Opinion ID: 2833600
Heading Depth: 3
Heading Rank: 2

Heading: Evidence of Commonality and Predominance

Text: It is often appropriate to discuss commonality and predominance together because the commonality inquiry is subsumed into the predominance inquiry. See, e.g., Danvers Motor Co. v. Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (“[W]here an action is to proceed under Rule 23(b)(3), the commonality requirement is subsumed by the predominance requirement.” (internal quotation marks omitted)). We have also concluded that “[r]eading the District Court’s commonality and predominance analyses together . . . is appropriate in [the RICO] context[.]” In re Ins. Brokerage Antitrust Litig., 579 F.3d at 266-67 (citation omitted). Therefore, we do not fault the District Court for combining its discussions of commonality and predominance. Reyes, 2013 WL 5332107, at -9. However, in the interest 23 of clarity, we will address each requirement separately. We will first discuss commonality, and then discuss predominance. In re LifeUSA Holding, Inc., 242 F.3d 136, 145 (3d Cir. 2001) (“[C]ommon questions (commonality) must be established before predominance can be found . . . .” (emphasis added)); see generally Marcus, 687 F.3d at 597, 600-12.
As explained above in relation to the different return rates, the District Court concluded that because Reyes’ evidence “result[s] in individual inquiries as to each telemarketer,” class certification is precluded. Reyes, 2013 WL 5332107, at . The focus of the District Court’s inquiry was whether the proposed class would “generat[e] common answers apt to drive the resolution of the litigation, such that a determination of the truth or falsity of the contention will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. at  (emphasis in original) (internal quotation marks omitted). Federal Rule of Civil Procedure 23(a)(2) merely requires that there be “questions of law or fact common to the class[.]” Commonality does not require perfect identity of questions of law or fact among all class members. Rather, “even a single common question will do.” Wal-Mart Stores, Inc., 131 S. Ct. at 2556 (quotation marks and alterations omitted); Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994) (discussing how Rule 23(a)(2) “is easily met[]”). “A putative class satisfies Rule 23(a)’s commonality requirement if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class.” Rodriguez v. Nat’l City Bank, 726 F.3d 372, 382 (3d Cir. 2013) (internal quotation marks omitted). A court’s focus must be “on whether the defendant’s conduct [is] common as to all of the class members[.]” Sullivan, 667 F.3d at 298. “Again, th[e] bar is not a high one.” Rodriguez, 726 F.3d at 382. When a party seeks to certify a class to bring a RICO claim, the focus is on the defendant’s conduct. As we said in In re Insurance Brokerage Antitrust Litigation: 24 [p]roving the first element of a RICO violation in this case would involve common questions about the activities of the . . . Defendants and, in particular, whether the . . . Defendants participated or engaged in conduct with other . . . Defendants. The second element also involves common questions of law and fact, namely whether an enterprise of . . . Defendants existed . . . either as an association in fact or as a more formal organization or entity. Proving the third and fourth elements would encompass common questions of law and fact as well, including whether activities that constitute racketeering were taking place through the enterprise (such as mail or wire fraud) and whether these racketeering activities were recurring such that a pattern could be established. 579 F.3d at 269-70 (emphasis added). These elements focus on the defendants’ joint conduct vis-à-vis the plaintiffs. Likewise, the District Court in this case noted that “the first four elements of a RICO claim . . . focus[] on the defendants’ conduct and the effect of that conduct.” Reyes, 2013 WL 5332107, at  (citation omitted). Thus, a properly supported RICO allegation will often contain common issues because, like “commonality[, a RICO allegation,] is informed by the defendant’s conduct as to all class members and any resulting injuries common to all class members[.]” Sullivan, 667 F.3d at 297; see also In re Ins. Brokerage Antitrust Litig., 579 F.3d at 269-70. “Whether the evidence presented proves a RICO conspiracy[]” is a question “common to each class member and will generate common answers[.]” In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig., 2015 WL 4547042, at -14. We also note that the elements of a RICO claim fit Wal-Mart’s commonality requirement because determining the “truth or falsity” of a “common contention[,]” here an element of RICO, “will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc., 131 S. Ct. at 2551; see In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig., 2015 WL 4547042, at 25  (distinguishing a putative RICO class action from the pitfalls of the class action rejected in Wal-Mart). Reyes has presented evidence which, if accepted, could establish by a preponderance of the evidence that (1) “Zions and Modern Payments were processing transactions for a number of entities -- in addition to NHS Systems -- that government agencies [later] determined were fraudulent[,]” Appellant Br. at 15; Appellee Br. at 48-49, (2) Zions Bank, Netdeposit, and Modern Payments sent e-mails communicating a sense of shock regarding the “staggering” return rates, JA 686, and concerns that they may be at risk for some of their business lines being used for “money laundering[,]” id. at 692, (3) Zions Bank was aware that its high return rates “alarm[ed]” NACHA,” id. at 814-15, and (4) Modern Payments was “afraid of” a probe by the FTC regarding potential fraud, id. at 693, and Zions Bank received warnings from other banks that they “will disput[e] all charges” generated by NHS Systems. Id. at 1061-62. On remand, the District Court should consider whether this evidence, if accepted as credible, is sufficient to conclude that there is “actual, not presumed, conformance” with Rule 23. Marcus, 687 F.3d at 591 (quotation marks omitted); see also Wal-Mart Stores, Inc., 131 S. Ct. at 2551 (requiring “[a] party seeking class certification [to] affirmatively demonstrate” compliance with Rule 23). We are not persuaded that the evidence here is similar to that which was deemed insufficient for class certification in Wal-Mart. Wal-Mart affirmed that commonality can be satisfied when there is “significant proof” that the defendant “operated under a general policy of discrimination.” Id. at 2553-54 (quotation marks omitted). In Wal-Mart, the defendant operated in a discretionary, and thus arguably individualized way toward the members of the proposed class. The record did not establish a national policy or any single individual or group of individuals responsible for the exercise of discretion. Here, there are slight variations in the telemarketers’ and defendants’ conduct underlying the putative class members’ claims. For example, some plaintiffs were offered 26 government grants, while others were offered healthcare discount cards, and still others had no direct involvement at all as their account information was purchased by a defendant. However, unlike Wal-Mart, we are not concerned with damages that result from the exercise of anyone’s discretion. Further, in Wal-Mart, the plaintiffs’ statistical and anecdotal evidence failed to demonstrate a “common mode of exercising discretion that pervades the entire company[.]” Id. at 2554-55. Without that, commonality could not be established. In stark contrast, the sham theory used here relies on a “common mode” of behavior and a “general policy” of fraud. See In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig., 2015 WL 4547042, at  (distinguishing Wal-Mart and reasoning that “the Plaintiffs in this case have alleged that the class was subjected to the same kind of illegal conduct by the same entities, and that class members were harmed in the same way, albeit to potentially different extents[]”). Reyes alleges that the defendants operated together in a common, fraudulent scheme that was a complete sham masquerading as a legitimate business undertaking. When a plaintiff alleges that a defendant’s disputed conduct is a complete sham, the relevant inquiry is whether there was an ongoing scheme to defraud or deceive, Rosario, 963 F.2d at 1017-19, and whether the defendant fails to meet the most basic standard of its purported commercial undertaking, Cullen, 188 F.R.D. at 235. If so, a common harm will be presumed from the mere fact that class members were all similarly injured by the sham. A court can then conclude that there are common issues and that those common issues will predominate over individual issues.15 When viewed at this macroscopic level, rather than the microscopic level that may be required when allegations implicate a defendant’s exercise of discretion, it is clear that we are not faced with the individual circumstances that were 15 Because the “complete sham” theory also applies to the predominance inquiry, it will be discussed further below. 27 fatal to certification in Wal-Mart. As said, it is for the District Court to determine in the first instance whether Reyes has presented evidence that demonstrates commonality.
