Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________
)
BENJAMIN COLEMAN, through his )
Conservator, ROBERT BUNN, et al., )
)
Plaintiffs, )
) Civ. Action No. 13-1456 (EGS) v. )
)
DISTRICT OF COLUMBIA, )
)
Defendant. )
__________________________________)
MEMORANDUM OPINION
Benjamin Coleman brought this lawsuit to challenge a District of Columbia law that directed the sale of a lien on his home after he failed to pay a $133.88 property-tax bill. That law permitted the private purchaser of the lien to add $4,999 in interest, costs, and fees to Mr. Coleman’s bill and, when Mr. Coleman could not pay, to institute a foreclosure proceeding. After the foreclosure proceeding, the private purchaser obtained title to Mr. Coleman’s home. Mr. Coleman, however, received nothing, although the amount of equity he had in his home far surpassed the amount he admittedly owed in taxes, interest, costs, and related fees. Because the loss of this surplus equity was dictated by District of Columbia law, Mr. Coleman sued to challenge that law. His claim is that the taking of his excess equity—the amount of equity minus the taxes and related costs he admits that he owed—violated his constitutional rights under the *2 Takings Clause of the Fifth Amendment to the United States Constitution. As a remedy for the alleged constitutional violation, Mr. Coleman asked this Court to award him monetary damages and to issue a declaratory judgment. Mr. Coleman brought this case not only on his own behalf, but also as a representative of all District property owners who suffered a loss of excess equity due to the District’s tax-sale law.
In September of 2014, this Court rejected the District’s attempt to dismiss the case. See Coleman ex rel. Bunn v.
District of Columbia
, No. 13-1456,
Mr. Coleman and Ms. Robinson’s Estate now ask the Court to certify this lawsuit as a class action, to permit them to represent all other District of Columbia property owners who similarly lost equity in excess of the amount of taxes and related fees they owed because of the tax-sale law. Upon consideration of their motion, the response and reply thereto, the applicable law, the entire record, and the oral argument, the Court concludes that Mr. Coleman and Ms. Robinson’s Estate *3 are entitled to certification as a class action and GRANTS their motion.
I. Background
A. The Challenged Tax-Sale Statutes
“The District of Columbia’s laws governing the procedure for
collecting delinquent property taxes are codified in Chapter 13A
of title 47 of the D.C. Code.”
Coleman
,
“At least 30 days before” any such sale is to be advertised, “the Mayor shall mail to the person who last appears as owner of the real property on the tax roll . . . a notice of delinquency.” Id. § 47–1341(a). Once thirty days have passed “from the mailing of the notice of delinquency,” the District must advertise that the property “will be sold at public auction because of taxes.” Id. § 47–1342(a). At this public sale, the District must sell the property “in its entirety,” id. § 47–1343, “to the purchaser who makes the highest bid.” Id. § 47–1346(a)(2). Sales are not to be conducted “for less than the amount of the taxes,” however. Id. § 47–1346(c).
Coleman
,
During the six months following the sale, “the purchaser may not foreclose the original owner’s right to redeem the property.” Id. (citing D.C. Code § 47–1370(a)). The original *4 owner is able to redeem the property “by paying to the District ‘the amount paid by the purchaser . . . exclusive of surplus with interest thereon,’ as well as ‘other taxes, interest, and penalties paid by a purchaser,’ and ‘expenses for which the purchaser is entitled to reimbursement.’” Id. (citing D.C. Code § 47–1361(a)).
After the redemption period closes, the purchaser “may file a
complaint to foreclose the right of redemption of the real
property.” D.C. Code § 47–1370(a). “The purchaser of the tax-
sale certificate must bring the action against the original
owner of the property and the District of Columbia, as well as
any entity with a particular interest in the property.”
Coleman
,
The law permits the Superior Court to issue a final judgment “foreclosing the right of redemption,” which bars the original owner from redeeming the property and vests in the purchaser a deed in fee simple. See id. § 47–1382(a). In doing so, the law permits the taking of not only the amount of delinquent taxes, plus any costs, fees, and interest, but also the entirety of the original owner’s equity in the property.
Id.
B. The District’s Amended Tax-Sale Statute After this lawsuit was filed in 2013, the D.C. Council passed two temporary amendments to the District’s tax-sale law. On *5 October 4, 2013, the Council passed an emergency amendment, which served, among other things, “to cancel any tax sale that occurred for the July 2013 tax sale of a resident’s real property who is a senior citizen, veteran, or disabled individual” and “to require the District to pay the owner of record before the tax sale any amount . . . in excess of the amount of taxes due to the District.” District Real Property Tax Sale Emergency Act, A20-179, pmbl.; see also id. § 2. On October 17, 2013, the District passed a temporary amendment, which codified the October 4th emergency amendment. See District Real Property Tax Sale Temporary Act of 2013, A20-194, § 2.
