The opinion of the court was delivered by: Daniel L. Hovland, District Judge United States District Court
ORDER DENYING PLAINTIFF'S MOTION FOR CLASS CERTIFICATION AND DENYING PLAINTIFF'S MOTION FOR
PARTIAL SUMMARY JUDGMENT
Before the Court are four motions filed by the plaintiff, Bonnie Delorme. Delorme filed motions for class certification and to certify class counsel on October 14, 2011. See Docket Nos. 30 and 39. Defendants Autos, Inc., Robert Opperude, and James Hendershot filed responses in opposition to the motions on November 2 and December 14, 2011. See Docket Nos. 37 and 49. Defendants RW Enterprises and Randy Westby filed responses in opposition to the motions on November 7 and December 14, 2011. See Docket Nos. 40 and 51.
Delorme filed a "Motion for Summary Judgment on Count II, Federal Truth-In-Lending Act Count III, North Dakota Retail Installment Sales Act" on November 22, 2011. See Docket No. 41. The Defendants filed responses in opposition to the motion on December 16, 2011. See Docket Nos. 52 and 53. Delorme filed a reply brief on December 30, 2011. See Docket No. 58.
Delorme filed a "Motion for Summary Judgment on Count I -- Usury" on December 20, 2011. See Docket No. 55. RW Enterprises and Westby filed a response in opposition to the motion on January 13, 2012. See Docket No. 62. Delorme filed a reply brief on January 24, 2012. See Docket No. 63.
Bonnie Delorme is a member of the Turtle Mountain Band of Chippewa Indians and lives on the Turtle Mountain Indian Reservation. On June 2, 2010, Delorme purchased a 2007 Chevrolet from Autos, Inc. (d/b/a/ Global Auto) ("Autos, Inc.") in Minot, North Dakota. See Docket No. 42-3. The total price was $9,485, including a $195 "document administration fee" and a $300 "loan fee." Delorme paid a $1,500 down payment in two installments of $750. Delorme then borrowed $7,985 to cover the remainder of the purchase price. The "Retail Installment Contract and Security Agreement" ("the Contract") between Delorme and Autos, Inc. states that the annual percentage rate of the loan is 25%. Delorme was to repay the loan in 36 monthly installments of $317.48, due on the 15th of each month, beginning on July 15, 2010. Delorme would have to pay a $25 late fee if a payment was more than ten days late. On June 2, 2010, Autos, Inc. assigned its interest in Delorme's contract to RW Enterprises, Inc. ("RW Enterprises"). Delorme had no personal dealings with anyone working for or representing RW Enterprises.
On October 30, 2010, Autos, Inc. repossessed Delorme's vehicle from Delorme's place of work on the Turtle Mountain Indian Reservation, and towed it to Minot. Autos, Inc. did not file a replevin action in the Tribal Court of the Turtle Mountain Indian Reservation. Delorme was not delinquent on her monthly payments. The next day, Delorme got a ride to Minot, paid the monthly payment, a $25 late fee and a tow fee, and retrieved the vehicle.
On December 14, 2010, Delorme sued Autos, Inc. and Robert Opperude in Tribal Court. Delorme requested damages on the following grounds:
A. For damages, actual and punitive, and declaratory relief to remedy the losses accrued to plaintiff by reason of defendants' unlawful exercise of "self-help" repossession within the exterior boundaries of the Turtle Mountain Indian Reservation under the guise of fraud and deception; and without compliance with the applicable provisions of the Tribal Constitution and Code and under the supervision of the Turtle Mountain Tribal Court.
B. For damages, actual and punitive, and declaratory relief to remedy the losses accrued to plaintiff by reason of defendants' violation of the Constitutional rights of the Plaintiff to due process of the law.
C. For damages, actual and punitive, to remedy the losses accrued to plaintiff by reason of the conversion (the unlawful taking and extortionate withholding of the use thereof) of the plaintiff's vehicle.
D. For damages, actual and punitive, to remedy the losses accrued to the plaintiff by reason of Defendants' intentional affliction of emotional and mental distress; and
E. For damages, actual and punitive, to remedy the losses accrued to the plaintiff by reason of Defendants conduct which has caused Plaintiff to suffer public humiliation and embarrassment.
See Docket No. 49-2, p. 2 (errors in original).
