SHAHRIAR JABBARI; KAYLEE HEFFELFINGER, оn behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. CHAD MICHAEL FARMER, Objector-Appellant, v. WELLS FARGO & COMPANY; WELLS FARGO BANK, N.A., Defendants-Appellees.
No. 18-16213, No. 18-16223, No. 18-16236, No. 18-16284, No. 18-16285, No. 18-16315, No. 18-16317
United States Court of Appeals for the Ninth Circuit
July 20, 2020
Opinion by Judge Gould
D.C. No. 3:15-cv-02159-VC
FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Appeal from the United States District Court for the Northern District of California Vince Chhabria, District Judge, Presiding
Argued and Submitted February 13, 2020 San Francisco, California
Filed July 20, 2020
Before: Ronald M. Gould and Mary H. Murguia, Circuit Judges, and Gary Fеinerman,1 District Judge.
Opinion by Judge Gould
SUMMARY2
Class Action
The panel affirmed the district court‘s holding that a nationwide class satisfied
This appeal presented objections to the settlement of a nationwide class action against Wells Fargo.
The panel held that the district court did not abuse its discretion in holding that common questions predominated. Specifically, the panel held that Hyundai made clear that it generally was not legal error to forego a choice-of-law analysis in a settlement-class predominance inquiry; and this principle applied with even greater force here, where the class was unified by a claim under federal law. The panel further held that the class‘s federal Fair Credit Reporting Act (“FCRA“) claim unified the class because the plaintiffs could show that the FCRA‘s elements were proven by a сommon course of conduct, and the existence of potential state-law claims did not outweigh the FCRA claim‘s importance.
In a separately filed memorandum disposition, the panel affirmed the district court‘s certification of the settlement class,
COUNSEL
Robert Clore (argued) and Christopher A. Bandas, Bandas Law Firm P.C., Corpus
N. Albert Bacharach Jr. (argued) and Charles Darbyshire, N. Albert Bacharach Jr. P.A., Gainesville, Florida, for Objector-Appellant Charles Darbyshire.
John J. Pentz (argued), Law Offices of John J. Pentz, Sudbury, Massachusetts, for Objector-Appellant Jill Piazza.
Cameron S. Christensen (argued) and Steven Alden Christensen, Christensen Young & Associates PLLC, Sandy, Utah, for Objector-Appellant Scott Johnston.
George W. Cochran, Streetsboro, Ohio, for Objector-Appellant Barbara Cochran.
Steve Scow, Koch & Scow, Henderson, Nevada, for Objector-Appellant Mike Murphy.
Annette Borzakian, Los Angelеs, California, for Objector-Appellant Lydia LaBelle de Rios.
Benjamin J. Horwich (argued), David H. Fry, and Nick M. Axelrod, Munger Tolles & Olson LLP, San Francisco, California; Erin J. Cox, Munger Tolles & Olson LLP, Los Angeles, California; for Defendants-Appellees.
Derek W. Loeser (argued), Gretchen Freeman Cappio, and Benjamin Gould, Keller Rohrback LLP, Sеattle, Washington; for Plaintiffs-Appellees.
OPINION
GOULD, Circuit Judge:
This appeal presents objections to the settlement of a nationwide class action against Wells Fargo. We have jurisdiction pursuant to
I
The class action complaint alleged that Wells Fargo & Company and Wells Fargo Bank, N.A. (Wells Fargo), pressured their employees to meet arbitrary and unrealistic sales quotas unrelated to true consumer demand. This allegedly resulted in Wells Fargo‘s systematic explоitation of its customers for profit. The crux of the alleged scheme was that Wells Fargo employees would open multiple accounts in a customer‘s name without the customer‘s consent.
According to the complaint, Wells Fargo directly harmed its customers to benefit itself. Once Wells Fargo opened an unаuthorized account, it charged fees to the customers. Customers soon fielded the calls of debt collectors seeking payment of debts of which the customers were unaware. The outstanding debts and unmonitored bank accounts also harmed the customers’ credit. Wells Fargo then offered to sell its credit-protection products to the customers whose credit it was harming.