In 2014, the D.C. Council enacted another temporary emergency measure, which expired on August 26, 2014. See Residential Real Property Equity and Transparency Emergency Amendment Act of 2014, A20-342. That amendment modified the procedures for future tax sales to, among other things, provide for the return of a portion of the excess equity to the former homeowner after the sale occurs. See id. § 101(c)(31). A permanent amendment to the District’s tax-sale law, with similar effect, has now been passed. See D.C. Fiscal Year 2015 Budget Support Act of 2014, A20-424, § 7102(c)(30). That amendment appears to have taken effect on February 26, 2015. See B20-0750 – Fiscal Year 2015 Budget Support Act of 2014, D.C. Council, http://lims.dccouncil. us/Legislation/B20-0750 (last visited April 13, 2015).
C. Procedural History
This lawsuit was filed on behalf of Mr. Coleman by Robert Bunn, who was appointed by the Superior Court “to manage Mr. Coleman’s legal and financial affairs.” Compl., ECF No. 1 ¶ 15. The District moved to dismiss this case, arguing that the Court lacked jurisdiction over Mr. Coleman’s claims and that he failed to state a claim for a violation of the Takings Clause. See Def.’s Mot. to Dismiss, ECF No. 5. While that motion was pending, Mr. Coleman moved for class certification. See First Mot. to Certify Class, ECF No. 12.
The Court held a hearing on the District’s motion to dismiss
on September 26, 2014, and issued its Opinion denying the motion
on September 30, 2014.
See Coleman
,
On December 29, 2014, Mr. Coleman informed the Court that Ms. Robinson’s will had been admitted to probate and that Wellington Robinson had been appointed personal representative of the estate. See Pl.’s Status Report, ECF No. 29. The Court granted the motion to amend the following day. See Minute Order of December 30, 2014. In light of the addition of a new potential class representative, the Court denied without prejudice Mr. Coleman’s motion for class certification and directed the filing of a renewed motion to address “whatever effect, if any, the new plaintiff may have on the class-certification analysis.” Id.
The plaintiffs filed their motion for class certification on January 9, 2015. See Pls.’ Mem. in Supp. of Mot. to Certify Class (“Mem.”), ECF No. 31-1. In that motion, they seek to certify two classes. See id. at 4. The first, “the damages class,” is defined as:
All persons who owned residential property on which the District of Columbia assessed a lien for an unpaid property tax deficiency, and where following the sale of a tax deed, such property was foreclosed upon and title transferred pursuant to D.C. Code §§ 47-1330 to 47-1385 and where such property included equity above the amount of real estate taxes, interest, penalties, expenses and attorney’s fees at the time a tax deed was issued.
Id. The second class, “the declaratory relief class,” is defined slightly differently:
All persons who own or owned residential property on which the District of Columbia has assessed a lien for an unpaid property tax deficiency, and for which lien the District subsequently sold the right to foreclose the right of redemption for the property pursuant to D.C. Code §§ 47-1330 to 47-1385 and where such property included equity above the amount of real estate taxes, interest, penalties, expenses and attorney’s fees at the time a tax deed was issued.
Id. The District opposes the motion for class certification, Def.’s Opp. to Mot. to Certify Class (“Opp.”), ECF No. 33, and the plaintiffs have filed a reply brief. See Pls.’ Reply in Supp. of Mot. to Certify Class (“Reply”), ECF No. 34. At the Court’s request, the parties filed supplemental briefs on March 18, 2015 answering a question not addressed in either parties’ pleadings. See Pls.’ Suppl. Br., ECF No. 35; Def.’s Suppl. Br., ECF No. 36; Part III.B.1, infra . The Court held oral argument on the motion on March 25, 2015, and the motion is now ripe for resolution.
II. Standing
“Any analysis of class certification must begin with the issue
of standing.”
Prado-Steinman ex rel. Prado v. Bush
, 221 F.3d
1266, 1280 (11th Cir. 2000) (quotation marks and alteration
omitted);
see also In re Lorazepam & Clorazepate Antitrust
Litig.
,
Plaintiffs also “bear[] the burden of showing that [they have]
standing for each type of relief sought.”
Summers v. Earth
Island Inst.
,
Plaintiffs have asserted, and the District does not dispute, that the Damages Class has standing. See Mem. at 5. [1] The District *10 argued in its opposition brief that the Declaratory Relief Class lacks standing because it contains members whose claims would be rendered moot by the enactment of amendments to the District’s tax-sale law. See Opp. at 25–27. Those amendments went into effect soon after the parties finished briefing the motion for class certification. During the March 25, 2015 hearing, the plaintiffs conceded that the Court should consider defining the Declaratory Relief Class in a manner that would render it identical to the Damages Class. The District agreed that this would absolve any standing issue. Accordingly, the Court will consider whether to certify the Declaratory Relief Class, defined as:
All persons who owned residential property on which the District of Columbia assessed a lien for an unpaid property tax deficiency, and where following the sale of a tax deed, such property was foreclosed upon and title transferred pursuant to D.C. Code §§ 47-1330 to 47-1385 and where such property included equity above the amount of real estate taxes, interest, penalties, expenses and attorney’s fees at the time a tax deed was issued.
Mem. at 4. This class may seek a retrospective declaratory
judgment because its claims are “intertwined with a claim for
monetary damages that requires [the Court] to declare whether a
suffered an injury insofar as they had equity above the amount
of taxes, interest, and related costs and penalties owed.
