Court Opinion

ID: 4714581
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:41:19.900768+00
Date Added: 2024-06-11T08:07:22.835787
License: Public Domain

Sanders, J. *
¶31 (dissenting) — Because the trial court abused its discretion when it denied nationwide class certification absent a sufficient analysis of the feasibility of such a class, I dissent.
¶32 This court reviews a trial court’s class certification ruling for abuse of discretion. Smith v. Behr Process Corp., 113 Wn. App. 306, 318, 54 P.3d 665 (2002). A discretionary decision will not be disturbed unless it is based on unten able grounds or is manifestly unreasonable or arbitrary. *282Oda v. State, 111 Wn. App. 79, 91, 44 P.3d 8 (2002). To certify a class, a trial court must find numerosity, commonality, typicality, and adequacy of representation. CR 23(a); Smith, 113 Wn. App. at 319. The court must also find (1) that there is a risk of inconsistent results on individual claims resulting in inconsistent standards of conduct or the possibility of a preclusive effect on other class members, or (2) that injunctive or declaratory relief is appropriate for the class as a whole, or (3) that common questions of law or fact predominate. CR 23(b); Smith, 113 Wn. App. at 321-22.
¶33 The trial court denied class certification because it reasoned the contract claims would be unmanageable (lacking commonality, typicality, and predominance of common questions) because 50 different state laws would need to be applied in order to interpret contract provisions and apply affirmative defenses, Clerk’s Papers (CP) at 617-19 (Mem. Op. Den. Mot. for Class Certification (Mem. Op.) at 2-4); and Washington’s Consumer Protection Act (CPA), chapter 19.86 RCW, applied nationwide but each individual would need to prove causation — that the alleged misrepresentation affected his or her decision to choose AT&T5 as a wireless provider — and therefore individual issues predominated over class issues, CP at 619-21 (Mem. Op. at 4-6).
¶34 The Court of Appeals reversed, reasoning the contract claims all shared a common legal theory, any differences could be resolved through subclasses and master’s hearings, and the CPA claims could be litigated nationwide and causation could be proved by means other than individual reliance. Schnall v. AT&T Wireless Servs., Inc., 139 Wn. App. 280, 289, 290-92, 161 P.3d 395 (2007), review granted, 163 Wn.2d 1022, 185 P.3d 1194 (2008).
¶35 The majority reverses the decision of the Court of Appeals, largely following the trial court’s decision, reasoning the contract claims require application of individual state laws and thus do not satisfy the predominance requirement for class certification, majority at 269-76, and *283the CPA claims cannot be certified for a class action because the general class issues do not predominate over individual ones where the trial court must make individual determinations of reliance, id. at 277-80.
¶36 I dissent. As recognized by the Court of Appeals, subclasses and master’s hearings could be used to address differing state contract laws. Not every state contract law is materially different for purposes here, and the trial court abused its discretion by failing to consider whether the laws of the states could be grouped together in a manageable number of subclasses. I agree with the trial court and Court of Appeals that the Washington CPA can be applied nationwide. The CPA and CR 23 (governing class certification) are intended to be liberally construed to provide the class a forum to litigate against the conduct alleged here — a corporation nickel and diming consumers wholesale.
¶37 For the sake of clarity I generally follow the headings used in the majority.6
Enforceability of choice of law provisions
¶38 The majority concludes that the choice of law clauses in the individual customers’ contracts should be enforced. The majority’s analysis appears to address only the contract claims and not the CPA ones. Majority at 266-69. I concur with the application of the choice of law clauses to the contract claims. As explained more fully below, however, this application of different state contract laws does not *284necessarily defeat class certification because subclasses and other mechanisms could likely be used to address any variances.
¶39 The choice of law clauses do not apply to the CPA claims.7 The CPA claims are based upon statute, not contract, and many of the claims arose before the class members even entered into their contracts with AT&T pertaining to choice of law. The first element of a CPA action — an unfair or deceptive act — can arise prior to a contract; a litigant need only show an act “had the capacity to deceive a substantial portion of the public.” Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 785, 719 P.2d 531 (1986) (emphasis omitted).8 That is the case here where the CPA claims relate to the use of allegedly deceptive language, advertising, and promotional materials.
Class certification of contract claims
¶40 The majority endorses the trial court’s view that individual issues predominate over the common legal and factual issues due to the “interpretation of the contract terms” and “the availability of differing affirmative defenses” under the laws of 50 different states. Majority at 270-71. The trial court listed potential differences in contract interpretation, the voluntary payment doctrine, and the interpretation of arbitration agreements as examples of where the claims would need to be analyzed under 50 *285different state laws. However, not every law of the 50 states has a different approach to contract interpretation and affirmative defenses. Where state laws materially differ, subclasses could be established to address those differences. See Sitton v. State Farm Mut. Auto. Ins. Co., 116 Wn. App. 245, 255, 63 P.3d 198 (2003) (“courts have a variety of procedural options to reduce the burden of resolving individual damage issues, including bifurcated trials, use of subclasses or masters, [or] pilot or test cases with selected class members”); In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 468 (D.N.J. 1997), aff’d, 148 F.3d 283 (3d Cir. 1998).9