Reyes also contends that the District Court erred in finding that class claims did not predominate over individual claims. He argues that the District Court mistakenly focused on the return rates instead of considering that evidence in context with all of the testimony of his three experts, the FTC proceedings,16 and all other evidence that the defendants knew that they were operating a fraudulent enterprise. “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Products, Inc., 521 U.S. at 623 (citation omitted). It is important to note that Reyes is alleging a kind of consumer fraud. “[T]he Supreme Court has observed that predominance is a test readily met in certain cases alleging consumer or securities fraud or violations of the antitrust laws.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 321-22 (quotation marks omitted). One relevant “guidepost[] that direct[s] the predominance inquiry[]” is “that commonality is informed by the defendant’s conduct as to all class members and any resulting injuries common to all class members[.]” Sullivan, 667 F.3d at 297. “[Wal-Mart v.] Dukes actually bolsters [this] position, making clear that the focus is on whether the defendant’s conduct was common as to all of the class members, not on whether each plaintiff has a ‘colorable’ claim.” Id. at 299. Rule 23 does not require the absence of all variations in a defendant’s conduct or the elimination of all individual circumstances. Rather, predominance is satisfied if common issues predominate. In re Linerboard Antitrust Litig., 305 F.3d 145, 162 (3d Cir. 2002). “[T]he 16 As noted supra note 8, the proceedings came after the defendants’ involvement here. But, if admissible, it would be for the factfinder to determine if the record, taken as a whole, supports the conclusion (or an inference) that the defendants were aware of the facts underlying the proceedings, or the proceedings themselves. 28 focus of Rule 23(b)(3) is on the predominance of common questions[.]” Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1195 (2013) (emphasis in original). A district court “analyze[s] predominance in the context of Plaintiffs’ actual claims.” Neale, 2015 WL 4466919, at . When Rule 23 is the mechanism to redress alleged RICO violations, predominance and commonality are satisfied if each element of the alleged RICO violation involves common questions of law and fact capable of proof by evidence common to the class. In re Ins. Brokerage Antitrust Litig., 579 F.3d at 269-70. This is true even if “establishing an injury is not as conducive to common proof[,]” so long as a court is “satisfied that the plaintiffs have presented a plausible theory for proving a class-wide injury as a result of the racketeering activities of the alleged enterprises at issue[.]” Id. at 270; see also Neale, 2015 WL 4466919, at  & n.10 (collecting cases regarding how an inability to calculate damages on a classwide basis will not, on its own, bar certification). “The question is not what valid claims can plaintiffs assert; rather, it is simply whether common issues of fact or law predominate.” Sullivan, 667 F.3d at 305 (citation omitted); In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311-12. The predominance inquiry seeks to resolve whether there are “reliable means of proving classwide injury[.]” In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244, 252-53 (D.C. Cir. 2013); see also In re Nexium Antitrust Litig., 777 F.3d 9, 21 (1st Cir. 2015). This is often done with the assistance of experts. The District Court relied on Johnston v. HBO Film Management, Incorporated, 265 F.3d 178, 190 (3d Cir. 2001), and In re LifeUSA Holding, Incorporated, 242 F.3d 136, 146 (3d Cir. 2001), to conclude that, because these “telemarketers . . . interacted with consumers in different ways (by telephone, internet, and slamming),” Reyes, 2013 WL 5332107, at , and because return rates are not absolute proof that the defendants are a complete sham, “the only way to determine if a class member was defrauded was to individually examine the interaction between the defendant 29 and each class member.” Id. at . Neither case persuades us. In In re LifeUSA Holding, Incorporated, the fraud involved a product that “was not sold according to standard, uniform, scripted sales presentations.” 242 F.3d at 146. We concluded that simply focusing on whether all potential class members were misled by the same product was inappropriate. Id. We also stated that when “the record is uncompromising in revealing non-standardized and individualized sales ‘pitches’ presented by independent and different sales agents, all subject to varying defenses and differing state laws, . . . certification of individualized issues [is] inappropriate.” Id. at 147; cf. Moore v. PaineWebber, Inc., 306 F.3d 1247, 1255 (2d Cir. 2002) (“[M]aterial uniformity in the misrepresentations may be established without the use of a standardized sales script[, for example.]”). In Johnston, we again held that oral misrepresentation must be uniform in order to establish predominance under Rule 23(b)(3). See 265 F.3d at 190. Thus, “it has become well-settled that, as a general rule, an action based substantially on