{¶ 1} This is an appeal of an order issued by the Monroe County Court of Common Pleas certifying a class of plaintiffs in a class-action suit. The underlying complaint alleges that Safe Auto Insurance Company and Safe Auto Insurance Group, Inc. (collectively, “Safe Auto” or “appellant”), breached the employment agreements of current and former sales representatives of the insurance company. The complaint also contained a claim for unjust enrichment. Appellees John Lucio and Regina Winland are from Ohio. Appellees filed the lawsuit to recover commissions and bonuses allegedly owed to them for selling automobile insurance contracts. Lucio and Winland sought to represent a class of employees from Ohio employed by Safe Auto since the year 2000. Appellees filed a motion for class certification, which was granted by the trial court. The court limited the class to Ohio employees of Safe Auto and named Lucio and Winland as the class representatives. The court certified the class for both the contract claim and the unjust-enrichment claim.
{¶ 2} Appellant argues that the trial court should not have certified a class on the unjust-enrichment claim because no proof was submitted of unjust enrich
History of the Case
{¶ 3} On December 11, 2006, the three appellees filed a complaint in Cuyahoga County against their former employer, Safe Auto. On January 5, 2007, appellant removed the case to district court in the Northern District of Ohio. Appellees later dismissed the complaint and refiled it in the Monroe County Court of Common Pleas on March 22, 2007. On April 20, 2007, appellant again removed the case to a federal court, this time in the Southern District of Ohio. On November 13, 2007, the case was remanded to Monroe County.
{¶ 4} Appellees sought to represent a class of sales representatives allegedly employed by Safe Auto from the year 2000 to the present who had their commissions reduced when Safe Auto restructured its sales-incentive programs starting in January 2004. The complaint alleged both breach of contract and unjust enrichment. Although the employees were at-will employees, certain terms of employment were contained in a Sales Representatives Agreement (“SRA”) that each employee was required to sign as a term of employment. One such SRA was dated January 1, 2004, and it stated: “After the initial policy term of six months (i.e., upon renewal), the commission remains 2% for each part (quote and printing of policy) for the duration of the policy.” Appellees rely on the phrase “duration of the policy” to establish that their commission rate should not have been reduced while the automobile insurance policies they sold were still in effect. Appellees alleged that after the employees signed the January 1, 2004 SRA, Safe Auto distributed a memorandum to employees (on January 19, 2004) that unilaterally reduced the commissions earned on renewed policies. Appellees alleged that Safe Auto distributed a similar memo on August 18, 2005, unilaterally reducing the commission on new policy sales. Appellees alleged that these unilateral actions constituted a breach of contract.
{¶ 6} Appellees filed a motion for class certification on July 11, 2008. A hearing on the motion was held on September 2, 2008. The trial court granted it on October 20, 2008. The court defined the class as “[a]U persons engaged by Safe Auto Insurance Company/Group as sales representatives in either the Monroe County or Franklin County Ohio call centers between the time period of January 1,1996 and the present, who had contractually determined sales commissions unilaterally reduced by Safe Auto at least once.” The court granted class certification with respect to both the breach-of-contract claim and unjust-enrichment claim and designated John Lucio and Regina Winland as the class representatives. Both plaintiffs are from Ohio and the class is limited to Ohio employees.
{¶ 7} On November 13, 2008, appellant filed its notice of appeal.
Final, Appealable Order Status
{¶ 8} R.C. 2505.02 states:
{¶ 9} “(B) An order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following:
{¶ 10} “ * * *
{¶ 11} “(5) An order that determines that an action may or may not be maintained as a class action.”
{¶ 12} An order of a trial court determining that an action may be maintained as a class action is a final, appealable order, pursuant to R.C. 2505.02(B)(5). Gabbard v. Ohio Bur. of Workers’ Comp., 10th Dist. Nos. 02AP-976 and 02AP-1168,
{¶ 13} The class action is an invention of equity. Amchem Prod., Inc. v. Windsor (1997),
{¶ 14} Class certification in Ohio is based upon Civ.R. 23, which is nearly identical to Fed.R.Civ.P. 23. A trial court’s decision to certify a class pursuant to Civ.R. 23 is reviewed for abuse of discretion. Marks v. C.P. Chem. Co., Inc. (1987),
(¶ 15} A decision to certify an action as a class action is not a decision on the merits of a claim: “In determining whether to certify a class, the trial court must not consider the merits of the case except as necessary to determine whether the Civ.R. 23 requirements have been met.” Williams v. Countrywide Home Loans, Inc., 6th Dist. No. L-01-1473,
{¶ 16} A party seeking class certification must meet all the requirements set forth in Civ.R. 23(A) and (B). The seven requirements of Civ.R. 23 are as follows: “(1) an identifiable class must exist and the definition of the class must be unambiguous; (2) the named representatives must be members of the class; (3) the class must be so numerous that joinder of all members is impracticable; (4) there must be questions of law or fact common to the class; (5) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; (6) the representative parties must fairly and adequately protect the interests of the class; and (7) one of the three Civ.R. 23(B) requirements must be met.” Hamilton,
{¶ 17} Civ.R. 23(B)(3) allows a class action to proceed if questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and if the court determines that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Although common questions must predominate the action, they do not need to be dispositive of the litigation. The common questions “must represent a significant aspect of the case and they must be able to be resolved for all members of the class in a single adjudication.” Schmidt v. Avco Corp. (1984),
ASSIGNMENT OF ERROR
{¶ 18} “The trial court abused its discretion in granting class certification, because plaintiffs wholly failed to establish the mandatory prerequisites for certification set forth in Civil Rule 23.”
