Court Opinion

ID: 871757
Source: CourtListenerOpinion
Date Created: 2013-05-25 02:29:55.195689+00
Date Added: 2024-06-11T13:20:33.573478
License: Public Domain

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F(`)R PUBLICTA'I`]()N IN W¢ES'I"S PL¢~‘\VV*AI‘I RE_P()RTS ANI) PACIFIC REI’()RTER

IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIYI
-~~o0o»~~
CYNTHIA NAKAMURA, individually and on behalf of all
others similarly situated, Plaintiff-Appellee,
v.
COUNTRYWIDE HOME LOANS, INC., Defendant-Appellant,
and
DOE DEFENDANTS l~50, Defendants~Appellees
NO. 27993

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. O4~l~l830) if

FEBRUARY 8, 2010

 

NAKAMURA, c.J., AND FoLEY, J.‘~  §_,V.J.;M,,

   

OPINlON OF THE COURT BY FOLEYl J. op
we
fm

  

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s

This is an interlocutory appeal by Defendant~Appellant
Countrywide Home Loans, Inc. (Countrywide) from the "Order
Granting Plaintiff's Motion For (A) Class Certification and (B)
to Approve Notice of Pendency of Class Action Filed on
January 27, 2006" (Certification Order) filed on May 22, 2006 in
the Circuit Court of the First Circuit (circuit court).2

On appeal,3 Countrywide contends the circuit court
abused its discretion by

(l) certifying the class of mortgagors who were

charged a fee by Countrywide for paying off their mortgages

§ Former Associate Judge Corinne K.A. Watanabe was a member of the
panel on this appeal, but has since retired from her judgeship effective

December 3l, 2009.
The Honorable Bert I. Ayabe presided.

’ This Opinion was originally filed on December 29, 2009 as a
Memorandum Opinion and is filed as a published Opinion pursuant to this
court’s February 8, 2010 "Order Granting Plaintiff-Appellee Cynthia Nakamura's
Motion to Publish This Court's Memorandum Opinion filed on December 29, 2009."

FOR PLFBLICATI()N IN VVEST'S HAWAI‘I REPORTS AN`D PA(TIFIC REPO`RTER

(Class) without conducting the rigorous analysis required under
Hawaii Rules of Civil Procedure (HRCP) Rule 23 (Rule 23) to
determine whether Plaintiff~Appellee Cynthia Nakamura (Nakamura),
the Class representative seeking certification, carried her
burden of proving compliance;

(2) holding that common issues predominate over
individual issues and that a class action is the superior method
for the adjudication of this controversy;

(3) holding that Nakamura met the typicality and
adequacy requirements because she was subject to materially
different statement fee practices than the majority of the absent
Class members;

(4) holding that Nakamura and Class counsel met the
adequacy requirement despite a conflict of interest; and

(5) directing Countrywide to identify Class members to
Nakamura.

I. BACKGROUND

Countrywide is a mortgage loan servicing company.
Countrywide performs such tasks as maintaining escrow accounts,
collecting and processing monthly loan payments, and performing
administrative services incident to the handling of a mortgage
loan payment.

On or about July l3, l993, Nakamura and her husband
obtained a mortgage loan, which was assigned to Countrywide on
that date. The mortgage contained a release clause, which
provided as follows: “Upon payment of all sums secured by this
Security Instrument, Lender shall release this Security
Instrument without charge to Borrower, Borrower shall pay any
recordation costs." In August 2002, Nakamura sought to pay off
the mortgage held by Countrywide and refinance the loan,
Nakamura‘s escrow officer requested a payoff statement from
Countrywide that listed the total amount due from Nakamura to
release her mortgage. On August l2, 2002, Countrywide sent a

payoff statement to Nakamura's escrow officer that included the

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principal and interest due on the mortgage; the county recording
fee; a subtotal consisting of the principal, interest, and
recording fee; a "Statement Fee ~ Due From Closing Agent" of
$60.00 (Statement Fee); and the "Total Due," which was comprised
of the subtotal amount and the Statement Fee amount. Based on
the HUD~l Uniform Settlement Statement ("HUD~l"} prepared by her
escrow officer for the transaction, Nakamura paid the "Total Due"
amount, which covered her mortgage, recording fee, and the
Statement Fee.