See
Coleman
,
past constitutional violation occurred.” Lippoldt v. Cole , 468 F.3d 1204, 1217 (10th Cir. 2006) (quotation marks omitted). III. Class Certification
“The class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual named
parties only.”
Comcast Corp. v. Behrend
,
A. Existence of a Class
“Although not specifically mentioned in the rule, an essential
prerequisite of an action under Rule 23 is that there must be a
‘class.’” Wright & Miller,
Federal Practice & Procedure
§ 1760A
(3d ed. 2014);
see also Simer v. Rios
,
Although the District does not dispute this issue, the Court notes briefly that the classes as defined are readily ascertainable. To determine whether an individual is a member, she need only answer four objective questions: (1) whether the District “assessed a lien for an unpaid property tax deficiency” on her D.C. residential property; (2) whether the District subsequently sold a tax deed on that property; (3) whether the purchaser of that property foreclosed on and obtained title to *13 the property pursuant to the old tax-sale law; and (4) whether she had equity in the property that exceeded the taxes, interest, and related costs owed.
B. Rule 23(a)
With one exception, the District concedes that the plaintiffs satisfy Rule 23(a), which requires that:
(1) the class is so numerous that joinder of 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.
Fed. R. Civ. P. 23(a). “These requirements are known
respectively as ‘numerosity, commonality, typicality, and
adequate representation.’”
Artis
,
1. Numerosity
Because of the general rule in favor of confining litigation
to the named parties only, a class action is appropriate only
when “the class is so numerous that joinder of all members is
impracticable.” Fed. R. Civ. P. 23(a)(1). Although commonly
called the “numerosity” requirement, “the Rule’s core
requirement is that joinder be impracticable” and numerosity
*14
merely “provides an obvious situation in which joinder may be
impracticable.” Newberg on Class Actions § 3:11 (5th ed. 2014).
“Impracticability of joinder means only that it is difficult or
inconvenient to join all class members, not that it is
impossible to do so.”
Bond v. Fleet Bank
, No. 1-177, 2002 WL
31500393, at *4 (D.R.I. Oct. 10, 2002);
see also Robidoux v.
Celani
,
Despite this flexible standard, courts have developed helpful
rules of thumb for assessing the approximate thresholds at which
joinder becomes presumptively impracticable. Absent unique
circumstances, “numerosity is satisfied when a proposed class
has at least forty members.”
Richardson v. L’Oreal USA, Inc.
,
Consistent with the Supreme Court’s admonition that a plaintiff
must prove compliance with Rule 23 “in fact,”
Wal-Mart
, 131 S.
Ct. at 2551, a plaintiff must provide some evidentiary basis
beyond a bare allegation of the existence of numerous class
members. The Court may, however, “draw reasonable inferences
from the facts presented to find the requisite numerosity.”
McCuin v. Sec’y of Health & Hum. Servs.
,
a. The Class Consists of Approximately Thirty-Four Potential Members
Plaintiffs asserted in their motion for class certification
that over forty class members exist, relying upon “[p]ublic real
estate records . . . to identify individual homeowners who have
Printing Indus. of Metropolitan Washington
,
lost their homes in tax lien foreclosures.” Mem. at 8. [3] The District concedes that seven individuals are potential class members, Opp. at 6, 9, 11, 14, 16, but argues that all other individuals identified by the plaintiffs are not potential class members for various reasons. The plaintiffs opposed most, but not all, of these arguments, listing in their reply brief thirty-four potential class members (not including the two named plaintiffs). See Reply at 5.
Upon review of these arguments, the Court noted that the District’s arguments seeking to remove individuals from the class “[a]rguably . . . ‘put the cart before the horse,’ by seeking an adjudication on the merits of the claims of potential class members in an attempt to exclude them from the numerosity analysis.” Minute Order of March 12, 2015 (quoting Amgen , 133 S. Ct. at 1191). The Court accordingly directed the parties to file supplemental briefs addressing “whether some or all of the District’s arguments regarding numerosity improperly seek a merits determination regarding the claims of potential plaintiffs and, if so, how that impacts the numerosity issue.” Id.
*17
In their supplemental brief, the plaintiffs assert that the
District’s numerosity arguments seek improper inquiries into the
merits of potential class members’ claims, rather than solely
into whether they meet the criteria for membership in the class.
See
Pls.’ Suppl. Br., ECF No. 35. The District disagrees. In so
doing, it correctly recites the law regarding the consideration
of merits issues: The Court
must
consider merits questions when
those questions overlap with Rule 23’s requirements. Def.’s
Suppl. Br., ECF No. 36 at 2;
see Ellis v. Costco Wholesale
Corp.
,
These arguments thereby stray from the purpose of the numerosity analysis. Rule 23(a)(1) directs the Court to *18 determine whether the plaintiff has put forth evidence to support the existence of a sufficiently numerous class. The concern of Rule 23(a)(1), therefore, is membership in the class, not likelihood of success on the merits. See McLaughlin on Class Actions § 4:5 (11th ed. 2014) (the determination under Rule 23(a)(1) “does not entail an assessment of how many putative class members ultimately will have meritorious claims”). The District would have the Court remove from the calculation of the class’s numbers various individuals whose claims the District contends will ultimately fail on the merits, not because those individuals do not meet the class definition, but because those individuals allegedly consented to the taking of their equity, abandoned their property interests, or have claims that are barred by res judicata . See Opp. at 4–22. Plaintiffs oppose these contentions on their merits, but the Court finds that these disputes “put the cart before the horse,” Amgen , 133 S. Ct. at 1191, by asking how many successful class members exist, rather than how many potential class members exist.
