Blue Ash Auto, Inc. v. Progressive Cas. Ins. Co. ( 2016 )

[Cite as Blue Ash Auto, Inc. v. Progressive Cas. Ins. Co., 2016-Ohio-7965.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
Nos. 104251 and 104252
BLUE ASH AUTO, INC., ET AL.
PLAINTIFFS-APPELLANTS
vs.
PROGRESSIVE CASUALTY INS. CO., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case Nos. CV-12-791816 and CV-14-821172
BEFORE: E.A. Gallagher, P.J., Boyle, J., and S. Gallagher, J.
RELEASED AND JOURNALIZED: December 1, 2016
ATTORNEYS FOR APPELLANT
James B. Rosenthal
Joshua R. Cohen
Cohen Rosenthal & Kramer
Hoyt Block Building, Suite 400
700 West St. Clair Avenue
Cleveland, Ohio 44113
Dennis A. Becker
526 Wards Corner Road
Suite A
Loveland, Ohio 45140
Erica L. Eversman
Eversman Law Offices
846 N. Cleveland Massillon Road
Akron, Ohio 44333
Peter D. Traska
Traska Law Firm, L.L.C.
4352 Pearl Road, Suite A
Cleveland, Ohio 44109
ATTORNEYS FOR APPELLEES
Michael Edward Mumford
Ernest E. Vargo
Baker & Hostetler L.L.P.
Key Tower, Suite 2000
127 Public Square
Cleveland, Ohio 44114
Michael R. Nelson
Sutherland Asbill & Brennan L.L.P.
1114 Avenue of the Americas
40th Floor
New York, New York 10036
EILEEN A. GALLAGHER, P.J.:
{¶1} Plaintiffs-appellants Blue Ash Auto, Inc., Finney Automotive Company, Inc.,
Russell Westfall and Westfall Auto Sales L.L.C., appeal the decision of the Cuyahoga
County Court of Common Pleas denying class action certification on their claims against
defendants-appellees (collectively, “Progressive”). For the following reasons, we
affirm.
Facts and Procedural Background
{¶2} In this consolidated class action case, appellants are independent auto body
shops that have performed repairs on vehicles insured under the policies of Progressive.
Appellants allege that Progressive tortiously interferes with their business practices by
dictating what services and parts it is willing to pay for when appellants are tasked with
repairing a Progressive insured automobile. Appellants also allege that Progressive
dictates the labor rates that it is willing to pay without regard to a particular shop’s rates.
Apellants allege that these limitations do not necessarily allow for them to restore an
insured’s car to its original, pre-loss condition and that the limitations violate both Ohio
law and Progressive’s own insurance policies. Appellants seek damages for parts and
labor expended in excess of Progressive’s limitations. Appellants also seek declaratory
relief in the form of an order requiring Progressive to indemnify them from any liability
arising from their compliance with Progressive’s restrictions.
{¶3} Progressive argues that its practices are part of the competitive market for
auto repair services in Ohio and that its own “Direct Repair Program” (“DRP”) auto body
shops are able to repair an insured’s vehicle to its pre-loss condition under the same terms
offered to plaintiffs.
{¶4} Appellants sought to prosecute their claims for tortious interference and
declaratory judgment on behalf of the following class:
All Ohio registered auto body repair shops, or registered individuals, with
the exception of those members of Progressive’s Direct Repair Program that
have performed physical auto body repairs paid for directly or indirectly,
partially or in full, by Progressive as a result of Automobile insurance
policies issued by Progressive, from August 7, 2005 through present.
{¶5} The trial court denied class certification on both of appellants claims finding
that appellants failed to meet their burden under four of the seven requirements set forth
in Civ.R. 23(A).
Law and Analysis
{¶6} Appellants first assignment of error argues that the trial court abused its
discretion in holding that appellants failed to satisfy the prerequisites of Civ.R. 23(A).
Under applicable law, this assignment of error necessarily overlaps with both appellants
second and third assignments of error. Therefore, we address it within our analysis of
those errors.
{¶7} We note that we do not reach the merits of appellants claims against
Progressive. This appeal is strictly limited to reviewing the trial court’s decision to deny
class certification. We consider the substance of appellants claims only to the extent that
they have a relevant bearing on that analysis.
Standard of Review for Class Certification under Civ.R. 23
{¶8} A trial court has broad discretion in determining whether to certify a class
action, and an appellate court should not disturb that determination absent an abuse of
discretion. Marks v. C.P. Chem. Co., 31 Ohio St. 3d 200, 509 N.E.2d 1249 (1987),
syllabus. That discretion, however, is not unlimited. It must be exercised within the
framework of Civ.R. 23. Hamilton v. Ohio Sav. Bank, 82 Ohio St. 3d 67, 70, 694 N.E.2d
442 (1998). “‘A determination by a trial court regarding class certification that is clearly
outside the boundaries established by Civ.R. 23, or that suggests that the trial court did
not conduct a rigorous analysis into whether or not the prerequisites of Civ.R. 23 are
satisfied, will constitute an abuse of discretion.’” Mozingo v. 2007 Gaslight Ohio,
L.L.C, 9th Dist. Summit Nos. 26164 and 26172, 2012-Ohio-5157, ¶ 8, quoting Hill v.
