Court Opinion

ID: 9388674
Source: CourtListenerOpinion
Date Created: 2023-04-21 14:03:44.098551+00
Date Added: 2024-06-11T17:18:21.839399
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                  No. 21–0649

               Submitted January 18, 2023—Filed April 14, 2023

ROBERT BENDA, on behalf of himself and all others similarly situated,

      Appellant,

vs.

PRAIRIE MEADOWS RACETRACK AND CASINO, INC.,

      Appellee,

and

IOWA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION and
IOWA THOROUGHBRED BREEDERS AND OWNERS ASSOCIATION,

      Intervenors-Appellees.

      Appeal from the Iowa District Court for Polk County, Scott D. Rosenberg,

Judge.

      A horseman appeals the district court’s refusal to certify a class action to

pursue a claim that a horseracing venue breached its contracts with a

horsemen’s association. AFFIRMED.

      May, J., delivered the opinion of the court, in which Christensen, C.J., and

McDonald and Oxley, JJ., joined. Mansfield, J., filed a dissenting opinion, in

which Waterman, J., joined. McDermott, J., took no part in the consideration or

decision of the case.
                                      2

      Todd M. Lantz (argued) of the Weinhardt Law Firm, Des Moines, and

Tyler M. Smith of Smith Law Firm, PLC, Altoona, for appellant.

      Dennis P. Ogden (argued) and Thomas L. Flynn of Brick Gentry, P.C., West

Des Moines, for appellee.

      Ryan G. Koopmans (argued), Waukee, for intervenor-appellee Iowa

Horsemen’s Benevolent and Protective Association.

      Jeffrey M. Lipman (argued) of Lipman Law Firm, P.C., West Des Moines,

for intervenor-appellee Iowa Thoroughbred Breeders and Owners Association.
                                        3

MAY, Justice.

      “Our review of the district court’s ruling granting or denying certification

of a class is limited because the district court enjoys broad discretion” in

determining whether class certification is appropriate. Freeman v. Grain

Processing Corp., 895 N.W.2d 105, 113 (Iowa 2017) (quoting Legg v. W. Bank,

873 N.W.2d 756, 758 (Iowa 2016)). In this case, Robert Benda claims that Prairie

Meadows Racetrack and Casino, Inc., (Prairie Meadows) breached contracts that

govern the distribution of winnings among owners and breeders of successful

horses. Benda appeals the district court’s refusal to certify his case as a class

action. Based on the specific facts of this unusual case, we do not conclude that

the district court abused its broad discretion. There is a reasonable basis in the

record to conclude that Benda could not appropriately represent the class.

Comes v. Microsoft Corp., 696 N.W.2d 318, 326 (Iowa 2005) (“On appellate review,

the question is whether there is any reasonable basis in the record to support

the district court’s finding.”). Specifically, the record shows fundamental

conflicts as to (1) the core question of whether Prairie Meadows breached the

contracts, and (2) the appropriate remedy: a lump sum of money damages or—

as the contracts expressly provide—an equitable remedy involving payouts for

future horseraces.

      Because the district court acted within its broad discretion, we affirm.
                                                 4

       I. Background.

       Prairie Meadows is Iowa’s only venue for live pari-mutuel1 racing of

thoroughbred horses. Pari-mutuel horseracing is heavily regulated. At the

federal level, the Interstate Horseracing Act regulates “interstate commerce with

respect to wagering on horseracing.” 15 U.S.C. § 3001(b) (2018); see id.

§§ 3001–3007. The Act prohibits certain wagers on Prairie Meadows’s races

unless Prairie Meadows has “a written agreement with the horsemen’s group”

that represents the majority of owners and trainers racing there. Id.

§ 3004(a)(1)(A); see id. § 3002(12) (defining “horsemen’s group” for purposes of

the Act). For thoroughbred racing, that “horsemen’s group” is the Iowa

Horsemen’s Benevolent and Protective Association (Iowa HBPA). The Iowa HBPA

represents over 1,100 horsemen2 who race thoroughbred horses at Prairie

Meadows. Iowa HBPA “promotes the common business interests of the members

and strives to improve the conditions of the thoroughbred industry.”

       There’s also state-level regulation. Iowa Code chapter 99D creates a

regulatory agency—the Iowa Racing and Gaming Commission (IRGC)—and vests

it with broad powers, including the power “[t]o regulate the purse structure for

race meetings.” Iowa Code §§ 99D.5, .7(5)(a) (2018). The Code also imposes some

particular duties on the IRGC. For example, section 99F.6 requires the IRGC to

“authorize” Prairie Meadows “to use receipts from gambling games and sports

       1There appear to be two alternative spellings: pari-mutuel and parimutuel. The Iowa Code

uses “pari-mutuel,” and we follow suit. Iowa Code § 99D.2(7) (2018) (defining “[p]ari-mutuel
wagering”).
       2In   this context, “horsemen” is a gender-neutral term.
                                               5

wagering within the racetrack enclosure to supplement purses for races

particularly for Iowa-bred horses pursuant to an agreement which shall be

negotiated between” Prairie Meadows “and representatives of the . . . horse

owners.” Id. § 99F.6(4)(a)(3). Those representatives are the Iowa HBPA.