¶41 The trial court abused its discretion by failing to determine whether the laws of the states could be separated into a few, manageable subclasses. The trial court referenced only speculative differences in the law of every state without determining whether material differences actually existed in each. I would therefore remand this issue to provide the parties an opportunity to further brief, and the trial court to fully consider, whether subclasses could be created to address materially different state laws within a nationwide class.
Superiority analysis
¶42 CR 23(b)(3) requires a court to find that “a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” The majority concludes that a nationwide class action is not superior to other available methods — namely, that individual state class actions are better suited to resolve the controversy. Majority at 275-76. However, the majority’s reasoning does not support this conclusion.
*286¶43 First, the majority asserts that, although class actions permit claims involving small amounts of money to be brought to court, this does not weigh in favor of a nationwide class because there are enough AT&T customers to bring 50 individual statewide class actions.10 See id. This ignores the significant advantages of a nationwide suit. The claims in every state involve the nature of the universal connectivity charge (UCC), an apparent nationwide approach to charging fees in relation to the UCC, omissions or the same or similar misrepresentations to further that approach, and the same defendant corporation. A nationwide suit avoids a 50-fold redundancy of litigation, which will substantially increase the costs of the litigation to both parties, particularly attorney fees; result in redundant discovery, including repetitive document production and depositions; result in redundant relitigation of the same issues; and saddle the judiciary of all 50 states with significant costs to redundantly try statewide class actions based on the actions of a single Washington corporation.
¶44 Next, the majority claims it would be inefficient to have a trial judge manage a claim litigated under 50 different state laws. Id. at 276. As more fully discussed infra, the law of all 50 states will not conflict and, as recognized by the Court of Appeals, see Schnall, 139 Wn. App. at 299, subclasses and master’s hearings can be used to address subsets of class members. The trial court abused its discretion, asserting a nationwide class would be unmanageable without analyzing the extent to which the state laws are materially similar and can be grouped into multistate subclasses.
¶45 Finally, the majority asserts Washington has no interest in having claims against a Washington corporation litigated in this state if they involve customers from other states. Majority at 276. But as later discussed in more *287detail, Washington has a substantial interest in assuring Washington corporations conduct business in a fair and honest manner. Washington also has a substantial interest to provide a forum to resolve the legal issues of Washington businesses.
¶46 Pending a determination that the contract laws of the 50 states do not materially differ from one another so as to preclude a manageable number of subclasses to address those differences, a nationwide class is the most efficient, economical, and reliable way to assure that every class member is provided a forum in which to bring his or her claim.
“Extraterritorial” application of Washington’s CPA
¶47 Holding that a nationwide class cannot be maintained in this case, the majority does not reach the issue of the CPA’s extraterritorial application. Majority at 276 n.4. Because I would hold that a class could be maintained, a brief discussion of the CPA’s application is warranted.
¶48 The trial court and the Court of Appeals agreed that the Washington CPA was applicable to the nationwide class because AT&T is headquartered in Redmond, Washington. Washington regulates the behavior of Washington businesses; the purpose of the CPA is not only to protect the public from unfair and deceptive acts, but also to “foster fair and honest competition” among businesses. RCW 19.86.920. If a Washington business is acting in an unfair or dishonest way nationwide, Washington has a strong interest to address the full, nationwide effects of that behavior; Washington should not become a harbor for businesses engaging in unscrupulous practices out of state. See Hangman Ridge, 105 Wn.2d at 785 (“ ‘The CPA, on its face, shows a carefully drafted attempt to bring within its reaches every person who conducts unfair or deceptive acts or practices in any trade or commerce.’ ” (quoting Short v. Demopolis, 103 Wn.2d 52, 61, 691 P.2d 163 (1984))). At least one party— AT&T — is native to Washington in every transaction here. *288The transactions involve AT&T’s formulation of its representations,11 the approval and distribution of those representations, and the offer and acceptance of the agreements.12 Significant portions of each transaction occurred in Washington.13
¶49 The statutory language of the CPA applies to transactions between a Washington party and an out-of-state party in two ways here. RCW 19.86.020 requires that the “[u]nfair methods of competition and unfair or deceptive acts or practices” must be “in the conduct of any trade or commerce.” (Emphasis added.) “Commerce” under the CPA is described as “any commerce directly or indirectly affecting the people of the state of Washington.” RCW 19.86.010(2) (emphasis added). “Person” is defined to include “natural persons, corporations, trusts, unincorporated associations and partnerships.” RCW 19.86.010(1) (emphasis added). Thus, the transaction here is “commerce” that “directly . . . affect [s]” AT&T, a corporation headquartered in Washington and thus a “person” under the CPA. The CPA therefore applies.