The Supreme Court recently addressed a similar problem in Amgen , where the Court found that a defendant opposing certification of a Rule 23(b)(3) class inappropriately sought to litigate a merits issue—the materiality of the defendant’s alleged misrepresentation—under the guise of establishing that individual issues would overwhelm common ones for purposes of *19 Rule 23(b)(3)’s predominance requirement. See id. at 1195. The Supreme Court rejected this leap to a merits determination— whether the misrepresentation was material—that did not bear on the Rule 23 issue—whether the plaintiffs could attempt to prove materiality on a class-wide basis. See id.
The District seeks to import an equally incongruous merits
inquiry into Rule 23(a)(1), similar to one the Seventh Circuit
recently rejected. In
Parko v. Shell Oil Co.
,
Skinnygirl Cocktails, LLC
, No. 11-cv-7060,
The District’s arguments that certain class members have given
up their Takings Clause claim by consenting to judgment in a
Superior Court foreclosure action or abandoning their property
such that they may not bring a Takings Clause claim, and that
res judicata
bars the claims of another are precisely the types
of merits arguments that ultimately have no bearing on
numerosity. Membership in the classes is not contingent upon any
of these factors. They do not bear, for example, on whether
individuals proffered as potential class members ever owned
property in D.C., had a tax-lien sold pursuant to the relevant
provision of the D.C. Code, or had their title taken in full.
Rather, those arguments seek to show that the individuals’
*21
claims will ultimately fail for lack of injury—whether due to
consent to that injury, loss of the property interest that was
allegedly injured, or failure to vindicate that injury in a
prior proceeding in which it was required to be raised.
[4]
But
“[h]ow many (if any) of the class members have a valid claim is
the issue to be determined
after
the class is certified.”
Parko
,
The District’s citation to
Szabo v. Bridgeport Machines, Inc.
,
Before deciding whether to allow a case to proceed as a class action, therefore, a judge should make whatever factual and legal inquiries are necessary under Rule 23. This would be plain enough if, for example, the plaintiff alleged that the class had 10,000 members, making it too numerous to allow joinder, while the defendant insisted that the class contained only 10 members. A judge would not and could not accept the plaintiff’s assertion as conclusive; instead the judge would receive evidence . . . and resolve the disputes before deciding whether to certify the class.
Id.
at 676.
Szabo
stands for the uncontroversial proposition
that the Court must consider merits issues and resolve fact
*23
disputes
where relevant
to Rule 23 (i.e. to determine how many
individuals exist that meet the class definition).
See
Schleicher v. Wendt
,
The sole argument raised by the District that bears on any
individual’s membership in the classes is that some potential
class members did not have equity in their property in excess of
the amount of taxes, interest, and additional fees owed.
See
Opp. at 4–22.
[6]
The claim that certain potential class members did
not have excess equity, if true, would exclude those class
*24
members from the class definition. Plaintiffs respond that the
figures the District uses to assess the market value of those
individuals’ properties—and thereby to obtain the amount of
equity—are improper measures and that a more appropriate
appraisal demonstrates that the equity was much higher.
See
Reply at 7–10. Plaintiffs, moreover, have proffered appraisals
that show just that.
See
Ex. A to Pls.’ Mot., ECF No. 31-2. The
Court finds that resolving any dispute over which appraisal
method to use is unnecessary at this stage. Doing so would
arguably seek a merits determination akin to that rejected by
the Seventh Circuit in
Parko
.
See
b. The Class’s Unique Vulnerability Makes Joinder Significantly More Difficult.
With roughly 34 potential members, plaintiffs’ proposed classes are close to the range where joinder is presumed to be impracticable. To the extent that 40 members has become a precise cutoff, plaintiffs would find themselves at the high end of numerosity’s gray area—where joinder is neither presumptively impracticable nor presumptively practical. Additional factors demonstrate strongly that joinder is impracticable.
The additional factors that courts consider in assessing the
practicability of joinder include: (1) “judicial economy arising
from avoidance of a multiplicity of actions”; (2) “geographic
dispersion of class members”; (3) “size of individual claims”;
(4) “financial resources of class members”; and (5) “the ability
of claimants to institute individual suits.” Newberg on Class
Actions § 3:12 (5th ed. 2014). Where the balance of these
factors “is a close call, some courts err in favor of
certification because a court always has the option to decertify
the class if it is later found that the class does not in fact
meet the numerosity requirement.”
Id.
;
see also J.D. v. Nagin
,
*26
The factors that favor the District are the likelihood that
the class is geographically concentrated in Washington, D.C.,
and the related ease of identifying class members by reference
to the District’s records. To be sure, courts have held that
small classes may be able to rely on joinder where class members
are geographically concentrated and their identity is readily
obtained from the defendant’s records.
See, e.g.
,
Gilchrist v.