       This case focuses on “supplement purses,” also known as “purse

supplements.” These are additional amounts paid to owners and breeders of

Iowa-bred horses that finish in first through fourth place.3 As the term

“supplement” implies, these supplement purses are in addition to other purses

that the horses might win. Suppose that, in a particular race, a non-Iowa-bred

horse takes first and an Iowa-bred horse takes second place. The non-Iowa-bred

horse would take the base purse that had been designated for the first-place

winner. The Iowa-bred horse would win both the base purse designated for the

second-place winner and a supplement purse designated for Iowa-bred horses.4

       Before the start of the racing season (which generally runs from May to

September), Prairie Meadows enters into a contract that governs the terms of

racing during that year’s season. Consistent with the statutory scheme, Prairie

Meadows enters these contracts with Iowa HBPA—whom the contracts describe

as “the representative entity for all horsemen racing at” Prairie Meadows. Also

       3The amounts paid to breeders are also referred to as “breeder’s awards.” For our

purposes, we will use the term “purse supplements” to describe the amounts paid to both owners
and breeders of Iowa-bred horses.
        4There are also races limited to Iowa-bred horses. There, the owner of each placing horse

receives both a base purse and a supplement.
                                       6

consistent with the statutory scheme, the contracts are subject to approval by

the IRGC.

      Through these contracts, Prairie Meadows and the Iowa HBPA determine

(subject to IRGC approval) the total amounts that Prairie Meadows will set aside

for thoroughbred racing for the season. For instance, in March 2010, Prairie

Meadows and the Iowa HBPA entered a contract governing the 2010–2014

seasons. In it, Prairie Meadows and the Iowa HBPA agreed that the annual “total

purses (including supplements)” for thoroughbred horses would be 83% of “11%

of the first $200 Million of net receipts” and “6% of the net receipts above $200

Million.” Similar terms appear in the January 2015 contract that governed the

2015–2019 seasons.

      The contracts also address how these amounts should be divided between

base purses—which any horse can win—and supplements—which are

designated for Iowa-bred horses. According to the 2015 IRGC meeting minutes,

“for approximately 25 years” the supplement for Iowa-bred-horses had been

calculated using the “Rasmussen formula.” The Rasmussen formula was the

product of an agreement between Jim Rasmussen, who represented Prairie

Meadows; Dick Clark, who represented the Iowa HBPA; and Gary Lucas, who

represented the Iowa Thoroughbred Breeders and Owners Association (ITBOA).

ITBOA is a nonprofit organization responsible for promoting the breeding and

racing of thoroughbreds in Iowa. In 2020, ITBOA represented “400+ Iowa-bred

thoroughbred owners and breeders.” It is the largest association that represents

this group.
                                        7

      Under the Rasmussen formula, the purse supplement amount is set at

20% of the “net purse amount,” that is, 20% of the purses available to all horses.

For example, the 2004 and 2005 contracts called for “total purses (including

supplements) of $15 million.” This total was allocated between $2,500,000 for

purse supplements and $12,500,000 for base purses, that is, purses that any

horse could win. Thus the net purse amount (the total of base purses) was equal

to the total purse money divided by 1.2. As the contracts put it:

      Calculation:
      Net Purse Amount (Total Purses divided by 1.2)           12,500,000
      Supplement (20% of Net Purse Amount)                      2,500,000
      Total                                                    15,000,000

      Similarly, the 2006 contract stated that “20% of the net purse amount

allocated for Thoroughbred Horses (the gross Thoroughbred Horse purse amount

divided by 1.20) shall be supplemented to Iowa bred horses placing in first

through fourth positions, but capped at a maximum of $50,000 per race.”

Similar language appears in the contracts for 2007, 2008, and 2009.

      As mentioned, in 2010, Prairie Meadows and the Iowa HBPA entered into

a five-year agreement for the 2010–2014 seasons. It said: “20% of the net purse

amount allocated for Thoroughbred Horses each year shall be supplemented to

Iowa-bred horses placing in first through fourth positions, but capped at a

maximum of $50,000 per race.” Similar language appears in the 2015–2019

contract.

      During the 2010 contract negotiations, there were disputes over a variety

of issues. To avoid future disputes, the Iowa HBPA and others asked the 2011
                                        8

legislature to codify the practice of allocating purse supplements. That spring,

the legislature enacted Iowa Code section 99D.22, which states, in part:

      No less than twenty percent of all net purse moneys distributed to
      each breed, as described in section 99D.7, subsection 5, paragraph
      “b”, shall be designated for registered Iowa-bred foals in the form of
      breeder’s awards or purse supplement awards to enhance and foster
      the growth of the horse breeding industry.

Iowa Code § 99D.22(1)(c).

      Prairie Meadows and the Iowa HBPA believed that, through this statute,

the legislature had enacted their existing contractual practice—the Rasmussen

formula. But some ITBOA members were not satisfied with this approach. They

thought purse supplements should be calculated as 20% of the total purse

amount allocated to thoroughbreds. To illustrate the difference: under the

Rasmussen formula, if the total purse amount was $15,000,000, then the

amount of money available to all horses would be $12,500,000, and the purse

supplement would be 20% of $12,500,000, or $2,500,000. Under the alternative

approach, if the total purse amount was $15,000,000, then the amount available

to all horses would be $12,000,000, and the purse supplement would be

$3,000,000, that is, 20% of $15,000,000. Either way, Prairie Meadows pays

$15,000,000. The difference is how the money is disbursed.

