Court Opinion

ID: 3218214
Source: CourtListenerOpinion
Date Created: 2016-06-29 15:09:21.686946+00
Date Added: 2024-06-11T13:27:09.258589
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 15-0723
                              Filed June 29, 2016

CARLA M. LIMMER, as Trustee of the Carla M. Limmer Trust,
    Plaintiff-Appellant,

vs.

CITY OF COUNCIL BLUFFS, IOWA,
      Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Pottawattamie County, James M.

Richardson, Judge.

      The plaintiff appeals from the district court’s denial of a class action

certification. REVERSED AND REMANDED.

      Anne M. Breitkreutz and Joshua W. Weir of Dornan, Lustgarten & Troia,

P.C., L.L.O., Omaha, Nebraska, for appellant.

      David J. McCann, Council Bluffs, for appellee.

      Considered by Danilson, C.J., and Vogel and Potterfield, JJ.
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POTTERFIELD, Judge.

       Carla Limmer, as trustee of the Carla M. Limmer Trust, appeals from the

district court’s denial of a class action certification. Limmer maintains the district

court abused its discretion when it denied her application because the rules of

certification have been met, the class action would be a fair and efficient way to

adjudicate the controversy, and she would fairly and adequately protect the

interests of the class.

I. Background Facts and Proceedings

       In January 2015, Limmer filed a complaint for declaratory order, judgment,

and injunctive relief, in which she challenged a property registration fee imposed

by the defendant, the City of Council Bluffs. The fee in question was part of a

rental registration program1 that charged owners of residential real estate fifteen

dollars per rental unit. Limmer sought a declaration that the fee exceeded the

reasonable     cost    to   administer     the    registration    program     and     thus

unconstitutionally acted as a tax on real estate owners, an injunction from

enforcing the registration fee, and an award of monetary damages for payments

made by her as registration fees that exceeded the reasonable cost to administer

the registration program.

       Limmer filed an application to certify the action as a class action. She

maintained all residential property owners within Council Bluffs were potential

1
  Cities with a population of 15,000 or more are required by statute to establish a uniform
housing code, “which shall include a program for regular rental inspections, rental
inspections upon receipt of complaints, and certification of inspected rental housing,
. . . .” Iowa Code § 364.17(3)(a) (2015).
                                          3

class members, with more than 2600 residential property owners owning

approximately 9200 residential rental units.

       The City resisted the application, asserting there was no useful purpose to

certify the class because the relief sought by Limmer would benefit all members

of the proposed class whether or not it was certified.

       Following an unreported hearing on the matter, the court filed an order

denying Limmer’s application.       The court agreed with the City, ruling the

certification would serve “no useful purpose” in determining whether the

regulation was unconstitutional. Additionally, the court reasoned that if it was

found to be unconstitutional, the proposed class members would have suffered

different amounts of damages, which would require independent calculation. As

such, a class action was “not the most appropriate means of adjudicating the

claims and defenses.”

       Limmer appeals.

II. Standard of Review

       “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 the

certification of class action lawsuits.” Vos v. Farm Bureau Life Ins. Co., 667

N.W.2d 36, 44 (Iowa 2003). We will reverse only if we find the court’s decision

was based on an abuse of discretion. Id.

III. Discussion

       “Iowa Rule of Civil Procedure 1.261 permits the commencement of a class

action if there is a question of law or fact common to a class of persons so
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numerous that joinder of all persons is impracticable.” Id. at 44–45. The district

court may certify an action as a class action if it finds:

              a. The requirements of rule 1.261 [numerosity and
       commonality] have been satisfied.
              b. A class action should be permitted for the fair and efficient
       adjudication of the controversy.
              c. The representative parties fairly and adequately will
       protect the interests of the class.

Iowa R. Civ. P. 1.262(2).

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

plaintiffs meets the prerequisites. Vos, 667 N.W.2d at 45. A failure of proof on

any one of the prerequisites is fatal to class certification. Id. That being said,

“[o]ur class-action rules are remedial in natural and should be liberally construed

to favor the maintenance of class actions.”         Comes v. Microsoft Corp., 696

N.W.2d 318, 320 (Iowa 2005).