On October 7, 2004, Nakamura and Janet Haole, both
individually and on behalf of all others similarly situated,
filed a complaint against Countrywide. Janet Haole was dismissed
as a plaintiff by stipulation of the parties on October 3, 2005.

On November l7, 2005, Nakamura, individually and on
behalf of all others similarly situated, filed a First Amended
Complaint. In the class-action lawsuit, Nakamura stated that she
“represents a class of mortgagors who have been damaged by
[Countrywide's] unlawful and deceptive trade practices."
Specifically, Nakamura alleged that Countrywide had no right to
charge Statement Fees, in addition to principal and interest,
before releasing its mortgages. She further alleged that
Countrywide falsely implied to Nakamura and the Class that (l)
the Statement Fee was secured by the mortgage, (2) the consumer
had to pay the Statement Fee to have the mortgage released, and
(3) Countrywide was authorized to charge the Statement Fee.

On appeal, Nakamura contends that Countrywide knew the
Statement Fee was a sham because Countrywide had a secret policy
of waiving the Statement Fee upon request, and she argues that
Countrywide’s charging of the Statement Fee amounts to an unfair
or deceptive trade practice, in violation of Hawaii Revised
StatuteS (HRS) § 480-2 (l993).

On January 27, 2006, Nakamura filed a Motion for (A)
Class Certification and {B) to Approve Notice of Pendency of

Class Action (Certification Motion). On May 22, 2006, the

F()I{ P¥.,I'IKLT.C,A'I`I()N IN WES'I"S l"IAW.A.l‘I REPO]~{"|`S ANI) PACIFIC REP()RTER

circuit court entered the Certification Order granting Nakamura's
Motion. In the Certification Order, the circuit court, inter
alia, (1§ granted Class certification, (2) appointed Nakamura as
Class representative, and (3) ordered Countrywide to provide
Nakamura with a list of Class members‘ names and addresses.

On June 6, 2006, Countrywide filed an application to
file an interlocutory appeal of the Certification Order. The
circuit court granted Countrywide's application on June 20, 2006,
and Countrywide timely filed its notice of appeal.

II. STANDARD OF REVIEW

"The trial court is vested with broad discretion in
deciding whether to certify a class and discretionary authority
is normally undisturbed on review " Levi v. Univ. of Hawafi, 67
Haw. 90, 92, 679 P.2d l29, 131 (l984). An abuse of discretion
occurs if the trial court has "clearly exceeded the bounds of
reason or disregarded rules or principles of law or practice to
the substantial detriment of a party litigant." Amfac, Inc. v.
Waikiki Beachcomber Inv. Co., 74 Haw. 85, 1l4, 839 P.2d 10, 26
(1992).

in Life of the Land v. Land Use Commission of HawaiUq
63 Haw. 166, 623 P.zd 431 <1981>, the Hewei‘i supreme court
stated that "[t]he party who seeks to utilize a class action must
establish his right to do so." ld; at 180, 623 P.2d at 443. The
court further stated that the party seeking class certification
assumes a burden of establishing the four prerequisites for class
certification delineated in Rule 23(a) and further demonstrating
the presence of a suitable situation for the maintenance of a
class action under the criteria set forth in at least one of the
subdivisions of Rule 23(b). ;d; A failure to satisfy the burden
in any respect can result in a denial of the necessary
certification. ld; at l81, 623 P.2d at 443 (footnotes omitted;

emphasis added>.

F(`)R PLFFB!_.!C.A.'I`I ()N !N WES"I"S HAVVAI"I RE`I,’OR'|`S AN'I) I’ACIFIC REP()RTER

III. DISCUSSION

A. CLASS CERTIFICATION

"A trial court is vested with broad discretion in
deciding whether to certify a class, and discretionary authority
is normally undisturbed on review," unless the record discloses a
possible "misapprehension or misapplication of Rule 23's
criteria." ;d¢ at l80, 623 P.2d at 443 (internal quotation marks

and citation omitted). The HawaiU.Supreme Court has emphasized:

The trial court must apply [Rule 23's] criteria
to the facts of the case in determining whether the
suit brought as a class action is to be so maintained,
and if it fails to do this its determination is
reviewable; but where it does apply the criteria to
the facts of the case it has broad discretion as to
whether the suit may be maintained as a class action,
which the appellate court should normally respect.