      In November 2014, the ITBOA filed a petition for declaratory order with the

IRGC. The ITBOA asked the IRGC to declare that this alternative approach was

required by the newly-enacted statute. Significantly, though, the ITBOA did not

ask the IRGC to make its order retroactive to 2014, 2013, 2012, or any prior

season. Nor did ITBOA ask for the alternative formula to apply in the 2015
                                           9

season. Instead, ITBOA asked for it to “take effect January 1, 2016.” In other

words, ITBOA asked for the alternative formula to first take effect in the 2016

racing season.

      The Iowa HBPA intervened. It argued for continued adherence to the

Rasmussen formula.

      Following a hearing in January 2015, the IRGC issued a declaratory order.

The IRGC acknowledged that “for the last twenty-plus years,” Prairie Meadows

had calculated purse supplements for Iowa-bred horses according to the

Rasmussen formula. The IRGC also noted that the proper reading of the new

statute was “concededly a close question.” Ultimately, though, the IRGC

concluded that the statute required the use of ITBOA’s proposed formula.

However, “to avoid any disruptions during the 2015 meet and in order to best

protect all parties’ interests,” the IRGC stayed its order “until November 1,

2015”—i.e., after the 2015 meet concluded. So, under the IRGC order, the new

calculation would not take effect until the 2016 meet. Prairie Meadows could

continue to use the Rasmussen formula for the 2015 meet.

      Over three years later, in December 2018, Benda commenced this action

against Prairie Meadows.5 Benda claimed that he “is a breeder and owner of

Iowa-foaled horses that performed well enough in races at Prairie Meadows from

2012–2015 that Benda was entitled to breeder’s awards and purse supplements

in each year.” Benda asserted “a class-wide claim to correct” what he

      5In October 2019, Benda filed his first amended petition, the relevant pleading for

purposes of this appeal.
                                               10

characterized as “a blatant miscalculation of awards due from Prairie Meadows

to Iowa horse breeders and owners.” Specifically, Benda alleged that Prairie

Meadows had illegally used the Rasmussen formula during the proposed class

period of 2012 through 2015.6 Benda claimed that this improper approach had

resulted in an underpayment of $1.8 million.

       Benda asserted claims for unjust enrichment (count I), breach of implied

contract (count II), breach of written contract (count III), breach of statutory duty

(count IV), and declaratory relief (count V). Four of these five claims were based

on alleged breaches of statutory duties.7 One of Benda’s claims—count III—was

a third-party beneficiary claim based on the written contracts between Prairie

Meadows and the Iowa HBPA. As relief, Benda requested “certification of this

action as a class action” and “a judgment against Prairie Meadows . . . in an

amount sufficient to fully compensate the Plaintiff and the other Class Members

       6The   amended petition explains:
       Rather than multiplying the net purse moneys for thoroughbreds and quarter
       horses by 0.2 to determine the minimum amount it had to pay under section
       99D.22, Prairie Meadows erroneously first divided the net purse by 1.2 and then
       multiplied the quotient by 0.2. This miscalculation was used to determine the
       amount of money deposited in a fund that was used to pay purse supplements.
              . . . The difference between what Prairie Meadows should have paid in
       breeder’s awards and purse supplements (according to Iowa Code § 99D.22(1)(c),
       the written agreements with the IAHBPA, and the data that Prairie Meadows
       reported to the IRGC) and Prairie Meadows’ actual distributions in the form of
       breeders awards and purse supplements was over $1.8 million from 2012–2015.
       7Count   I alleged Prairie Meadows had been unjustly “enriched” through “racing activity
that was premised on the statutory framework for purse supplements and breeder’s awards.”
Count II alleged an implied contract that “it would distribute purses in accordance with
applicable Iowa law.” Count IV alleged “Prairie Meadows violated its statutory obligations and
duties to Plaintiff under the plain terms set forth in Iowa Code Chapter 99D and all related
sections of the Iowa Code.” Count V sought a declaration that plaintiff “is a beneficiary entitled
to purse supplements and breeder’s awards under Iowa Code Chapter 99D and all related
sections of the Iowa Code.”
                                        11

for the underpayment of Iowa breeder’s awards and purse supplements from

2012–2015, plus interest and attorney’s fees.”

      Prairie Meadows answered and asserted affirmative defenses. Among other

things, Prairie Meadows asserted that it “is not a proper party in this action

because it received no benefit from” any erroneous division of purses.

      Iowa HBPA filed a motion to intervene and an answer. Iowa HBPA

emphasized that Benda’s lawsuit was premised on contracts between Iowa HBPA

and Prairie Meadows. And, according to Iowa HBPA, “there was no breach of the

Prairie Meadows/Iowa HBPA contracts.” Iowa HBPA asserted that “Benda’s

claims should be dismissed and his request to certify a class denied.”

      The district court granted Iowa HBPA’s motion to intervene. Soon after,

Iowa HBPA filed a motion for summary judgment, which Prairie Meadows joined.

