Edwards v. First American Corp.

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUN 21 2010
MOLLY C. DWYER, CLERK
DENISE P. EDWARDS, individually and Nos. 08-56536 U.S. COURT OF APPEALS
on behalf of all others similarly situated, 08-56538
Plaintiff - Appellant, D.C. No. CV-07-03796-SJO-FFM
v.
MEMORANDUM *
THE FIRST AMERICAN
CORPORATION; FIRST AMERICAN
TITLE INSURANCE COMPANY,
Defendants - Appellees.
Appeals from the United States District Court
for the Central District of California
S. James Otero, District Judge, Presiding
Argued and Submitted February 4, 2010
Pasadena, California
Before: B. FLETCHER, PREGERSON, and GRABER, Circuit Judges.
Plaintiff Denise P. Edwards appeals with respect to the denials of her two
motions for class certification and her motion for nationwide discovery in her suit
against Defendants The First American Corporation and its wholly owned
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
subsidiary, First American Title Insurance Company (collectively, "Defendants").
The complaint alleged a national scheme by which Defendants paid millions of
dollars to individual title companies and received written exclusive referral
agreements in return. In an opinion filed this date, we addressed Defendants’
motion to dismiss. Here, we address Plaintiff’s appeal.
We review for abuse of discretion the district court’s determination of class
certification. Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003). We also
review for abuse of discretion whether or not discovery is permitted in a class
action. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 210 (9th Cir. 1975).
1. The district court did not abuse its discretion in denying the nationwide
class. The party seeking certification bears the burden of showing that each of the
four requirements of Federal Rule of Civil Procedure 23(a) and at least one
requirement of Rule 23(b) have been met. Zinser v. Accufix Research Inst., Inc.,
253 F.3d 1180, 1186 (9th Cir.), amended by 273 F.3d 1266 (9th Cir. 2001).
Plaintiff failed to meet that burden on the present record.
2. The district court abused its discretion in denying nationwide discovery.
Plaintiff must be given "an opportunity to present evidence as to whether a class
action [is] maintainable," and such an opportunity requires "enough discovery to
obtain the material." Doninger v. Pac. Nw. Bell, Inc. 564 F.2d 1304, 1313 (9th
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Cir. 1977). We hold that Plaintiff should be allowed to conduct nationwide
discovery and, following that discovery, Plaintiff may renew her motion for
certification of a nationwide class.
3. The district court abused its discretion in denying the Tower City (Ohio)
class. With respect to liability, there is a single, overwhelming common question
of fact: whether the arrangement between Tower City and First American violated
the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2607 ("RESPA").
The district court erred when it held that individualized issues predominated
because individualized proof would be necessary to determine whether Tower City
had referred each class member to First American Title, who was in the class, and
what damages each class member suffered. The second two factors clearly do not
defeat class certification; every class action requires identification of class
members, and most require individual proof of loss. See Yokoyama v. Midland
Nat’l Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010) ("[T]he amount of
damages is invariably an individual question and does not defeat class action
treatment." (internal quotation marks omitted)).
To show that a "referral" was made by Tower City would not require a great
amount of individualized proof. A "referral" is "any oral or written action directed
to a person which has the effect of affirmatively influencing the selection by any
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person of a provider of" title insurance. 24 C.F.R. 3500.14(f). Plaintiffs contend
that Tower City was contractually obligated to refer customers to First American
Title, which, if true, would be common proof of the "action" element of a referral.
The reliance or causation element requires a more individualized
determination, but when misrepresentations are made to a class of similarly
situated individuals, the requirement that the Plaintiff prove reliance or causation
will not, by itself, defeat class certification. See Fed. R. Civ. P. 23(b)(3) advisory
committee’s note ("[A] fraud perpetrated on numerous persons by the use of
similar misrepresentations may be an appealing situation for a class action . . .
[unless] there [is] material variation in the representations made or in the kinds or
degrees of reliance by the persons to whom they were addressed."). Evidence
submitted by Plaintiff demonstrates that title agents, in this case Tower City, rather
than purchasers, choose which title insurance underwriter to use. Indeed, RESPA
was motivated by the fact that "reverse competition" is widespread in the title
insurance market. In support of their contention that title agents do not always
pick the title insurance underwriter, Defendants point to an affidavit stating that,
"[f]rom time to time," banks and other lenders involved in a real estate purchase,
not the title agent, pick the title insurance underwriter. This statement is plainly
insufficient to show that class members are not similarly situated.
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Because individualized questions of law and fact do not predominate, the
district court’s denial of Plaintiff’s motion to certify the Tower City class was an
abuse of discretion.
AFFIRMED in part; REVERSED in part and REMANDED. The parties
shall bear their own costs on appeal.
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