Plaintiffs Shahriar Jabbari and Kaylee Heffelfinger sued Wells Fargo in a putative class action. The complaint alleged violations of the
[a]ll Persons for whom Wells Fargo or Wells Fargo‘s current or former subsidiaries, affiliates, principals, officers, directors, or employees opened an Unauthorized Account or submitted an Unauthorized Application, or who obtained Identity Thеft Protection Services from Wells Fargo during the period from May 1, 2002 to April 20, 2017.
In addressing the objections to the certification and the settlement, the district court held that “[d]ifferences among state laws do not bar certification of the class here, as Plaintiffs have asserted a claim under a federal statute (the Fair Credit Reporting Act) that is equally applicable in all states.”
Some Objectors appealed. Among the objections is that the class did not satisfy
II
“We review for abuse of discretion the district court‘s decision to certify a class for settlement purposes, limiting our review ‘to whether the district court correctly selected and applied
III
Also relevant is whether a district court certifies a class for settlement or for trial. In re Hyundai & Kia Fuel Econ. Litig. (Hyundai II), 926 F.3d 539, 558 (9th Cir. 2019) (en banc). Settlement may “obviate[] the need to litigate individualized
The potential applicability of variations in state law can complicate the predominance determination. See Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918, 928 (9th Cir. 2019) (“[P]otentially varying state laws may defeat predominance in certain circumstances.“), petition for cert. filed, (U.S. June 4, 2020) (No. 19-1339); see also Mazzа v. Am. Honda Motor Co., 666 F.3d 581, 591–94 (9th Cir. 2012); Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1189 (9th Cir. 2001), amended on denial of reh‘g, 273 F.3d 1266 (9th Cir.). When the relevant state laws differ in material ways, a court may have to decide which state‘s or states’ law applies before it can determine whether common questions of law or fact predominate. See Zinser, 253 F.3d at 1189.
In our prior decisions, we have outlined the contours of the predominance determination in the context of variations in state law. In Hanlon v. Chrysler Corp., we affirmed the district court‘s certification of a settlement class asserting various consumer protection causes of action without requiring a choice-of-law analysis. 150 F.3d 1011, 1023–24 (9th Cir. 1998), overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). We held that variations in “products liability, breaches of express and implied warranties, and ‘lemon laws‘” across the states did not defeat predominance because “there were still sufficient common issues to warrant a class action, particularly questions of Chrysler‘s prior knowledge of the latch deficiency, the design defect, and a damages remеdy.” Id. at 1022–23. A conclusion as to which state‘s law applied was not necessary to the predominance determination in that case because the law of each state at issue shared common questions that were central to the resolution of the claims and capable of resolution in one fell swoop.
In Mazza, which involved a class certification for trial, we came to the opposite conclusion. There, we held that the district court abused its discretion by certifying a nationwide class because the district court erroneously applied California law to the entire class. Mazza, 666 F.3d at 589–90. In applying California‘s governmentаl-interest test, we identified material differences in the relevant state laws, such as differing scienter and reliance requirements. Id. at 590–91. We did not hold that no class could exist, especially given the possibility of subclasses, but only that the class as certified was the result of an erroneous choice-of-law analysis. Id. at 594. Our predominance holding, if any, was thus implicit. See In re Hyundai & Kia Fuel Econ. Litig. (Hyundai I), 881 F.3d 679, 692–93 (9th Cir. 2018), rev‘d en banc, 926 F.3d 539 (9th Cir. 2019).
Hanlon affirmed a settlement class‘s certification whereas Mazza reversed a certification for trial. Those cases align with the general rule that predominance is easier to satisfy in the settlement context. Hyundai II, 926 F.3d at 558. But the imprecise line between Hanlon and Mazza nevertheless blurred.
The three-judge panel‘s and en banc panel‘s decisions in Hyundai are illustrative. In that case, a putative class of consumers who sued the automaker Hyundai under California consumer-protection law, among other claims, alleging that Hyundai “misled consumers throughout the United States by advertising inflated fuel economy standards” in particular vehicles. Id. at 553.