Bolger
,
First, the vulnerability of many members of the class renders
their claims uniquely unsuited for individual prosecution. Rule
23, in permitting the aggregation of claims, embodies a
“principle of protection for weaker plaintiffs.”
Primavera
Familienstiftung v. Askin
,
Berrybrook Farms, Inc.
,
The members of the proposed classes in this case are, by definition, uniquely vulnerable. To be a class member, an individual must have failed to pay property taxes and failed to redeem her property during foreclosure proceedings in the Superior Court of the District of Columbia. As Mr. Coleman’s and Ms. Robinson’s stories demonstrate, some individuals may have found themselves in this situation due to unique vulnerabilities. Mr. Coleman ended up as a class member because he “forgot to pay a $134 real property tax bill,” was “at the *29 time of foreclosure[,] suffer[ing] from dementia,” and “was incapable of protecting his rights or managing his financial and legal affairs.” First Am. Compl., ECF No. 30 ¶¶ 10–11.
Similarly, “Ms. Robinson was living in a senior care facility when the tax lien was assessed against her home and later died shortly before” foreclosure proceedings began. See id. ¶ 10. The failure of other class members to pay their property taxes or engage in proceedings in Superior Court similarly indicates a financial vulnerability to the extent that class members were financially unable to meet their property-tax obligations or to pay the interest, penalties, and fines that were added on top of the tax obligation. It may also reflect difficulty in managing the class member’s own affairs. Each of these vulnerabilities is a factor counseling in favor of finding that joinder is impracticable.
Nor is the Court barred from inferring that class members are
likely vulnerable. Although the Court may not merely adopt as
true a class representatives’ factual allegations,
Wal-Mart
, 131
S. Ct. at 2551, courts discussing a class’s vulnerability
regularly make inferences that flow logically from the class
definition.
See, e.g.
,
McDonald
,
The Court’s inferences regarding the unique vulnerability of the class are similarly derived from the class definition, as well as the facts proffered by the plaintiffs supporting the existence and status of each of the thirty-four potential class members. See Exs. A–C to Pls.’ Mot., ECF Nos. 31-2, 31-3, 31-4. Both the class definition and these specific facts regarding the class members demonstrate that class members, by definition and in fact, failed to pay property taxes, had equity that exceeded the amount they owed, and failed to redeem their property in *31 Superior Court or otherwise reach an arrangement under which they could extract the excess equity that they owned. It is reasonable to infer that one with the financial ability to pay the taxes or fees would pay them (after all, the equity to be saved exceeds the taxes and fees to be paid), unless the excess equity was minimal. Even one without the financial ability to pay in cash could, for example, borrow against that equity to obtain the amount of cash needed to pay the taxes and costs. An individual who is a potential class member, by definition, did not do these things to defend her interest. It is therefore reasonable to infer that some class members, if not many, lack the financial resources to prosecute their claims individually, the ability to manage their legal affairs, or both.
Not only is joinder impracticable due to these unique
vulnerabilities, but joinder would also serve judicial economy
by permitting the adjudication of the class’s claims in one
case. Where a putative class seeks damages that “flow from the
resolution of a single question,” considerations of judicial
economy may strongly favor addressing the question at once.
Gaspar v. Linvatec Corp.
,
2. Commonality
Next, plaintiffs must establish that “there are questions of
law or fact common to the class.” Fed. R. Civ. P. 23(a)(2).
Commonality is not satisfied solely because all plaintiffs
suffered “a violation of the same provision of law.”
Wal-Mart
,
A class may satisfy the commonality requirement even if
factual distinctions exist among the claims of putative class
members. The question is “whether dissimilarities between the
claims may impede a common resolution.” Wright & Miller,
Federal
Practice & Procedure
§ 1763 (3d ed. 2014). This is less likely
to occur where, as here, the class challenges a generally
applicable policy or practice.
See, e.g.
,
Wal-Mart
, 131 S. Ct.
at 2553–54 (noting that a plaintiff could maintain a Title VII
class action by challenging a “biased testing procedure”);
*33
Thorpe v. District of Columbia
,
Plaintiffs argue that their claims are susceptible to class treatment because the entire class brings the same legal claim regarding the same D.C. Code provision. See Mem. at 13–15. Plaintiffs’ legal claims against that provision, moreover, boil down to a series of common legal questions, as this Court noted in its Opinion denying the District’s motion to dismiss:
This Court draws two clear principles from the Supreme Court’s decisions in Lawton and Nelson . Nelson makes clear that a Takings Clause violation regarding the retention of equity will not arise when a tax-sale statute provides an avenue for recovery of the surplus equity. Lawton makes clear that a Takings Clause violation will arise when a tax-sale statute grants a former owner an independent property interest in the surplus equity and the government fails to return that surplus. The question Mr. Coleman’s case presents is: What if the tax-sale statute does not provide a right to the surplus and the statute provides no avenue for recovery of any surplus? A property interest in equity could conceivably be created by some other legal source. In that circumstance, failure to provide an avenue for *34 recovery of the equity would appear to produce a result identical to Lawton : Property to which an individual is legally entitled has been taken without recourse. The issue, then, is whether Mr. Coleman has a property interest in his equity and, if so, whether an unconstitutional taking of that property has been alleged.
