Opinion ID: 2294280
Heading Depth: 1
Heading Rank: 10

Heading: The Propriety Of Class Action Certification

Text: The last issue is whether the Circuit Court erred in certifying a class action under Maryland Rule 2-231(b)(3), thereby denying the County the ability to provide refunds by publishing notice and reviewing applications pursuant to Section 17-11-210 of the impact fee ordinance. Maryland Rule 2-231 provides that any class action lawsuit, in addition to meeting certain prerequisites set out in 2-231(a), must satisfy the requirements of one of the three statutory categories of 2-231(b). In this case, the class was certified under 2-231(b)(3), which has the following requirements: (b) Class actions maintainable. Unless justice requires otherwise, an action may be maintained as a class action if the prerequisites of section (a) are satisfied, and in addition:    (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions, (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class, (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum, (D) the difficulties likely to be encountered in the management of a class action. In its order, the Circuit Court found that `the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy[.]' It then made the following findings regarding the Rule 2-231(b)(3) factors to determine whether common issues of law or fact predominate: As for the first factor, the Court will reiterate its findings as to the commonality of the putative class plaintiffs' claims. If they are successful, all plaintiffs will be entitled to the same relief. The only differences between the plaintiffs will be based on the fees paid on the properties they now own and the amount of funds, if any, available for refund in their respective school and transportation districts. The second and third factors are also easily dismissed. Neither side has presented any evidence that there is any related litigation that has already commenced. Also, all of the alleged injuries occurred in Anne Arundel County; clearly, this Court would be the proper forum for the claims of any of the putative class members. Finally, as to the fourth factor, this Court can find no reason why the difficulties encountered in the present class action suit would be any different from those encountered in any other class action suit. The County takes issue with the Circuit Court's class certification, asserting it did not analyze whether a class action member identification and personal notification procedure is superior to the impact fee ordinance's administrative refund procedure for the fair and efficient adjudication of the controversy. [13] The County points to the administrative burden it will face in complying with the class member identification and individual notice requirements of a class action lawsuit. To provide notice to each potential class member, it claims, County employees will have to manually review microfiche building records to construct a computer database containing property tax account numbers for the properties on which impact fees were paid. The County will then have to compare this property-specific data with information in a separate property tax database containing the names of the current owners for each fee-owed property. The County estimates that the process will require over 900 hours of employee time, and argues that this burden should preclude the Circuit Court's finding that a class action was a mechanism superior to the administrative process set forth in the impact fee ordinance. The County views the newspaper publication notice procedure under the impact fee ordinance as superior because it has maintained records sufficient to allow it to respond, quickly and effectively, to refund applications submitted in response to this form of notice. It explains: [T]he [State Department of Assessments and Taxation] property tax account number for properties is shown on the [Permit Information Processing System] building permit record. Thus, when the County receives a refund application with a property tax account number, it can readily search for this number and determine whether the applicant is entitled to a refund because an impact fee was paid on the properly in the relevant FY. In short, the County has maintained records that are fashioned to permit it to comply with [Section] XX-XX-XXX by responding to applications, and has not maintained records that allow it to readily identify all current owners of properties who are entitled to a refund. Thus, not only is a class action for damages not superior to the available administrative remedy, a class action is unnecessary because the relief that can be granted through the established administrative process will, by definition, apply to and benefit all property owners in the affected districts. Our holding in Part I that the impact fee ordinance leaves the Owners with no administrative procedure to obtain a refund undermines the central tenet of the County's argument. Moreover, there are additional reasons justifying the Circuit Court's Rule 2-231(b)(3) class certification, which we address below. We ordinarily review a [Circuit Court's] decision regarding whether to certify a class action for an abuse of discretion. Creveling v. Gov't Employees Ins. Co., 376 Md. 72, 90, 828 A.2d 229, 239 (2003). [T]he basis of the certification inquiry is essentially a factual one, and thus, deference is due. Id., 828 A.2d at 240. Our standard of review for determining whether a Circuit Court used