On May 14, 2011, the parties entered into a "Settlement, Release, and Indemnity Agreement" providing that Delorme receive the following relief:
a. The sum of $10,000.00 (Ten Thousand Dollars) to [Bonnie Delorme] and her attorneys, Robert Ackre and Larry Baer;
b. The delivery of unencumbered title to the 2007 Chevrolet . . . automobile described in the Complaint.
On January 13, 2011, the plaintiff, Bonnie Delorme, filed a complaint in the state district court of Ward County, North Dakota. See Docket No. 1-1. The complaint alleges the Defendants committed usury (Count I), violated the federal Truth in Lending Act (Count II), violated North Dakota's Retail Installment Sales Act (Count III), violated North Dakota's Unlawful Sales or Advertising Practices Act (Count IV), violated the federal Fair Debt Collection Practices Act (Count V), denied Delorme due process of law and breached the duty of good faith (Count VI), and violated federal and state racketeer influenced and corrupt organizations laws (Counts VII and VIII). See Docket No. 1-1. The Defendants removed the case to federal court on April 27, 2011. See Docket No. 1. Delorme seeks to sue on her own behalf and on behalf of a class defined as "persons known and unknown who have financed the purchase of automobiles with the financing being provided by either Defendant Autos, Inc. or Defendant RW Enterprises, Inc., directly or indirectly, at anytime during the four year period immediately preceding the commencement of this civil action." See Docket No. 1-1.
On July 8, 2011, the Court issued a scheduling order stating that "Plaintiff shall have until September 15, 2011, to file a motion for class certification. Defendants shall have until November 15, 2011, to file a response." See Docket No. 10 (emphasis in original). On October 14, 2011, Delorme filed a "Motion and Brief in Support of Motion to Certify Class Action Status for Causes of Action I, III, IV, VII, and VIII and for the Appointment of Class Counsel." See Docket Nos. 30 and 39. Delorme contends that her proposed class meets the prerequisites of Federal Rule of Civil Procedure 23(a) and should be certified as a class under Rule 23(b)(1) or (3).On November 2, 2011, the Defendants filed a response in opposition to the motion. See Docket No. 37. The Defendants contend Delorme's motion should be declined because it is untimely. They also contend the proposed class members cannot be readily determined to have standing, individual issues predominate over common ones, and that a class action is not superior to other methods.
On November 22, 2011, Delorme filed a "Motion for Summary Judgment on Count II, Federal Truth-in-Lending Act Count III, North Dakota Retail Installment Sales Act." See Docket No. 41. Delorme argues that Autos, Inc. unlawfully failed to include the $300 loan fee and $195 document administration fee when calculating the annual percentage rate, and the contract does not state the proper annual percentage rate. RW Enterprises and Randy Westby filed a response in opposition to the motion on December 16, 2011. See Docket No. 52. RW Enterprises and Westby contend there are questions of fact as to whether RW Enterprises, as an assignee, can be held liable for Autos, Inc.'s alleged Truth in Lending Act violation, whether such a violation was willful, and whether the loan fee and document administration fee constitute "finance charges." Autos, Inc. and Robert Opperude filed a response in opposition to the motion on December 16, 2011. See Docket No. 53. They contend the loan fee and document administration fee do not constitute finance charges.
On December 20, 2011, Delorme filed a "Motion for Summary Judgment on Count I -- Usury." See Docket No. 55. Delorme alleges the real interest rate charged by Autos, Inc. was usurious. The Defendants filed responses in opposition to the motion on January 13, 2012. See Docket Nos. 60 and 62. They contend that North Dakota's statute prohibiting usury (N.D.C.C. § 47-14-09) is inapplicable because the transaction is governed by North Dakota's Retail Installment Sales Act (N.D.C.C. ch. 51-13).