oral rather than written communications is inappropriate for treatment as a class action.” Id. (internal citations omitted). However, both of those cases involved legitimate businesses and Reyes relies upon that to distinguish the circumstances here, arguing instead that the defendants and telemarketers here were not legitimate business entities. See In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig., 2015 WL 4547042, at ,  (affirming the District Court’s finding that individual issues of reliance will not predominate when the plaintiffs “allege[] that [the defendant] performed absolutely no services to earn the . . . fees[]”). Rather, Reyes asserts that they all acted in concert to perpetrate fraud through a sham enterprise and that each of the defendants had to have known the real nature of that fraudulent enterprise. He also claims that any variations in the manner in which various individuals were defrauded is irrelevant and not sufficient to preclude common issues of law from predominating. The argument is based on his claim that the defendants “engaged in systematic fraud and operated solely 30 to debit victims’ accounts[]” and “there is no evidence of any cohort of class members who were not victims.” Appellant Br. at 64. Likewise, in Cullen, plaintiffs claimed that, while the “defendants represented that they were providing a program that would prepare students for careers as ultrasound sonographers[,]” they “misrepresent[ed] the nature of the ultrasound program, and failed to provide the education represented.” 188 F.R.D. at 228. Even though the institution was accredited, the program that the plaintiffs were enrolled in was not. That prevented the program’s graduates from sitting for the relevant registration examination. Id. at 22829. The plaintiffs contended that the “defendants’ operation was a ‘complete sham,’ and did not provide even a minimal education.” Id. at 228. Cullen held that the sham theory satisfied the predominance requirement and it certified a RICO class. Cullen explained: “plaintiffs’ proof will be focused on the defendants’ conduct; plaintiffs’ case will revolve around evidence that the school did not meet the most basic standards of an educational program. It need not involve time consuming proof of individual causation or reliance.” Id. at 235. Instead, at trial, “[i]f the plaintiffs can prove that [the defendant] was a complete sham, then a fact finder can infer from the evidence that anyone who paid tuition and attended the school suffered damage.” Id. Cullen relied on Rosario, which had similar facts and involved a similar fraudulent scheme. The trial evidence in Rosario established that the defendant failed to provide students with the skills, equipment, or environment to prepare for a cosmetology career for which the school was supposed to train students. Rosario, 963 F.2d at 1016-17. The Court of Appeals for the Seventh Circuit affirmed the District Court’s certification of the class. It held that the operative question was whether the “schools operated pursuant to an ongoing scheme to defraud and deceive prospective students[,]” thus applying a “complete sham” theory. Id. at 1018. The defendants attempted to negate that approach by relying on evidence that some students were satisfied with their education and two students who graduated did become licensed and were working in the field. The Seventh Circuit refused to conclude that the defendant-institution was not a 31 complete sham merely because “some class members were satisfied with their teachers, and at least two class members graduated from [the defendant’s] schools and passed the state licensing exam.” Id. at 1017. Rather, the Court concluded that “[t]he fact that there is some factual variation among the class grievances will not defeat a class action.” Id. at 1017-18 (citation omitted). While the District Court here recognized Reyes’ theory of a sham enterprise, it nevertheless concluded that the evidence Reyes offered in support of that theory was insufficient to satisfy predominance because different sales pitches were used and different products were pitched. However, if absolute conformity of conduct and harm were required for class certification, unscrupulous businesses could victimize consumers with impunity merely by tweaking the language in a telemarketing script or directing some (or all) of the telemarketers not to use a script at all but to simply orally convey a general theme designed to get access to personal information such as account numbers. We do not believe that our discussion of predominance in our prior cases intended to either license such behavior by placing it beyond the reach of Rule 23 or to supply a roadmap that would guide the unscrupulous in designing fraudulent schemes that would be beyond the reach of Rule 23. Otherwise, although such subtle but irrelevant variations in the manner of defrauding members of the public would not insulate unscrupulous marketers from liability in individual suits, it would -- for all practical purposes -- insulate them from class actions. An interpretation of Rule 23 that places class actions beyond the reach of consumers who have been victimized by