847 F.3d 992
8th Cir.2017Background
- TMBC, a Missouri-headquartered seller of boats/trailers, used a standardized sales contract with a Missouri choice-of-law clause and charged a separate $75 “document fee.”
- Robert and Janet McKeage bought a boat in Missouri, sued under Missouri statutes alleging the document fee constituted unauthorized practice of law, and sought class certification for similarly situated purchasers nationwide whose contracts selected Missouri law.
- Missouri state courts certified a nationwide class (because TMBC’s form contracts selected Missouri law); the case was removed to federal court under CAFA and the district court ultimately certified ~100,000 class members after a file-by-file review.
- On cross-motions for summary judgment the district court held TMBC’s separate document fee violated Missouri’s unauthorized-practice statutes, applied Missouri law to out-of-state sales because of the contractual choice-of-law clause, and awarded treble damages totaling $21,735,754.
- The district court awarded class counsel 33% of the untrebled damages ($2,425,359) paid from the common fund; the McKeages cross-appealed, arguing contractual fee-shifting should have been enforced and that fees should be calculated on the full common fund.
- The Eighth Circuit affirmed certification, liability, choice-of-law application, and damages, but reversed and remanded on the fee issue, holding the contractual fee-shifting provision must be honored (while leaving open district-court discretion to award any additional fee from the common fund).
Issues
| Issue | Plaintiff's Argument (McKeage) | Defendant's Argument (TMBC) | Held |
|---|---|---|---|
| Class certification / ascertainability | Form-contract class is ascertainable via file review; common issues predominate | Individualized inquiries (which contracts contained Missouri clause) defeat predominance and ascertainability | Affirmed: intensive file-by-file review produced an ascertainable class; common issues predominated |
| Unauthorized practice of law (summary judgment) | Charging separate document fee for preparing legal forms violates Mo. Rev. Stat. §§ 484.010/.020; treble damages appropriate | TMBC: employees didn’t exercise legal judgment; some documents weren’t legal; fee should be prorated | Affirmed: separate fee for preparing documents (including some recognized legal forms) violates statute; whole separate fee recoverable |
| Choice-of-law / extra-territoriality | Contractual Missouri choice-of-law clause binds parties; Missouri law applies to nationwide contracts selecting it | Applying Missouri penal/statutory scheme extraterritorially is unconstitutional and improper | Affirmed: enforcing parties’ choice of Missouri law is permissible; no extra-territorial enforcement issue presented by private suit |
| Attorneys’ fees source (cross-appeal) | Contract’s prevailing-party fee-shifting clause requires TMBC to pay class counsel’s fees | District court: common-fund principles justify paying fees from the fund rather than enforcing contractual fee-shifting | Reversed/remanded: contractual fee-shifting must be honored; district court may still award additional fees from the common fund in its discretion |
Key Cases Cited
- Carpenter v. Countrywide Home Loans, 250 S.W.3d 697 (Mo. banc 2008) (separate charge for legal-form completion violates unauthorized-practice law)
- Eisel v. Midwest BankCentre, 230 S.W.3d 335 (Mo. banc 2007) (bank charging for preprinted legal forms constituted unauthorized practice)
- Hargis v. JLB Corp., 357 S.W.3d 574 (Mo. banc 2011) (analysis balancing public protection and convenience; focus on legal judgment required)
- Sandusky Wellness Ctr. v. Medtox Sci., Inc., 821 F.3d 992 (8th Cir. 2016) (ascertainability via objective records supports class certification)
- Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353 (U.S. 1931) (freedom to contract and enforce choice-of-law clauses)
- Boeing Co. v. Van Gemert, 444 U.S. 472 (U.S. 1980) (common fund doctrine and equitable allocation of attorneys’ fees)
- Gisbrecht v. Barnhart, 535 U.S. 789 (U.S. 2002) (distinction between fee-shifting awards against losing parties and fees a lawyer may obtain from client)
- Venegas v. Mitchell, 495 U.S. 82 (U.S. 1990) (statutory fee provisions govern what losing defendant pays, not what a prevailing plaintiff pays his counsel)