3B Moore‘s Federal Practice § 23.97, at 23-596 (19B0).

lQ; at l8O n.l6, 623 P.2d at 443 n.l6.

However, the party seeking to utilize a class action
must establish his or her right to do so. Life of the Land, 63
Haw. at 1S0, 623 P.2d at 443. Thus, the party requesting class
certification assumes the burden of establishing the four
prerequisites for class certification under Rule 23(a) and
"demonstrating the presence of a suitable situation for the
maintenance of a class action under the criteria set forth in at
least one of the subdivisions of Rule 23(b)." ;d; at 181, 623
P.2d at 443.

In the instant case, Nakamura had to show all of the
following to meet her burden for class certification: (1) the
class is so numerous that joinder of all members is
impracticable; (2) questions of law or fact common to the class
eXist; (3) the claims or defenses of the representative parties
are typical of those of the class; (4) the representative parties
fairly and adequately will protect the class's interest; and (5)
questions of law or fact common to the class predominate over

questions affecting individual members, and a class action is

FOR l?’I_,)’BLIlC/\']`I()N lN VVES'I"S I~IAWAI‘I REPOIZ'I`S AND PACIFIC REP()R'I`ER

superior over available methods for the fair and efficient
adjudication of the controversy. Rule 23(a) and (b)(3).

1. Rule 23(a)(1): Numerosity

Rule 23(a)(1) provides that a class action is only
maintainable where "the class is so numerous that joinder of all
members is impracticable." The key inquiry is "Who Are The
Proposed Class, and the specific criteria are that its members be
identifiable and their possible joinder impracticable." Life of
;h§_Land, 63 Haw. at 181, 623 P.2d at 444 (internal quotation
marks and citation omitted).

in this case, the Certification Order defined the Class

as follows:

Hawaii Consumers who, during the period from October 7, 2000
to the date on which this order is filed, paid a "Statement
Fee“ to [Countrywide] in connection with the payoff of their
note and mortgage. Excluded from the Class are
{Countrywide] and its subsidiaries, parents, and affiliates,
including all directors, officers and employees.

The record denotes that there were over 19,000 Countrywide loans
on which a Statement Fee was charged to Hawafi consumers. lt is
unclear from the record exactly how many Statement Fees were paid
directly by the consumer and how many were paid by third parties.
However, it is clear from Countrywide's admissions in the record
that there were numerous consumers who either paid the Statement
Fee directly or indirectly through their closing escrow agent
and, thus, would be members of the proposed Class. Furthermore,
Countrywide has not contended on appeal that the number of
proposed Class members is insufficient. Therefore, this court
will not disturb the finding of requisite "numerosity" in the
Certification Order.

2. Rule 23(a)(2): C0mmonality

Rule 23(a)(2) requires that there are questions of law
or fact common to the class. The inquiry focuses on "What Are
The Claims Or Defenses Of The Class, and the pertinent criterion

is the presence of common claims or defenses extending throughout

FOR PLYBI,ICA"I`ION IN VVES'I"S HAWAI‘I RE_PORTS AND PACIFIC REPORTER

the class." Qife~gf*theMQand, 63 Haw. at 182, 623 P.2d at 444
(internal quotation marks and citation omitted).

Nakamura‘s First amended Complaint alleges several
factual and legal issues of common concern to persons affected by

Countrywide’s conduct. Specifically, Nakamura states:

(a) Each Class member paid off a mortgage to
{Countrywidel;

(b) Each payoff was for an amount dictated by
§Countrywide};

(c) Each Class member was charged a "Statement Fee";

(d) If [Nakamura] proves that these fees were
improperly charged or disclosed then each Class member was
damaged in the identical manner[;}

(e) A common question of fact and/or law is whether
[Countrywide] committed an unfair or deceptive trade
practice in charging the Class a "Statement Fee"[;]

(f) A common question of fact and/or law is whether
[Countrywide] needed to disclose to the Class (and/or not to
falsely imply otherwise) that [Countrywide] was obligated to
release the mortgage without payment of a Statement Fee
and/or that the Statement Fee would not be charged or
reimbursed if requested[;]

(g) A common question of fact and/or law is whether
[Countrywide] should be enjoined from engaging in the
alleged wrongful acts listed above[;]

(h) A common question of fact and/or law is the total
amount of money which [Countrywide] obtained from their
wrongful act and how much total funds should [Countrywide]
be required to disgorge.