Moneytree of Ohio, Inc., 9th Dist. Lorain No. 08-CA-009410, 2009-Ohio-4614, ¶ 9.
{¶9} The application of the abuse of discretion standard to a trial court’s decision
to certify a class “is grounded not in credibility assessment, but in the trial court’s special
expertise and familiarity with case-management problems and its inherent power to
manage its own docket.” Hamilton at 70. “[A]ny doubts about adequate
representation, potential conflicts, or class affiliation should be resolved in favor of
upholding the class, subject to the trial court’s authority to amend or adjust its
certification order as developing circumstances demand, including the augmentation or
substitution of representative parties.” Baughman v. State Farm Mut. Auto. Ins. Co., 88
Ohio St. 3d 480, 487, 727 N.E.2d 1265 (2000); Gattozzi v. Sheehan, 2016-Ohio-5230, 57
N.E.3d 1187, ¶ 17 (8th Dist.). An abuse of discretion occurs where the trial court’s
decision is unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore, 5 Ohio
St.3d 217, 219, 450 N.E.2d 1140 (1983).
Requirements for Class Certification under Civ.R. 23(A)
{¶10} Seven prerequisites must be met before a class may be properly certified as a
class action under Civ.R. 23: (1) an identifiable class must exist and the definition of the
class must be unambiguous; (2) the named plaintiff representatives must be members of
the class; (3) the class must be so numerous that joinder of all the members is
impracticable; (4) there must be questions of law or fact common to the class; (5) the
claims or defenses of the representatives 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 requirements under Civ.R. 23(B) must be met. Hamilton,
82 Ohio St. 3d at 71, 694 N.E.2d 442, citing Warner v. Waste Mgmt., 36 Ohio St. 3d 91,
96, 521 N.E.2d 1091 (1988); Civ.R. 23.
{¶11} The party seeking to maintain a class action “has the burden of
demonstrating that all factual and legal prerequisites to class certification have been met.”
Repede v. Nunes, 8th Dist. Cuyahoga Nos. 87277 and 97469, 2006-Ohio-4117, ¶ 14,
citing Gannon v. Cleveland, 13 Ohio App. 3d 334, 335, 469 N.E.2d 1045 (8th Dist.1984);
see also Cullen v. State Farm Mut. Auto. Ins. Co., 137 Ohio St. 3d 373, 2013-Ohio-4733,
999 N.E.2d 614, ¶ 15 (“a party seeking certification pursuant to Civ.R. 23 bears the
burden of demonstrating by a preponderance of the evidence that the proposed class
meets each of the requirements set forth in the rule.”). If the party seeking to maintain a
class fails to meet any one of the Civ.R. 23 requirements, class certification must be
denied.
“Rigorous Analysis”
{¶12} The trial court is required to “carefully apply the class action requirements”
and to conduct a “rigorous analysis” into whether the prerequisites for class certification
under Civ.R. 23 have been satisfied. Hamilton at 70. This entails “resolv[ing] factual
disputes relative to each [Civ.R. 23] requirement and to find, based on those
determinations, other relevant facts, and the applicable legal standard, that the
requirement is met.” Cullen at ¶ 16. This “rigorous analysis” often requires the trial
court to “[look] into the enmeshed legal and factual issues that are part of the merits of
the plaintiff’s underlying claims,” Felix v. Ganley Chevrolet, Inc., 145 Ohio St. 3d 329,
2015-Ohio-3430, 49 N.E.2d 1224, ¶ 26, considering “what will have to be proved at trial
and whether those matters can be presented by common facts,” Cullen at ¶ 17.
However, the trial court may examine the underlying merits of the plaintiff’s claims only
to the extent necessary to determine whether the plaintiff has satisfied the Civ.R. 23
requirements. Id.; Felix at ¶ 26; Stammco, L.L.C. v. United Tel. Co. of Ohio, 136 Ohio
St.3d 231, 2013-Ohio-3019, 994 N.E.2d 408, ¶ 44. The abuse of discretion standard
applies both to the trial court’s “ultimate decision” regarding class certification as well as
its determination regarding each of the Civ.R. 23 requirements.
{¶13} The two arguments presented by appellants are that the trial court erred in
denying class certification on (1) their declaratory judgment claim and (2) their tortious
interference claim. Subsumed within these arguments is appellants first assignment of
error. Pursuant to the seventh requirement for class certification under Civ.R. 23(A), the
trial court found that the above claims failed to satisfy the requirements of Civ.R.
