ORDER GRANTING CLASS CERTIFICATION
THIS CAUSE is before the Court upon the Plaintiffs’ Motion for Class Certification and Incorporated Memorandum of Law (DE # 1387) (“Motion”).
I. Factual Allegations
Plaintiffs allege that, through the use of specially designed software programs, Union Bank, N.A. (“Union”) engaged in a systematic scheme to extract the greatest possible number of overdraft fees from Plaintiffs and similarly situated Union consumers across the country. Union allegedly collected millions of dollars in excessive overdraft fees as a result of this systematic scheme, much of it, according to Plaintiffs, from Union’s most vulnerable customers. To carry out this scheme, Plaintiffs allege that Union manipulated debit card transactions by, among other things, employing a bookkeeping trick to re-sequence the transactions from highest-to-lowest dollar amount at the time of posting. Plaintiffs allege that these account manipulations, which Union deponents testified were applied in the same manner to all class members as a result of Union’s standardized computer software, caused funds in customer accounts to be depleted more rapidly, resulting in more overdrafts and, consequently, more overdraft fees. Plaintiffs further allege that, in many instances, overdraft fees were levied at times when, but for Union’s manipulation, there would have been sufficient funds in the consumers’ accounts. Plaintiffs allege that Uniоn did not fairly disclose its manipulations, took active steps to keep them secret, and engaged in these manipulations despite recognizing that it harmed its own customers. Union disputes that it has manipulated account transactions and that it has committed any violations of law.
Plaintiffs move for certification of their claims for breach of contract and the breach of the duty of good faith and fair dealing, unjust enrichment, unconscionability, and violation of the California Unfair Competition Law.
II. Legal Standard for Class Certification
Questions concerning class certification are left to the sound discretion of the district court, and the Court must undertake a rigorous analysis to insure that the Rule 23 prerequisites are met. Klay v. Humana, Inc.,
Courts “formulate some prediction as to how specific issues will play out in order to determine whether common or individual issues predominate in a given case.” Waste Mgmt. Holdings v. Mowbray,
A. Rule 23(a)
As to Rule 23(a), there are four prerequisites for class certification: numerosity, commonality, typicality, and adequacy of representation. See Fed.R.Civ.P. 23(a); Amchem Prods. Inc. v. Windsor,
A district court may certify a class only if, after “rigorous analysis,” it determines that the party seeking certification has met its burden of a preponderance of the evidence. Gen. Tel. Co. of the Sw. v. Falcon,
In reviewing a motion for class certification, the court generally is bound to take the substantive allegations of the complaint as true. Moreno-Espinosa v. J & J AG Prods., Inc.,
(i) Numerosity
Rule 23(a)(1) requires that “the class is so numerous that joinder of all members is impracticable.” Impracticable does not mean impossible, only that it would bе difficult or inconvenient to join all members of the class. Hammett v. Am. Bankers Ins. Co. of Fla.,
As this Court is required to do even where a requirement for class certification is not satisfied, it has independently considered the prospective numerosity of the putative class members. See Valley Drug Co.,
Plaintiffs’ proposed class consists of All Union Bank customers in the United States who had one or more consumer accounts and who, from applicable statutes of limitation thrоugh August 13, 2010 (the “Class Period”), incurred an overdraft fee as a result of Union Bank’s practice of sequencing debit card transactions from highest to lowest.3
Counsel for Union noted that the bank has thousands of customers who incurred overdraft fees. Tr. at 47.
Plaintiffs propose to have their expert, Mr. Olsen, mine Union’s data to determine who аre the members of the class. This method of determining class membership has been accepted by other courts. See Sadler v. Midland Credit Mgmt.,
Although the exact number of class members is not рresently known, the proposed class appears to number in the tens- or hundreds-of-thousands. Because of that great number, and the fact that the members of the class are geographically dispersed, joinder is impractical. Kilgo v. Bowman Transp., Inc.,
(ii) Commonality
The next factor under Rule 23(a) is commonality. This prerequisite requires that there be at least one issue common to all members of the class, and that any class certification be predicated on “questions of law or fact common to the class.” Notably, it “does not require that all of thе questions of law or fact raised by the ease be common to all the plaintiffs.” Walco Invs., Inc. v. Thenen,
The common issues of law and fact in this case include whether Union:
• Manipulated and re-ordered transactions in order to increase the number of overdraft fees imposed;
• Disclosed and/or refused to allow its class members to opt out of the overdraft protection program and shadow line of credit;
• Omitted to alerted class members that a debit card transaction would trigger an overdraft fee if processed and provided them with an opportunity to cancel the transaction;
• Imposed overdraft fees when, but for re-sequencing, there would be sufficient funds in the account;
• Delayed posting transactions so that class members were charged overdraft fees even when sufficient funds were in the account to cover the transactions; and
• Breached its covenant of good faith and fair dealing with Plaintiffs and the class; engaged in practices that were substantively and procedurally unconscionable; was unjustly enriched at the expense of Plaintiffs and the class; and violated the California Unfair Competition Law.
