Opinion ID: 200373
Heading Depth: 3
Heading Rank: 2

Heading: The Predominance Requirement

Text: 22 The district court's decertification of the classes for the contract, ch. 93A, and TCA claims, as well as its denial of the motion to substitute a new class representative, all rested on fundamental errors of law and fact. Once these errors are corrected, it becomes clear that common issues as to both liability and damages predominate on the elements of the breach of contract and ch. 93A claims. We first consider the contract claim. 23
24 The first error was initially contained in the following statement from the district court's March 22, 2001 opinion decertifying the class: 25 Proof of charges and payments is not evidence of harm or an amount of harm on the basis of which damages could be awarded in the face of (i) a strong likelihood that services were received in return for billed payments and (ii) lack of admissible evidence to rebut that strong likelihood. 26 Smilow, 200 F.R.D. at 8. In its April 10, 2002 memorandum and order after remand, the district court repeated this language and stated that it thought this analysis correct. 27 From this statement we understand the district court to have believed that the defendant would be entitled to payment for incoming calls on a theory of quantum meruit even if plaintiffs were to prevail on their breach of contract claim. Under the doctrine of quantum meruit, one who renders goods or services in the absence of an enforceable contract may be entitled to payment for those services to the extent the recipient benefitted from them. See, e.g., Meng v. Trs. of Boston Univ., 44 Mass.App.Ct. 650, 693 N.E.2d 183, 187 n. 4 (1998). If the plaintiff is entitled to recover on a contract, he cannot recover in quantum meruit. Marshall v. Stratus Pharms., Inc., 51 Mass.App.Ct. 667, 749 N.E.2d 698, 703 n. 6 (2001). Though we do not decide the question here, it would similarly seem that where a defendant is clearly not due payment under the terms of an enforceable contract, such defendant cannot claim a right to payment under quantum meruit. Where... there is an enforceable express or implied in fact contract that regulates the relations of the parties or that part of their relations about which issues have arisen, there is no room for quasi contract. A.L. Corbin, Corbin on Contracts § 1.20 (J.M. Perillo ed., rev'd ed.1993). 28 The district court's reliance on the doctrine of quantum meruit led it to overlook questions of law and fact common to all class members. As plaintiffs' brief says, The plaintiffs' claims are based entirely on a standard form contract which the defendant used with every member of the class. The common factual basis is found in the terms of the contract, which are identical for all class members. The common question of law is whether those terms precluded defendant from charging for incoming calls. 29 Cellular One's waiver defense is also common to the class. [A]ffirmative defenses should be considered in making class certification decisions. Mowbray, 208 F.3d at 295. Again, both the factual basis for and the legal defense of waiver present common issues for all class members. 7 All class members received a user guide and monthly invoices showing that defendant charged the class members for the incoming calls. 30 Even in the unlikely event that individual waiver determinations prove necessary, the proposed class may still satisfy the predominance requirement. See id. at 296. Courts traditionally have been reluctant to deny class action status under Rule 23(b)(3) simply because affirmative defenses may be available against individual members. E.g., 6A Fed. Proc., L.Ed. § 12:248, Defenses to Individual Members' Claims (2002) (citing cases); 32B Am. Jur.2d Federal Courts § 2018 & n. 1 (2002) (citing cases); see, e.g., Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 924 (3d Cir.1992) (Given a sufficient nucleus of common questions, the presence of the individual issue of compliance with the statute of limitations has not prevented certification of class actions in securities cases.) (internal quotation omitted); Cameron v. E.M. Adams & Co., 547 F.2d 473, 478 (9th Cir.1976) (same). See generally Mowbray, 208 F.3d at 295 (identifying statute of limitations as an affirmative defense). 31 Instead, where common issues otherwise predominated, courts have usually certified Rule 23(b)(3) classes even though individual issues were present in one or more affirmative defenses. See, e.g., In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 138-40 (2d Cir. 2001); Hoxworth, 980 F.2d at 924; Cameron, 547 F.2d at 477-78. After all, Rule 23(b)(3) requires merely that common issues predominate, not that all issues be common to the class. In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 315 (3rd Cir.1998); see 5 J.W. Moore, Moore's Federal Practice § 23.46[.1], at 23-206 to 23-207 (3d ed. 1997 & Supp.2002). If, moreover, evidence later shows that an affirmative defense is likely to bar claims against at least some class members, then a court has available adequate procedural mechanisms. In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d at 141 (describing procedural options and collecting authorities); 1 H. Newberg & A. Conte, Newberg on Class Actions § 4.26, at 4-91 to 4-97 (3d ed.1992) (same). For example, it can place class members with potentially barred claims in a separate subclass, 29A Fed. Proc., L.Ed. 70:411 & n. 69, Predominance of Common Issues (2002) (citing cases); see Fed.R.Civ.P. 23(c)(4)(B), or exclude them from the class altogether, In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d at 141; 6A Fed. Proc., supra, § 12:248 & n. 6 (citing cases). 