23(B)(2) and (B)(3), respectively. For the reasons set forth below, we find no abuse of
discretion in the trial court’s conclusions.
I. Class Certification of Appellants Declaratory Judgment Claim
{¶14} The trial court found that appellants proposed class certification of their
declaratory judgment claim did not satisfy the requirements of Civ.R. 23(B)(2).
{¶15} Civ.R. 23(B)(2) provides that class treatment may be maintained when “the
party opposing the class has acted or refused to act on grounds generally applicable to the
class, thereby making appropriate final injunctive relief or corresponding declaratory
relief with respect to the class as a whole.” “Claims for individualized relief are not
compatible with Civ.R. 23(B)(2) because the relief sought must affect the entire class at
once.” WalMart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S. Ct. 2541, 180 L. Ed. 2d 374
(2011). In other words:
[Civ.R. 23(B)(2)] applies only when a single injunction or declaratory
judgment would provide relief to each member of the class. It does not
authorize class certification when each individual class member would be
entitled to a different injunction or declaratory judgment against the
defendant. Similarly, it does not authorize class certification when each
class member would be entitled to an individualized award of monetary
damages.
Cullen, 137 Ohio St. 3d 373, 2013-Ohio-4733, 999 N.E.2d 614, ¶ 21, quoting Walmart at
2557.
{¶16} Furthermore, certification depends on “what type of relief is primarily
sought, so where the injunctive relief is merely incidental to the primary claim for money
damages, Civ.R. 23(B)(2) certification is inappropriate.” Id. at ¶ 22, quoting Wilson v.
Brush Wellman, Inc., 103 Ohio St. 3d 538, 2004-Ohio-5847, 817 N.E.2d 59, ¶ 17.
{¶17} Here the trial court concluded that appellants cannot maintain their Civ.R.
23(B)(2) declaratory judgment claim because it is merely incidental to their damages
claim. Appellants argue that the injunctive relief sought under their Civ.R. 23(B)(2)
claim is separate and inverse from the damages sought under their Civ.R. 23(B)(3)
tortious interference claim. Appellants argue that their Civ.R. 23(B)(2) claim seeks
indemnification for potential liability arising from their adherence to Progressive’s
mandates while their Civ.R. 23(B)(3) claim seeks unrelated damages for situations in
which they perform necessary repairs notwithstanding Progressive’s refusal to pay.
{¶18} While the two types of damages may be distinguishable, we find this to be a
distinction without difference. Appellants Civ.R. 23(B)(2) claim would lead to
individualized awards of monetary damages for each class member in the event that a
class member were to be sued for an allegedly faulty repair. More importantly, the Ohio
Supreme Court denied Civ.R. 23(B)(2) class certification under substantially the same
circumstances in Cullen holding that “claims for declaratory relief that merely lay a
foundation for subsequent determinations regarding liability or that facilitate an award of
damages do not meet the requirement for certification as set forth in Civ.R. 23(B)(2).”
Cullen at ¶ 27, citing Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 893 (7th
Cir.2011) (“this case is unsuitable for class certification: An injunction would not provide
“final” relief as required by Rule 23(B)(2). An injunction is not a final remedy if it would
merely lay an evidentiary foundation for subsequent determinations of liability”).
{¶19} It is easy to understand the Supreme Court’s hesitance to so extend Civ.R.
23(B)(2) class certifications where, as here, establishing the applicability of the desired
indemnification would require a case-by-case analysis of facts pertinent to the repair.
Whether Progressive rightfully or wrongfully refused to pay for a particular service or
part would need to be examined in each instance of an allegedly faulty repair. A myriad
of other issues would also need to be resolved as well. Causation in particular would be
a case-by-case dispute that cannot be resolved by the appellants desired relief. For
example: Was the allegedly defective repair in a particular incident due to Progressive’s
mandates or the body shop’s own negligent labor performance within those mandates?
Was the shop’s desired service or part appropriate and necessary for each particular repair
that is later deemed faulty? How can the trial court deem that Progressive is always liable
when it and the shop diverge on the manner or type of repair to be performed without the
individualized context of every possible car repair that may occur? As the trial court
noted, any indemnification would be premised on an initial decision that the estimate
provided by Progressive was inadequate based on the unique facts of each case. These
issues simply cannot be resolved on a class-wide basis with any finality without
considering the facts pertinent to a particular instance of negligent repair.
{¶20} Because appellants’ desired declaration would merely lay the foundation for
subsequent individualized determinations of liability, we cannot say the trial court abused
its discretion in denying class certification on appellants Civ.R. 23(B)(2) declaratory
judgment claim.