Counsel for Union conceded at oral argument that there is at least one common issue here. Tr. at 47.
(iii) Typicality
The third factor under Rule 23(a)(3), typicality, requires that “the claims or defenses of the representative parties [be] typical of the claims or defenses of the class.” Fed.R.Civ.P. 23(a)(3); Appleyard, v. Wallace,
The Court finds that Plaintiffs’ claims arise out of the same course of conduct and are based on the same legal theories as those of the absent class members. Pursuant to a standardized, automated process, Union posted all debit transactions that settled on a given day late in the evening or early the following morning before business hours. The order in which the bank posted debit transactions to an account directly corresponded to the order in which the funds were deducted from the account. Throughout the Class Period, as to each Plaintiff and every member of the proposed class, it was Union’s uniform practice to post all POS, ATM, and teller debit transactions in a single “batch,” in the order of highest-to-lowest dollar amount. That is, all Plaintiffs and members of the proposed class, whose accounts were governed by common and materially uniform agreements, were subjected to Union’s practice of re-sequencing debit card transactions from high-to-low, and Plaintiffs allege that they and all members of the proposed class were assessed additional overdraft fees as a result. Plaintiffs propose discrete multi-state subclasses for some of the state law claims to ensure that the proposed class representatives’ claims are materially identical to all other class members that they seek to represent. Therеfore, the Court finds that the typicality exists within the meaning of Rule 23(a)(3).
(iv) Adequacy
Rule 23(a)(4) requires that “the representative parties will fairly and adequately
(1) Do either the named plaintiffs or their eounsel have any conflicts of interest with other class members; and
(2) Will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?”
Kirkpatrick,
The Court finds that neither the Plaintiffs nor their counsel have any interests that are antagonistic to those of the absent class members. The central issues in this case — the existence, unlawfulness and effect of Union’s scheme to manipulate debit card transactions and increase the number of overdraft fees assessed — are common to the claims of Plaintiffs and the other members of the class. Each representative Plaintiff, like each absent class member, has a strong interest in proving Union’s scheme, establishing its unlawfulness, demonstrating the impact of the illegal conduct and obtaining redress. Plaintiffs thus “share the true interests of the class.” Hastings-Murtagh v. Texas Air,
The law firms seeking to represent the class here include qualified and experienced lawyers. The Court has reviewed the firm resumes setting forth their experience and expertise in class actions. In addition, the Court is familiar with many of the lawyers seeking to represent the class, as they have appeared before the Court a number of times. The Court is satisfied that the lead Plaintiffs and the firms seeking appointment as class counsel will properly and adequately prosecute this case. The Court therefore appoints Plaintiffs as representatives of the class, and appoints the following firms as class counsel pursuant to Fed.R.Civ.P. 23(g): Alters Law Firm, P.A.; Podhurst Orseck, P.A.; Grossman Roth, P.A.; Baron & Budd, P.C.; Golomb & Honik, P.C.; Lieff Cabraser Heimann & Bernstein LLP; Trief & Oik; Webb, Klase & Lemond, L.L.C.; and Bon-nett Fairbourn Friedman & Balint.
B. Rule 23(b) Certification
In addition to meeting the requirements under Rule 23(a), Plaintiffs must estаblish that one or more of the grounds for maintaining the suit as a class action are met under Rule 23(b). Plaintiffs seek certification under Rule 23(b)(3). Thereunder, a plaintiff bears the burden of demonstrating two requirements are met: 1) predominance of the questions of law or fact common to the members of the class over any questions affecting only individual members; and 2) superiority of class action for the fair and efficient adjudication of the controversy. See Amchem,
(i) Predominance
“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem,
Here, “irrespective of the individual issues which may arise, the focus of the litigation” concerns “the alleged common course” of unfair conduct embodied in Union Bank’s alleged scheme to maximize overdraft fees through the hidden reordering of transactions at account posting. Sargent v. Genesco, Inc.,
The Court finds that predominance is satisfied in this ease. Plaintiffs allege that Union’s course of conduct commonly, and adversely, affected the entire class, and have submitted evidence supporting that allegation. The class members are similarly situated with regard to the readily determined, allegedly excess fees they incurred as a result of a standardized process. The class is unified by both common questions and a common interest. The evidence necessary to establish Plaintiffs’ claims is common to both Plaintiffs and all members of the class; they all seek to prove that Union’s high-to-low re-sequencing practice was wrongful. That evidentiary presеntation involves the same evidence of (i) Union’s form contracts, with similar terms, applicable to all Plaintiffs and class members; (ii) Union’s systematic re-sequencing of debt transactions from high-to-low for all Plaintiffs and class members through its automated software programs; and (iii) the “Matrix” line of credit that Union secretly established for all Plaintiffs and class members in order to charge them overdraft fees. The evidence to be presented by the Plaintiffs has a direct impact on every class member’s effort to establish liability and on every class member’s entitlement to relief. Klay,
The Court further notes that the problems plaguing the proposed classes in Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Servs., Inc.,
In addition, the court’s certification in Gutierrez is instructive. Wells Fargo, like Union, also contended that individual issues would predominate, but the court in that case found the “challenged practice is a standardized one applied on a routine basis to all customers.”