¶50 Furthermore, RCW 19.86.010(2) also encompasses commerce that indirectly affects the people of the state of Washington. AT&T’s exchange of goods and services with individuals outside the state of Washington is still commerce that indirectly affects Washingtonians. First, the Washington employees of AT&T are “natural persons,” RCW 19.86.010(1), and AT&T’s commerce with the claimants indirectly affects the nature and availability of their employment. Second, to the extent “the people of the state of *289Washington,” RCW 19.86.010(2), is read as a broader appeal to the public interest, the commerce and trade AT&T brings into Washington, and the alleged unfair and dishonest method by which it does so, affects the state economy and thus affects the Washington public at large.
¶51 The transactions here, between a Washington resident and out-of-state customers, originating at least in part in this state, fall well within the jurisdictional boundaries of the CPA.14 The CPA encompasses the nationwide class action proposed here.
Remaining Washington plaintiffs’ CPA claims
¶52 To prevail on a private CPA claim, a plaintiff must (1) show that the defendant engaged in an unfair or deceptive act or practice (2) in trade or commerce (3) that affects the public interest (4) and injured the plaintiff’s business or property, and (5) show that there is a causal link between the unfair or deceptive act and the injury suffered. Indoor Billboard /Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 74, 170 P.3d 10 (2007) (citing Hangman Ridge, 105 Wn.2d at 784-85). The fifth requirement, causation, is at issue here.
¶53 Causation “is a factual question to be decided by the trier of fact.” Id. at 83. A plaintiff is not limited in how he or she can prove causation, as long as there is “some demonstration of a causal link between the misrepresentation and the plaintiff’s injury.” Id. In Indoor Billboard this court rejected the notion that payment of an invoice that contained a misrepresentation or omission was automatically sufficient evidence to establish causation; however, we recognized that such a payment, when considered with all relevant evidence, could be sufficient. Id. at 83-84.
¶54 That is the case here, where payment in combination with the whole of the evidence is sufficient to establish *290causation. The class members agreed to pay AT&T a certain amount for services; AT&T charged more than that amount; AT&T misrepresented that the excess charges were imposed by the federal government on the consumer; those charges were not imposed by the federal government on the consumer; and the class members paid the excess charges.15 A trier of fact could make the commonsense inference that people do not willingly pay more money for commercial services than they must and, in particular, more than they originally agreed. People do, however, expect to be taxed; AT&T’s misrepresentation of the fee as a mandatory federal tax on consumers causes class members to pay the “tax.” Payment of the UCC in light of the nature of the misrepresentation and reasonable inferences drawn from common sense provides a sufficient basis for a trier of fact to find causation, as envisioned in Indoor Billboard. See id. at 84.
¶55 Here, the surrounding facts provide a basis for a causal connection. Class members, after entering into a contract with AT&T at a certain price, would not have rationally intended to pay more without a valid justification for the additional charge. A trier of fact could draw the inference that individuals were motivated by the most obvious source — a belief that the charge was a mandatory federal tax on consumers. Cf. Hangman Ridge, 105 Wn.2d at 795 (where this court made a similar distinction between fact sets, comparing those in Hangman Ridge — where causation was not established due to causal gaps — to those in our decision in Bowers v. Transamerica Title Insurance Co., 100 Wn.2d 581, 590, 675 P.2d 193 (1983) — where the causal link was sufficiently established with reasonable inferences concerning the plaintiff’s behavior).
¶56 This court liberally construes CR 23 and the CPA to effectuate their purposes. See Scott v. Cingular Wireless, 160 Wn.2d 843, 857, 161 P.3d 1000 (2007) (“ ‘ “[T]he interests of justice require that in a doubtful case . . . any error, *291if there is to be one, should be committed in favor of allowing the class action.” ’ ” (second alteration in original) (quoting Smith, 113 Wn. App. at 319 (quoting Esplín v. Hirschi, 402 F.2d 94,101 (10th Cir. 1968)))); Dix v. ICT Grp., Inc., 160 Wn.2d 826, 161 P.3d 1016 (2007); see also RCW 19.86.920. The CPA permits private citizens to act as private attorneys general to protect the public interest against unfair and deceptive practices. See Cingular Wireless, 160 Wn.2d at 851-53. Any requirement that class members individually prove reliance precludes the CPA from sufficiently protecting the public if a corporation misrepresents its charges or services to the public. Under the facts and circumstances of this case, a sufficient causal link exists to certify the class.
California class
¶57 Since the filing of the nationwide class action in Washington, a separate state class action has been filed in California. The nationwide class has moved to amend so as to exclude the California class from the Washington litigation. The trial court should determine on remand whether the plaintiffs can exclude the California consumers, resolve reportedly inconsistent arguments concerning which state consumer protection law should apply, and avoid conflicts of interest among counsel.
Conclusion
¶58 The majority errs by holding the trial court did not abuse its discretion to decline certification of a nationwide class without first considering whether subclasses or master’s hearings could be used to address potential material conflicts among state contract laws. I would remand the nationwide class certification issue to the trial court for reconsideration in light of the discussion here.
Owens and Stephens, JJ., concur with Sanders, J. Pro Tem.
Reconsideration denied February 17, 2011.

