William Gray, III v. Hearst Communications, Inc.
444 F. App'x 698
4th Cir.2011Background
- Hearst Communications, Inc. and White Directory Holdings Carolina appeal a district court's conditional class certification of claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair and deceptive trade practices.
- Gray, on behalf of himself and other advertisers who bought in The Talking Phone Book in multiple South Carolina markets, contends White Directory solicited class members with uniform distribution claims but misrepresented actual distribution and concealed deception.
- District court found a uniform distribution obligation existed and certified the three class claims as suitable for class treatment under Rule 23(b)(3).
- White Directory challenges commonality, predominance, and other Rule 23(b)(3) requirements, arguing distribution terms are not uniform and may require individualized proof.
- The majority affirms, holding the uniform distribution obligation predominates and extrinsic evidence may establish the normal course of distribution, making common issues central to the class claims.
- Judge Wilkinson dissents, arguing contracts lack a uniform distribution term and that reliance on extrinsic evidence requires individualized inquiry, defeating predominance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Gray's claims satisfy Rule 23(b)(3) predominance? | Gray asserts a uniform distribution obligation governs all contracts, so common questions predominate. | White Directory argues no uniform distribution term exists and extrinsic evidence would be needed, undermining predominance. | Yes; predominance satisfied; uniform distribution obligation applies and resolves central issues classwide. |
| Is there a uniform distribution obligation within the contracts, and may extrinsic evidence define it? | There is a uniform distribution policy implied by contracts and White Directory’s course of distribution. | The contracts lack a distribution term; extrinsic evidence would be necessary but is improper under the integration clause. | Uniform obligation exists and extrinsic evidence permissible to define it. |
| Does parol evidence or the contract's integration clause bar extrinsic evidence to interpret distribution obligations? | Extrinsic evidence should be allowed to explain the distribution term under an integrated agreement. | Integration clause forbids extrinsic terms and disputes should be governed only by the contract. | Extrinsic evidence allowed; does not bar determination of the distribution obligation. |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) (predominance requires common questions to resolve central issues classwide)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (Rule 23(b)(3) predominance more demanding than commonality)
- Gunnells v. Healthplan Services, Inc., 348 F.3d 417 (4th Cir.2003) (pleader bears burden to show class satisfies Rule 23)
- Lienhart v. Dryvit Sys., Inc., 255 F.3d 138 (4th Cir.2001) (Rule 23(b)(3) predominance standard governs class certification)
- Edwards v. Hill, 703 S.E.2d 452 (N.C. Ct. App. 2010) (extrinsic evidence may explain terms in an integrated contract)
- Phelps v. Spivey, 486 S.E.2d 226 (N.C. App. 1997) (course of dealing evidence admissible to interpret contract terms)