SUPERIOR COURT OF CALIFORNIA, COUNTY OF SACRAMENTO Gordon D Schaber Courthouse 720 Ninth STREET Sacramento, CA 95814-1311 SHORT TITLE: Bohannan vs. Professional Cycle Parts CLERK'S CERTIFICATE OF SERVICE BY MAIL (Minute Order) CASE NUMBER: 34u2011-00108983-CU-BT.GDS I certify that I am not a party to this cause. I certify that a true copy of the Minute Order was mailed following standard court practices in a sealed envelope with postage fully prepaid, addressed as indicated below. The mailing and this certification occurred at Sacramento, California, on 11/06/2015. Clerk of the Court, by: L~, Deputy / VBRYAN KEMNITZER 445 BUSH STREET # 6TH FLR SAN FRANCISCO, CA 94108 A CLERK'S CERTIFICATE OF SERVICE BY MAIL Page: 1 V3 1013a (June 2004) Code of Civil Procedure, CCP1 013(a)
SUPERIOR COURT OF CALIFORNIA, COUNTY OF SACRAMENTO GORDON D SCHABER COURTHOUSE MINUTE ORDER DATE: 11/04/2015 TIME: 01 :30:00 PM JUDICIAL OFFICER PRESIDING: Alan Perkins CLERK: E. Bernardo, M. Milbourne REPORTER/ERM: E. Teklinsky CSR# 7895 BAILIFF/COURT ATTENDANT: T. Elder CASE NO: 34-2011-00108983-CU-BT",GDS CASE INIT.DATE: 08/12/2011 CASE TITLE: Bohannan vs. Professional Cycle Parts CASE CATEGORY: Civil - Unlimited EVENT TYPE: Motion to Certify a Class Action - Complex APPEARANCES Bryan Kemnitzer, counsel, present for Plaintiff(s). Daniel P Costa, counsel, present for Defendant(s). Kristin Kemnitzer for Plaintiff COURT RULING Court reporter fee paid by Defendant. Oral argument was requested by the Defendant. This matter was argued and submitted. The Court affirmed the tentative ruling. The Status Conference - Complex is scheduled for 12/03/2015 at 09:30 AM in Department 35. Case Management Statements are due end of business day 12/01/15. Joint Statements allowed and there is no need to follow the judicial counsel form. All filings and pleadings except Law and Motion matters are to be filed in Department 35. Plaintiff is ordered to notify all counsel/parties of this minute order. Motion for Class Certification - Tentative Ruling The following is a copy of the tentative ruling for the hearing on November 4, 2015, at 1:30 p.m. NOTICE: To request oral argument on this matter, you must call the Court at (916) 874-7885 (Department 35) by 4:00 p.m., the court day before this hearing and notification of oral argument must be made to the opposing party/counsel. If no call is made, the tentative ruling becomes the order of the court. Local Rule 1.06. Parties requesting services of a court reporter shall advise the court at (916) 874-7885 no later than 4:00 DATE: 11/04/2015 MINUTE ORDER Page 1
p.m. the court day before the hearing. Please be advised there is a $30.00 fee for court reporting services, which must be paid at the time of the hearing, for each civil proceeding lasting less than one hour. (Govt. Code 68086(a)(1 ) (A).) The Court Reporter wil not report any proceeding unless a request is made and the requisite fees are paid in advance of the hearing. The motion to certify the class is provisionally granted as follows. According to his points and authorities, plaintiff seeks to certify a class consisting of: (a) All California Consumers who purchased motor vehicles from defendant Professional Cycle Parts (PCP); (b) For which title would vest in the buyer only upon payment of part or all of the price, or the performance of any other condition; (c) Through a contract that fails to state in a single document all the agreements with respect to the total cost and the terms of payment, including without limitation, the applicable interest rate; (d) Between August 12, 2007 and the date of class certification." The Court notes that the definition set forth in the Notice of Motion and Motion for Class Certification, filed July 22, 2015, differs from the previous definition of the class the Court declined to certify. The request for judicial notice is granted. However, the Court takes notice of the existence of the order not the truth of the contents. The Court also notes that the trial court decision has no precedential value. Named plaintiff, Joshua Bohannan, alleges he is a buyer who purchased a used Yamaha motor cycle from PCP on August 22, 2008. He received two sale documents that failed to disclose the financing agreement into which he entered. The financing was subject to an open-ended agreement. The documents indicated that HSBC retained a security interest in the vehicle until it was paid in full. Named plaintiff seeks to represent a class of 1,816 buyers who made purchases from PCP and were not provided a single document that informed them of all the financial disclosures required by the Rees-Levering Act. The third amended complaint alleges four causes of action against PCP for violation of the Rees Levering Act (First), violation of the Consumer Legal Remedies Act (CLRA) (Second), violation of Business & Professions Code section 17200 et seq. (B&P 17200) (Third) and for Declaratory relief (Fourth). The Court previously denied plaintiff's motion to certify the class without prejudice. Plaintiff has filed this second motion that is accompanied by additional evidence. In the motion, plaintiff seeks to address the concerns expressed by the Court at the hearing and in its order. The standards for class certification are well-established. Code of Civil Procedure section 382 authorizes class actions when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 CaL. 4th 319,326) The party advocating class treatment must demonstrate the existence of an ascertainable and MINUTE ORDER Page 2