      While the summary judgment motion was pending, Benda filed a motion

for class certification. He described the proposed class as “[a]ll horse breeders or

owners who were eligible to receive . . . supplement awards from Prairie Meadows

for one or more Iowa-foaled horses . . . from 2012–2015.”

      ITBOA then moved to intervene. With its motion, ITBOA filed a resolution

of its board of directors. Here are some excerpts from the resolution:

           WHEREAS, the Board has been advised by counsel on
      Benda’s claims and the relief requested in the lawsuit, and

             WHEREAS, ITBOA’s members would be potential members of
      the class action proposed by Benda, and

            WHEREAS, Benda’s requested relief would damage Iowa’s
      racing industry, and would be contrary to the interests of ITBOA’s
      members, and
                                       12

            WHEREAS, Benda’s requested relief, and his attorney’s
      request for fees, are not in the best interest of Iowa-bred owners and
      breeders, and

            WHEREAS, neither Benda nor his counsel can or should
      represent the interests of Iowa-bred owners and breeders, because
      IRGC revoked Benda’s license to race horses in Iowa, and

            WHEREAS, the ITBOA, as representative of its 400+ members
      who would be affected by this lawsuit, should be allowed to intervene
      in Benda’s lawsuit . . . .

      ITBOA, Iowa HBPA, and Prairie Meadows all resisted Benda’s motion for

class certification. Each presented supporting evidence. For instance, Iowa HBPA

presented an affidavit from William Gessmann, who served as president of Iowa

HBPA from 2002 to 2017. During that time, Gessmann “led the contract

negotiations with Prairie Meadows on behalf of the Iowa HBPA.” In particular,

Gessmann “represented the Iowa HBPA in negotiating and signing” the

2010–2014 and 2015–2019 contracts at issue in this case. In Gessmann’s view,

Prairie Meadows had “allocated funds to purse supplements consistent with the

Iowa HBPA’s intent.” “I do not agree that Prairie Meadows breached the Iowa

HBPA contract as alleged by Benda,” Gessmann added.

      Meanwhile, the district court ruled on the pending summary judgment

motion. The court concluded that because section 99D.22(1)(c) creates no private

cause of action, Benda’s claim for breach of statutory duty (count IV) must be

dismissed. Likewise, the court reasoned, Benda cannot bring any other claims

that rely on section 99D.22(1)(c) “to create a common law duty.” Accordingly, the

court dismissed Benda’s claims for unjust enrichment (count I), breach of

implied contract (count II), and declaratory relief (count V). But the court
                                        13

declined to dismiss Benda’s claim for breach of the written contracts. The court

believed that the agreements between Prairie Meadows and the Iowa HBPA

created contractual duties that were independent of the statute.

      Soon after, the district court heard the motion for class certification.

Ultimately, the court entered an order denying certification. Benda appealed

under Iowa Rule of Civil Procedure 1.264(3), which permits an immediate appeal

as of right from “[a]n order certifying or refusing to certify an action as a class

action.”

      II. Standard of Review.

      As noted, “[o]ur review of the district court’s ruling granting or denying

certification of a class is limited because the district court enjoys broad

discretion in the certification of class action lawsuits.” Freeman, 895 N.W.2d at

113 (quoting Legg, 873 N.W.2d at 758). We adopt a district court’s findings if

“there is any reasonable basis in the record to support” them. Comes,

696 N.W.2d at 326 (citing Stone v. Pirelli Armstrong Tire Corp., 497 N.W.2d 843,

846–49 (Iowa 1993)). “Reversal is appropriate only if the record reveals that the

district court’s decision was based on clearly untenable or unreasonable

grounds.” Stone, 497 N.W.2d at 845.

      III. Analysis.

      A. Introduction. Class actions are governed by Iowa Rules of Civil

Procedure 1.261 through 1.279. As the district court properly observed, “[o]ur

class-action rules are remedial in nature and should be liberally construed to

favor the maintenance of class actions.” Comes, 696 N.W.2d at 320.
                                          14

       Under our rules, a class may be certified

       if four requirements are met: (1) the class is so numerous or so
       constituted that joinder is impracticable; (2) a common question of
       law or fact exists; (3) the action should be certified as a class action
       for ‘fair and efficient adjudication of the controversy’; and (4) the
       representative parties will protect the interests of the class fairly and
       adequately.

Iowa Ann. Conf. of United Methodist Church v. Bringle, 409 N.W.2d 471, 474 (Iowa

1987); Iowa R. Civ. P. 1.262(2) (permitting certification if the district court “finds

all of the following:” (1) “[t]he requirements of rule 1.261 have been satisfied,”

(2) “[a] class action should be permitted for the fair and efficient adjudication of

the controversy,” and (3) “[t]he representative parties fairly and adequately will

protect the interests of the class”); see id. r. 1.261(1)–(2) (requiring (1) the class

to be “so numerous or so constituted that joinder of all members, whether or not

otherwise required or permitted, is impracticable” and (2) “a question of law or

fact common to the class”).

       “The plaintiff has the burden of establishing that a purported class of

plaintiffs meets the prerequisites.” Vos v. Farm Bureau Life Ins., 667 N.W.2d 36,

45 (Iowa 2003). “A failure of proof on any one of the prerequisites is fatal to class

certification.” Id.