{¶ 19} There are four subparts in this assignment of error. The first two subparts deal with the class certification for the unjust-enrichment claim. The second two subparts deal with whether appellees satisfied the requirements of Civ.R. 23(B)(3) for both the contract claim and the unjust-enrichment claim. The first two subparts will be treated together.
Subparts 1 & 2 dealing with Unjust Enrichment.
{¶ 20} “1. The trial court abused its discretion in certifying plaintiffs’ unjust enrichment claim because plaintiffs presented no evidence to permit a determination, and the trial court failed to conduct a thorough analysis.”
{¶ 22} Both of these arguments allege error in the court’s certification of the unjust-enrichment claim. The first argument is that appellees presented no evidence to support their unjust-enrichment claim. The essence of appellees’ unjust-enrichment claim is as follows: former sales representatives were encouraged to sell a large volume of insurance policies at a high contractual rate of commissions; the commissions were unilaterally reduced, forcing the employees to leave Safe Auto; and Safe Auto continued to collect premiums on those policies using the former employees’ names and sales licenses. Appellees’ complaint argued that Safe Auto should not be permitted to retain those profits and that the former contractual commission rates should be applied to determine damages.
{¶ 23} “Unjust enrichment” is defined as the retention of money or benefits by one person that, in justice and equity, belong to another. Hummel v. Hummel (1938),
{¶ 24} If the issue at trial becomes more of an issue of fraud rather than the much simpler question of whether Safe Auto merely retained commissions that should more properly have gone to former sales representatives, the nature of the proof required of appellees may indeed change, but that does not necessarily mean, as suggested by Safe Auto, that every plaintiff will need to prove individualized fraud. “[T]he existence of common misrepresentations obviates the need to elicit individual testimony as to each element of a fraud or misrepresentation claim, especially where written misrepresentations or omissions are involved. * * * Courts also generally find that a wide variety of claims may be established by common proof in cases involving similar form documents or the use of standardized procedures and practices.” Cope v. Metro. Life Ins. Co. (1998),
{¶ 25} Safe Auto also argues that the trial court did not actually review the unjust-enrichment claim and arbitrarily added it to the class certification, almost as an afterthought. The trial court’s lengthy judgment entry, though, clearly speaks to two different claims under review for class certification. The court addressed “breach of contract and/or alleged oral representation.” The court referred to “a contract or its breach and/or any misrepresentations.” The court clearly sets forth two claims for which class certification is being sought: “Plaintiffs’ claims are based on a central legal theory that Safe Auto breached its contracts * * *. Plaintiffs further claim that Safe Auto also acted fraudulently against the putative Plaintiffs when these agreements were unilaterally changed, reducing the commission structure of the sales representatives.” The court then repeats that two claims are being reviewed: “a breach of contract theory and/or a fraudulent misrepresentation theory of recovery.” The court went on to say that the actual nature of Safe Auto’s fraudulent conduct was not currently before the court, and that appellees could prove this in any manner they deemed proper. The court, at some length, described the nature of proof required to prove fraud and misrepresentation. It is clear from the record that the trial court was keenly aware that it was reviewing two distinct causes of actions and that it was granting certification for both of them. Although appellant is correct that the trial court
Subparts 3 & 4 dealing with Civ.R. 23(B)(3)
{¶ 26} The third and fourth subparts of appellant’s assignment of error deal with whether the trial court properly analyzed the requirements of Civ.R. 23(B)(3). These will be treated together:
{¶ 27} “3. The trial court abused its discretion in certifying a class action under Rule 23(b)(3) because plaintiffs faded to prove predominance as required for class actions.”
{¶ 28} “4. The trial court abused its discretion in certifying a class action under Rule 23(b)(3) because plaintiffs failed to prove superiority as required for class actions.”
{¶ 29} As stated earlier, a trial court cannot certify a class unless one of the three options listed in Civ.R. 23(B) is satisfied. Appellees attempted to obtain certification under Civ.R. 23(B)(1) and (3). The trial court denied certification under Civ.R. 23(B)(1) but found that the elements of Civ.R. 23(B)(3) were satisfied. Safe Auto argues that Civ.R. 23(B)(3) was not satisfied.