32 Cellular One argues that even if there are common questions of law and fact, the district court did not abuse its discretion by decertifying the class because individual issues predominate on damages. This is largely an issue of whether plaintiffs could use a computer program to extract from Cellular One's computer records information about individual damages. The district court viewed this question as mostly beside the point and its decertification orders rested mainly on other grounds. 33 The individuation of damages in consumer class actions is rarely determinative under Rule 23(b)(3). Where, as here, common questions predominate regarding liability, then courts generally find the predominance requirement to be satisfied even if individual damages issues remain. In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d at 139; Bogosian v. Gulf Oil Corp., 561 F.2d 434, 456 (3d Cir.1977); Gold Strike Stamp Co. v. Christensen, 436 F.2d 791, 798 (10th Cir.1970); 5 Moore, supra, § 23.46[2][a], at 23-208 & n. 11 (collecting additional cases); 4 Newberg & Conte, supra, § 18.27, at 18-89; see Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975) (The amount of damages is invariably an individual question and does not defeat class action treatment.). 8 34 There is even less reason to decertify a class where the possible existence of individual damages issues is a matter of conjecture. See Mowbray, 208 F.3d at 298-99. Common issues predominate where individual factual determinations can be accomplished using computer records, clerical assistance, and objective criteria — thus rendering unnecessary an evidentiary hearing on each claim. See Roper v. Consurve, Inc., 578 F.2d 1106, 1112 (5th Cir.1978), aff'd on other grounds sub nom., Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980); 5 Moore, supra, § 23.46[3], at 23-210 & n. 18 (collecting cases holding that class certification is appropriate where damages are calculable by mathematical formula). 35 Still, the parties here dispute whether it will be possible to establish breach, causation, and damages using a mechanical process. Cellular One argues that Smilow has not shown that she could use defendant's computer records either to distinguish the subset of incoming call recipients who exceeded their monthly allotment of free minutes or to calculate how much extra each class member was charged as a result of receiving incoming calls. 36 The plaintiffs' expert, Erik Buchakian, says he could fashion a computer program that would extract from Cellular One's records (1) a list of customers who received incoming calls during the class period; (2) a list of customers who paid extra during the class period because they were billed for incoming calls; and (3) actual damages for each class member during the class period. Buchakian had access to more than adequate materials — including a sample computer tape and the deposition of defendant's expert — and has more than adequate expertise — degrees in business and computer science and thirteen years of relevant work experience. The affidavits of defendant's expert, Susan Quintiliani, are consistent with Buchakian's conclusions. 37 If later evidence disproves Buchakian's proposition, the district court can at that stage modify or decertify the class, see Gen. Tel. Co., 457 U.S. at 160, 102 S.Ct. 2364 (Even after a certification order is entered, the judge remains free to modify it in light of subsequent developments in the litigation.), or use a variety of management devices, In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d at 141; 1 Newberg & Conte, supra, § 4.26, at 4-91 to 4-97. Indeed, even if individualized determinations were necessary to calculate damages, Rule (23)(c)(4)(A) would still allow the court to maintain the class action with respect to other issues. See, e.g., In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d at 141; Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1197 (6th Cir.1988); Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 470-71 (5th Cir.1986). 