Lamar ANDREWS, Individually and as representatives of a class of all other persons similarly situated; Jerry Harper, Individually and as class representatives of a class of all other persons similarly situated; Josephine Meadows, Individually and as class representatives of a class of all other persons similarly situated; J.D. Powell, Individually and as class representatives of a class of all other persons similarly situated, Plaintiffs-Appellees, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, individually and as representatives of a class of all other entities similarly situated, Defendant, Cross-Claimant-Appellant, Bellsouth Corporation, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Incorporated, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Systems, Incorporated, Individually and as representatives of a class of all other entities similarly situated; Southern Bell Telephone and Telegraph Company, Individually and as representatives of a class of all other entities similarly situated; Financial Collection Agencies, Individually and as representatives of a class of all other entities similarly situated, Defendants, U.S. Sprint Communications Company Limited Partnership, Individually and as representatives of a class of all other entities similarly situated, MCI Telecommunications Corporation, Individually and as representatives of a class of all other entities similarly situated; Mical Communications, Individually and as representatives of a class of all other entities similarly situated; Sweepstakes, Individually and as representatives of a class of all other entities similarly situated; Prize 395BE, Individually and as representatives of a class of all other entities similarly situated; Reward Line, Individually and as representatives of a class of all other entities similarly situated; Value House, Individually and as representatives of a class of all other entities similаrly situated; Sweeps 900, Individually and as representatives of a class of all other entities similarly situated; Instant 398, Individually and as representatives of a class of all other entities similarly situated; Gift Giveaway, Individually and as representatives of a class of all other entities similarly situated; Fast Cash 398, Individually and as representatives of a class of all other entities similarly situated; Unclaimed Funds, Individually and as representatives of a class of all other entities similarly situated; Service 900, Individually and as representatives of a class of all other entities similarly situated; Control A, Individually and as representatives of a class of all other entities similarly situated, Defendants, West Interactive Corporation, Defendant, Cross-Defendant.
Nos. 95-8046, 95-8047 and 95-8048.
United States Court of Appeals, Eleventh Circuit.
Sept. 19, 1996.
Dudley H. Bowen, Jr., Judge.
Nos. 95-8046, 95-8047 and 95-8048.
Lamar ANDREWS, Individually and as representatives of a class of all other persons similarly situated; Jerry Harper, Individually and as class representatives of a class of all other persons similarly situated; Josephine Meadows, Individually and as class representatives of a class of all other persons similarly situated; J.D. Powell, Individually and as class representatives of a class of all other persons similarly situated, Plaintiffs-Appellees, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, individually and as representatives of a class of all other entities similarly situated, Defendant, Cross-Claimant-Appellant, Bellsouth Corporation, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Incorporated, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Systems, Incorporated, Individually and as representatives of a class of all other entities similarly situated; Southern Bell Telephone and Telegraph Company, Individually and as representatives of a class of all other entities similarly situated; Financial Collection Agencies, Individually and as representatives of a class of all other entities similarly situated, Defendants, U.S. Sрrint Communications Company Limited Partnership, Individually and as representatives of a class of all other entities similarly situated, MCI Telecommunications Corporation, Individually and as representatives of a class of all other entities similarly situated; Mical Communications, Individually and as representatives of a class of all other entities similarly situated; Sweepstakes, Individually and as representatives of a class of all other entities similarly situated; Prize 395BE, Individually and as representatives of a class of all other entities similarly situated; Reward Line, Individually and as representatives of a class of all other entities similarly situated; Value House, Individually and as representatives of a class of all other entities similarly situated; Sweeps 900, Individually and as representatives of a class of all other entities similarly situated; Instant 398, Individually and as representatives of a class of all other entities similarly situated; Gift Giveaway, Individually and as representatives of a class of all other entities similarly situated; Fast Cash 398, Individually and as representatives of a class of all other entities similarly situated; Unclaimed Funds, Individually and as representatives of a class of all other entities similarly situated; Service 900, Individually and as representatives of a
West Interactive Corporation, Defendant, Cross-Defendant.