Based on the allegations in the First Amended Complaint and the
fact that Countrywide does not contend on appeal that the circuit
court was incorrect in finding "commonality," there is no basis
for overruling the circuit court's implicit finding on the
existence of common issues and facts under Rule 23(a)(2).

3. Rule 23(a)(3): Typicality

Under Rule 23(a)(3), a prerequisite to class
certification is that "the claims or defenses of the
representative parties [be] typical of the claims or defenses of
the class." The critical question is "What ls The Individual

Claim (Or Defense) Of The Class Representative, and the primary

F()R Plll$ly,l(fyi~‘&'l`l(_)_f\ IN W §ST'S I“I,.»'XW"AI‘I, REP()R"I`S ANI) PACI,FIC REP()R'I`FII{

requisite is that his for herl claim or defense be essentially
similar . . . throughout the class.“ Life of the Land, 63 Haw.
at lS2, 623 P.2d at 444.

The Hawaid.Supreme Court has found that the
"typicality" requirement of Rule 23€a)(3) has an affinity to the
”adequacy“ requirement of Rule 23(a}(4) and read together focus
on whether there is a conflict of interest between class members.
;@fe_pf the Land, 63 Haw. at 182-83, 623 P.2d at 444-45. The
Hawaii Supreme Court explained what it meant by a conflict of

interest;

where colorable [claims or] defenses may derive from
particular circumstances, rather than from those common to
the putative [plaintiff or] defendant class, a class
certification is improper. And where there is indication
that the representative may be particularly interested in a
claim or defense unique to him or a subclass, the court is
justified in denying class action certification on the
grounds of inadequate representation.

;d; at 184, 623 P.2d at 445 (internal quotation marks, citations,
and brackets omitted).

Countrywide contends the circuit court abused its
discretion by holding that Nakamura met the typicality
requirement because she was subject to materially different
Statement Fee practices than the majority of the absent Class
members. Countrywide argues that Nakamura's claims are not
typical of Class members because the Statement Fee practices at
the time of Nakamura's claims are different from the Statement
Fee practices of post-November 25, 2002 Class members.

Between October 7, 2000 and November 25, 2002,
Countrywide charged a $60 Statement Fee to the closing escrow
agent for its payoff statement service on conventional loans
secured by property located in Hawari, but Countrywide provided a
free alternative on the internet. After November 25, 2002,
Countrywide changed its statement fee practices. Countrywide
began charging a S30 Statement Fee directly to the consumer and
offered free alternatives by internet and mail. Citing to

Courbat v. Dahana Ranch, Inc., 111 Hawafi 254, 141 P.3d 427

P`OR PI,F.IWIAIC.»»*».TI()NV IN WES'F'S HAW'AI‘I REP()RTS ANI) PACIFIC REP()RTER

(2006>, Countrywide argues that these factual differences are
critical because the Hawaid.Supreme Court has held that the
determination of whether there is an unfair or deceptive trade
practice under HRS § 480~2 depends upon the totality of the
circumstances. Countrywide maintains that a judgment rendered in
favor of Nakamura cannot be applied to the post~November 25, 2002
Class members because their claims arise in a wholly different
context and under different circumstances.

Although there are incidental factual differences
between Nakamura and the Class members, the nature of Nakamura's
individual claim and the Class members' claims are essentially
similar and there is no conflict of interest. Nakamura and the
Class alleged that Countrywide's practices relating to the
collection of Statement Fees from borrowers constituted a
deceptive trade practice under HRS § 480-2. Specifically,

Nakamura and the Class both argue on appeal that

(l) Countrywide charged a Statement Fee; (2) the consumer
was paying off a Countrywide mortgage; (3) Countrywide
claimed that the fee was for a "service" and yet its
internal documents stated that the fee is to "recoup some of
the costs that we incur when paying off the loan"; (4)
Countrywide had a hidden policy of waiving or refunding the
fee; and (5) its notes and mortgages did not authorize
Countrywide to charge the fee.