As discussed above, class members are readily ascertainable through objective criteria: Union’s own records of individuals who were assessed overdraft fees. Plaintiffs’ expert will formulate calculations that can identify members of the class by running queries in Union’s computer records. Such calculations will be merely ministerial in nature, and will not be plagued by resolution of individual class member issues. Damages will be calculated using the same Union records used to identify the class members. These facts make this ease manageable as a class action.
Nor do Union’s affirmative defenses defeat certification of the class. Union claims that it will advance a number of affirmative defenses, but it purports to meet its burden of proof as to those defenses by introducing common evidence, including “common evidence showing that it took affirmative steps to explain the change in its posting practices in April of 2004” (Trial Plan Opp. at 7-8); “common evidence” purportedly showing that it disclosed its “hold” practice but that the practice did not “delay” posting (although Union does not cite to any record evidence supporting the assertion) (id. at 10); and “much ... evidence [that] is common” to allegedly show that it carefully and studiously implemented the re-sequencing practice for reasons other than increasing revenue (id. at 11-12). Union’s use of common evidence supports a finding that common issues predominate. Both sides will present cоmmon evidence on these issues. Of course, whether Plaintiffs’ or Union’s evidence will prevail is not the appropriate inquiry at this time. Instead, it is enough to note that both Plaintiffs and Union plan to rely on common evidence in making their cases.
Union’s specific defenses do not defeat predominance. Some (such as setoff) pertain (if at all, to a merits determination to be made later) to damages, and can be accounted for in Plaintiffs’ expert’s calculations. See Carbajal v. Capital One F.S.B.,
Specifically, Plaintiffs alleged that throughout the Class Period, if a customer’s primary account and any linked account balanсes were not sufficient to cover the transaction amount, and if the customer did not have a cash reserve line of credit, Union secretly authorized customers’ debit-card transactions into overdraft up to a maximum or ceiling amount that the bank determined was appropriate for each customer. Plaintiffs allege that this was done via a confidential automated process using a “Matrix” line of credit that Union built for the customer. Plaintiffs further allege that, augmenting its re-sequencing practice, Union’s secret use of the Matrix line of credit was integral to its overall scheme of increasing the number of completed debit transactions and the number of overdrafts. And they allege that the entire process of determining the amount of the Matrix line of credit and authorizing a transaction into overdraft was not disclosed to the customer before 2010. If Plaintiffs can prove these facts, they will undercut Union’s defenses by common evidence.
(ii) Superiority
Finally, the Court now turns to the issue of superiority under Rule 23(b)(3). The four factors identified by Rule 23, see Waico,
When considerеd in light of Rule 23(b)(3), the Court finds that Plaintiffs have
Class treatment is superior to other available methods for the fair and efficient adjudication of this controversy. Nearly all of the class members in this ease have claims that are so small that it would cost them much more to litigate an individual case than they could ever hope to recover in damages, and thus there is no reason to believe that the putative class members in this case have any particular interest in controlling their own litigation. Concentrating the litigation in this forum is logical and desirable. And as noted above, this case is eminently manageable as a class action. Accordingly, the Court finds that Plaintiffs have met the superiority requirement of Rule 23(b)(3).
(iii) Subclasses
The Court also certifies the creation of four subclasses: the two state-good faith and fair dealing subclass (encompassing California and Oregon), the California unjust enrichment subclass, the three state uncon-scionability subclass (encompassing California, Oregon and Washington), and the California Unfair Competition Law subclass. Plaintiffs who represent each subclass reside in one of the states belonging to each subclass; thus, they may represent Class members residing in the other state(s) included in the subclass. The Court finds the creation of these subclasses to address variations in state law appropriate, and will make this case manageable as a class action. See, e.g., Klay,
(1) a single body of law applies to all such claims or issues;
(2) different claims or issues are subject to different bodies of law that are the same in functional content; or
(3) different claims or issues are subject to different bodies of law that are not the same in functional content but nonetheless present*680 a limited number of patterns that the court ... can manage by means of identified adjudicatory procedures.”
