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Pludeman v. Northern Leasing Systems

June 1, 2010

KEVIN PLUDEMAN, ET AL., PLAINTIFFS-APPELLANTS-RESPONDENTS,
v.
NORTHERN LEASING SYSTEMS, INC., ET AL., DEFENDANTS-RESPONDENTS-APPELLANTS.



Order, Supreme Court, New York County (Martin Shulman, J.), entered June 30, 2009, which, insofar as appealed from as limited by the briefs, upon renewal of plaintiffs' motion for class certification, certified a class, defined the class as, in pertinent part,"[a]ll persons and entities who signed as lessees and/or guarantors... between January 1, 1999 and January 22, 2004... and who made monthly loss and damage waiver... payments... to defendant Northern Leasing Systems, Inc.," and excluded from the class (1) lessees whose leases had been assigned to Northern Leasing; (2) lessees who entered into leases after January 22, 2004; and (3) lessees who signed agreements in which the term "LDW" or "Loss & Damage Waiver" was expressly written above the merger clause on the signature page of the agreement, and ordered that Northern Leasing bear the cost of notifying the class, unanimously modified, on the law, to the extent of expanding the class to include (1) lessees/guarantors whose leases were assigned to Northern Leasing; (2) lessees/guarantors who executed leases with Northern Leasing, irrespective of whether they made loss damage waiver payments; and (3) lessees/guarantors who executed leases with Northern Leasing from January 1, 1999 through the date of this action's resolution, and otherwise affirmed, without costs. Appeal from order, same court and Justice, entered on or about April 24, 2009, unanimously dismissed, without costs, as subsumed in the appeal from the June 30, 2009 order.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Mazzarelli, J.P., Sweeny, Moskowitz, Manzanet-Daniels, RomÁn, JJ.

M5898 & M81

101059/04

Plaintiffs are small business owners who leased credit card point of sale (POS) equipment from Northern Leasing, which is in the business of leasing such equipment. The POS equipment was purportedly leased pursuant to a four page lease. Plaintiffs contend that the first page of the lease represents the entire agreement and that this page failed to disclose, inter alia, that plaintiffs were subject to a loss damage waiver (LDW) fee. Plaintiffs contend that Northern Leasing breached the equipment lease by charging and collecting LDW payments that were not disclosed on the first page of the lease. Plaintiff's claims sound in breach of contract and fraud.

The motion court granted plaintiffs' application for class certification with respect to the breach of contract claim, finding that plaintiffs had satisfied the requisites of CPLR 901 and 902. The motion court also granted plaintiffs' application seeking that Northern Leasing bear the cost associated with providing court approved notices to all members of the class.

Plaintiffs appeal the portion of the motion court's order that limited the class definition to any lessees who entered into leases with Northern Leasing prior to commencement of this action and to any lessees who made LDW payments. Plaintiffs also appeal the motion court's failure to include in the class definition any lessees whose leases were assigned to Northern Leasing. Lastly, plaintiffs appeal the motion court's exclusion from the class definition of those lessees whose leases made reference to LDW on the first page. Northern Leasing appeals the motion court's decision to certify the class, alleging error in the court's conclusion that common issues predominate over those pertaining to individual class members and that the named plaintiffs are typical of the class, as well as its decision that Northen Leasing should bear the expense of providing court approved notices to all class members.

CPLR 902 states that a class action can only be maintained if the prerequisites promulgated by CPLR 901(a) are met (Weinberg v Hertz Corp., 116 AD2d 1, 4 [1986], affd 69 NY2d 979 [1987]). Those prerequisites are (1) that the class is so numerous that joinder of all members is impracticable (numerosity); (2) questions of law or fact common to the class predominate over questions of law or fact affecting individual class members (commonality); (3) the claims or defenses of the class representatives are typical of those in the class (typicality); (4) the class representatives will fairly and adequately protect the interests of the class; and (5) a class action represents the superior method of adjudicating the controversy (superiority) (id.; CPLR 901[a]). If the prerequisites set out in CPLR 901(a) are met, the court, in deciding whether to grant class action certification should then consider the additional factors promulgated by CPLR 902 such as the interest of individual class members in maintaining separate actions and the feasability thereof; the existence of pending litigation regarding the same controversy; the desirability of the proposed class forum; and the difficulties likely to be encountered in managing the class action (CPLR 902; Ackerman v Price Waterhouse, 252 AD2d 179, 191 [1998]).

