee “is doing

something in furtherance of the duties he owes to his employer

and where the employer is, or could be, exercising some control,

directly or indirectly, over the employee’s activities.” Lundberg

v. State, 255 N.E.2d 177, 179 (N.Y. 1969) (citations omitted). 

Even if these variations in state laws do not affect this

case as MetaBank argues, Guardian Angel’s allegations with

respect to vicarious liability will still require individualized

analysis because Guardian Angel seeks to hold MetaBank

vicariously liable for Pickhinke’s alleged fraud. Resolution of

this fraud claim requires proof both that Pickhinke made

misrepresentations and that the individual class members

reasonably relied on those representations. See Rothwell, 191

F.R.D. at 31. Guardian Angel had shown no reason why reliance

could be presumed in this case. Thus, the court will have to

analyze proof of reliance individually with respect to each

individual class member and certification of the class is

inappropriate. See id. at 31-32 (noting that certification

generally is inappropriate when individual reliance is an issue); 

Castano, 84 F.3d at 745; Andrews v. Am. Tel. & Tel. Co., 95 F.3d

1014, 1025 (11th Cir. 1996). 

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In sum, the predominance of individualized legal and factual

issues throughout Guardian Angel’s Complaint leads me to find

that the proposed class is not “sufficiently cohesive to warrant

adjudication by representation.” Amchem, 521 U.S. at 623.

MetaBank has set forth a substantive argument that variations in

state law may predominate over the common legal issues in this

case. Guardian Angel has done nothing to dispute MetaBank’s

argument and thus has failed to meet its burden of demonstrating

to the court that variations in state laws will not predominate

over common legal issues in this case. Further, MetaBank has

demonstrated that individual factual issues will predominate when

determining whether Pickhinke had apparent authority to bind

MetaBank in contract and whether individual class members

reasonably relied on Pickhinke’s alleged misrepresentations. 

Guardian Angel has done nothing to demonstrate that these

individual factual issues will not be an impediment to efficient

class adjudication. Accordingly, where Guardian Angel has not

shown that common legal and factual issues predominate, a class

action is not the superior means of resolving its claims and

certification under Rule 23(b)(3) would be inappropriate on this

record.

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IV. CONCLUSION

For the reasons stated herein, I deny plaintiff’s motion for

class certification (Doc. No. 16) based on Guardian Angel’s

failure to satisfy its burden with respect to the requirements of

Rule 23(b).

SO ORDERED

/s/Paul Barbadoro 

Paul Barbadoro

United States District Judge

August 12, 2009

cc: Christopher T. Meier, Esq.

Bruce W. Felmly, Esq.

Christine B. Cesare, Esq.

Rachel E. Barber Shwartz, Esq.

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