Arch Street Pawn Shop, LLC v. Gunn ( 2017 )

Cite as 2017 Ark. 341
SUPREME COURT OF ARKANSAS
No. CV-17-182
Opinion Delivered: November 30, 2017
ARCH STREET PAWN SHOP, LLC,
AND ROCKY CARTER APPEAL FROM THE PULASKI
APPELLANTS COUNTY CIRCUIT COURT
[NO. 60CV-16-3432]
V.
HONORABLE WENDELL GRIFFEN,
ANITA GUNN AND MAURICE JUDGE
SPENCER
APPELLEES REVERSED AND REMANDED
WITH INSTRUCTIONS TO
DECERTIFY THE CLASS.
SHAWN A. WOMACK, Associate Justice
Arch Street Pawn Shop, LLC, and Rocky Carter (“Arch Street”) appeal the Pulaski
County Circuit Court’s order granting class certification for a group of Arch Street’s
customers including Anita Gunn and Maurice Spencer. Appellees allege that Arch Street’s
business practices violated the anti-usury language of amendment 89 to the Arkansas
Constitution and of the Arkansas Deceptive Trade Practices Act. The circuit court’s order
defined the class as “[a]ny and all persons who have owed, currently owe or will incur debts
directly arising out of pawn transactions with Defendant Arch Street Pawn Shop, LLC
within five years of the date this Complaint was filed and continuing up through and until
judgment may be rendered in this matter.” Arch Street argues on appeal that the circuit
court abused its discretion in determining that a class exists, in determining that the putative
class satisfied the requirements of Arkansas Rule of Civil Procedure 23 (2016), and in
refusing to admit testimony relevant to these issues at the hearing on class certification. We
reverse and remand with instructions to decertify the class.
We review a trial court’s decision to certify a class under an abuse of discretion
standard. See SEECO, Inc. v. Hales, 330 Ark. 402, 954 S.W.2d 234 (1997). When
scrutinizing the trial court’s decision, we look to the evidence in the record to see if the
grant of certification is supported. See Ark. Blue Cross & Blue Shield v. Hicks, 349 Ark. 269,
279, 78 S.W.3d 58, 64 (2002). It is not appropriate for either the trial court or this court to
delve into the merits of the legal claims asserted by the class representatives at the
certification stage; the only inquiries are whether a class exists and, if so, whether that class
satisfies the requirements of Rule 23. Id.
Arch Street argued below and maintains on appeal that certification is improper in
this case because no class is “ascertainable.” Ascertainability is an aspect of the requirement
that a class must exist prior to running that class through Rule 23’s gauntlet of requirements.
See, e.g., Sw. Bell Yellow Pages, Inc. v. Pipkin Enters., Inc., 359 Ark. 402, 405, 198 S.W.3d
115, 117 (2004). The class definition must lay out objective factors from which it is
“administratively feasible” for the circuit court to ascertain “whether a particular individual
is a member of the proposed class.” Id. In Southwestern Bell, for example, the circuit court
certified a class definition including all the defendant’s customers who were charged
“usurious interest charges.” Id. We reversed, however, because the legal dispute in the case
was whether the rates charged amounted to usury at all. Using the class definition to sort
out which customers were or were not members of the class would require a resolution of
the ultimate issue in the case.
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Here, the class definition attempts to lasso all who “owe or will incur debts” springing
from business with Arch Street. Given the nature of the legal claims, however, proceeding
with class litigation on this basis would put the cart before the horse just as in Southwestern
Bell. The ultimate legal issue in this case is whether the transactions Arch Street typically
engages in are “loans” that create “debts” for which appellees “owe” payment as those terms
are contemplated in, or controlled by, the Arkansas Constitution’s anti-usury language. See
Ark. Const. amend. 89, § 3. Determining whether a particular pawn transaction was a loan
and thus created a debt is the sort of predicate question that would have to be determined
by reference to each potential class member’s situation rather than a uniform set of objective
criteria. All customers at Arch Street received similarly phrased pawn tickets. However,
some customers redeemed their pawned items, some surrendered their pledges intending to
redeem them but ultimately did not, and still others pawned items with no intent to redeem
them at all. Proposed class definitions posing such administrative difficulties are not suitable
for certification. Because the class as defined is not ascertainable as a threshold matter, we
hold that the circuit court abused its discretion by proceeding to a Rule 23 analysis and
granting certification. Because we hold that the circuit court erred in certifying the class, we
do not reach Arch Street’s objections to the circuit court’s evidentiary rulings.
Reversed and remanded with instructions to decertify the class.
Williams & Anderson, PLC, by: Heather G. Zachary, Philip E. Kaplan, David M. Powell,
and Alec Gaines, for appellants.
Omavi Shukur, for appellees.
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