Whether the facts presented on a motion for class certification satisfy the statutory criteria is within the sound discretion of the trial court (Small v Lorillard Co., 94 NY2d 43, 52 [1999]; CLC/CFI Liquidating Trust v Bloomingdale's, Inc., 50 AD3d 446, 447 [2008]; Wilder v May Dept. Stores Co., 23 AD3d 646, 649 [2005]; Klein v Robert's Am. Gourmet Food, Inc., 28 AD3d 63, 70 [2006]; Ackerman at 191; Lauer v New York Tel. Co., 231 AD2d 126, 130 [1997]). However, this Court is also vested with the same discretion and may exercise it even if there has been no abuse by the trial court (Small at 52-53; CLC/CFI Liquidating Trust at 447; Klein at 70). The proponent of class certification bears the burden of establishing the criteria promulgated by CPLR 901(a) (CLC/CFI Liquidating Trust at 447; Ackerman at 191), and must do so by the tender of evidence in admissible form (Feder v Staten Is. Hosp., 304 AD2d 470, 471 [2003]). Conclusory assertions are insufficient to satisfy the statutory criteria (id.; Chimenti v American Express Co., 97 AD2d 351, 352 [1983]).

In determining whether an action should proceed as a class action, it is appropriate to consider whether the claims have merit (Bloom v Cunard Line, 76 AD2d 237, 240 [1980]). However this "inquiry is limited" (id.) and such threshold determination is not intended to be a substitute for summary judgment or trial (Kudinov v. Kel-Tech Constr. Inc., 65 AD3d 481, 482 [2009]). Class action certification is thus appropriate if on the surface there appears to be a cause of action which is not a sham (Brandon v Chefetz, 106 AD2d 162, 168 [1985]).

CPLR 901(a)(2) requires that questions of law or fact common to the class predominate over any such questions affecting individual class members. Thus, when individualized proof is required for the claims alleged or individual factual questions with respect to individual class members preponderate, commonality is lacking (CLC/CFI Liquidating Trust at 447; DeFilippo v Mutual Life Ins. Co. of N.Y., 13 AD3d 178, 180-181 [2004], lv dismissed 5 NY3d 746 [2005]; Banks v Carroll & Graf Publs., 267 AD2d 68, 69 [1999]). However, the rule requires predominance not identity or unanimity among class members (Friar v Vanguard Holding Corp., 78 AD2d 83, 98 [1980]). Thus, commonality is not merely an inquiry into whether common issues outnumber individual issues but rather "whether the use of a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated" (id. at 97 [internal quotation and citation marks omitted]). Class certification is appropriate even when there are questions of law or fact not common to the class (id.; Weinberg at 6; Kudinov at 482; Freeman v Great Lakes Energy Partners, L.L.C., 12 AD3d 1170, 1171 [2004]).

CPLR 901(a)(3) requires that the claims asserted by the plaintiff(s) seeking to represent the class, as well as any defenses to those claims, be typical of the claims made by and the defenses asserted against the class members. If it is shown that a plaintiff's claims derive "from the same practice or course of conduct that gave rise to the remaining claims of other class members and is based upon the same legal theory... [the typicality] requirement is satisfied" (Friar at 99; see also Ackerman at 201; Freeman at 1171). Typicality does not require identity of issues and the typicality requirement is met even if the claims asserted by class members differ from those asserted by other class members (Pruitt v Rockefeller Cetr. Props., 167 AD2d 14, 22 [1991]; Super Glue Corp. v Avis Rent A Car Sys., Inc., 132 AD2d 604, 607 [1987]).

Northern Leasing claims that individual issues among the class members will predominate over common issues. Primarily, Northern Leasing claims that plaintiffs can only prevail on their breach of contract claim if they establish a valid excuse for failing to read the lease or to perceive that it consisted of four pages rather than just one. Northern Leasing contends that this excuse will be unique to each class ...


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