The district court at first indicated that it was likely to deny class certification for trial. Hyundai I, 881 F.3d at 696 (citing Mazza, 666 F.3d at 590–92). But later, when asked to certify a class for settlement,
The three-judge panel relied on Mazza to reverse on appeal. Id. at 702–03 (majority opinion). The panel reasoned that, “[i]n failing to apply California choice of law rules, the district court committed a legal error” because, “[a]s explained in Mazza, the district court was required to apply California‘s choice of law rules.” Id. at 702. The distinction between certifying a class for trial or settlement, the panel concluded, was immaterial. Id. at 702–03.
The en banc panel reversed on rehearing. Speaking generally, the en bаnc panel clarified that “[t]he criteria for class certification are applied differently in litigation classes and settlement classes.” Hyundai II, 926 F.3d at 556. In the settlement context, a district court assessing predominance “need not inquire whether the case, if tried, would present intractable management problems.” Id. at 558 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)). Reaffirming Hanlon, the en banc panel explained that common issues like whether the fuel economy statements were inaccurate and whether the automakers knew about the inaccuracy were the sort of “common course of conduct by [a] defendant” that can establish predominance. Id. at 559.
Hyundai thus dictates that, as a general rule, a district court does not commit legal error by not conducting a choice-of-law analysis, despite variations in state law, before determining that common issues predominate for a settlement class. Id. at 562–63 & n.6.3 For purposes of a settlement class, differences in state law do not necessarily, or even often, make a class unmanageable.
IV
Applying Hyundai, we affirm. The district court did not abuse its discretion in holding that common questions predominate. Hyundai made clear that it generally is not legal error to forego a choice-of-law analysis in a settlement-class predominance inquiry. This principle applies with
even greater force here, where the class is unified by a claim under federal law.
The district court held that “[d]ifferences among state laws do not bar certification of the class here, as Plaintiffs have asserted a claim under a federal statute (the Fair Credit Reporting Act) that is equally applicable in all states.” Bеfore we decided Hyundai en banc, Objectors argued that the district court‘s predominance holding was legal error simply because the court did not conduct a choice-of-law analysis. As detailed in Section III, Hyundai forecloses that argument. In re Hyundai & Kia Fuel Econ. Litig. (Hyundai II), 926 F.3d 539, 561–62 (9th Cir. 2019) (en banc).
This case presents a stronger case than Hyundai for predominance because Plaintiffs asserted a federal clаim common to all class members. In cases like Hyundai and Hanlon, a district court must generally assess whether variations in state law are not so wide as to render the commonalities insufficient. When a class asserts a federal
The FCRA claim is provable collectively. To succeed on the FCRA claim, Plaintiffs would have to prove that Wells Fargo willfully used or obtained “consumer reports” in a statutorily impermissible manner.
willful4 act, just as the class in Hanlon could prove that the defendant knew that the latch design was defective. 150 F.3d 1011, 1023 (9th Cir. 1998); see also Edwards v. First Am. Corp., 798 F.3d 1172, 1183 (9th Cir. 2015) (“This common scheme, if true, presents a significant aspect of [the defendant‘s] transactions that warrant class adjudication . . . .“). This case is thus analogous to consumer fraud cases where predominance is easier to prove because “[t]his cohesive group of individuals suffered the same harm in the same way because of [Wells Fargo‘s] alleged conduct.” Hyundai II, 926 F.3d at 559.
The FCRA claim is important enough bind the class together. The district court permissibly found that the FCRA claim gave the best route to certification and recovery, thus driving the resolution. Nothing in the record indicates to us that the district court assessed improper factors or erred in judgment. See Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1018 (9th Cir. 2011), abrogated on other grounds by Comcast Corp. v. Behrend, 569 U.S. 27 (2013).
Objectors asserted that potential claims under state-law identity-theft statutes; the
class with a reasonable recovery given the feasibility of all legal options that Plaintiffs and Objectors presented.
Only rarely will a class assert every possible claim that might offer relief. As a general rule, a court need not assess the importance of every claim a class might make before holding that a class satisfies
V
It is generally not legal error for a district court to hold that a settlement class satisfies predominance, particularly for a class asserting a unifying federal claim, without first performing a choice-of-law analysis.
The district court here made no lеgal error. Nor did the court abuse its discretion by holding that the class satisfied
AFFIRMED.