Opinion
Case No. 99 C 2294.
March 1, 2000.
MEMORANDUM OPINION AND ORDER
On September 26, 1998, plaintiff Gina Williams signed a retail installment sales contract (RIC) for the purchase of a car from defendant Rizza Chevrolet-GEO, Inc. Before signing, Rizza's representatives performed a credit check and allegedly told her that she would get financing for the purchase at 3.9% interest. She left the dealership with the car after signing the RIC, which disclosed a 3.9% interest rate and payment terms consistent with that rate. However, Rizza' s alleged representations about the interest rate turned out to be untrue. About a week later, Rizza called Williams and told her that to get financing approval, she would have to make a bigger down payment, but her interest rate would remain the same. But when she returned to the dealership on October 5 to add to her down payment, Williams says that she was asked to sign a new RIC with a higher interest rate; her request to cancel the deal and return the car was refused; and she was buffaloed into signing the new RIC. Williams claims that Rizza' s actions violated the Truth in Lending Act (TILA) and the Illinois Consumer Fraud Act (ICFA) and constituted unjust enrichment.
Williams says that in discovery she has learned that during the year preceding the filing of this case, Rizza had around 300 customers who signed a second RIC after the first one was purportedly rejected by a lender. She has now moved under Fed.R.Civ.P. 23(b)(3) to certify three classes, one as to each of her three claims.
TILA claim
Williams contends that the original RIC's disclosures are nothing more than an educated guess as to the terms that Rizza actually intends to honor. Rizza' s finance director, Russell Brown, testified in a deposition that there is no set formula as to whether a lender will accept any particular RIC, that Rizza has "no clue" as to what terms a lender will approve, and that the terms Rizza uses in the RIC are a "guess based on past performance." According to Williams, this makes the RIC's disclosures concerning the rate and amount of interest misleading in violation of TILA, as they are contained in a document that purports to be binding.
Before the Court can certify a class under Rule 23(b)(3), the plaintiff must establish that each of the criteria of Rule 23(a) and those of Rule 23(b)(3) are met. Williams has made the necessary showing as to her TILA claim.
First, there are approximately 300 Rizza customers who, in the year preceding the filing of this case, signed a second RIC with terms different from the initial RIC. There is no dispute that a class of 300 is sufficiently numerous that joinder of all members is impracticable. See Fed.R.Civ.P. 23(a)(1).
Second, the question whether Rizza has a practice of inducing customers to sign an initial RIC whose terms are not really final, and whether under those circumstances the initial RIC's TILA disclosures are misleading, are questions common to the class. See Fed.R.Civ.P. 23(a)(2). Rizza maintains, citing Jasper v. New Rogers Pontiac, Inc., No. 99 C 5195, 1999 WL 1024522 (N.D.Ill. Nov. 5, 1999), that a RIC's interest rate disclosures are not rendered misleading in violation of TILA by the subsequent voiding of the RIC when financing cannot be obtained. However, Rizza has not sought dismissal or summary judgment, and thus it is premature to consider the merits of Williams' claims. A court may not "conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action." Eisen v. Carlisle Jacquelin, 417 U.S. 156, 177 (1974). Indeed, the issue of the legality of Rizza's alleged practice is undeniably common to the class even if Rizza turns out to be right on the merits.
Third, based on the material currently before the Court, it appears that Williams' claims are typical of those of the class and that common questions will predominate over any individual issues, as required by Rules 23(a)(3) and 23(b)(3). Rizza contends that the fact that a purchaser signed a second RIC does not necessarily make the first RIC's disclosures unlawful and that liability will turn on individual questions concerning what each particular purchaser understood at the time he or she executed the first RIC. Rizza also points out that the bill of sale that Williams signed — which is entitled "purchase contract" even though it is a separate document from the "retail installment contract" that Williams also signed — contains a clause permitting Rizza to cancel the sale if it cannot obtain financing on the agreed terms within 15 days. It argues that this case is similar to Janikowski v. Lynch Ford, Inc., No. 98 C 8111, 1999 WL 608714 (N.D.Ill. Aug. 5, 1999), in which the court held that the purchaser in that case could not establish TILA, ICFA, or unjust enrichment claims because she was aware, via a clause in her contract, that the car dealer retained the right to cancel the contract if it could not obtain financing in accordance with the contract's terms.
As noted earlier, a class certification motion is not the time to argue the merits of the case, so we have no occasion at this point to determine whether Williams can sustain a TILA claim against Rizza. Rizza suggests, however, that Janikowski is nonetheless pertinent in that it indicates that individual reliance and causation issues will be a major focus of the litigation. Indeed, Williams contends that she was affirmatively misled concerning Rizza's ability to obtain the rates stated in her initial RIC. As Rizza says, we do not know whether this is so as to all or even most of the other 300 customers who signed a second RIC.