 Justice Richard Sanders is serving as a justice pro tempore of the Supreme Court pursuant to Washington Constitution article IV, section 2(a).

 AT&T Wireless Services Inc.

 Although one of the grounds upon which we granted review was federal preemption, the majority does not address that issue — but since the majority concludes that a Washington-only CPA class may survive, it tacitly rejects the preemption argument. There is no federal preemption here. The CPA does not preclude AT&T from billing its customers for contributions to the Universal Service Fund (which would be preempted), but rather precludes AT&T from doing so through misrepresentation or a failure to disclose the true nature of the charge (a matter of generally applicable state consumer protection). See In re Truth-in-Billing & Billing Format, 20 F.C.C.R. 6448, 6450 (2005) (“[N]o action we propose will limit states’ ability to enforce their own generally applicable consumer protection laws.”), vacated on other grounds sub nom. Nat’l Ass’n of State Util. Consumer Advocates v. Fed. Commc’ns Comm’n, 457 F.3d 1238, modified, 468 F.3d 1272 (11th Cir. 2006).

 I can only assume that the majority, silent on this issue, majority at 266-69, does not find the choice of law clauses applicable to the CPA claims.

 A litigant can make such a showing even prior to suffering an injury because the CPA not only vindicates individual rights but also protects the public interest. See Scott v. Cingular Wireless, 160 Wn.2d 843, 853, 161 P.3d 1000 (2007); Hangman Ridge, 105 Wn.2d at 785 (“The purpose of the capacity-to-deceive test is to deter deceptive conduct before injury occurs.” (citing Jeffrey M. Koontz, Recent Development, Washington Lawyers Under the Purview of the State Consumer Protection Act — the “Entrepreneurial Aspects” Solution — Short v. Demopolis, 103 Wn.2d 52, 691 P.2d 163 (1984), 60 Wash. L. Rev. 925, 944 (1985))). This protection of the public interest extends to misrepresentations made to one person, where those misrepresentations have the capacity to deceive a substantial portion of the public — for example, if they are made in a standard form contract. See, e.g., Potter v. Wilbur-Ellis Co., 62 Wn. App. 318, 327-28, 814 P.2d 670 (1991).

 The majority cites over 50 cases in which federal courts declined to certify a class based on Fed. R. Civ. P. 23 where multiple state laws applied. Majority at 271-73. But this list of cases, devoid of detail or discussion, merely supports the obvious proposition that under some facts, application of numerous state laws can defeat class certification. There is no need to counter in kind to cite to the equally obvious corollary — that under some facts the potential application of multiple state laws can be managed and class certification is warranted.

 The majority provides no basis for its insinuation that a class is waiting in every state to file a statewide class action now that the majority is dissolving the nationwide class action here. A nationwide class provides no risk that the consumers of any states will be left behind.

 These representations include those made in advertising and discussions prior to the contract, those made in the contract, and those made postcontract in response to customer inquiries.

 To the extent AT&T branch offices in other states offered and accepted the contracts with customers, the AT&T headquarters would have provided them the authority to do so under the representations and omissions challenged here.

 The CPA claims also include allegations of omissions. To the extent AT&T decided to omit information or failed to provide information it should have to consumers, those decisions or oversights would be attributable to decisions made at AT&T’s headquarters in Washington.

 Although the statutory language here is clear, any ambiguity would be liberally resolved with a construction that effectuates the CPA’s purposes, including the fostering of fair and honest competition. See RCW 19.86.920.

 The trial court must take the plaintiffs’ substantive allegations as true for the purpose of class certification. See Cingular Wireless, 160 Wn.2d at 856-57 (quoting Smith, 113 Wn. App. at 318-19).