fraudulent schemers who are wise enough to adopt schemes with subtle (but meaningless) variations would invite the kind of consumer fraud that Reyes is alleging here. Class actions are often the only practical check against the kind of widespread mass-marketing scheme alleged here. The individual claims arising from such conduct are usually too small to justify suit unless aggregated in a class action. This is particularly true when, as is often the case, the scheme targets unsophisticated consumers with little disposable income and without the means or wherewithal to seek 32 assistance of legal counsel. As a practical matter, the average victim of such a scheme nearly always finds it far easier -- and much cheaper -- to reluctantly accept any loss and move on than to undertake the expense and inconvenience endemic in the protracted process of trying to recover a few dollars years later. A class action “permit[s] the plaintiffs to pool claims which would be uneconomical to litigate individually. . . . [M]ost of [such] plaintiffs would have no realistic day in court if a class action were not available.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985). “[C]onsumers have little interest in litigating their claims individually because of the small amount of money per plaintiff that is at stake.” Cabraser, supra, at 822 (quotation marks omitted). Moreover, obtaining counsel to pursue such a claim is usually the height of impracticality -- even for those who can afford to do so. “What rational lawyer would have signed on to represent the [party] in litigation for the possibility of fees stemming from a $30.22 claim?” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1761 (2011) (Breyer, J., dissenting). In such cases, the class action can “create[] greater access to judicial relief[.]” Marcus, 687 F.3d at 594. “[I]t is[, in fact,] possible to think of consumer class actions as providing an indispensable mechanism for aggregating claims when the individual stake is low and the similarity of the challenged conduct is high.” Samuel Issacharoff, Group Litig. of Consumer Claims: Lessons from the U.S. Experience, 34 Tex. Int’l L.J. 135, 149 (1999).17 Thus, class actions have the practical effect of allowing plaintiffs who have suffered relatively de minimis loss to nevertheless function as private attorneys general and thereby deter fraud in the marketplace. 17 See Fed. R. Civ. P. 23 advisory committee’s note to the 1966 amendment (“[A] fraud perpetrated on numerous persons by the use of similar misrepresentations may be an appealing situation for a class action, and it may remain so despite the need, if liability is found, for separate determination of the damages suffered by individuals within the class.”). 33 The “complete sham” theory, if supported by an appropriate record, can satisfy the predominance prong of Rule 23(b)(3) by focusing on the overarching material and defining aspects of a defendant’s conduct. This allows a court to certify a class despite subtle (but meaningless) variations that may occur while perpetrating a fraudulent scheme. Thus, as Reyes contends “[u]ltimately, the question is the extent to which fraud can be shown to have been committed on the class by common evidence.” Appellant Br. at 64. On remand, the District Court should consider the entire record to determine if it supports that contention. Investigator Blake testified “each of the schemes at issue was a totally fraudulent mass-marketing fraud.” Blake Decl., JA 1613, ¶ 15. She concluded that these were all “precisely the kind of fundamentally fraudulent schemes that, in [her] experience, have been routinely adjudicated on the basis of common evidence of fraud.” Id., JA 1627-28, ¶ 85. Professor Meyer reviewed the evidence and concluded that the proof of fraud was classwide. He identified four key features common to the way each telemarketer obtained bank account information and initiated debits from bank accounts. He concluded that although “these ‘products and programs’ appear to vary, all had [those] four common features essential to their use as props in the scheme of deception[.]” Meyer Decl., JA 1639-40 ¶ 19. The court-appointed receiver for NHS Systems, Geisser, testified that NHS Systems was “totally fraudulent and that no consumer who . . . had money taken from their account was not injured in the amount of money taken from their account[.]” Geisser Dep., JA 1161. The District Court may consider that the defendants’ experts offer little reason to conclude that predominance cannot be satisfied here. As noted above, Milner testified for the defendant. Milner did not agree that a return rate in excess of 10% was prima facie evidence of fraud. However, she also explained that pursuant to its Operating Rules, “NACHA gathers specific information concerning individual Originators with high rates of unauthorized returns . . . [and] may send the bank of an originator producing unauthorized returns in excess of 1% a written request for information 34 about specific originators.” Milner Decl., JA 3787, ¶ 25 (citation and footnote omitted). Professor Boss testified that “the overwhelming majority of banks in the United States have no