HRS § 480~2(a) provides that "[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful." (Emphasis
added). The Hawafi Supreme Court has found that the dispositive
issue in HRS § 480-2 cases is whether the allegedly deceptive
practice is "likely to mislead consumers acting reasonably under
the circumstances." Courbat, ill Hawafi at 262, 141 P.3d at 435.
Actual deception is not required -- the capacity to deceive is
sufficient. State of HawaFi ex rel. Bronster v. U.S. Steel
COrp., 82 HaWai‘i 32, 5l, 919 P.2d 294, 313 (l996). "ThiS is an
objective test, and therefore actual reliance need not be
established." Yokoyama v. Midland Nat'l Life Ins. Co., No. 07-
l6825, 2009 WL 2634770, at *l (9th Cir. Aug. 28, 2009).

F()R l’l?'I?»l.,lCA.'l`!()N IN W’I`.S'I"S HAWAI‘I REP()}KTS ANI) PACIFIC RIEPORTER

in the instant case, regardless of the minor factual
differences in the Statement Fee policies before and after
November 25, 2002, the dispositive issue in both Nakamura's
individual claim and the Class action is whether Countrywide‘s
alleged act of charging a Statement Fee constitutes a deceptive
act under HRS § 480~2. There is no need to look at the
circumstances of each individual consumer because the allegations
of the complaint are narrowly focused on the allegedly deceptive
practices of Countrywide, and it is only necessary for the
factfinder to determine whether those practices were capable of
misleading a reasonable consumer. Therefore, this court
concludes the circuit court did not abuse its discretion in
finding that Nakamura‘s claim was typical of the Class members
under Rule 23(a)(3).

4. Rule 23(a)(4): Adequacy

Rule 23(a)(4) provides that a class action can be
certified if the class representative and class counsel will
fairly and adequately protect the interests of the class. The
Hawari Supreme Court explained that "[w]here claims or defenses
are coeXtensive, there is a probability of fair and adequate
representation; where they are potentially conflicting, absentees
are unlikely to be afforded representation consistent with
notions of fairness and justice." Life of the Land, 63 Haw. at
183, 623 P.Zd at 445.

Countrywide contends the circuit court abused its
discretion in finding that Nakamura met her burden of
establishing Rule 23(b)(4) because (l) Nakamura was subject to
materially different statement fee practices than the majority of
the absent Class members and (2) Nakamura and Class counsel have
a conflict of interest because of their familial relationship.

First, Countrywide argues that Nakamura is not an
adequate representative because she was subject to materially
different Statement Fee practices than the majority of Class

members. The circuit court did not abuse its discretion in

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F()R Plll?»lil(].¢\'l`l()i\l IN WPZS"{"S Hz»\‘vVAl‘l RI€P()RTS ANI) I’ACIFIC REP()RTEI?

finding that Nakamura was an adequate representative. Despite
minor factual differences, Nakamura‘s individual claim and the
Class members‘ claims are coextensive and without conflict. Both
claims are based on the same exact Countrywide conduct of
charging an unauthorized Statement Fee. Additionally, Nakamura
and the Class have suffered the same alleged injury of being
forced to pay that Statement Fee, Furthermore, as analyzed
above, the dispositive issue in both claims is whether
Countrywide's conduct constitutes a deceptive act under HRS

§ 480-2. Because Nakamura and the Class possess the same
interest and have suffered the same injury, Nakamura is likely to
prosecute the Class members' case as she would litigate her own.

Second, Countrywide argues it was an abuse of
discretion to find that Nakamura and Class counsel met the
adequacy requirements of Rule 23(a)(4) despite an irreconcilable
conflict of interest between them and the Class members.
Specifically, Countrywide argues that Nakamura and Class counsel
are inadequate representatives because Nakamura's brother, John
Shimizu, is a partner in one of the law firms acting as Class
counsel and thus stands to gain financially from the prosecution
of this case.

Countrywide cites to several federal court decisions
where courts have found a class representative inadequate because
of a close familial relationship to class counsel.4 The primary
concern of the courts in these cases has been the threat that the

class representative may have an interest in the attorneys' fees

the class counsel will seek. See, e.g., Susman v. Lincoln Am.
Corp., 561 F.2d 86, 91 (7th Cir. 1977). In Susman, a

consolidated appeal, the United States Court of Appeals for the

Seventh Circuit affirmed a lower court decision that denied class

_S_e__e_ Susman v. Lincoln Am. Corp., 561 F.Zd 86, 91 ('?th Cir. 1977),-
Zlotnick v. TIE Commc'ns, lnC., 123 F.R.D. 189, 193-94 (E.D. Pa. 1988);
Helfand v. CenCO, InC., 80 F.R.D. l, 6-7 (N.D. Ill, 1977); Stull V. POO]., 63
F.R.D. 702, 704 (S.D.N.Y. 1974).