       In its written ruling, the court did not lay out the criterion provided above

nor list any findings that supported certifying the class. Assuming its reasons for

not certifying the class are completely set out in the order, the court did not deny

certification due to the lack of numerosity and commonality, see Iowa R. Civ. P.

1.261, or because Limmer would not fairly and adequately protect the interests of

the class, see Iowa R. Civ. P. 1.262(2)(c). Rather, the court found Limmer failed

to satisfy her burden to prove that “[a] class action should be permitted for the fair

and efficient adjudication of the controversy.” See Iowa R. Civ. P. 1.262(2)(b).

       Iowa Rule of Civil Procedure 1.263(1) provides thirteen non-exclusive

factors for the court to consider “[i]n determining whether the class should be

permitted for the fair and efficient adjudication of the controversy.” Iowa R. Civ.
                                         5

P. 1.263(1)(a)-(m). Here, the district court explicitly considered whether other

means of adjudicating the claim was inefficient or impracticable and whether a

class action was the appropriate means for adjudicating the claim. See Iowa R.

Civ. P. 1.263(1)(f), (g); see also Comes, 696 N.W.2d at 321 (Iowa 2005) (stating

courts are not required to make written findings as to each of the factors).

Although the district court concluded a class action was not necessary for the fair

and efficient adjudication of the claim, we disagree.

       The court found that certification was not appropriate because if Limmer

was successful in her claim, the court’s injunctive and declaratory ruling would

apply to all potential class members even though it was not a class action. The

court also indicated “other harmed parties could join the case, or they could wait

and bring suit against” the City.     In her application for certification, Limmer

identified more than 2600 residential property owners as potential class

members. Our case law establishes that a “class with forty or more members is

within the range where impracticality is presumed.” Legg v. West Bank, 873

N.W.2d 756, 759 (Iowa 2016).         Joinder is not practical and allowing each

individual to bring their own claim would “easily overwhelm the legal department

of the City and the resources of the district court.” See Kragnes v. City of Des

Moines, 810 N.W.2d 492, 503 (Iowa 2012).

       Limmer estimates her individual damages to be $1425; we believe we

may reasonably anticipate that her legal fees for pursuing the action outpace her

possible individual recovery. Where the cost of litigation is large in comparison to

the damages recoverable by each individual, certifying a class action makes it

more likely the action will be fully litigated. See Comes, 696 N.W.2d at 320
                                           6

(stating class actions are “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” (citation omitted)). As the Supreme Court stated:

       The policy at the very core of the class action mechanism is to
       overcome the problem that small recoveries do not provide the
       incentive for any individual to bring a solo action prosecuting his or
       her rights. A class action solves this problem by aggregating the
       relatively paltry potential recoveries into something worth
       someone’s (usually an attorney’s) labor.

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v.

Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). Similarly, in Kragnes,

the Iowa Supreme Court was asked whether a class action was properly certified

where the City of Des Moines had charged residents a franchise fee for gas and

electricity services in excess of the cost of the administrative expenses. 810

N.W.2d at 515. The court found that it was, noting the resolution of the claim had

required protracted litigation while the individual’s “claim standing alone would

likely fall within the jurisdictional limit of the small claims court.” Id. at 503. The

court continued:

       We think this case demonstrates the very necessity and importance
       of class action litigation both for the plaintiffs and for the City. The
       likelihood of a plaintiff bringing such a complex suit requiring
       substantial resources to litigate in small claims is highly unlikely.
       And if she, and scores of thousands of others like her, did bring
       their claims individually, it could easily overwhelm the legal
       department of the City and the resources of the Polk County district
       court, and would likely result in inconsistent adjudications.

Id.

       Lastly, the district court noted that the possible damages for each of the

proposed class members would have to be independently calculated.                  Our

supreme court has rejected the notion that the mere fact that there may be
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damage issues unique to different class members precludes class certification.

See, e.g., Legg, 873 N.W.2d at 760; Vignaroli v. Blue Cross of Iowa, 360 N.W.2d

741, 745 (Iowa 1985).

       After considering the remedial nature of our class rules and the fact that

we are to “liberally construe” the rules in favor of the maintenance of class

actions, we conclude certification of the class allows for the efficient resolution of

the common question involving many potential members. As such, the district

court abused its discretion in denying Limmer’s application for class certification,

and we remand for further proceedings consistent with this opinion.

       REVERSED AND REMANDED.