       In this case, the district court did not find that any of the prerequisites

had been met. Its order focused on two concerns. First, the court rejected the

notion that class certification would advance the “fair and efficient adjudication

of the controversy,” as rule 1.262(2)(b) requires. Iowa R. Civ. P. 1.262(2)(b).

Second, the court found “Benda is not an adequate representative party to

protect the interests of the purported class members,” as rule 1.262(2)(c)
                                        15

requires. Id. r. 1.262(2)(c). Because we conclude that the question of adequate

representation is dispositive, we focus on it. See Stone, 497 N.W.2d at 846

(concluding district court did not abuse its discretion in denying class

certification solely on basis of adequacy of representation).

      B. Fair and Adequate Representation. Under rule 1.262(2)(c), a class

may not be certified unless the class representative will “fairly and adequately

. . . protect the interests of the class.” Iowa R. Civ. P. 1.262(2)(c). We have said

that “adequacy of representation is perhaps the most significant of the

prerequisites to a determination of class certification.” Stone, 497 N.W.2d at 846

(quoting Folding Cartons, Inc. v. Am. Can Co., 79 F.R.D. 698, 701 (N.D. Ill. 1978));

see also Rattray v. Woodbury County, 614 F.3d 831, 835 (8th Cir. 2010) (“The

inquiry into adequacy of representation, in particular, requires the district

court’s close scrutiny, because the purpose of Rule 23(a)(4) is to ensure due

process for absent class members, who generally are bound by a judgment

rendered in a class action.”).

      A district court may not conclude that “the representative parties fairly

and adequately will protect the interests of the class” unless the court

      find[s] all of the following:

            a. The attorney for the representative parties will adequately
      represent the interests of the class.

             b. The representative parties do not have a conflict of interest
      in the maintenance of the class action.

            c. The representative parties have or can acquire adequate
      financial resources, considering rule 1.276, to ensure that the
      interests of the class will not be harmed.
                                       16

Iowa R. Civ. P. 1.263(2).

      When considering the adequacy of representation, “each case must be

judged on its own facts.” Stone, 497 N.W.2d at 847. “Resolution of the issue

depends on all the circumstances presented.” Id. “When a court denies class

action certification on the basis of inadequate representation there are usually

special circumstances or a combination of factors involved.” Id.

      That is true here. Under the particular circumstances of this highly

unusual case, we find no abuse of discretion in the district court’s determination

that Benda is not an appropriate class representative. Rather, we see multiple

areas of conflict between Benda and the interests of potential class members.

      First, as explained, Benda’s proposed class action is opposed by the Iowa

HBPA, which represents over 1,100 horsemen who run thoroughbreds at Prairie

Meadows. Indeed, under both state and federal law, the Iowa HBPA is the legally

designated representative of horsemen for purposes of bargaining and signing

purse agreements with Prairie Meadows. And the very contracts on which this

case relies were negotiated by and entered into by the Iowa HBPA. But Iowa

HBPA does not believe Prairie Meadows breached the contracts. As part of its

opposition to class certification, Iowa HBPA filed an affidavit from William

Gessmann, a former president of the Iowa HBPA who actually negotiated the

contracts at issue in this case. Gessmann testified that “Prairie Meadows

allocated funds to purse supplements consistent with the Iowa HBPA’s intent.”

      There’s more. Although the core premise of Benda’s suit is that Prairie

Meadows breached by following the Rasmussen formula, the Iowa HBPA believes
                                                17

the opposite is true.8 The Iowa HBPA notes that it “indisputably wanted and

urged Prairie Meadows to perform the contract using the Rasmussen formula.”

This is not a brand-new position that Iowa HBPA manufactured in response to

Benda’s current suit. Back in 2015—three years before Benda’s lawsuit—the

Iowa HBPA litigated before the IRGC about the proper allocation of purse money

and supplements. The record from those 2015 proceedings makes it clear that—

in Iowa HBPA’s view—the Rasmussen formula was the right way for Prairie

Meadows to distribute purse money. And that view is, of course, the opposite of

Benda’s theory in this case.

       That’s not all. Even if the Iowa HBPA agreed with Benda’s view of the

merits, it would still think that this class action is a bad idea. Iowa HBPA

explains that horseracing requires “the coordination of owners, trainers,

breeders, and—obviously—Prairie Meadows.” They must work “together for the

common good of the entire industry.” But “[s]uing Prairie Meadows for over

$2 million,” as Benda proposes, would “hurt[] Prairie Meadows, who is a partner

in promoting the horseracing industry in Iowa.” And so, Iowa HBPA and its

members “have an interest in opposing this lawsuit, regardless of the merits.”

       Iowa HBPA is not alone in resisting this suit. As noted, although Iowa

HBPA is the statutorily designated representative of the horsemen and—indeed—

the promisee for the contracts on which Benda’s case is based, there is another

       8In  his reply brief, Benda argues that even if the Rasmussen formula is the proper
calculation, Prairie Meadows still did not follow the formula correctly and, therefore, underpaid
purse supplements. Even if this is true, we do not believe it resolves the important conflicts
present here. For one thing, it doesn’t resolve the conflict over whether the Rasmussen formula
should apply. Also, as will be explained, it doesn’t resolve the conflict over appropriate remedies.
                                       18

important group that represents horsemen who race at Prairie Meadows. That

group is ITBOA, a 400+ member organization that represents “Iowa-bred

thoroughbred owners and breeders.” Because of ITBOA’s focus on Iowa-bred

horses, “ITBOA’s members would be potential members of the class action

proposed by Benda.” But ITBOA agrees with Iowa HBPA that the class action is

a bad idea. ITBOA thinks that “Benda’s requested relief would damage Iowa’s

racing industry, and would be contrary to the interests of ITBOA’s members.”