a correct legal standard in determining whether to grant or deny class certification is de novo. Philip Morris, Inc. v. Angeletti, 358 Md. 689, 726, 752 A.2d 200, 220 (2000). In Angeletti, we gave an in-depth explanation of the appropriate superiority analysis for a 2-231(b)(3) class certification and analyzed each of the four specified factors with the guidance of cases applying the corresponding federal rule. 358 Md. at 762-69, 752 A.2d at 240-44. Regarding the first Rule 2-231(b)(3) factor, the interest[] of members of [the] class in individually controlling the prosecution or defense of separate actions, we observed that this factor protects `traditional notions of an individual's jurisprudential rights.' Id. at 763, 752 A.2d at 240-41 (citation omitted). There is no indication in this case that current property owners will lose some benefit if unable to individually prosecute their cases. The issue on remand is whether the County timely encumbered feesa shared burden of proof for all potential refund claimants. Litigation of this issue does not involve a wide range of strategy and tactics that might favor the maintenance of separate suits. Cf., e.g., Causey v. Pan Am. World Airways, Inc., 66 F.R.D. 392, 398-99 (E.D.Va.1975)(declining class certification due to the varying mass-accident plaintiffs' citizenships and resulting conflicts of law questions as to the plaintiff's burden of proof, the use of certain defenses, and the availability of some theories of recovery). This is not a case, moreover, in which there are potentially divergent forms of relief available. Cf., e.g., Crasto v. Estate of Kaskel, 63 F.R.D. 18, 24 (S.D.N.Y.1974)(declining class certification when some shareholder plaintiffs in a co-operative apartment building may prefer to move out and collect damages whereas others may prefer an amicable agreement and remain in their homes). Once the court determines the overall amount of fees available for refund, each individual owner's share will be identifiable from County records. The second factor focuses on the extent and nature of any litigation concerning the controversy already commenced by or against members of the class[.] Md. Rule 2-231(b)(3)(B). This evaluation is `aimed at determining whether there is so much pre-existing litigation that a class would be unproductive' and `is intended to serve the purpose of assuring judicial economy and reducing the possibility of multiple lawsuits.' Angeletti, 358 Md. at 764, 752 A.2d at 241 (citations omitted). Here, there is no other pending litigation for refunds under the impact fee ordinance, and no corresponding concerns over judicial economy or multiple lawsuits. Under Rule 2-231(b)(3)(C), courts should consider the desirability or undesirability of concentrating the litigation of the claims in the particular forum[.] In Angeletti, we cited with approval the following explanation: This factor embodies basically two considerations. First, a court must evaluate whether allowing a Rule [2-231(b)(3)] action to proceed will prevent the duplication of effort and the possibility of inconsistent results.... The other consideration ... is whether the forum chosen for the class action represents an appropriate place to settle the controversy, given the location of the interested parties, the availability of witnesses and evidence, and the condition of the court's calendar. 358 Md. at 764-65, 752 A.2d at 241 (quoting 7A C. WRIGHT, A. MILLER, & M. KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D § 1780, at 572-73 (2d ed.1986)). In this case, the Circuit Court for Anne Arundel County is an able and appropriate forum. It will provide consistent results and is located near all potential class members in Anne Arundel County. The final factor looks to any difficulties likely to be encountered in the management of a class action. Md. Rule 2-231(b)(3)(D). This factor `encompasses the whole range of practical problems that may render the class action format inappropriate for a particular suit.' Angeletti, 358 Md. at 765, 752 A.2d at 242 (quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 164, 94 S.Ct. 2140, 2146, 40 L.Ed.2d 732 (1974)). Federal courts have denied class-certification under this factor for concerns due to individualized and exceedingly complex factual or legal programs. See Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 191 (3rd Cir.2001)(finding unmanageable class action which would require individualized inquiry into hundreds of millions NASDAQ transactions); Andrews v. American Tel. & Tel. Co., 95 F.3d 1014, 1023 (11th Cir.1996)(denying as unmanageable a class action against 1-900 marketing schemes which would require state law-specific inquiries for plaintiffs from all 50 states); Emig v. American Tobacco Co., Inc., 184 F.R.D. 379, 393 (D.Kan.1998)(ruling that plaintiffs' proposed trifurcated trial plan was unmanageable because it would necessarily require some type of individual trial for every class member and would greatly complicate the management of the class action). The County would include a class action defendant's administrative difficulty as one of the practical problems that can make a class action unmanageable. We are unconvinced, however, that the County's burden makes this class action unmanageable and thus not superior. The Circuit Court's determination of the fees available for refund, though complicated, has not required, nor will require in its reconsideration on remand, an extensive, individualized, refund inquiry for each