{¶21} Appellants second assignment of error is overruled. Appellants first
assignment of error is also denied as it applies to the Civ.R. 23(B)(2) class certification.
II. Class Certification of Appellants Tortious Interference Claim
{¶22} The trial court also found that appellants proposed class certification of their
tortious interference claim did not satisfy the predominance requirement of Civ.R.
23(B)(3).
{¶23} For a class action to be certified under Civ.R. 23(B)(3), the trial court must
make two findings: (1) that “the questions of law or fact common to the members of the
class predominate over any questions affecting only individual members” and (2) that “a
class action is superior to other available methods” for the fair and efficient adjudication
of the controversy. Civ.R. 23(B)(3).
{¶24} A “key purpose” of the predominance requirement “is to test whether the
proposed class is sufficiently cohesive to warrant adjudication by representation.” Felix
v. Ganley Chevrolet, Inc., 145 Ohio St. 3d 329 2015-Ohio-3430, 49 N.E.3d 1224, ¶ 35,
citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623, 117 S. Ct. 2231, 138 L. Ed. 2d
689 (1997). “‘For common questions of law or fact to predominate it is not sufficient
that such questions merely exist; rather, they must represent a significant aspect of the
case.” Cullen, 137 Ohio St. 3d 373, 2013-Ohio-4733, 999 N.E.2d 614, ¶ 30, quoting
Marks v. C.P. Chem. Co., 31 Ohio St. 3d 200, 204, 509 N.E.2d 1249 (1987). They must
also be “capable of resolution for all members in a single adjudication.” Id. at ¶ 30,
quoting Marks at 204.
{¶25} It is not, however, sufficient for class certification under Civ.R. 23(B)(3)
that the allegations of the complaint raise “a colorable claim.” The plaintiff must
demonstrate and the trial court must find “that questions common to the class in fact
predominate over individual ones.” Cullen at ¶ 33-34.
{¶26} Civ.R. 23(B)(3) sets forth a list of factors “pertinent” to the predominance
and superiority findings required under Civ.R. 23(B)(3): (1) “the class members’ interests
in individually controlling the prosecution or defense of separate actions”; (2) “the extent
and nature of any litigation concerning the controversy already begun by or against class
members”; (3) “the desirability or undesirability of concentrating the litigation of the
claims in the particular forum” and (4) “the likely difficulties in managing a class action.”
Civ.R. 23(B)(3)(a)-(d). This list, however, is not exhaustive; other relevant factors may
also be considered. State ex rel. Davis v. Pub. Emps. Retirement Bd., 111 Ohio St. 3d 118,
2006-Ohio-5339, 855 N.E.2d 444, ¶ 27-28.
{¶27} In Cullen, the Ohio Supreme Court rejected class certification under Civ.R.
23(B)(3) where the plaintiffs were unable to establish by common proof a breach of duty
by the defendants but would rather require individualized inquiries for each plaintiff.
The Cullen court stated, “To meet the predominance requirement, a plaintiff must
establish that issues subject to generalized proof and applicable to the class as a whole
predominate over those issues that are subject to only individualized proof.” Cullen at ¶
30, quoting Randleman v. Fidelity Natl. Title Ins. Co., 646 F.3d 347, 352-353 (6th
Cir.2011).
{¶28} The same flaw exists in this case. Any common questions of law or fact in
this instance fail to predominate over the voluminous individual questions that would
need to be resolved. The trial court aptly pointed out that an individualized inquiry
would be necessary for not just each potential class member, but every separate instance
where such class members conducted a repair under the alleged limitations imposed by
Progressive. The court would have to examine each repair and consider whether the
additional services or parts that Progressive allegedly denied to the particular class
member were necessary to restore the damaged vehicle in question to its pre-loss
condition.
{¶29} Appellants argue that such an individualized inquiry would not be necessary
but their reasoning is flawed. They ask that the trial court accept as established fact that
each additional service, part and higher labor rate that Progressive allegedly denied them
was necessary to properly repair every conceivable damaged vehicle. Appellants’ theory
leaves no room for Progressive to exercise its right to dispute these facts in this litigation.
Because the resolution of these disputes would require a case-by-case analysis of every
Progressive repair conducted by every member of the class, we cannot say that common
questions of law or fact predominate over the looming mass of individualized inquires
that would dominate this litigation.
{¶30} We find no abuse of discretion in the trial court’s decision to deny class
certification on appellants tortious interference claim under Civ.R. 23(B)(3).
{¶31} Appellants first and third assignments of error are overruled.
{¶32} The judgment of the trial court is affirmed.
It is ordered that appellee recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
_______________________________________________
EILEEN A. GALLAGHER, PRESIDING JUDGE
MARY J. BOYLE, J., and
SEAN C. GALLAGHER, J., CONCUR