      In short, Benda’s suit faces substantial resistance. As Iowa HBPA

observes, “it may be unprecedented” that “two groups who already represent

virtually every proposed class member have intervened to say that this case

should be dismissed and class certification denied.” This is particularly striking

because Benda has not countered by identifying any group of potential class

members—not even just a handful—who support the case. The one potential

class member who has given support to the suit appears to have based her

position on her knowledge and trust of Benda’s attorneys. She admitted that she

hadn’t “gotten into the merits” of the case and didn’t know whether Benda would

adequately represent the interests of all of the potential class members.

      In Benda’s view, though, the opposition he faces here is no different from

that in Kragnes v. City of Des Moines, 810 N.W.2d 492, 498 (Iowa 2012). In

Kragnes, we concluded that—although some class members opposed the class

action—there was “no fundamental conflict among the class members” as to

whether the defendant city had collected fees illegally. Id. at 500. Here, though,

there are fundamental conflicts as to whether Prairie Meadows did anything
                                               19

wrong. Both ITBOA and Iowa HBPA hold the position that Benda’s suit “has no

merit.” And Iowa HPBA believes Prairie Meadows made appropriate payments

from 2012 through 2015. That’s a fundamental conflict about the central merits

issue in this case, namely: Did Prairie Meadows breach the contracts by failing

to make appropriate payments from 2012 through 2015?

       There are other problems, too. As the district court noted, the IRGC has

revoked Benda’s license to race horses in Iowa.9 ITBOA believes this means that

Benda “neither . . . can [n]or should represent the interests of Iowa-bred owners

and breeders.” Others have expressed similar views. And our cases acknowledge

that “[t]he stature of the purported class representative is a legitimate area of

inquiry.” Stone, 497 N.W.2d at 847.

       But we are much more troubled by a different aspect of Benda’s license

situation. The contracts on which Benda’s suit depends include a clause that

dictates the remedy for underpayment of purses or supplements. It provides that

“[a]ny underpaid purses or supplements” from prior years must be “set aside

solely to enhance purses and supplements” in future years. Benda doesn’t want

this remedy because—unlike many possible class members—Benda is no longer

racing at Prairie Meadows. In his deposition, Benda was asked about the

possibility of requiring Prairie Meadows to pay out the alleged underpayment

through future purse supplements. Benda responded: “Well, that would be

unfair to the owners in 2012 to ’15 that no longer are participating. How do they

        9In his reply brief, Benda points out that horses that he bred in Iowa are still racing at

Prairie Meadows. However, we do not believe this resolves the conflicts we have described.
                                         20

recover -- how do they recover? Such in a specific instance myself. I’m not racing.”

(Emphasis added.).

      According to Benda’s own testimony, then, the remedy prescribed in the

contracts is not a remedy that would benefit Benda—although it might benefit

other class members who still race at Prairie Meadows. This shows that Benda

has a conflict with class members that is “fundamental, going to the specific

issues and controversies.” Vignaroli v. Blue Cross of Iowa, 360 N.W.2d 741, 746

(Iowa 1985). And it shows Benda has a “conflict of interest in the maintenance

of the class action” for purposes of rule 1.263(2)(b). Iowa R. Civ. P. 1.263(2)(b);

Stone, 497 N.W.2d at 848 (holding the district court could properly consider a

conflict between the potential class representative, who no longer worked for

defendant-employer, and potential class members who remain as employees).

This alone shows denial of certification was not an abuse of the district court’s

“broad discretion.” Kragnes, 810 N.W.2d at 503 (“[T]he applicable standard of

review accords broad discretion to the district court . . . .”).

      We have considered all of Benda’s counterarguments. For example, we

note Benda’s suggestion that “Iowa’s class action rules do not permit an inquiry

into the merits of class action claims for relief.” We think the analysis is

somewhat more nuanced. Certainly, we agree that class certification doesn’t

depend “on a determination of whether the plaintiffs will ultimately prevail on

the merits.” Vos, 667 N.W.2d at 45. This doesn’t mean, though, “that the court

may not require sufficient information to form a reasonable judgment in deciding

whether to certify a class action.” Id. at 46 (quoting Martin v. Amana
                                        21

Refrigeration, Inc., 435 N.W.2d 364, 367–68 (Iowa 1989)). Indeed, “[b]ecause ‘the

class determination generally involves considerations that are enmeshed in the

factual and legal issues comprising the plaintiff’s cause of action,’ ” the class

certification “analysis often requires the court ‘to probe behind the pleadings

before coming to rest on the certification question.’ ” Id. (quoting Cohn v. Mass.