Lamar ANDREWS, Individually and as representatives of a class of all other persons similarly situated; Jerry Harper, Individually and as class representatives of a class of all other persons similarly situated; Josephine Meadows, Individually and as class representatives of a class of all other persons similarly situated; J.D. Powell, Individually and as class representatives of a class of all other persons similarly situated, Plaintiffs-Appellees, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, Individually and as representatives of a class of all other entities similarly situated, Defendant, Cross-Claimant, Bellsouth Corporation, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Incorporated, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Systems, Incorporated, Individually and as representatives of a class of all other entities similarly situated; Southern Bell Telephone and Telegraph Company, Individually and as representatives of a class of all other entities similarly situated; Financial Collection Agencies, Individually and as representatives of a class of all other entities similarly situated, Defendants, U.S. Sprint Communications Company Limited Partnership, Individually and as representatives of a class of all other entities similarly situated, Defendant-Appellant. MCI Telecommunications Corporation, Individually and as representatives of a class of all other entities similarly situated; Mical Communications, Individually and as representatives of a class of all other entities similarly situated; Sweepstakes, Individually and as representatives of a class of all other entities similarly situated; Prize 395BE, Individually and as representatives of a class of all other entities similarly situated; Reward Line, Individually and as representatives of a class of all other entities similarly situated; Value House, Individually and as representatives of a class of all other entities similarly situated; Sweeps 900, Individually and as representatives of a class of all other entities similarly situated; Instant 398, Individually and as representatives of a class of all other entities similarly situated; Gift Giveaway, Individually and as representatives of a class of all other entities similarly situated; Fast Cash 398, Individually and as representatives of a class of all other entities similarly situated; Unclaimed Funds, Individually and as
West Interactive Corporation, Individually and as representatives of a class of all other entities similarly situated, Defendant, Cross-Defendant.
Lamar ANDREWS, Individually and as representatives of a class of all other persons similarly situated; Jerry Harper, Individually and as class representatives of a class of all other persons similarly situated; Josephine Meadows, Individually and as class representatives of a class of all other persons similarly situated; J.D. Powell, Individually and as class representatives of a class of all other persons similarly situated, Plaintiffs-Appellees, v. AMERICAN TELEPHONE & TELEGRAPH COMPANY, Individually and as representatives of a class of all other entities similarly situated, Defendant, Cross-Claimant, Bellsouth Corporation, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Incorрorated, Individually and as representatives of a class of all other entities similarly situated; Bellsouth Communications Systems, Incorporated, Individually and as representatives of a class of all other entities similarly situated; Southern Bell Telephone and Telegraph Company, Individually and as representatives of a class of all other entities similarly situated; Financial Collection Agencies, Individually and as representatives of a class of all other entities similarly situated, Defendants, U.S. Sprint Communications Company Limited Partnership, Individually and as representatives of a class of all other entities similarly situated; MCI Telecommunications Corporation, Individually and as representatives of a class of all other entities similarly situated; Mical Communications, Individually and as representatives of a class of all other entities similarly situated; Sweepstakes, Individually and as representatives of a class of all other entities similarly situated; Prize 395BE, Individuаlly and as representatives of a class of all other entities similarly situated; Reward Line, Individually and as representatives of a class of all other entities similarly situated; Value House, Individually and as representatives of a class of all other entities similarly situated; Sweeps 900, Individually and as representatives of a class of all other entities similarly situated; Instant 398, Individually and as representatives of a class of all other entities similarly situated; Gift Giveaway, Individually and as representatives of a class of all other entities similarly situated; Fast Cash 398,
Sept. 19, 1996.
Appeals from the United States District Court for the Southern District of Georgia. (Nos. 1:91-175 and 92-134-CV), Dudley H. Bowen, Jr., Judge.
Before COX and BARKETT, Circuit Judges, and PROPST*, Senior District Judge.
COX, Circuit Judge.
American Telephone & Telegraph Corporation (AT & T), Sprint Corporation (Sprint), and West-Interactive Corporation (West-Interactive) separately appeal the district court‘s certification under
I. FACTS AND PROCEDURAL HISTORY
Pay-per-call, or “900-number,” telephone service was developed in the early 1980s. It was first used for telephone polling and
Appellants AT & T and Sprint are major long distance carriers that provided phone service to various “sponsors” of 900-number promotions and, aftеr deregulation of the industry in 1986, offered billing and collection services to 900-number sponsors. The sponsors, some of which hired independent “service bureaus” to operate the 900-number enterprises, received a share of the fees collected by the long distance carriers from customers who called the 900-numbers. Appellant West-Interactive is a large service bureau based in Omaha, Nebraska, allegedly involved in the creation, promotion, and operation of various games of chance and “sweepstakes” entailing the public‘s use of 900 numbers.1 This
*Honorable Robert B. Propst, Senior U.S. District Judge for the Northern District of Alabama, sitting by designation.
