Opinion ID: 1094068
Heading Depth: 2
Heading Rank: 2

Heading: Class decertification

Text: Parrish also argues that the trial court erred in decertifying the class. As stated above, the issue is whether the trial court exceeded its discretion in decertifying the class. We hold that the trial court did not exceed its discretion. The class, of which Parrish was the named representative, was certified under Rule 23(b)(3), Ala. R. Civ. P., [10] and purported to include approximately 11,000 members who had participated in the CIM program. In granting Blazer's motion to decertify, the trial court explained its rationale as follows: The Plaintiff acknowledged in [his] briefs and oral argument that claims for actual damages under TILA should not be certified as a class because developments in the caselaw, such as Turner v. Beneficial Corporation, [242 F.3d 1023] (11th Cir., Feb.22, 2001), required individual proof of the causal link between the violation and those damages. However, Plaintiff [has] continued to insist that ... statutory damage[s] under TILA could properly be pursued as a class action because the class members need not present individual proof in order to establish the violation or their right to recovery. Nevertheless, the Court is convinced that the unique nature of the Plaintiff's TILA claim here is such that it would be inappropriate to attempt to try this case as a class action even for statutory damages. The Defendants' [counterclaims] superimposed upon the TILA claims would create the result that individual proof of claims would predominate over class claims and destroy the manageability of the class. See, e.g., Heaven v. Trust Company Bank, 118 F.3d 735, 738 [(11th Cir.1997) ]. Secondly, Plaintiff has relied extensively in the presentation of TILA claims on argumentation that disclosures made on the loan document were not understandable to class members because of their poverty, lack of sophistication, and lack of education. Even if that be the case, it cannot realistically be assumed that all members of the class fit that personal profile, and individual fact-finding would be necessary to identify those persons to whom Plaintiff's arguments would be applicable. The individualization of the claims would in turn make the trial of this action as a class unmanageable. Thirdly, Plaintiff [has] argued that language contained in the loan agreement [that] permitted the lender to stop payment on the check if the borrower had obtained a loan from Blazer within the prior sixty (60) days was a source of confusion and itself constituted a Truth-in-Lending Act violation. Yet, because of changes in the form promissory note used, this claim was only available to the Plaintiff Armetha Parrish and not to any other members of the class. Therefore, as to at least a certain portion of the Truth-in-Lending Act claims, Mr. Parrish's claims were not typical of those of the class. Finally, the Court is aware that the statutory damage[s] recoveries for individuals seeking to vindicate their own rights under TILA are potentially as high as $1,000, plus attorney's fees and costs. By contrast, the portion of each class member's recovery participating in a pro rata distribution of a class action recovery would be only a small fraction of that amount. This results from the fact that 15 U.S.C. § 1640 establishes a maximum statutory damage[s] recovery for the class equal to the lesser of 1% of the net worth of the lender, or $500,000. The class which was certified in this case includes thousands of class members and, even assuming that the largest possible class recovery were obtained, each class member would receive an extremely small recovery, certainly less than $1 per class member. Given the disparity between the potential recovery as an individual and that as class member, the Court is of the opinion that a class action is not a superior method of adjudicating these disputes as to any class member as required under [Rule 23(b)(3), Ala. R. Civ. P.] This Court is aware that other Courts have certified class actions for statutory damages under the Truth-in-Lending Act, while others have declined certification. As the Court understands the matter, it has considerable discretion as to whether or not a class action would provide a superior method of adjudicating the Truth-in-Lending Act claims. It is the opinion of this Court that it would not. The Court admits to being influenced in its decision to some degree by the fact that it has concluded that summary judgment must be granted in favor of the Defendant. If the case remained certified as a TILA class action, and summary judgment is granted, then all borrowers under this [CIM] program will be barred from all potential claims under TILA. In exchange for the potential of recovering less than $1 in damages, these individuals will experience the extinguishment of this class which, because of unique circumstances or the choice of different legal theories by their counsel, could be litigated successfully. This Court believes that it is the fair and more appropriate thing to allow the pursuit of potential claims which might be based on currently unknown and unexplored factual distinctions or arguments. Class certification under Rule 23(b)(3) is not appropriate when class treatment of an action is not superior to other available methods for the fair and efficient adjudication of the controversy. Rule 23(b)(3), Ala. R. Civ. P.; see Compass Bank v. Snow, 823 So.2d 667 (Ala.2001). In this respect, we note that Parrish's argument that the class should not have been decertified must be premised on Parrish's argument that the summary judgment as to Parrish's TILA claim was not appropriate, because if it were not so premised Parrish would be acting, as the trial court noted, to the severe detriment of the remaining class members. While we also find the trial court's other reasons for decertification persuasive, we hold that, because the summary judgment was appropriate, class treatment was not superior to individual litigation by the class members; therefore the trial court did not exceed its discretion in decertifying the class.