Mut. Life Ins., 189 F.R.D. 209, 212 (D. Conn. 1999)). That is true here. As

explained, the question of adequate representation is interlaced with possible

remedies available to the class as well as the basic question of whether Prairie

Meadows breached the contracts.

      Benda makes other points that are worthwhile. For instance, Benda

suggests that the district court placed too much emphasis on Benda’s various

legal and financial problems, including alleged impropriety by Benda in

connection with horseracing. The district court believed that these various

problems   would    impact   Benda’s   credibility   and,   therefore,   “make   his

representation less effective.” As to the specific question of credibility, we

disagree with the district court. As we confirmed with counsel at oral arguments,

it is unlikely that Benda would even have to testify at a trial of this matter. And

so his credibility as a witness is not especially relevant. Moreover, because Benda

is represented by highly-skilled attorneys who are fronting the costs of this

litigation, Benda’s financial problems haven’t and wouldn’t undermine his ability

to advance the litigation.

      All the same, though, Benda’s problems are not irrelevant. As noted, they

impact Benda’s stature. Much more importantly, though, Benda’s problems have
                                       22

led to him losing his license to race horses. They make it unlikely that he will

race at Prairie Meadows again. And that creates fundamental conflicts between

Benda and horsemen he wants to represent.

      III. Conclusion.

      As we emphasized in Kragnes, “the applicable standard of review accords

broad discretion to the district court” in determining whether conflicts preclude

class certification. Kragnes, 810 N.W.2d at 503. Applying this deferential

standard of review to the unusual facts of this particular case, we find no abuse

of discretion in the district court’s determination that certification is

inappropriate. We affirm.

      AFFIRMED.

      Christensen, C.J., and McDonald and Oxley, JJ., join this opinion.

Mansfield, J., files a dissenting opinion, in which Waterman, J., joins.

McDermott, J., takes no part.
                                         23

                #21–0649, Benda v. Prairie Meadows Racetrack and Casino, Inc.

MANSFIELD, Justice (dissenting).

      I respectfully dissent.

      I. Class Representation Is Adequate.

      In my view, Robert Benda is an adequate class representative under Iowa

Rule of Civil Procedure 1.263(2). His claim is a third-party beneficiary claim for

breach of contract; Benda alleges misapplication of a mathematical payment

formula. As the majority notes, “[I]t is unlikely that Benda would even have to

testify at a trial of this matter.” Benda is represented by capable class action

counsel who are fronting the costs of litigation. Benda’s licensure status and

other legal or financial problems are irrelevant to the contract interpretation

issues at the heart of this case.

      Benda may have had past conflicts with the Iowa Horsemen’s Benevolent

and Protective Association (Iowa HBPA) and Prairie Meadows, but rule 1.263(2)

requires only that he not have “a conflict of interest in the maintenance of the

class action.” Iowa R. Civ. P. 1.263(2)(b) (emphasis added). There is no showing

that Benda is conflicted in that sense. He will be financially better off if this

lawsuit is successful, and the defendants do not point to any reason why he

would not be motivated to pursue it.

      The majority really is advancing several other reasons why a class should

not be certified. The district court did not rely on these reasons. I do not find any

of them persuasive or supported by our class action rules.
                                        24

      II. The Opposition of the Iowa HBPA Is Not a Reason for Denying
Certification; They Have a Conflict of Interest.

      One reason is that the Iowa HBPA opposes Benda’s suit. That’s not

surprising. The Iowa HBPA negotiated the contract on which Benda is suing. If

Benda has a claim, that means the Iowa HBPA neither negotiated nor

administered the contract correctly. So the Iowa HBPA is not a disinterested

party. If anybody has a conflict of interest, it is the Iowa HBPA. The Iowa HBPA’s

opposition is not a reason for denying class certification.

     III. The Opposition of Some Class Members Is Not a Reason for
Denying Certification.

      Nor is the opposition of some class members a reason for denying class

certification. Neither the Iowa HBPA nor the Iowa Thoroughbred Breeders and

Owners Association (ITBOA) surveyed their members. Many might support the

lawsuit if they saw the prospect of receiving cash payments. Nonetheless, I

accept for purposes of discussion that some class members are opposed to

Benda’s lawsuit. That is not enough to defeat class certification. See Kragnes v.

City of Des Moines, 810 N.W.2d 492, 500 (Iowa 2012); Vignaroli v. Blue Cross of

Iowa, 360 N.W.2d 741, 746–47 (Iowa 1985). In any securities class action,

various insiders will have large holdings of stock in the corporation and will be

opposed to class certification. Do they get a veto? Of course not. The situation

may be similar here.
                                        25

    IV. The Record Indicates That Prairie Meadows Can Pay a Judgment;
Any Decision to Pursue Prior Overpayments Would Be That of Prairie
Meadows.

      The reasons given by the Iowa HBPA and the ITBOA for not allowing this

litigation against Prairie Meadows to go forward—even if the claim has legal

merit—are also unpersuasive. A successful lawsuit would “hurt” Prairie

Meadows only in the sense that paying a casino jackpot hurts Prairie Meadows.

The record shows that Prairie Meadows generates a “casino net win” of

approximately $200,000,000 per year. That is more than enough to pay a verdict

in this case.