class member. As we explained in footnote seven, the Circuit Court's task on remand will only require that the court determine whether and how much refund is owed, in total, after considering all impact fee amounts that the County had timely encumbered for eligible capital improvements, including payments or encumbrances for both transportation projects and school projects. This remaining step, though requiring an initially burdensome notice procedure, is not comparable to other complex, furcated, trial procedures for which a class action has been denied. Although the burden on a defendant is certainly considered, the County fails to cite any other case in which a class certification was denied because of a burden on the defendant comparable to that claimed here. In Pattillo v. Schlesinger, 625 F.2d 262, 264-65 (9th Cir.1980), a case relied on by the County, the United States Court of Appeals for the Ninth Circuit denied class certification on the basis that the administrative procedure was superior for the plaintiff, not more convenient for the defendant. The proposed class in Pattillo was uniformed military personal who had not received payments from the military. The administrative process for getting this pay was functioning and reliable, however, and the speed and amount of recovery would [actually] be increased by opting out of the class and filing a separate claim directly with the particular branch of the uniformed services with which the class member had served. 625 F.2d at 265. The County cannot seriously contend that its proposed alternativepublishing notice in a newspaper and waiting for applications would enhance the ability of class members to get a refund. The decision in Ferguson v. Housing Authority of Middlesboro, 499 F.Supp. 334 (E.D.Ky.1980) also does not support the County's argument. In Ferguson, plaintiffs challenged an eviction process by a local housing authority, and attempted to certify a class of tenants who had not yet been evicted. The Court found that class certification was unnecessary, reasoning that if the Court determined that the housing authority must change its eviction procedure, its ruling would automatically provide a pre-emptive remedy for the potential class member tenants. Id. at 335. By contrast, here, there will be no automatic remedy for proposed class members. Rather, the County's proposed alternative would render unlikely any recovery by most class members. Given this probability, the County's burden is a secondary consideration in the superiority analysis. Because the refund is owed to current owners of the properties, the class members, for the most part, would not be the owners who paid impact fees, in some cases, nearly twenty years ago. Thus, these owners would have little reason to attach any significance to a public notice. Even property owners who actually paid the fee have only a small likelihood that they would see the notification, remember paying an impact fee, and respond in time for a refund. The superiority required by the statute is not superior administrative convenience exclusively for the defendant, but superiority for the fair and efficient adjudication of the matter. Adopting a method in which so few deserving property owners would receive refunds, however convenient it may be for the County, is not fair. [14] The class certification here is also distinguishable from the class certification we denied in Hooks v. Comptroller, 265 Md. 380, 289 A.2d 332 (1972). In Hooks, a taxicab lessee taxpayer asserted his right to bring a class action for refunds of sales tax on behalf of other similarly situated taxpaying taxicab drivers. The refund process in Hooks, however, was controlled by the Retail Sales Tax Act, which required that an application and appeal be made by the person who paid the tax: It would seem patently clear that applications for refund may be made only by the taxpayer who paid the tax or by a vendor who has collected the tax from others. Here, it was the taxpayer, Hooks, who made the claim, and while he may act in his own behalf, there is no warrant in the Act permitting him to advance a claim in behalf of others similarly situated. The right of appeal to the Maryland Tax Court provided for by § 352 of the Act is accorded any taxpayer and taxpayer, as defined by § 324(q) ... means any person required ... to pay or pay over to the Comptroller the tax imposed[.] While the definition of person appearing in § 324(a) encompasses a person acting in a fiduciary or representative capacity, or a group ... of individuals acting as a unit, the definition must be read in the context of § 348, which provides that application must be made by the person who paid the tax. Id. at 383-84, 289 A.2d at 334. A second reason the Hooks Court assigned for denying the class action focused on the nature of a Maryland Tax Court appeal: Additionally, it is quite clear that Maryland Rule 209, dealing with class actions, on which Hooks relies, while made applicable to the courts of the State by Rule 1, is not applicable to either the Comptroller or the Maryland Tax Court under Rule 5 i. Hooks, 265 Md. at 384, 289 A.2d at 334. In contrast, the proper forum for the Owners' cause of action in assumpsit is the Circuit Court, not the Tax Court. Unlike the Tax Court, circuit courts are the correct forum for Rule 2-231 class actions. Quite simply, the Hooks rationale does not apply here. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED; COSTS TO BE PAID BY ANNE ARUNDEL COUNTY.