A. The Andrews litigation
Lamar Andrews filed Andrews v. AT & T, No. CV 191-175 (S.D. Ga. filed Sept. 12, 1991), individually and on behalf of “a class of all other persons similarly situated,” alleging that AT & T, Sprint, West-Interactive, and others knowingly participated in an “enterprise operated in interstate commerce ... by which [people dialing applicable 900-numbers] ... place a bet or wager in the hope of winning a cash prize or some other award of great value.” (R. 1-2 at 10 (First Am.Compl. at ¶ 30).) Andrews contends that 900-number charges incurred by callers participating in programs involving games of chance, sweepstakes, or information on unclaimed funds equate to “bets” placed in hope of winning some jackpot or prize. Andrews‘s complaint alleges that this gambling activity is “illegal under the laws of all of the fifty states,” (id. at 18 (¶ 61)), and constitutes racketeering activity in violation of the federal RICO statute,
Andrews‘s complaint further alleges that the defendants committed mail and wire fraud, in violation of
After discovery was completed with respect both to the merits and to class issues, the district court conducted a class certification hearing, beginning on May 23, 1994.2 Andrews, along with the other named plaintiffs in Harper, testified at the hearing. Andrews stated that he could not identify any particular 900-number call that he had placed, and he failed to show that he actually paid 900-number charges that appeared on his phone bill, although his phone service had been disconnected for failure to pay his bills in full. (R. 39-272 at 241-44.) With regard to the promotional postcards he had received in the mail, Andrews admitted that he could not point to any fraudulent statements on them on which he had relied to place 900-number calls. (Id. at 261.)
The defendants challenged Andrews‘s standing to bring suit, as well as his ability to represent the interests of unnamed class members. They also argued that class certification was neither
The district court stated that it was “not at all impressed with the standing of ... Andrews as a representative” of unnamed class members. (R. 39-272 at 560.) The court recommended that the plaintiffs consider “augmentation of the class representatives” and recessed the hearing. (R. 39-272 at 560-61.) When the court resumed the certification hearing in September 1994, the plaintiffs moved to amend their complaints to add several new class representatives to both the Andrews and Harper groups of representatives.
The district court granted the motions to amend in November 1994, when it concluded that “all Rule 23 class action requirements are met in this case.” (R. 27-336 at 22; R. 38-210 at 22.)3 The
The court rejected AT & T, Sprint and West-Interactive‘s arguments that individual issues predominate over common questions of law or fact and that class treatment of the plaintiffs’ claims is inferior to other modes of litigation in resolving their claims. Applying the language of
The court certified a master class and a Georgia subclass. The master class includes:
All persons who paid for one or more 900-number telephone calls billed and collected by AT & T or Sprint, which calls were made in connection with programs offering sweepstakes, games of chance, awards, cash or other prizes, gifts, or information on unclaimed funds.
(R. 27-336 at 31.) The Georgia subclass was defined to include those members of the master class who paid for 900-number calls within Georgia. (Id.)
B. The Harper litigation
In Harper v. AT & T, No. CV 192-134 (S.D.Ga. filed June 24, 1992), Andrews and plaintiffs Jerry Harper, Josephine Meadows, and J.D. Powell sued AT & T, Sprint, Southern Bell, and MCI on behalf of a
Harper proceeded in a similar fashion to the Andrews litigation. During the certification hearing, the named Harper plaintiffs testified that they, like Lamar Andrews, could not identify any deceptive representation on which they relied in making 900-number calls. (See R. 39-272 at 354 (testimony of Jerry Harper); id. at 328-29 (testimony of Josephine Meadows).) The defendants attacked the named plaintiffs and the proposed Harper class, using the same arguments asserted in opposition to the Andrews class. As in Andrews, the court rejected the defendants’ arguments concerning standing, and it was not persuaded by their arguments against class certification. The court defined a master class and a Georgia subclass to include
persons who paid for one or more 900-number telephone calls billed and collected by AT & T or Sprint, which calls were made in connection with programs offering credit cards, financial information services, catalog cards, or information on obtaining credit cards or catalog cards.
(R. 38-210 at 31-32.)