Coleman
,
Plaintiffs therefore raise common legal questions regarding
whether D.C. law creates a property interest in equity; whether
the District’s tax-sale statutes effect a “taking” of that
property; whether any such taking was done without public
purpose; and whether the plaintiffs were granted just
compensation for any such taking.
See
Mem. at 14. These legal
questions, moreover, are susceptible to class-wide answers
because their resolution does not depend upon the particular
circumstances of any individual’s loss: “All putative plaintiffs
are advancing the same legal theory based on the same set of
facts and the same course of conduct by the District.”
Hardy v.
District of Columbia
,
3. Typicality
Plaintiffs must also demonstrate that “the claims or defenses
of the representative parties are typical of the claims or
defenses of the class.” Fed. R. Civ. P. 23(a)(3). The typicality
requirement is concerned with whether “the named plaintiffs are
*35
appropriate representatives of the class whose claims they wish
to litigate.”
Wal-Mart
,
As discussed above, the plaintiffs’ claims all arise from a
common statutory background and raise identical legal questions.
See supra
Part III.B.2. Accordingly, “the interests of the named
plaintiffs and the proposed class members are aligned because
all plaintiffs would assert the same legal claim, a taking in
contravention of the Fifth Amendment, arising out of the same
government actions.”
Geneva Rock Prods., Inc. v. United States
,
Although class members may ultimately be entitled to differing
amounts of damages, this variance is not fatal to typicality,
which “may be satisfied even though . . . there is a disparity
in the damages claimed by the representative parties and the
*36
other class members.” Wright & Miller,
Federal Practice &
Procedure
§ 1764 (3d ed. 2014);
see also
Newberg on Class
Actions § 3:43 (5th ed. 2014) (“Courts routinely find that the
proposed class representative’s claims are typical even if the
amount of damages sought differ from those of the class or if
there are differences among class members in the amount of
damages each is claiming”). “Rule 23 contains no suggestion that
the necessity for individual damage determinations destroys . .
. typicality.”
Gunnells v. Healthplan Servs.
,
Nor do there appear to be any unique defenses to the claims of
either named plaintiff that might destroy typicality. Such
defenses are found only in narrow circumstances: “The critical
question for the Court is not whether these defenses are legally
viable, but rather, assuming they are supportable, whether they
would ‘skew the focus of the litigation and create a danger that
absent class members will suffer because their representative is
preoccupied with defenses unique to it.’”
Thorpe
, 303 F.R.D. at
149-50 (quoting
Meijer, Inc. v. Warner Chilcott Holdings Co.
*37
III
,
4. Adequate Representation
The final requirement of Rule 23(a) is that “the
representative parties will fairly and adequately protect the
interests of the class.” This ensures that “the named
representative must not have antagonistic or conflicting
interests with the unnamed members of the class,” and “the
*38
representative must appear able to vigorously prosecute the
interests of the class through qualified counsel.”
Twelve John
Does v. District of Columbia
,
C. Rule 23(b)
Having demonstrated that their proposed classes satisfy the threshold requirements of Rule 23(a), plaintiffs must also show that each class can be maintained as one of three types of class actions listed in Rule 23(b). Plaintiffs seek to bring the Declaratory Relief Class under Rule 23(b)(2), and the Damages Class under Rule 23(b)(3).
1. The Declaratory Relief Class May Be Certified Pursuant to Rule 23(b)(2)
A (b)(2) class may be certified where “the party opposing the class has acted or refused to act on grounds that apply *39 generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). “The key to the (b)(2) class is the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of the class members or as to none of them.” Wal-Mart , 131 S. Ct. at 2557 (quotation marks omitted).
To determine whether the District has treated the class on generally applicable grounds, “[t]he key is whether the party’s actions would affect all persons similarly situated so that those acts apply generally to the whole class.” Wright & Miller, Federal Practice & Procedure § 1775 (3d ed. 2014). The District has not opposed plaintiffs’ allegations that they meet this standard. Plaintiffs challenge the District’s admitted practice— codified in the D.C. Code—of selling the right to foreclose entirely on a property owner’s right of redemption and thereby to take the entirety of the property owner’s equity. This legal provision affected all class members in the same way.
The second requirement of Rule 23(b)(2) is that plaintiffs seek “final injunctive relief or corresponding declaratory relief . . . respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). The District does not dispute that the declaratory relief sought by the class meets this criterion. Accordingly, *40 the Declaratory Relief Class may be certified under Rule 23(b)(2).
2. The Damages Class May Be Certified Pursuant to Rule 23(b)(3).
A (b)(3) class may be certified where “the questions of law or
fact common to class members predominate over any questions
affecting only individual members” and “a class action is
superior to other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). These
requirements are referred to respectively as “predominance and
“superiority.”
Barnes v. District of Columbia
,
a. Predominance
The predominance requirement “tests whether proposed classes
are sufficiently cohesive to warrant adjudication by
representation.”
Amchem Prods. v. Windsor
,
First, the court must “characterize the issues in the case as
common or individual.”
Id.
(emphasis omitted). This
determination is “primarily based on the nature of the
*41
evidence.”
Id.
“Evidence is considered ‘common’ to the class if
the same evidence can be used to prove an element of the cause
of action for each member.”