In this case, apparently unlike in Janikowski, the RIC does not give Rizza an "out"; rather, the clause permitting Rizza to cancel is contained in a separate document. It is premature to address whether the difference is significant.
Though the allegedly misleading representations made to Williams prior to her execution of the first RIC may not have been made to all the class members, that does not make her claims atypical. Williams contends that the class's TILA claim will be premised upon the allegedly inherently misleading character of the disclosures in the RIC and that liability therefore will not turn on what individual purchasers were told or understood. As a general rule, a TILA plaintiff is not required to show intent to mislead or actual deception. "[L]enders are generally strictly liable under TILA for inaccuracies, even absent a showing that the inaccuracies are misleading." Smith v. Cash Store Management, Inc., 195 F.3d 325, 328 (7th Cir. 2000). Based on Williams' contentions regarding her theory of liability, the Court does not believe that individual questions relating to liability will predominate over common questions. If later developments in the litigation indicate otherwise, Rizza can request that the Court revisit the issue by way of a motion to decertify the class.
Rizza also argues that damages are likely to constitute an individual issue that will predominate over common issues. However, TILA provides for statutory damages in a fixed amount in many types of cases, including those in which the violations involve disclosure of the annual percentage rate of interest and the finance charge. See 15 U.S.C. § 1640 (a)(2); Brown v. Payday Check Advance, Inc., No. 99-3110, 2000 WL 122437, at *2-3 (7th Cir. Feb. 2, 2000) (discussing when statutory damages are available). And though a TILA plaintiff can seek actual damages, that does not defeat class certification in this case, for as the court concluded in similar circumstances in Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669, 675 (N.D.Ill. 1989), such damages, if claimed, are likely to be simple to measure. The possibility of individualized damage inquiries does not defeat class certification even if individual hearings ultimately may be required. Id.
Fourth, there is no real contention that plaintiff would be an inadequate class representative. Her counsel are qualified to handle a class action of this type, and there is no indication that there would be any conflicts of interest between Williams and other class members that would make her an inadequate representative. See Fed.R.Civ.P. 23(a)(4).
Fifth and last, a class action is a superior method of adjudicating the TILA claims against Rizza, as required by Rule 23(b)(3). Damages in any individual case are likely to be small, thus discouraging individuals form bringing separate suits. "Class actions . . . may permit the plaintiffs to pool claims which would be uneconomical to litigate individually. [In such a case,] most of the plaintiffs would have no realistic day in court if a class action were not available." Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985).
For these reasons, the Court grants Williams' motion to certify a class as to her TILA claim.
ICFA and unjust enrichment claims
Liability under ICFA requires proof of (1) a deceptive act or practice by the defendant; (2) in the course of conduct involving trade or commerce; (2) made with the intent that the plaintiff rely on the deception; (4) that proximately caused an injury to the plaintiff. Connick v. Suzuki Motor Co., 174 Ill.2d 482, 675 N.E.2d 584, 593 (1996). Proof of actual reliance by the plaintiff is not required. Id.
In the Court's view, Williams' need to prove intent makes her ICFA claim materially different from her TILA claim with regard to class certification. Though the defendant's intent may be proved circumstantially, see, e.g., Olympic Chevrolet, Inc. v. General Motors Corp., 95 F. Supp. 918, 920 (N.D.Ill. 1997), there is a significant possibility that some inquiry regarding what was said to individual purchasers will be necessary. The need to deal with this issue on an individual basis may well overwhelm any common issues. This is not necessarily so: it may be that Rizza had a standardized way of discussing the financing issue with purchasers. However, Williams has offered no such evidence. For this reason, the Court cannot say that the common issues will predominate over issues individual to each class member, as required by Rule 23(b)(3). The Court therefore denies class certification with respect to Williams' ICFA claim.
The Court does not believe the need to prove actual damages by itself would cause individual issues to predominate. As indicated with respect to the TILA claim, proof of individual damages is not likely to be difficult. See generally Heastie, 125 F.R.D. at 678-79.
Neither party has made much of an effort to explain the elements of plaintiffs unjust enrichment claim or to discuss how that claim is similar to or different from the others with regard to class certification. The Court therefore denies without prejudice Williams' request to certify a class as to that claim.
Defendant has suggested that this claim will require individualized proof of damages, but as explained in footnote 1, we do not believe that this by itself requires denial of class certification.
Conclusion
For the reasons stated above, the Court grants Williams' motion for class certification as to plaintiffs TILA claim contained in Count 1 of her complaint but denies the motion as to her remaining claims. The March 3, 2000 status hearing is canceled. The case is set for a status hearing on March 16, 2000 at 9:30 a.m. for the purpose of addressing the form of notice to the class. The Court directs the parties to discuss a proposed form of notice and to submit to the Court by March 13, 2000 either an agreed proposed notice or, if agreement cannot be reached, the parties' separate proposals.