sufficiently numerous class, a well-defined community of interest and substantial benefits from certification that render proceeding as a class superior to the alternatives. (Brinker Restaurant Corp. v. Superior Court (2012) 53 CalAth 1004, 1021) The "community of interest" requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. (Sav-On Drugs at 326) The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. (Ibid.) Whether there is an ascertainable class is determined by examining the class definition, the size of the class and the means available for identifying the class. (Reyes v. San Diego County Board of Supervisors (1987) 196 Cal.App.3d 1263, 1271) Ascertainabilty and Numerosity In reviewing the previous class definition in this matter, the Court determined that the class was not ascertainable because of the differences across the various alleged open-ended financing transactions and the overbreadth of class definition. Plaintiff has now filed the third amended complaint that narrows the class definition and limits the claims to allegations that PCP uniformly failed to provide consumers entering into open-ended financing transactions with a single document that complied with the Rees-Levering Act and in all cases, the financial institution retained the same security interest in the vehicle until the vehicle is paid off as it would have if it had been a closed-end transaction. Plaintiff contends that the violations now alleged in each cause of action arise solely from PCP's uniformly violative open-ended sales documents. Plaintiff has also reviewed all 1816 class member files to address the Court's concern that there was no documentary evidence that each putative class member's transaction was the same in terms of the financial institution retaining a security interest in the motorcycle. Plaintiff contends his review has revealed that in every transaction, PCP gives the financial institution a security interest at the point of sale; the DMV documents this security interest in the identical way whether the transaction is open or closed-ended; and the financial institution retains a security interest until the motorcycle is paid off. Plaintiff has provided the Court with examples of class member files showing the similarities and plaintiff has ascertained that all of the identified files show the name of an individual, not a business. Based on the changes in the record, the Court is persuaded that there is an ascertainable class. It does not appear that the differences in manufacturers and financial institutions previously identified have any relevance to the resolution of the claims in the third amended complaint. Defendant's arguments set forth in the opposition are unpersuasive. Plaintiff has already spent the time ascertaining the class. The use of the word "title" in the class definition does not lead to the conclusion that there are no class members. The contention that this is a fail-safe class lacks merit. In any event, it appears defendant's arguments go to the merits of plaintiff's case. It is not properly addressed at the class certification stage. The Court determined that there was a sufficient showing of numerosity of the class under the previous MINUTE ORDER Page 3
definition and it now affirms that determination as to the new proposed definition. Plaintiff has now identified 1816 putative class members. No specific number is required for numerosity. The class of 1816 buyers identified by plaintiff is sufficiently numerous. Predominant Common Questions of Law or Fact The question then is whether common questions of law and fact predominate. In its earlier ruling, the Court was persuaded by defendant's argument that individual issues predominate as to all of the claims because at the time plaintiff failed to show that the same sales documents were used across all transactions such that individualized proof is not required on such claims. Given the changes made to plaintiff's claims in the third amended complaint and the additional evidence and authorities cited by plaintiff the court must analyze this question anew. Plaintiff now identifies the following common issues: Whether the transactions in the 1816 files discovered were subject to the Rees-Levering Act. Whether the bills of sale issued for all class members comply with the Rees-Levering Act. Whether the sales slips issued for all class members comply with the Rees-Levering Act. Whether PCP's use of standard form documents violate the Rees-Levering Act by failing to contain all pertinent financial disclosures in a purchase document. Whether PCP's use of standard form documents constitute unlawful, unfair or deceptive acts in violation of the CLRA and the UCL by misrepresenting credit sales as cash transactions in violation of the Rees-Levering Act. Whether PCP's use of standard form documents constitute unlawful, unfair or deceptive acts in violation of the CLRA and UCL by making deceptive representations concerning material payment terms. Whether the appropriate remedies are damages restitution and/or disgorgement of profits. Plaintiff contends that everyone of PCP's open-ended financing transactions violated the law in the same way by failing to provide the consumer with a single sales document that complied with the Rees-Levering Act. He contends the claims are susceptible of common proof from PCP's deal profitability sheets. In opposition, defendant continues to assert that plaintiff has failed to identify common questions because the answers to his questions depend on review of each of the individual files. Defendant also argues that plaintiff has identified no common questions of law or fact applicable to his CLRA claim and denies that the damages can be determined from the deal profitabilty sheets. The Court does not find defendant's arguments persuasive. The contentions go largely to the merits. In Sav-On Drug Stores Inc. (supra), the Supreme Court explained, "As the focus in a certification dispute is on what type of questions-common or individual-are likely to arise in the action, rather than on the merits of the case, in determining whether there is substantial evidence to support a trial court's certification order, we consider whether the theory of recovery advanced by the proponents of MINUTE ORDER Page 4