After the court concluded that the Andrews and Harper classes could proceed under
II. ISSUES ON APPEAL
III. STANDARDS OF REVIEW
Whether the named plaintiffs have standing to assert their claims against AT & T, Sprint, and West-Interactive is a threshold legal issue subject to de novo review. See Griffin v. Dugger, 823 F.2d 1476, 1482 (11th Cir.1987) (“Only after the court determines the issues for which the named plaintiffs have standing should it address the question whether [they] have representative capacity, as defined by
We review the district court‘s grant of class certification for an abuse of discretion. Shroder v. Suburban Coastal Corp., 729 F.2d 1371, 1374 (11th Cir.1984). Assuming that the district court
IV. DISCUSSION
A. Standing and the Rule 23(a) issues
AT & T, Sprint, and West-Interactive contend that the representative plaintiffs, particularly Lamar Andrews, have no standing to assert claims against them, either individually or as class representatives. They contend that Andrews and the other named plaintiffs failed to show that they actually made calls handled by each of the appellants or paid 900-number charges, so that they have suffered no injury sufficient to create a “case or controversy” under
The appellants also challenge the district court‘s conclusion that the class representatives’ claims are typical and that the class representatives would adequately represent the interests of the classes, as required by
The class representatives need not have participated in a wide variety of 900-number programs to have suffered harm typical of the harm suffered by the class members in general. See In re American Medical Systems, Inc., 75 F.3d 1069, 1082 (6th Cir.1996)
B. The application of Rule 23(b)(3)
AT & T, Sprint, and West-Interactive argue that the district court abused its discretion by certifying the Andrews and Harper classes under
The class representatives counter that the district court acted within its discretion to develop a manageable way to try millions of small claims that otherwise may never be adjudicated. They argue that, although the hundreds of 900-number programs may vary in exact content, the predominant issues—the legality of the basic methods of solicitation and operation of the programs, as well as the basic wrong suffered by class members—can be assessed on a class-wide basis in both Andrews and Harper.
Issues of class action manageability encompass the “whole range of practical problems that may render the class action format inappropriate for a particular suit.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 164, 94 S.Ct. 2140, 2146, 40 L.Ed.2d 732 (1974); see also Windham, 565 F.2d at 70 (stating that, while the district court “should not decline to certify а class because it
1. The Andrews class
It may be true that, at a general level, the predominant issue presented in Andrews is whether the appellants were involved in the operation of illegal gambling schemes that used 900 numbers to facilitate caller participation. But as a practical matter, the resolution of this overarching common issue breaks down into an unmanageable variety of individual legal and factual issues. See Georgine v. Amchem Products, Inc., 83 F.3d 610, 626 (3rd Cir.1996) (stating that beyond broad common issues surrounding harmfulness of asbestos exposure, class members’ claims against asbestos manufacturers varied widely in character and could not be tried on a class basis). The class‘s mail and wire fraud allegations, for example, are not wholly subject to class-wide resolution. See Pelletier v. Zweifel, 921 F.2d 1465, 1499-1500 (11th Cir.) (stating that each plaintiff must demonstrate reliance on deceptive conduct in furtherance of the alleged RICO scheme) (citations omitted), cert. denied, 502 U.S. 855, 112 S.Ct. 167, 116 L.Ed.2d 131 (1991); Alabama v. Blue Bird Body Co., 573 F.2d 309, 328-29 (5th Cir.1978) (expressing “serious reservations about the manageability of a class” when all damage questions cannot be handled by one forum).
The appellants cite the need to interpret and apply the gaming laws of all fifty states to assess the legality of each 900-number program as foremost among the difficulties in trying the gambling claims on a class basis, and we agree. 900-number programs could conceivably be legal in one state but not in another. Scrutinizing hundreds of 900-number programs under the provisions of fifty jurisdictions complicates matters exponentially. See Georgine, 83 F.3d at 627; Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718, 725 (11th Cir.1987), cert. denied, 485 U.S. 959, 108 S.Ct. 1220, 99 L.Ed.2d 421 (1988); see also American Medical Systems, 75 F.3d at 1085 (stating that even where state laws differ only in nuance, nuance can be significant, leaving district court with the “impossible task of instructing a jury on the relevant law“) (citing Matter of Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1300 (7th Cir.), cert. denied, 516 U.S. 867, 116 S.Ct. 184, 133 L.Ed.2d 122 (1995)); W.R. Grace, 6 F.3d at 188-89 (stating that use of subclasses to allow juries to consider different state laws will still “pose management difficulties and reduce the judicial efficiency sought to be achieved through certification“).
The plaintiffs contend that only the gaming laws of Nebraska, West-Interactive‘s home state, need to be construed in order to assess the legality of the games of chance implicated in Andrews, because a gambling business is illegal under RICO if it is illegal under the laws of any state in which its affairs are conducted. But this contention assumes that Nebraska law prohibits each of the 900-number programs encompassed by the suit. If this assumption fails, each program that is legal in Nebraska will have to be assessed under each class member‘s home state law. See Castano v. American Tobacco Co., 84 F.3d 734, 741-42 (5th Cir.1996) (stating that class action proponents must do more than merely assert that variations in state law are insignificant or “academic“; court cannot take class proponents’ interpretations of law “on faith“) (citations omitted).