H

I'<`()R I’LEISI_,IC,»\'I`I()N `IN WPIS'I"S HA\VAI‘I REPOR'I`S AND PAClFIC REPORTER

certification because Plaintiff Michael Susman (Michael), the
named class representative in one of the consolidated cases, did
not satisfy the adequacy requirements of Federal Rules of Civil
Procedure (FRCP) Rule 23{a}{4}. Ld; at 87-89 & 92. Michael was
found to be an inadequate class representative because he was the
brother of class counsel, who was one of only two attorneys
representing Michael and the class. ld¢ at 89. The Seventh
Circuit noted that Michael's “possible recovery as plaintiff is
dwarfed by attorney's fees which could be awarded to his brother
as class counsel." ld; at 95. This being the case, the Seventh
Circuit agreed with the district court's statement that "there
exists the possibility that one so situated will become more
interested in maximizing the 'return' to his counsel than in
aggressively presenting the proposed class' [sic] action." LQ;
However, it should be noted that neither Susman nor any of the
other cases cited to by Countrywide held that there is a per se
rule of disqualification when class representative and class
counsel are closely related. '

On the other hand, Nakamura has cited to several
federal court decisions where the federal courts granted class
certification despite a close familial relationship between class
representative and class counsel.5 See, e.q , Irvin E. Schermer
Trust v. Sun Equities Corp., 116 F.R.D. 332, 338 (D. Minn. 1987).
ln Schermer, the United States District Court for the District of
Minnesota found a class representative adequate under FRCP Rule
23(a)(4) even though the class representative was the father of
class counsel. ;d; at 338. The district court adopted the
reasoning of other federal courts that have granted class
certification despite a familial relationship between class

representative and class counsel because of the absence of any

See lrvin E. Schermer Trust v. Sun Equities Corp., 116 F.R.D. 332,
338 (D. Minn. 1987); L€Wis v. Goldsmith, 95 F.R.D. lE, 20 (D.N.J. 1982);
Fischer v. lnt’l Tel. & Tel. Corp., 72 F.R.D. 170, 173-74 (E.D.N.Y. 1976).

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F()R P[IIZLIC.A.'.I`I()N IN WE`ST’S HAWAI‘I REP()RTS AND PACIFIC REI’GRTER

concrete evidence to support the existence of such collusion.
gap at 337~3S.

in the instant case, Nakamura and the Class are
represented by two law firms: van Buren Campbell & Shimizu and
alston Hunt Floyd & lng, Nakamura is the sister of John Shimizu,
a partner in van Buren, Campbell & Shimizu. Other than the fact
that Nakamura and Shimizu are brother and sister, Countrywide has
presented no evidence that the relationship will create a
conflict of interest. Furthermore, Nakamura states, and
Countrywide pose not dispute, that Shimizu has no personal
involvement in the case whatsoever.

Given that there is no per se rule of disqualification,
Countrywide has not presented any evidence of a conflict of
interest, and the circuit court has wide discretion in certifying
a class, this court concludes the circuit court did not abuse its
discretion in finding Nakamura and Class counsel met the adequacy
requirements of Rule 23(a)(4).

5. Rule 23(b)(3): Pred0minance and Superiority

To certify a class, a plaintiff must meet the
prerequisites of Rule 23(a) and one of the subdivisions of Rule
23(b). ln this case, Nakamura sought to certify the Class under
Rule 23(b)(3), which provides:

(b) Class Actions Maintainable. An action may be
maintained as a class action if the prerequisites of
subdivision (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.