Rule 23 of the Federal Rules of Civil Procedure governs a district court's consideration of a motion for class certification. The decision whether to certify a class action is left to the district court's "broad discretion." Rattray v. Woodbury Cnty, Iowa, 614 F.3d 831, 835 (8th Cir. 2010) (citing In re Milk Prods. Antitrust Litig., 195 F.3d 430, 436 (8th Cir. 1999); Bishop v. Comm. on Prof'l Ethics & Conduct, 686 F.2d 1278, 1287 (8th Cir. 1982)). In determining whether to certify a class action, "the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (quoting Miller v. Mackey Int'l, 452 F.2d 424, 427 (5th Cir. 1971). "[T]he court must conduct a 'rigorous analysis' to ensure that the prerequisites of Rule 23 are satisfied." Elizabeth M. v. Montenez, 458 F.3d 779, 784 (8th Cir. 2006) (quoting Gen. Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 161 (1982)). "The district court may grant a motion to certify a class action only if the putative class representative satisfies all four of the requirements set forth in Federal Rule of Civil Procedure 23(a), and the class action satisfies one of the three subsections of Federal Rule of Civil Procedure 23(b)." Rattray, 614 F.3d at 834-35 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-14 (1997)). The plaintiff bears the burden of satisfying the requirement of Rule 23. Coleman v. Watt, 40 F.3d 255, 258-59 (8th Cir. 1994).
The Court notes that Delorme's "Motion to Certify Class Action Status for Causes of Action I, III, IV, VII, and VIII and for the Appointment of Class Counsel" was not timely filed. On July 8, 2011, Magistrate Judge Charles S. Miller, Jr. issued a scheduling order providing that Delorme had until September 15, 2011, to file a motion for class certification. See Docket No. 10. Delorme's motion for class certification was filed almost one month after the deadline, October 14, 2011. See Docket No. 30. Delorme has not provided an explanation for the late filing. The Defendants request that the Court dismiss the motion for failure to meet the deadline. The Court, in the exercise of its broad discretion, will consider the merits of the motion despite the late filing.
Rule 23(a) of the Federal Rules of Civil Procedure sets forth the prerequisites to a class action. It provides:
(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(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). "In common shorthand, the requirements for class actions under Rule 23(a) are (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation." Rattray, 614 F.3d at 835 (citing Amchem, 521 U.S. at 613). "Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule--that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011).
Delorme bears the burden of proving that her proposed class meets the prerequisites of Rule 23(a). Coleman, 40 F.3d at 258-59. In the brief in support of her motion, Delorme makes the following assertions regarding the Rule 23(a) prerequisites:
(1) the class is so numerous that joinder of all members is impracticable because the class consists of more than 500 members.
(2) there are questions of both law and fact common to the class because all members of the proposed class have purchased motor vehicles on credit from Defendant Autos, Inc., and that credit has been indirectly provided by by [sic] Defendant RW Enterprises, Inc., through a common scheme or devise;
(3) the claims of the representative party is typical of the claims of the class * in every instance, the members of the members of the class were charged loan fees
* in every instance, the members of the class were charged an un-itemized document administration fees
* in every instance, the costs of both the loan fees charged and the document administration fees charged were not included within the disclosure of the cost of borrowing funds from the Defendants, materially understating the true cost of borrowing funds from the Defendants;
* in every instance, each member's contract provided for the assessment of a $25.00 Late Charge upon all payments made more than ten days late;
(4) the representative party will fairly and adequately protect the interests of the class.
See Docket No. 31 (errors in original). Delorme provided the following additional justifications for granting class action status:
(A) the class members' interests in individually controlling the prosecution of separate actions is minimal -- all members of the class have similar interests, while the common questions of law and fact predominate over any questions affecting individual members only;
(B) the extent and nature of this civil litigation concerning the facts of this case has already been brought by the named plaintiffs and no others, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy;
(C) to conserve judicial time and resources, there exists the desirability to concentrate the litigation of these claims in the United States District Court;
(D) the difficulties in managing this civil action as a class action are minimal due to the proximity of most affected parties, knowledge of the names and addresses of each member of the class, and documentation of the nuances of damages unique to each member of the class; and
(E) to the best of plaintiffs' knowledge, no other actions by individual member of the class which plaintiffs seek to represent have, to this date, been initiated.
The Defendants contend that Delorme and the proposed class members do not share sufficiently common questions of law or fact.
Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury. This does not mean merely that they "have suffered the same injury," Falcon, supra, at 157 . . . . Their claims must depend upon a common contention. . . . That common contention, moreover, must be of such a nature that it is capable of classwide resolution--which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.
Wal-Mart Stores, Inc., 131 S. Ct. at 2551.
