Opinion
CV-18-01637-PHX-DLR
04-25-2023
Crossfirst Bank, et al., Plaintiffs, v. Vieste SPE LLC, et al., Defendants.
ORDER
DOUGLAS L. RAYES, UNITED STATES DISTRICT JUDGE
Pending before the Court is Plaintiffs' motion for class certification, which Defendants have uniformly opposed in responsive briefing. (Docs. 231, 245, 246, 250, 251, 261.) The Court denies the motion.
This action arises from Plaintiffs' purchase of $28,935,000 in industrial development bonds (“Bonds”) described in Defendants' Official Statement dated April 17, 2013. The operative complaint alleges aiding and abetting fraud, negligent misrepresentation, and common law fraud claims and makes class action allegations.
The operative complaint also restates other, dismissed claims “to preserve them for appeal.” (Doc. 209 at 28.)
A plaintiff seeking class certification bears the burden to prove the prerequisites to certifying a class:
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. . . . [S]ometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question, and that
certification is proper only if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011) (quotation marks and citations omitted). “[P]laintiffs must prove the facts necessary to carry the burden of establishing that the prerequisites of Rule 23 are satisfied by a preponderance of the evidence.” Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 665 (9th Cir. 2022).
Among other things, a party must prove “numerosity,” that is, that a putative class is “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a). The numerosity requirement is satisfied when the putative class consists of at least 40 members. Ely v. Saul, 572 F.Supp.3d 751, 771 (D. Ariz. 2020).
Plaintiffs here “believe” that the putative class consists of over 200 members (Doc. 231 at 4; see Doc. 261 at 5-6), which they will “easily ascertain[ from] Defendants' own records in addition to other documents from the bond sale” (Doc. 231 at 8). Yet the deadline to conduct class certification discovery has passed (Doc. 243), and Plaintiffs-with several thousand of Defendants' documents in hand-have offered no evidence to support their numerosity argument. On the contrary, the evidence suggests otherwise. The Lawson Defendants introduced evidence that there were only seven purchasers of the Bonds. (Doc. 245-1 at 24.) And the Vieste Defendants and Sims Defendants both identified deposition testimony wherein the named Plaintiffs admitted they didn't know how many putative class members there were. (Docs. 246-1 at 6; 246-3 at 13; 246-4 at 8; 250 at 5.)
Plaintiffs argue that they need not produce evidence in support of their numerosity argument as that would require inappropriately broaching the merits of the claims. (Doc. 261 at 5.) But class-certification analysis may “entail some overlap with the merits of the plaintiff's underlying claim.” Dukes, 564 U.S. at 351, and the Court may consider merits questions to the extent they touch upon the Rule 23 prerequisites, Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455, 466 (2013).
Plaintiffs also claim that it's “simply too early for defendants to argue, let alone prevail, that evidence supporting Plaintiffs' claims is lacking.” (Doc. 261 at 5.) But Plaintiffs conducted class-certification discovery and benefited from two extensions of time to complete it. The time is ripe for Defendants to argue that Plaintiffs have not produced any evidence to support its numerosity argument.
Finally, Plaintiffs argue that “general knowledge and common sense indicate that [the class] is large.” (Doc. 231 at 3 (citing Perez-Olano v. Gonzalez, 248 F.R.D. 248, 256 (C.D. Cal. 2008)). This is unavailing. For starters, the full quote in Perez notes that general knowledge and common sense might be useful “where the exact size of the class is unknown.” 248 F.R.D. at 256 (emphasis added). The issue here isn't one of exactitude- it's one of magnitude, with a yawning gap between an evidentiarily established putative class size of 7 compared to Plaintiffs' speculated putative class size of 200. More importantly, if general knowledge and common sense would apply here, the Court would expect it possible to marshal some evidence of the scores of putative class members after the close of class-certification discovery. Plaintiffs have presented no such evidence, either in their motion for class certification, or in reply to Defendants' charges that Plaintiffs failed to offer any evidence in support of their numerosity argument.
Plaintiffs have not proven by a preponderance of the evidence that the putative class size exceeds 7 members, much less the speculation that the putative class exceeds 200 members. Because Plaintiffs have not established numerosity, the Court need not address the other Rule 23 requirements and will deny class certification. Richards v. Del Webb Communities, Inc., No. CV-11-368-PHX-SMM, 2012 WL 12792184, at *8 (D. Ariz. Sept. 5, 2012).
IT IS ORDERED that Plaintiffs' motion for class certification (Doc. 231) is DENIED.