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F()R P{JIBLI(,`A”[`I()N IN WISST'S HAVVAI`I REP()‘R'I`S ANI) PACIFIC REPORTEI{

Countrywide argues that the circuit court abused its
discretion by holding that common issues predominate over
individual issues and that a class action is the superior method
for the adjudication of this controversy. Specifically,
Countrywide argues that individualized proof (a) regarding each
Class member‘s knowledge of and agreement to pay the Statement
Fee bears directly upon Countrywide's defenses, (b) is necessary
to establish the contractual violation element of Nakamura‘s
class claims, and (c) is necessary to establish the injury
element of Nakamura's class claims. y

a. Predominance

The Rule 23(b)(3) predominance requirement "tests
whether proposed classes are sufficiently cohesive to warrant
adjudication by representation." Amchem Prods., lnc. v. Windsor,
521 U.S. 591, 623 (1997). when common questions are a
significant aspect of the case and they can be resolved for all
members of the class in a single adjudication, there is clear
justification for handling the dispute on a representative rather
than an individual basis. Hanlon v. Chrysler Corp., 150 F.3d
1011, 1019~20 (9th Cir. 1998). Thus, if proof of the essential
elements of the cause of action requires individual treatment,
then predominance is defeated and the class should not be
certified. 1n rec Hydrogen Peroxide Antitrust Litiq;, 552 F.3d
305, 3l0~ll (3d Cir. 2008).

Nakamura's primary claim is that Countrywide's
Statement Fee policies and practices constitute a deceptive
practice under HRS § 480-2. As stated above, the dispositive
issue in HRS § 480-2 cases is whether the alleged deceptive

practice “is likely to mislead consumers acting reasonably under

the circumstances." Courbat, 111 Hawafi at 262, 141 P.3d at 435.

"A deceptive act or practice is (1) a representation, omission,
or practice that (2) is likely to mislead consumers acting
reasonably under the circumstances where (3) the representation,

omission, or practice is material.“ Id. (internal quotation

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FOR PllI?»l,ICs\'I`l()N IN VWBIS'I"S HAWAI‘I REPORTS AN]) PAC`IFIC REP()RTEI{

marks, citation, and brackets omitted}. The representation,
omission, or practice is material if it is likely to affect a
consumer‘s choice. Ldg Whether information is likely to affect
a consumer‘s choice is an objective inquiry, "turning on whether
the act or omission is likely to mislead consumers as to
information important to consumers in making a decision regarding
the product or service." lQ¢ (internal quotation marks,
citations, and footnote omitted).

Despite Countrywide‘s argument that individual issues
predominate over common questions, the key inquiry in both
Nakamura‘s individual claim and the Class action is whether
Countrywide's Statement Fee practices constitute deception under
HRS § 480~2. Specifically, the question is whether Countrywide's
Statement Fee practices, as a natural and probable result, misled
and caused Nakamura and the Class to pay the Statement Fee when
they would not otherwise have done so. The proof of the
essential elements of HRS § 480~2 do not require individual
treatment because the dispositive question revolves around
Countrywide's alleged deceptive practices and not individual
Class member transactions. Thus, it is Countrywide's alleged act
of withholding information about the Statement Fee waiver policy
that will predominate and form the basis of Nakamura's individual
claim and the Class action under HRS § 480~2. Therefore, this
court concludes the circuit court did not abuse its discretion in
finding predominance.

b. Superiority

Under Rule 23(b)(3), class certification is appropriate
if a class action is superior to other available methods for the
fair and efficient adjudication of the controversy. Having
already found that common questions of fact and law predominate
over individual issues, it follows that a class action is the
superior method to adjudicate this case. Nakamura's individual
claim and the Class action hinge on whether Countrywide’s conduct

constitutes a deceptive practice under HRS § 480-2. This being

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F()R PUI£`LI(.`A'I`I()N IN WEST'S HAVVAI‘I REP()RTS AND PACIFIC REPORTER

the case, the most fair and efficient adjudication of the
controversy is through a class action.

Moreover, Hawaii‘s consumer protection laws may be
enforced through class actions. §ee HRS § 480-13(c) (1993 &
Supp. 2000) ("The remedies provided in subsections (a) and (b)
shall be applied in class action and de facto class action
lawsuits or proceedings."). This court has also recognized that
consumer protection laws are enforceable through class actions.
See Fuller v. Pac. Med. Collections, Inc., 78 HawaFi 2l3, 218,
891 P.2d 3GO, 305 (App. 1995). Therefore, this court concludes
that the circuit court did not abuse its discretion in finding
superiority under Rule 23(b)(3).