Delorme has filed over 2,900 pages of loan documents from proposed class members. See Docket Nos. 46 through 46-63. Even a cursory review of the loan documents reveals that not all of the proposed class members were charged the same fees or interest rate as Delorme. Some were charged a document administration fee of $65, some were charged a fee of $195. Some were charged a loan fee of $200, some $300, and some no loan fee at all. Therefore, Delorme's assertion that "in every instance, the members of the members of the class were charged loan fees" is not accurate. See Docket No. 31. In addition, the Court would need to engage in an examination of each particular loan transaction to determine whether the Defendants violated state law or federal law. The Court finds by a preponderance of the evidence that Delorme has not met her burden under Rule 23(a)(2) of showing there are questions of law or fact common to the class.
The Defendants also contend that Delorme will not fairly and adequately protect the interests of the class. The Eighth Circuit Court of Appeals has explained:
Rule 23(a)(4) requires that "the representative parties will fairly and adequately protect the interests of the class." This requirement depends upon two factors: "(a) the plaintiff's attorney must be qualified, experienced, and generally able to conduct the proposed litigation, and (b) the plaintiff must not have interests antagonistic to those of the class. Eisen v. Carlisle and Jacquelin, 391 F.2d 555, 562 (2d Cir. 1968)." Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239, 247 (3rd Cir. 1975), cert. denied, 421 U.S. 1011. Accord, [Jenson v. Continental Financial Corporation, supra, 404 F. Supp. 806, 811 (D. Minn. 1975)].
United States Fid. & Guaranty Co. v. Lord, 585 F.2d 860, 873 (8th Cir. 1978).
The Defendants argue that Delorme's interests are adverse to those of the class because she owns her vehicle outright and no longer owes the Defendants for the loan. In the companion Tribal Court action, the parties reached a settlement in which the Defendants agreed to pay Delorme $10,000 and deliver to Delorme unencumbered title to the 2007 Chevrolet. See Docket No. 49-3. The settlement agreement also states:
This agreement in no manner affects the claims and defenses now pending in a separate civil action (Case No. 4:11-cv-00039) presently before the United States District Court for the District of North Dakota, which alleges acts and subject matter not within the jurisdiction of the Tribal Court. This agreement shall not serve or act as a collateral estoppel, res judicata, or any admission to any of the factual or legal questions at issue before the Federal Court civil action.
See Docket No. 49-3. This Court is not bound by this statement in the parties' Tribal Court settlement agreement. Delorme bears the burden of showing that she will fairly and adequately protect the interests of the class. In the brief in support of her motion, she cursorily states, "[T]he representative party will fairly and adequately protect the interests of the class." The fact that Delorme owns clear title to her vehicle and no longer owes money to the Defendants makes her situation significantly different from many of the proposed class members. The Court finds by a preponderance of the evidence that Delorme has not met her burden under Rule 23(a)(4) of showing that she will fairly and adequately represent the interests of the class. Therefore, Delorme's motion for class certification and to certify class counsel is denied. In addition, the motion is denied as it is untimely.
Delorme contends the interest rate charged on her loan is usurious and in violation of N.D.C.C. § 47-14-09, which provides, in part:
1. Except as otherwise provided by the laws of this state, a person, either directly or indirectly, may not take or receive, or agree to take or receive, in money, goods, or things in action, or in any other way, any greater sum or greater value for the loan or forbearance of money, goods, or things in action than five and one-half percent per annum higher than the current cost of money as reflected by the average rate of interest payable on United States treasury bills maturing in six months in effect for North Dakota for the six months immediately preceding the month in which the transaction occurs, as computed and declared on the last day of each month by the state banking commissioner, but that in any event the maximum allowable interest rate ceiling may not be less than seven percent, and in the computation of interest the same may not be compounded; provided, however, that a minimum interest charge of fifteen dollars may be made. A contract may not provide for the payment of interest on interest overdue, but this section does not apply to a contract to pay interest at a lawful rate on interest that is overdue at the time such contract is made. Any violation of this section is deemed usury.
2. This section does not apply to a: . . .
e. Loan made by a lending institution which is regulated or funded by an agency of a state or of the federal government.
The Defendants contend the transaction between Delorme and Autos, Inc. is not subject to N.D.C.C. § 47-17-09. They argue that North Dakota's Retail Installment Sales Act, N.D.C.C. ch. 51-13, governs the transaction. Section 51-13-01 of the North Dakota Century Code provides the following definitions:
4. "Finance charge" means the amount which the retail buyer contracts to pay or pays for the privilege of purchasing the personal property to be paid for by the buyer in installments; it does not include the amounts, if any, charged for insurance premiums, delinquency ...