Kottaras v. Whole Foods Market,
Inc.
,
Second, the Court must “compare the issues subject to common
proof against the issues subject solely to individualized proof
to assess whether the common issues predominate.” Newberg on
Class Actions § 4:50 (5th ed. 2013). This comparison is “a
qualitative rather than a quantitative concept.”
Parko
, 739 F.3d
at 1085. “[T]he common issues do not have to be shown to be
dispositive.”
In re Vitamins Antitrust Litig.
,
At the weighing step, the Court must keep in mind that “common
liability issues are typically far more important and contested
and the individual damage calculations often formulaic.” Newberg
on Class Actions § 4:54 (5th ed. 2014);
see also In re Nexium
Antitrust Litig.
,
The District argues only that the individualized nature of the calculation “of each class member’s property value at the time the tax deed was issued will require individual treatment.” Opp. at 24-25. This, the District claims, inserts an individualized issue not only into the calculation of the damages owed each class member, but also to the proof whether the class member “had equity in the property that could qualify as an alleged taking.” Id. at 25. Although the District is correct at the first step of the predominance analysis—that proof of the value of a particular class member’s property will be individualized—a number of factors render that issue a minor part of the otherwise strikingly common class claims, so the District’s argument must fail at the second step.
405 (2d Cir. 2015) (
Comcast
did not displace the Second
Circuit’s long-established rule that “the fact that damages may
have to be ascertained on an individual basis is not sufficient
to defeat class certification under Rule 23(b)(3)”) (quotation
marks omitted);
In re Deepwater Horizon
,
First, the valuation issue may be provable by the District’s own existing property valuations, making it subject to efficient proof of a more common nature (i.e. proof based upon a preexisting record that was compiled pursuant to a common methodology). As the plaintiffs note, the District regularly assesses the value of properties within its borders in calculating property taxes. See Mem. at 20. These assessments provide a preexisting uniform source for the value of each property—the calculation of which the District contends is so individualized that class treatment is unwarranted. Indeed, the District’s Office of Tax and Revenue has made several assertions that support the utility of these figures as a proxy for market value. [8] There is thus a common basis for potential resolution of *45 the valuation issue, without the need for any individualized proof beyond references to the District’s calculations.
The District, in response, questions the validity and utility
of its own appraisals.
See
Opp. at 25. Assuming without deciding
that the District would prevail on this argument, the District
offers no explanation of why conducting new appraisals would
overwhelm the otherwise common issues in the case. Indeed, the
District did not respond to the assertion in plaintiffs’ motion
that “new appraisals could be conducted using common, standard
appraisal methods across the class.” Mem. at 22. At least one
court has certified a (b)(3) class despite the need for similar
appraisals.
See Turner v. Murphy Oil USA, Inc.
,
liability issues were largely common, predominance was met even though damages were individualized because “the formula for damages was identical for all class members”); Ramos , 796 F. Supp. 2d at 359 (“True, the putative class members earned prevailing wages at different rates, some worked more hours than others, and some are electricians and others are sprinkler fitters. However, these differences do not predominate over the main issue: whether defendant systematically failed to pay its employees the prevailing wages due them.”).
The predominance requirement is therefore met because the
class challenges a “generalized practice,” the “central element
of Plaintiffs’ theory of liability . . . is common to every
class member,” and “even the minor differences between the class
members—such as the amount of total damages—are susceptible to
generalized proof since a common formula is used to calculate
the individual damages.”
Alvarez
,
b. Superiority
The superiority requirement is intended to “ensure[] that
resolution by class action will ‘achieve economies of time,
effort, and expense and promote . . . uniformity of decision as
to persons similarly situated, without sacrificing procedural
fairness or bringing about other undesirable consequences.”
Vista Healthplan, Inc. v. Warner Holdings Co.
,
consider, in analyzing the alternatives to class-action treatment, the following factors: “the class members’ interests in individually controlling the prosecution or defense of separate actions; the extent and nature of any litigation concerning the controversy already begun by or against class members; the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and the likely difficulties in managing a class action.” Fed. R. Civ. P. 23(b)(3). Although the District’s opposition to the motion for class certification stated that “several pertinent factors indicate that class certification is not superior,” it did not enumerate these factors or otherwise address the superiority issue. See Opp. at 24-25.
A class action is superior when it “may forestall an
inefficient and uneconomical flood of individual lawsuits and/or
prevent inconsistent outcomes in like cases.” Newberg on Class
Actions § 4:67 (5th ed. 2014). This is an especially powerful
concern when, as here, common issues predominate strongly. “If
there are genuinely common issues, issues identical across all
the claimants, issues moreover the accuracy of the resolution of
which is unlikely to be enhanced by repeated proceedings, then
it makes good sense, especially when the class is large, to
resolve those issues in one fell swoop.”
Mejdrech v. Met-Coil
Systems Corp.
,
Superiority is also often found when use of the class action
device would “enable[] ‘vindication of the rights of groups of
people who individually would be without effective strength to
bring their opponents into court at all.’”
Id.