{¶ 30} Civ. 23(B) states:
{¶ 31} “(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 concerning the controversy already commenced by or against members of the class; (e) 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.”
{¶ 32} Civ.R. 23(B)(3) thus requires the trial court to make two findings: that common questions predominate over issues that only affect individual members and that a class action is superior to other available methods of adjudication.
{¶ 33} The “predominance” requirement of Civ.R. 23(B)(3) necessitates an examination of “common” versus “individual” issues. A predominance inquiry focuses on the legal or factual questions that qualify each class member’s case as a genuine controversy. Hoang v. E*Trade Group, Inc., 151 Ohio App.3d
{¶ 34} The trial court found that appellees alleged a common scheme of fraudulent activity involving the unilateral modification of employment contracts. The court found that Safe Auto’s alleged misrepresentations occurred in its written documentation, that there was a single unified scheme of misrepresentation alleged, and that both parties acknowledge that the SRAs and the two company memoranda from January 2004 and August 2005 were critical to appellees’ claims. The court was aware that the complaint raised other allegations that may require more individualized proof, but it concluded that the meaning and interpretation of the aforementioned documents would be dispositive of most or all of the claims. There is nothing arbitrary or capricious about the court’s analysis. Based on appellees’ representations at the September 2, 2008 hearing, they intended to rely almost exclusively on the SRAs and company memos to establish their case in a motion for summary judgment. Obviously Safe Auto does not consider appellees’ interpretation of the SRAs to be viable, but that goes to the merits of the action and not whether a class should have been certified. If Safe Auto is correct, the SRAs will resolve the case in its favor rather than in appellees’ favor, and both sides appear to agree on the importance of the few written documents that form the basis of the complaint. The record supports the trial court’s conclusions and no abuse of discretion is evident in its treatment of the “predominance” issue.
{¶ 35} Regarding whether a class action is a superior method of adjudication, “the court must make a comparative evaluation of the other procedures available to determine whether a class action is sufficiently effective to justify the expenditure of judicial time and energy involved therein.” Schmidt,
{¶ 36} Although there are four criteria listed in Civ.R. 23(B)(3) that the court should consider in its analysis, appellant is focusing on only the fourth factor: “the difficulties likely to be encountered in the management of a class action.” Appellant contends that the trial court failed to consider the difficulties in creating appropriate jury instructions and the burden that would be placed on the jury in hearing the individual testimony of 180 witnesses.
{¶ 37} Appellant’s argument is that it plans to call all 180 potential plaintiffs to testify, thus making a single trial unworkable. It is clear that it is appellant and not the plaintiffs themselves who plan on bringing every class member into court. The plaintiffs intend to use only the written documents and the testimony of the two class representatives to establish their case. Appellant is employing a specious argument that could defeat every class-action suit if carried to its inevitable conclusion. In essence, Safe Auto is asserting that it is willing to endure the expense of calling 178 rebuttal witnesses, if that is what it would take to defeat appellees’ claims. Appellees, on the other hand, explained to the court that their claims were based on written documentation, not personal testimony. The court itself would control the presentation of witnesses and evidence, and it is difficult to conceive of a scenario in which the court would permit 180 witnesses to testify as to the terms of identical contracts.
{¶ 38} As noted earlier, the fact that the damages may have to be calculated individually is not a reason to deny a motion to certify a class. Appellant contends that the court will not be able to formulate jury instructions to accommodate the individual claims and damage calculations of 180 plaintiffs. Given that class-action suits have been maintained in the past with classes encompassing tens of thousands of plaintiffs, the needs of 180 plaintiffs do not seem insurmountable. As stated in a recent case from the Tenth District Court of Appeals:
{¶ 39} “Moreover, with respect to the manageability issues raised by [the defendant], they raise no obstacle not encountered with any otherwise certifiable class action. The possibility that individual defenses based on causation may be raised is admittedly a concern, but one that has been dealt with in similar cases by means of various procedural devices which are within the trial court’s wide discretion in managing a class action: the creation of appropriate subclasses, bifurcation of common and individual liability issues, or severance.” Grant v. Becton Dickinson & Co., 10th Dist. No. 02AP-894,
{¶ 41} Because we have determined that none of appellant’s arguments is persuasive, the sole assignment of error is overruled.
Conclusion
{¶ 42} In summary, Safe Auto has not established any abuse of discretion in the trial court’s decision to certify a class for appellees’ breach-of-contract and unjust-enrichment claims. Certification of the unjust-enrichment claim was supported by some evidence and the issue was thoroughly reviewed by the trial court. The trial court also examined in great detail the question whether common elements predominated and whether a class action was the superior method of litigation. The trial court reviewed each factor in Civ.R. 23(B)(3), and the record supports the trial court’s decision. The trial court did not abuse its discretion, and judgment certifying the class action is affirmed in full.
Judgment affirmed.