unauthorized returns at all . . . .” Boss Decl., JA 590 ¶ 82. Reyes focuses our attention on testimony that Zions Bank, like most U.S. banks, had no unauthorized returns in August of 2006. It then started working with its wholly-owned subsidiary, Modern Payments, and its unauthorized returns began to “immediately . . . increase dramatically from zero in August 2006 to 799 in October, [and] 2,095 to 2,632 by February 2007.” Id., JA 587-88 ¶ 78 (emphasis in original). As noted earlier, when adjusted for its size, Zions Bank had the highest rate of returns of any U.S. bank. Reyes also offers the following chart summarizing the evidence regarding the return rates of the telemarketers: Total Return Rates First Total Return Rate as a Average Month Months Multiple of 2007 Return Return With National Average Fraud Scheme Rate Rate Zions (1.25%) NHS 64.79% 51.90% 15 52 RX Smart 54.21% 42.00% 3 43 Market Power Entities Market Power 86.73% 85.10% 11 69 Payday loan 73.46% 70.98% 4 59 Get Your Credit Rept 62.48% 55.94% 4 50 Vexeldale 74.09% 70.52% 4 59 Platinum Benefit Group 30.83% 37.98% 39 25 Group 1 Entities 51.67% 65.41% 21 41 Low Pay Inc 68.83% 65.41% 10 55  JA 661  JA 663 Appellant Br. at 25 (footnote omitted).18 18 We are not, of course, suggesting that the District Court had to accept the conclusions in the chart or the expert testimony that the scheme here is susceptible to class treatment. That determination remains left to the sound discretion of the District Court. However, the District Court 35 The crux of the Rule 23(b)(3) predominance inquiry here is whether a preponderance of the evidence supports Reyes’ proposition that the defendants operated a complete sham, and whether an affirmative answer to that inquiry would establish the required element of predominance. Reyes claims that if the evidence supports such a finding by a preponderance of the evidence, the predominance requirement of Rule 23(b)(3) is satisfied, even though the telemarketers did not read from a uniform script or use the same method of defrauding each of the members of the putative class. Appellant Br. at 62-63 (distinguishing this case from In re LifeUSA Holding, Incorporated and Johnston because there is a “question about the legitimacy of the [entity] itself[]” in which Reyes alleges the existence of one “systematic fraud”). As we have reiterated, Reyes argues the District Court erred in relying only on high return rates to deny class certification. As detailed above, Reyes also introduced proof of the structure of each of the schemes and FTC investigations. In particular, Reyes points to “broader eviden[ce] . . . includ[ing] three experts (all of whom opined that the underlying mass-marketing schemes were completely fraudulent), the related government proceedings, Mr. Geisser’s testimony, and a wealth of documentary evidence and deposition testimony reflecting Defendants’ knowledge of the fraud they were furthering.” Id. at 54.19 According to is not free to simply ignore such testimony without explaining why it is rejecting it. That is the antithesis of the thorough and rigorous inquiry that the law demands at the certification stage. 19 See also Appellant Reply Br. at 9-12 (discussing additional evidence, including “internal bank documents showing that Defendants were aware that they were providing services to frauds,” warnings from regulators, other banks, and employees “directly inform[ing] [the defendants] that they were carrying out transactions for frauds[,]” expert testimony, testimony from Geisser, “documents and declarations from both regulatory actions that identified each of the mass-marketing entities as frauds and those that 36 Reyes, the “evidence [presented about the fraudulent companies] applies to the class as a whole, [therefore] the jury’s consideration of th[e] evidence would apply to each class member’s claim.” Id. at 37. If accepted, the District Court may conclude that this evidence supports a finding that there was a single fraudulent RICO enterprise, that each defendant participated in that enterprise, and that all members of the proposed class were damaged in the amount of the funds debited from their bank accounts pursuant to the fraudulent scheme. We leave it for the District Court to assess this on remand. Reyes further asserts that the District Court could have specified subclasses for each defendant if it were concerned about proving fraud with respect to each entity. Id.; Appellant Reply Br. at 6 n.4. On remand, to the extent that ordered complete restitution of their victims[,]” data demonstrating the “explo[sion]” of unauthorized returns following the formation of the alleged RICO enterprise, and “documents showing that Defendants closely monitored the entities’ extreme return rates—which they openly acknowledged were staggering[.]” (citations and quotation marks omitted)). In mentioning this evidence, we in no way suggest that we agree with the District Court’s conclusion that evidence of high return rates cannot establish fraud on this record. We refrain from concluding that return rates can never be prima facie evidence of fraud or knowledge of fraud, no matter how much they vary from industry norms. See