      I also doubt that anyone other than Prairie Meadows would end up paying

any part of a verdict or settlement in this case. If Prairie Meadows decides to

pursue owners and breeders who received prior overpayments in good faith, that

would be a decision attributable to Prairie Meadows, not anyone else.

      Note that we affirmed class certification in Kragnes v. City of Des Moines

even though the defendant there was not a racetrack and casino earning

$200,000,000 a year but a city being ordered to pay “roughly $40 million” to its

residents. 810 N.W.2d at 498, 515. This was a much clearer case of class

members being forced to fund their own successful class action, including the

attorney fees for the class counsel. See id. at 496. True, the city’s residents were

to receive tax refunds, but the residents would end up paying for those refunds

(plus attorney fees) through whatever financing mechanism the city used. Id. at

502–03.
                                              26

       V. The Contract Does Not Defeat Benda’s Class Claim.

       Finally, the majority contends that Benda’s third-party beneficiary breach

of contract claim will fail on the merits. The majority points to a contract clause

relating to “Underpaid Purses.” The majority doesn’t actually quote the clause,

and I believe a quotation from the contract shows that the clause is plainly

inapplicable:

       Underpaid Purses From Prior Years. To the extent that PRAIRIE
       MEADOWS has not fully distributed all net purse money or purse
       supplements for Thoroughbred Horses from prior years, such
       underpaid funds shall be segregated and set aside by PRAIRIE
       MEADOWS in a separate interest bearing account (the “Account”)
       for Thoroughbred Horse racing at PRAIRIE MEADOWS, the principal
       of which shall be paid in purses and/or supplements for
       Thoroughbred Horse racing at PRAIRIE MEADOWS in subsequent
       years.10

       To my reading, this paragraph deals with the situation where Prairie

Meadows has leftover purse and purse supplement money that “has not [been]

fully distributed.” Such funds go into an escrow to enhance future purses and

supplements. That’s not the situation here. Prairie Meadows doesn’t have leftover

money; it is alleged to have paid out according to the wrong formula. Iowa HBPA’s

executive director confirmed that this “underpayment account” has no

connection to the purse supplements for Iowa horses.

       Normally, “we decline to ‘engage in free-ranging merits inquiries at the

certification stage.’ ” Freeman v. Grain Processing Corp., 895 N.W.2d 105, 120

(Iowa 2017) (quoting Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455,

       10The quotation is from the 2015 contract. The same wording appears in the 2010

contract except the phrase “all allotted purses” is used instead of “all net purse money or purse
supplements.”
                                        27

466 (2013)). “The merits should be analyzed only to the extent relevant in

determining whether the rules have been satisfied.” Id. But even if we were to

make an exception to this practice and examine the merits here, I’m not

persuaded that the “Underpaid Purses From Prior Years” clause provides a

defense.

      I would also note that Benda’s third-party beneficiary breach of contract

claim has already been through the summary-judgment wringer and emerged

unscathed. The defendants did not raise this particular clause as a reason for

granting summary judgment.

      VI. This Case Is Well Suited for Class Adjudication.

      Our cases emphasize that “the proponent’s burden is light” to establish

the grounds for class certification. Freeman, 895 N.W.2d at 114 (quoting City of

Dubuque v. Iowa Tr., 519 N.W.2d 786, 791 (Iowa 1994)). Benda met that light

burden. As the majority acknowledges, “[t]he class action rules should be

‘liberally construed and the policy should favor maintenance of class actions.’ ”

Id. (quoting Lucas v. Pioneer, Inc., 256 N.W.2d 167, 176 (Iowa 1977) (en banc)).

“A key factor is whether ‘common questions of law or fact predominate over any

questions affecting only individual members.’ ” Id. at 115 (quoting Iowa R. Civ.

P. 1.263(1)(e)). That key factor is met here. All several hundred class members

are in the same boat: their claims rise or fall based on resolution of the disputed

formula. If Benda’s interpretation prevails, the class members all were underpaid

and the individual recoveries will be based on simple math. That common

question—which payout formula governs—predominates over individual issues.
                                           28

         Importantly, the amount of each individual claim is probably too small to

justify individual lawsuits. These claims will be heard, if at all, as a group. As we

reiterated in Freeman v. Grain Processing Corp., the goal of our class action rules

is the

         efficient resolution of the claims or liabilities of many individuals in
         a single action, the elimination of repetitious litigation and possibly
         inconsistent adjudications involving common questions, related
         events, or requests for similar relief, and the establishment of an
         effective procedure for those whose economic position is such that
         it is unrealistic to expect them to seek to vindicate their rights in
         separate lawsuits.

Id. at 114 (quoting Comes v. Microsoft Corp., 696 N.W.2d 318, 320 (Iowa 2005)).

That goal is thwarted by today’s majority opinion, which leaves the putative class

members without a meaningful remedy.

         VII. Conclusion.

         For all these reasons, I would reverse the district court’s order denying

class certification and remand for further proceedings. Of course, nothing is

permanent, least of all class action certification. Based on later developments, a

class can be decertified. Freeman, 895 N.W.2d at 119–20. For example, if it turns

out that Benda is truly alone on his own island and that no one else in the class

wants the case to go forward, decertification could be ordered for lack of

numerosity. Benda could then pursue his own individual claim. That’s not the

state of the record here.

         Waterman, J., joins this dissent.