Just Film, Inc. v. Sam Buono
847 F.3d 1108
| 9th Cir. | 2017Background
- Plaintiffs are small businesses/owners who leased point-of-sale credit/debit equipment and allege Leasing Defendants and Merchant Service Defendants ran a scheme to overcharge merchants via fraudulent long-term leases and improper post-lease tax/fee collections.
- Two schemes: (1) Post-lease tax collection—Leasing Defendants compiled Schedule 1 listing ~107,000 merchants allegedly owing back taxes, sent Notices of Debt, and attempted/obtained ACH debits from former-lessee accounts (sometimes via shell entities); (2) Property-tax calculation—Leasing Defendants used an inflated "Acquisition Cost" (lease income/commissions) instead of the lower actual "Equipment Cost" as the tax base, causing over-assessments.
- Erin Campbell (Silicon Valley Pet Clinic) is the named representative for the SKS Post-Lease Expiration Class; she received a Notice of Debt after her lease had been terminated, spent time and resources investigating, and alleges injury even though her closed account was not actually debited.
- Plaintiffs sought nationwide class certification under Rule 23(b)(3); the district court certified two classes relevant on appeal: the SKS Post-Lease Expiration Class (RICO, RICO conspiracy, and a CA UCL subclass) and the Property Tax Equipment Cost Basis Class (various claims including breach of contract and CA common-law/UCL claims).
- Leasing Defendants appealed certification; the Ninth Circuit reviewed for abuse of discretion and affirmed both class certifications.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Typicality for SKS Post‑Lease Class | Campbell’s claim arises from the same course of conduct (the post‑lease tax/collection scheme) and is reasonably coextensive with class injuries. | Campbell’s injury differs (her account not debited) and her theory differs from class members whose accounts were debited; unique defenses (standing) exist. | Typicality satisfied—differences in individual injury do not defeat typicality where representative and class share the same course of misconduct and legal theory. |
| Standing/proximate causation for Campbell’s RICO claim | Campbell lost business time and paid an assistant to investigate after receiving the Notice of Debt—this is injury to business or property caused by defendants’ scheme. | Because Campbell’s account was not debited, the alleged ACH misrepresentations to processors were not the proximate cause of her injury. | Campbell has RICO standing: time/costs spent responding to defendants’ fraudulent collection efforts constitute injury traceable to the alleged scheme. |
| Commonality/Predominance (SKS Post‑Lease) — liability and damages model | Common issues (validity of simulation, misuse of ACH authorizations, misrepresentations to processors/banks) predominate; damages measurable via defendants’ records and claimant records. | Individualized reliance and differing damage types (actual debits vs. investigatory time) predominate and defeat classwide proof. | Common questions predominate; individualized damage calculations do not defeat certification because damages are traceable to the same course of conduct and can be computed. |
| Commonality/Predominance and Superiority (Property Tax Equipment Cost Basis Class) | Lease interpretation (whether using Acquisition Cost instead of Equipment Cost breached duties) is a common contract question; class treatment is superior given small individual recoveries and litigation costs. | National class unmanageable due to varied tax jurisdictions/rates; no evidence Acquisition Cost is inflated. | Certification affirmed: contract interpretation predominates (not merits), multi‑jurisdictional tax issues do not defeat predominance or superiority; class action is superior. |
Key Cases Cited
- Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952 (9th Cir. 2013) (deference standard when reviewing grant of class certification)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (U.S. 2011) (common‑question requirement for class certification)
- Comcast Corp. v. Behrend, 133 S. Ct. 1426 (U.S. 2013) (damages model must measure damages attributable to theory of liability)
- Hanon v. Dataproducts Corp., 976 F.2d 497 (9th Cir. 1992) (typicality standard for class representatives)
- Parsons v. Ryan, 754 F.3d 657 (9th Cir. 2014) (typicality and common issues in class litigation)
- Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007) (representative need not have identical injury to class to satisfy typicality)
- Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 133 S. Ct. 1184 (U.S. 2013) (courts should not conduct free‑ranging merits inquiries at certification stage)
- Ticor Title Ins. Co. v. Florida, 937 F.2d 447 (9th Cir. 1991) (measure of damages in civil RICO is harm caused by predicate acts)
- Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) (business/time costs can constitute injury to business or property under RICO)