American Law Institute, Principles of the Law: Aggregate Litigation § 2.05(b) (2010). The proposed special verdict forms and supporting surveys of law submitted by Plaintiffs with their Trial Plan illustrate that the variations among the potentially applicable state laws are not material and can be managed to permit a fair and efficient adjudication by the fact finder at trial. As detailed in Plaintiffs’ Trial Plan, Plaintiffs propose just four subclasses for the state law claims. Each subclass will have its own start date linked to the statute of limitations for each of those claims. Each subclass groups the laws of California, Oregon and Washington accordingly.
Union argues that, despite the fact that the law of only three states, at most, is at issue with regard to any of the subclasses (and, as grouped by Plaintiffs, is sufficiently uniform), individual issues predominate with regard to these claims. Its argument relies on an incorrect reading of the relevant law. For example, it is not the case that the individual Plaintiffs’ and class members’ subjectivе expectations are necessary to prove their claims. To the contrary, breach of the duty good faith and fair dealing may be shown by class-wide evidence of a defendant’s subjective bad faith or objectively unreasonable conduct. See, e.g., Menagerie Prods, v. Citysearch,
III. Conclusion
In accordance with the findings above, it is hereby ORDERED, DECREED, AND ADJUDGED as follows:
Plaintiffs’ Motion For Class Certification (DE # 1387) be, and the same is hereby, GRANTED. The Court certifies the following Rule 23(b)(3) class:
All Union Bank customers in the United States who had one or more consumer accounts and who, from applicable statutes of limitation through August 13, 2010 (the*681 “Class Period”), incurred an overdraft fee as a result of Union Bank’s practice of sequencing debit card transactions from highest to lowest.
It is further ORDERED, DECREED, AND ADJUDGED that Plaintiffs’ Motion for the creation of four subclasses included in its Motion for Class Certification (DE # 1387) be, and the same is hereby, GRANTED. The Court certifies the following four subclasses:
The two state-good faith and fair dealing subclass (encompassing California and Oregon), the California unjust enrichment subclass, the three state unconscionability subclass (encompassing California, Oregon and Washington), and the California unfair competition subclass.
The Court appoints Plaintiffs as representatives of the Class, and as representatives of the following specific subclasses: Cynthia Larsen, Cheryl Brown, Kristian Logan and Josh Naehu-Reyes as representatives of Plaintiffs’ proposed two state good faith and fair dealing subclass; Cynthia Larsen, Cheryl Brown, Kristian Logan, and Josh Naehu-Reyes as representatives of the California unjust enrichment subclass; Cynthia Larsen, Cheryl Brown, Kristian Logan, Josh Naehu-Reyes as representatives of the three state unconscionability subclass; and Cynthia Larsen, Cheryl Brown, Kristian Logan and Josh Nаehu-Reyes as representatives of the California unfair competition subclass. The Court also appoints the following firms as Class Counsel pursuant to Fed.R.Civ.P. 23(g): Alters Law Firm, P.A.; Podhurst Or-seck, P.A.; Grossman Roth, P.A.; Baron & Budd, P.C.; Golomb & Honik, P.C.; Lieff Cabraser Hermann & Bernstein LLP; Trief & Oik; Webb, Klase & Lemond, L.L.C.; and Bonnett Fairbourn Friedman & Balint.
Notes
. Defendant filed its Response (DE # 1601) on June 9, 2011, to which Plaintiffs Replied on July 5, 2011.
. Plaintiffs do not seek to certify for class treatment their claims for conversion at this time. Plaintiffs also sought to certify their claim for violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO”), 18 U.S.C. § 1962(c). However, the Court dismissed that cause of action by order dated July 13, 2011, and that part of Plaintiffs’ Motion is moot.
. Plaintiffs also seek the certification of subclasses for specific claims as set forth in Plaintiffs’ Proposed Trial Plan for Trial of All Class Claims (the "Trial Plan”). These subclasses are discussed below.
. References to the transcript оf the hearing on July 13, 2011, are denoted as "Tr. at-.”
. "The typicality and commonality requirements tire distinct but interrelated, as the Supreme Court made clear: ‘The commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiffs claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.' ” Cooper v. Southern Co.,
. References to the transcript of the hearing on July 13, 2011, are denoted as "Tr. at-.”
. Moreover, these defenses may pertain more to damages than liability, depending on how the facts develop in discovery. See, e.g., Coughlin v. Blair,
. See Padres Hacia Una Vida Mejor v. Davis,
. Plaintiffs have alleged and offered evidence to support the allegation that Union instructed its employees “never" to reveal the Matrix limits to customers. To the extent Union could prove that some customers nonetheless learned of their Matrix limit, yet continued to incur and pay overdraft fees, the presence of individualized defenses as to a small number of class members would not destroy the predominance of common liability questions. See Smilow v. Southwestern Bell Mobile, Sys., Inc.,
. The Court will address the procedure for providing notice to class members regarding the certification of the class and these claims separately.