Blake Decl., JA 1612-13 ¶ 14.d (“The schemes at issue here involve unusually high numbers of returns even compared to other fraudulent schemes I have investigated. It is therefore highly likely that most of these schemes engaged in what is commonly known as ‘slamming.’”); Boss Decl., JA 587-88, 590 ¶¶ 78, 82 (“Anyone in possession of the[] facts [about the return rates] would have to have known fraud was involved. . . . It is obvious that the high rates of unauthorized returns are indicative of fraudulent activity by these companies.”); Meyer Decl., JA 1637-38 ¶¶ 12.a, 14 (“For there to be such high return rates there had to be fraud involved. . . . I conclude with reasonable certainty that the return rates alone establish that each of the entities at issue was fraudulent.”). 37 the District Court is concerned with the commonality and predominance requirements because of variations in the way the affairs of the allegedly fraudulent enterprise was conducted, it can consider whether Reyes’ proposed subclasses would adequately address those concerns. Fed. R. Civ. P. 23(c)(5), (d); see also Neale, 2015 WL 4466919, at  (“[T]he District Court should evaluate the relevant claims (grouping them where logical and appropriate) and rule on the predominance [and commonality] question[s] in light of the claims asserted and the available evidence.” (citation omitted)); Tobias Barrington Wolff, Discretion in Class Certification, 162 U. Pa. L. Rev. 1897, 1898 (2014) (“[D]istrict courts sometimes exercise discretion in defining the parameters of the class definition and deciding when subclasses are necessary, often acting independently of any proposals made by the parties.” (footnote omitted)).20 We note, however, “[t]he court has no sua sponte obligation so to act.” U.S. Parole Comm’n v. Geraghty, 445 U.S. 388, 408 (1980). “[I]t is not the District Court that is to bear the burden of constructing subclasses. That burden is upon the [plaintiff] . . . who is required to submit proposals to the court.” Id. As we have already explained, Reyes is correct in asserting that the District Court erred when it “examined one piece of evidence -- the mass-marketers’ extreme return rates -- and concluded that these rates alone were not ‘absolute proof’ of fraud.” Appellant Br. at 37. The law does not permit a district court to only consider and analyze the “most significant evidence[.]” Reyes, 2013 WL 5332107, at . Rather, the trial court must consider “all relevant evidence and arguments, including relevant expert testimony of the parties [unless there is a reason to reject certain testimony].” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 325 (emphasis added); see also In re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015). Moreover, as we have also explained, we do not require “absolute proof.” Indeed, such a burden would be prohibitive, as few things are capable of absolute proof that removes all possibility of 20 For a very thorough development of the evolution of discretion under Rule 23, see Wolff, Discretion in Class Certification, 162 U. Pa. L. Rev. at 1911-39. 38 doubt. Here, the District Court’s analysis singled out the “most significant evidence” (return rates) and then improperly applied a heightened standard to that evidence while ignoring all of the other testimony. However, there is an even more fundamental flaw in the District Court’s analysis. The District Court relied on fact witnesses while ignoring expert testimony, and confused the testimony of the witnesses it did consider.21 As noted above, Reyes presented declarations from three expert witnesses: Professors Boss and Meyer, and Investigator Blake. However, the District Court failed to mention, let alone closely scrutinize, any of Reyes’ experts. See Amchem Products, Inc., 521 U.S. at 615-16 (referring to the trial court’s “close look” before finding predominance and superiority); In re Hydrogen Peroxide Antitrust Litig., 553 F.3d at 320 (“[A] district court errs as a matter of law when it fails to resolve a genuine legal or factual dispute relevant to determining the requirements.”). The District Court then referred to Geisser and Fox as Reyes’ expert witnesses. Reyes, 2013 WL 5332107, at . Geisser and Fox were not expert witnesses, but fact witnesses. Geisser was installed as the NHS Systems receiver after the FTC obtained a preliminary injunction against NHS Systems; Fox was a senior director of risk investigation at NACHA. Appellant Br. at 10, 12, 26. Perhaps because it confused their role and expertise, the District Court relied on a concession by the fact witnesses to justify limiting its analysis to evidence of high return rates. Reyes, 2013 WL 5332107, at  (relying on Geisser’s concession and Fox’s silence to conclude that the high return rates are not dispositive of fraud). However, not only did Reyes’ expert witnesses fail to make this concession, Blake Decl., JA 1612-13 ¶ 14.d; Boss Decl., JA 587-88, 590 ¶¶ 78, 82; Meyer Decl., JA 1637-38 ¶¶ 12.a, 14, they also based their conclusions on the additional evidence discussed above. 21 Much of the confusion here is understandable. The District Court inherited the rather voluminous record in this