§ 4:65 (quoting
Amchem
,
Essentially every liability issue in this case is common, with the exception of the valuation of individual properties. See supra Part III.C.2.a. The 34 class members in this case, by definition, have less financial resources, a lesser ability to manage their legal affairs, or both, than the average citizen. See supra Part III.B.1.b. In the absence of a class action, then, class members are less likely to be able to prosecute separate actions, and if they were to do so, would face *50 inefficient resolution of 34 disputes that are largely identical to the disputes presented by Mr. Coleman and Ms. Robinson’s Estate. Accordingly, this case is a prime candidate for the use of a (b)(3) class to handle more efficiently all common claims.
The other factors enumerated in Rule 23(b)(3) do not weigh heavily against the use of a class action. The parties have alerted the Court to no other litigation regarding this subject matter. [10] If anything, the desirability of concentrating the litigation in a particular forum counsels in favor of a class action, because the relevant actions necessarily occurred in the District and the defendant is located here. Nor is there any risk that the classes will be particularly unmanageable, given the extent to which class members raise common issues.
IV. Conclusion
For the foregoing reasons, the Court hereby GRANTS plaintiffs’ motion for class certification. An appropriate Order accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
April 13, 2015
Notes
[1] Individuals whose property was foreclosed upon and title transferred pursuant to the District’s tax-sale statute have
[2] Arguably, “as few as 25-30 class members should raise a presumption that joinder would be impracticable.” EEOC v.
[3] The plaintiffs limited their numbers to those who “lost their real property . . . during the three years prior to the filing of the lawsuit,” but noted that “[m]any more lost their properties prior to that period.” Id.
[4] During oral argument, the District maintained that its
arguments regarding abandonment and consent bear on whether a
class member’s property “included equity above the amount of
real estate taxes, interest, penalties, expenses and attorney’s
fees at the time a tax deed was issued” as required by the class
definition.
See
Mem. at 4. The argument is essentially that the
alleged consent or abandonment destroyed any equity interest the
individual may have had. This argument would appear to permit a
court to address any defense—including the lack-of-standing
defense rejected by the Seventh Circuit in
Parko
—on the theory
that a successful defense would show that the class member
suffered no injury. This would far exceed the case law cited by
the District permitting courts to consider statute of
limitations defenses or similar time-bar rules in assessing
numerosity.
See Nat’l Ass’n of Gov’t Emps. v. City Pub. Serv.
Bd.
,
[5] The existence of such defenses could theoretically affect the analysis under other parts of Rule 23, but the District did not raise these arguments and indeed sought to downplay the extent to which these defenses would require in-depth individualized proof.
[6] The District raised briefly the claim that certain putative class members own unimproved lots of land rather than residential property. See Def.’s Suppl. Br., ECF No. 36 at 4 n.3. During oral argument, the plaintiffs argued that the lots at issue are themselves residential. Plaintiffs confirmed this in a post-hearing filing, which demonstrates that all lots at issue are zoned residential. See Pls.’ Post-Hearing Br., ECF No. 37. The Court therefore considers the owners of these lots to be “residential property owners” as relevant to the class definition. The District also argued that one potential class member, Elizabeth Neal, is “not entitled to any equity [her] property may have had” by virtue of her estate’s debt to the D.C. Department of Health. Opp. at 18–19. This debt, however, would not deprive Ms. Neal’s estate of the ability to recover; to the extent she prevails and obtains damages, she may “recover the surplus equity and deal separately with the Department of Health to resolve that obligation.” Reply at 10.
[7] This general rule remains valid in the wake of the Supreme
Court’s decision in
Comcast
, which involved a “straightforward
application of class-certification principles” to hold that
predominance may not be established unless the “model purporting
to serve as evidence of damages . . . measure[s] only those
damages attributable to” the plaintiff’s theory of liability.
[8] The Office asserts that its assessments reflect “the estimated market value of your property,” which it defines as “the most probable price for which you can sell your property given normal terms and conditions of sale.” Real Property Assessments and Appeals FAQs , D.C. Office of Tax and Revenue, http://otr.cfo.dc. gov/page/real-property-assessments-and-appeals-faqs (last visited April 13, 2015). It also touts the “substantial improvements” it has made to the assessment process “to provide the most equitable and uniform assessments possible,” and claims that the Office prepares reports to “measure[] assessment quality by looking at the most recent assessment program and comparing the results of that effort to actual market conditions.” Real Property Assessment Process , D.C. Office of Tax and Revenue, http://otr.cfo.dc.gov/node/388692 (last visited April 13, 2015). The latest such report claims that “[t]he data show that the District has acceptable levels and uniformity of assessments” and that a comparison of assessments to real market sales prices demonstrated that “values determined by appraisers for the most recent valuation attained a uniform and appropriate level of value.” Real Property Tax Administration, D.C. Office
[9] Nor would any defense related to the statute of limitations
prevent the class from meeting the predominance requirement.
“Statute of limitations defenses . . . rarely defeat class
certification.” Newberg on Class Actions § 4:57 (5th ed. 2014);
see also Hoxworth v. Blinder, Robinson & Co.
,
[10] That others may be litigating cases against the private entity that bought their tax lien and ultimately instituted the foreclosure does not bear on this question, which asks whether there is other litigation regarding the issue raised in this case—a Takings Clause claim against the District of Columbia for the taking of excess equity.