certification is, as an analytical matter, likely to prove amenable to class treatment. ((Id. at 327) Reviewing courts consistently look to the allegations of the complaint and the declarations of attorneys representing the plaintiff class to resolve this question. (Ibid.) The Court is now persuaded that the potential differences in individual transactions previously identified are no longer material. Plaintiff no longer relies on salesperson representations. Plaintiff has produced evidence that the differences between manufacturers and financial institutions did not result in any significant difference in the documents. The Court determines that as presently stated the theory of recovery is amenable to class action. It appears from the documentary and testimonial evidence provided that plaintiff can show through common proof from defendant's records that all putative class members were buyers of motorcycles for personal use who entered open-ended financing agreements without being given a single document as required by the Rees-Levering Act. It also appears at this time that the type of damages or restitution sought may also be determined from defendant's records. Even if it transpires there may be individual questions as to damages this does not necessarily preclude a finding that a case is amenable to class treatment. As general rule, if the defendant's liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004,1022) A determination that group, rather than individual, issues predominate does not preclude the consideration of individual issues at trial when those issues legitimately touch upon relevant aspects of the case being litigated. (Ibid.) The question then is whether any individual issues are manageable. On the present record, plaintiff has produced sufficient evidence to persuade the Court that any individual issues can be managed fairly and efficiently in a class setting. (See Brinker (supra) at p. 1033) The fact that non-restitutionary disgorgement is no available in a UCL action does not have any effect on this determination Class Representative with Claims or Defenses typical of the Class and abilty to represent the class Typicality requires the class representatives be similarly situated to members of the class. There is no requirement they be identical. (See e.g. BWI Custom Kitchen v. Owens-Ilinois, Inc. (1987) 191 Cal.App.3d 1341) Plaintiff contends that plaintiff is typical of the class because he entered into a transaction that is the same as the transactions included in the class definition and he asserts he and counsel are adequate and prepared to represent the class. Defendant contends plaintiff cannot meet the typicality prong because his claims are not typical of those individuals who received loans from banks or credit unions or who signed traditional sales contracts and because PCP has a number of unique defenses to plaintiffs claims that threaten absent putative members. Defendant's contentions lack merit. Plaintiff's discovery requests sought the files of consumers who met his class definition. Defendant provided 1816 such files. Customers who had closed-end transactions or who received bank loans were not included in the production and are not included in the proposed DATE: 11/04/2015 MINUTE ORDER Page 5
CASE NO: 34-2011-001 08983..CU-BT -GDS definition. The unique defenses arguments are equally unavailing. Whether or not plaintiff has standing under the UCL and CLRA because he relies on salespersons representations is no longer an issue. The argument regarding the applicability of a one-year statute of limitations lacks merit. Defendant also contends that plaintiff is inadequate to represent the class based on the same lack of standing argument and because he has material conflcts with putative class members. For the reason stated above the lack of standing argument is unpersuasive. The Court has already rejected the contentions based on arbitration clauses and the financial institutions are not parties to this action. Also the Court does not find that plaintiff has "thrown away potentially valuable claims." In any event, any putative class members who wish to pursue such claims may opt-out of the class at the appropriate time. Superiority of Class Action Procedure In light of the above conclusions, the Court is persuaded of the superiority of class action for pursuing the claims set forth in the third amended complaint. All of the claims are based on alleged violations of the Rees-Levering Act. Pursuing those claims as a class action is the fairest method for the parties and the most efficient method for both the parties and the court. The Court is prepared to certify such a class. Accordingly, the Court provisionally grants the motion for class action certification. DATE: 11/04/2015 MINUTE ORDER Page 6