B. COUNTRYWIDE'S REMAINING ARGUMENTS

1. Rigorous Analysis

Countrywide contends the circuit court abused its
discretion by failing to perform the required "rigorous analysis"
of the Rule 23 requirements. Countrywide cites to the United
States Supreme Court case General Telephone Co. of Southwest v.
Falcon, 457 U.S. 147, 161 (l982), which states that a class may
only be certified after a "rigorous analysis" that the
prerequisites of FRCP Rule 23 have been satisfied. Countrywide
argues that a "rigorous analysis" requires that "a trial court go
beyond the pleadings to understand the claims, defenses, relevant
facts, and applicable substantive law in order to make a

meaningful determination of the certification issues." (Emphasis

in original.) Therefore, Countrywide argues that the circuit
court’s Certification Order failed to comply with this "rigorous
analysis" standard because the order was ”inadequate, cursory and
conclusory.“

Countrywide partially misstates the law of General

Telephone. 1n General Telephone, the Supreme Court stated:

Sometimes the issues are plain enough from the pleadings to
determine whether the interests of the absent parties are

fairly encompassed within the named plaintiff's claim, and
sometimes it may be necessary for the court to probe behind

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I*`()R I’[JBI_.»IC.»\'I`}()N IN \VI€S"|"S HAWAI‘I REP()R'I`S AND PAC!FIC REP()RTER

the pleadings before coming to rest on the certification
question.

ldg at l6G. Thus, a "rigorous analysis" does not require the
court to go beyond the pleadings when the pleadings themselves
indicate that the requirements of Rule 23 have been met.

in the instant case, the Certification Order provides:

The requirements of [HRCPj Rule 23(a) and (b){3) are
met as demonstrated in §Nakamura‘s] arguments, motion and
supporting memcranda. The Class is so numerous that joinder
of all members is not practicable; there are questions of
law or fact common to the C1ass; [Nakamura‘s] claims are
typical of the claims of the Class; [Nakamura] and her
counsel will fairly and adequately protect the interests of
the Class; questions of law and fact common to the Class
predominate over any questions affecting only individual
members; and a class action is superior to other available
methods of adjudicating this controversy.

By examining Nakamura's pleadings, the circuit court was able to
determine that the interests of the absent parties were fairly
encompassed by Nakamura‘s claims. Thus, the circuit court
conducted the requisite "rigorous analysis" and did not abuse its
discretion.
2. List of Class Members
Countrywide contends the circuit court abused its
discretion by directing Countrywide to identify Class members to
Nakamura. Specifically, the Certification Order directs
Countrywide to "provide to [Nakamura] a list of Class members'
names and addresses."
The United States Supreme Court has held that FRCP

"Rule 23(d) vests power in the district court to order one of the
parties to perform the tasks necessary to send notice."
Oppenheimer Fund, 1nc. v. Sanders, 437 U.S. 340, 354 (1978)
(footnote omitted). The general rule is that the representative
plaintiff should bear the burden of performing tasks necessary to
send class notice. ;d; at 357. However, in some instances, the
defendant may be able to perform the necessary task with less
difficulty or expense than could the representative plaintiff.

Id. at 356. Thus, FRCP Rule 23 authorizes a district court in

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appropriate circumstances to require a defendant’s cooperation in
identifying the class members to whom notice must be sent. ;d$
at 355.

Countrywide is in the best position to identify
Countrywide customers who were charged a Statement Fee and who
subsequently paid that Statement Fee. Therefore, the Circuit
Court did not abuse its discretion in ordering Countrywide to
provide a list to Nakamura of Class members' names and addresses.

IV. CONCLUSION
The "Order Granting Plaintiff's Motion For (A) Class
Certification and (B) to Approve Notice of Pendency of Class
Action Filed on January 27, 2006" filed on May 22, 2006 in the

Circuit Court of the First Circuit is affirmed.

On the briefs:

Patricia J. McHenry and

W. Keoni Shultz

(Cades Schutte LLP)

Brooks R. Brown, pro hac vice §§ ‘ ¢;%/ ;z: §
(Goodwin Procter LLP) `

for Defendant~Appellant.

`2"
Paul Alston, ~
Bruce H. Wakuzawa, and ~

Peter Knapman

(Alston Hunt Floyd & Ing)
George Van Buren and

Robert Campbell

(Van Buren Campbell & Shimizu)
for Plaintiff~Appellee.

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