2. The Harper class
We are even more certain that the Harper class is unsustainable under
Even if it could be shown that the appellants were engaged in a scheme to defraud and made misrepresentations to further that scheme, the plaintiffs would still have to show, on an individual basis, that they relied on the misrepresentations, suffered injury as a result, and incurred a demonstrable amount of damages. See Pelletier, 921 F.2d at 1498-1500 (discussing elements of mail and wire fraud; requiring individualized proof of reliance on deceptive conduct and injury); Blue Bird Body Co., 573 F.2d at 327 (stating that class treatment in no way alters substantive proof required to succeed on claim for relief); see also Castano, 84 F.3d at 745 (stating that fraud class action cannot be certified when individual reliance will be an issue) (citing Simon v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 482 F.2d 880 (5th Cir.1973)). As in Andrews, the problems with trying the individualized elements of the plaintiffs’ claims, as well as handling the unique aspects
The district court, recognizing the challenge of litigating these cases, assured the parties that it “can and will assemble thе resources that [management of these cases] requires.” (R. 27-336 at 22; R. 38-210 at 22). But litigating the plaintiffs’ claims as class actions no matter what the cost in terms of judicial economy, efficiency, and fairness runs counter to the policies underlying
V. CONCLUSION
Because the district court abused its discretion in certifying the Andrews and Harper classes based on its belief that these actions would be manageable, we reverse the certification order and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
BARKETT, Circuit Judge, concurring in part and dissenting in part:
I agree with the majority‘s determination that the district court properly found standing, adequacy of representation, and typicality of claims under
As the majority notes, determining the manageability of a class action is committed to the discretion of the district court “because that court generally has a greater familiarity and expertise with the practical and primarily factual problems of administering a lawsuit than does a court of appeals.” Central Wesleyan College v. W.R. Grace & Co., 6 F.3d 177, 185 (4th Cir.1993) (quotation omitted). In my view, the district court‘s conclusion, following a six-day evidentiary hearing, thаt the Andrews class action was manageable because common questions of fact and law predominate over individual legal and factual issues that might arise, does not constitute an abuse of discretion.
The majority‘s abuse-of-discretion finding is based primarily on its conclusion that the district court “underestimated the management difficulties that would persist as these suits proceed as class actions.” Maj.Op. at 3580. According to the majority, management would be difficult because the district court would have to resolve “an unmanageable variety of individual legal and factual issues,” id., that would predominate over the common questions of fact and law.1 According to the majority, three primary issues are
As to the mail- and wire-fraud-based RICO claims, issues of individual reliance do not generally preclude
Similarly, the majority places too much emphasis on the number of different schemes involved, identifying this issue as the biggest one confounding class certification. As an initial matter, I emphasize again that the district judge had the benefit of a six-day hearing on the merits of certifying the class, and, given the thoroughness of that hearing, I am hesitant to substitute our judgment for his on such a fact-based inquiry. But even upon my independent review of the schemes at issue here, I find that the similarities far outweigh the differences. Generally, the schemes offer a chance to win a prize—$20,000, $15,000, a Chevrolet Blazer—in exchange for dialing, and being billed for, the 900 number. Though the prizes and the charges vary (the schemes charge varying amounts by the minute; others charge a flat fee for the call), the schemes generally involve one or more prizes distributed by chance to persons who have paid for a chance to win such a
Moreover, that the district court may have to examine the anti-gambling laws of numerous states in addressing plaintiffs’ gambling-based RICO claims is not a reason to find the class unmanageable at this time. To begin with, the possibility that the district court will have to apply the laws of numerous states is just that—a possibility. As the majority recognizes, if the gambling schemes are illegal under the law of Nebraska, West-Interactive‘s home state, then the schemes’ illegality need not be examined under the laws of any other state. And even if the anti-gambling laws of other states must be examined, these individual examinations, as the district court found, would share many common questions; nor would the individual state legal issues
Even if the litigation does become unmanageable, due to individual questions of reliance, the particularities of the games, or the need to apply numerous anti-gambling laws, the district court could employ a variety of mechanisms to mitigate the unmanageability. As the court noted, the use of special masters and computer programs may be used to facilitate an efficient resolution of certain types of issues. And pursuant to
In short, I believe the majority does not give sufficient
Notes
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder оf all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
....
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation сoncerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
A few schemes fall outside these generalities. For example, a few schemes appear to offer coupons to everyone who calls.