38 Consideration of the policy goals underlying Rule 23(b)(3) also supports class certification. The class certification prerequisites should be construed in light of the underlying objectives of class actions. S.S. Partridge & K.J. Miller, Some Practical Considerations for Defending and Settling Products Liability and Consumer Class Actions, 74 Tul. L.Rev. 2125, 2129 (2000); see Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.1997); see also Fed. R. Civ. Pro. 23(b)(3) advisory committee's note (construing predominance as a prerequisite for obtaining economies of scale). Rule 23(b)(3) is intended to be a less stringent requirement than Rule 23(b)(1) or (b)(2). See Amchem Prods., Inc., 521 U.S. at 615, 117 S.Ct. 2231 (Framed for situations in which class-action treatment is not as clearly called for as it is in Rule 23(b)(1) and (b)(2) situations, Rule 23(b)(3) permits certification where class suit may nevertheless be convenient and desirable.) (internal quotations omitted). The core purpose of Rule 23(b)(3) is to vindicate the claims of consumers and other groups of people whose individual claims would be too small to warrant litigation. 9 See id. at 617, 117 S.Ct. 2231 (While the text of Rule 23(b)(3) does not exclude from certification cases in which individual damages run high, the Advisory Committee had dominantly in mind vindication of the rights of groups of people who individually would be without effective strength to bring their opponents into court at all.) (internal quotations omitted); Mace, 109 F.3d at 344 (The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.); see also Roper, 445 U.S. at 338 n. 9, 100 S.Ct. 1166 (A significant benefit to claimants who choose to litigate their individual claims in a class-action context is the prospect of reducing their costs of litigation, particularly attorney's fees, by allocating such costs among all members of the class who benefit from any recovery.). 39 In this case, the claims of most if not all class members are too small to vindicate individually. Smilow, for example, received just a single incoming call and so can obtain only minimal contract damages. 40 Overall, we find that common issues of law and fact predominate here. The case turns on interpretation of the form contract, executed by all class members and defendant. See W.D. Henderson, Reconciling the Juridical Links Doctrine with the Federal Rules of Civil Procedure and Article III, 67 U. Chi. L.Rev. 1347, 1373-74 (2000) (the fact that prospective class members signed nearly identical consumer contracts might, in itself, satisfy the predominance requirement). 41
42 The decertification of the ch. 93A class is similarly flawed: it also rests on the premise that individual inquiries would be required because services were received for the charges on incoming calls. 43 As plaintiffs' brief says, the Ch. 93A claim is not an oral misrepresentation claim, but [is] based on the same standard form contract which was signed by all class members. See generally Anthony's Pier Four, Inc. v. HBC Assoc., 411 Mass. 451, 583 N.E.2d 806, 821 (1991) ([C]onduct in disregard of known contractual arrangements and intended to secure benefits for the breaching party constitutes an unfair act or practice for ch. 93A purposes.). Cellular One points to law to the effect that a mere breach of contract is not a ch. 93A violation. See Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85, 390 N.E.2d 243, 251 (1979). That defense, though, argues for, not against, the commonality of liability issues. Plaintiffs disclaim any intent to rely on oral misrepresentations, and must adhere to that position or risk losing class status. 10 44 Our prior discussion is adequate to dispose of any argument that decertification would be required because of a need for individual damages determinations. Since Smilow can compute actual damages using a computer program, we need not address plaintiffs' argument that common issues would predominate only on a claim for statutory damages, and not on a claim for individual damages. 11 As to statutory damages, the Supreme Judicial Court has held that plaintiffs who cannot show actual damages under ch. 93A may nonetheless obtain statutory damages if liability is established. Leardi v. Brown, 394 Mass. 151, 474 N.E.2d 1094, 1101-02 (1985) (awarding statutory damages under ch. 93A § 9(3)). This too supports class certification. 45 We are left with the district court's concern that any ch. 93A class would be composed of two groups: a statutory damages group and an actual damages group. But plaintiffs' position is that should any conflict develop between the two groups, the action would seek only statutory damages, class members would be given notice to that effect, and those who wish to pursue individual claims for actual damages could opt-out. We agree this is an option and, in this context, the hypothetical conflict provides no basis for decertification. 46
47 Though the district court decertified the class for all claims, Smilow's appellate briefs and oral argument completely ignore its TCA claim. Issues raised on appeal in a perfunctory manner (or not at all) are waived. Ryan v. Royal Ins. Co., 916 F.2d 731, 734 (1st Cir.1990). Smilow has therefore waived her argument that the district court improperly decertified the class in the TCA claim. See Penobscot Indian Nation v. Key Bank, 112 F.3d 538, 563 (1st Cir.1997).