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State ex rel. U-Haul Company of West Virginia v. Tabit

Supreme Court of West Virginia

May 21, 2018


          Kanawha County No. 11-C-1426


         The petitioner (defendant below), U-Haul Co. of West Virginia ("U-Haul"), seeks a writ of prohibition to either (1) prevent the enforcement of the circuit court's class certification order on the basis that the court erred as a matter of law in finding the respondents (plaintiffs below), Amanda Ferrell, John Stigall, and Misty Evans (collectively "the respondents"), met the commonality and predominance requirements under Rule 23 of the West Virginia Rules of Civil Procedure, or (2) prevent the enforcement of such order pending the entry of a more thorough order addressing the class certification prerequisites.[1]Upon review of the parties' arguments, we affirm the circuit court's certification order. Inasmuch as this case does not present a new or significant question of law, and having considered the applicable standard of review and the record presented, this matter is properly disposed of through this memorandum decision in accordance with Rule 21(c) of the Rules of Appellate Procedure.

         I. Factual and Procedural Background

         On August 19, 2011, the respondents filed this putative class action against U-Haul alleging breach of contract, fraudulent concealment, and violations of the West Virginia Consumer Credit and Protection Act ("WVCCPA"). This case was previously before this Court when U-Haul sought a writ of prohibition to set aside the circuit court's order denying U-Haul's motion to compel arbitration. We declined to issue the writ, and the case was remanded to the circuit court. State ex rel. U-Haul Co. of West Virginia v. Zakaib ("U-Haul I"), 232 W.Va. 432, 752 S.E.2d 586 (2013).

         Following the remand in U-Haul I, the parties engaged in class discovery after which the respondents filed a motion to certify their claims as a class action. Following an evidentiary hearing on the certification motion, the circuit court entered a twenty-seven-page order granting the motion and certifying a class of U-Haul customers who had declined to make a contribution to the "Conservation Fund"[2] during the process of renting a truck from U-Haul, but who were nonetheless charged an"Environmental Fee, "[3] as more fully addressed below.

         This environmental fee was not required by a governmental or regulatory body; rather, it was implemented by U-Haul as a company policy in January2008. U-Haul customers were automatically charged an environmental fee of $1.00 to $5.00 per day for in-town truck rentals and $5 for one-way truck rentals.[4] During the certification hearing, U-Haul's counsel explained that U-Haul made this environmental fee a "mandatory added item, " using the monies collected through this fee to support its "long-running sustainability" program. This fee appears as a line-item charge on the equipment contract. An explanation of the environmental fee is provided by U-Haul only if a customer asks about it. As discussed herein, the respondents offered evidence that even when a customer asked about the fee, incorrect information was provided.

         U-Haul's Rule 30(b)(7) corporate representative testified during her deposition that U-Haul did not include the amount of the environmental fee in providing quotes for rentals because U-Haul wanted only its rental rates to be considered by customers engaged in comparative shopping with U-Haul's competitors. This representative further testified that U-Haul was concerned that the "environmental fee" was not "communicated well." Evidence was also presented regarding a U-Haul policy whereby a refund of the "environmental fee" could be made upon a customer's request, but this policy is not voluntarily conveyed to customers.

         U-Haul rental reservations can be made telephonically, over the internet, or in person at a U-Haul center or dealer. When visiting a U-Haul center, a customer can make a reservation using an electronic terminal [5] where information is provided on screens concerning rental equipment and the terms and conditions of the equipment contract. One of the screens provides the customer with the opportunity to make a voluntary donation to the "Conservation Fund." Another screen displays a list of itemized charges and, alongside the term "Adjustments" is a hyperlink titled "Click More to see details." If a customer clicks on that link, a new screen appears that displays the words "Environmental Fee" and a monetary amount. U-Haul alleges that if a customer were to ask a U-Haul representative for more information about the environmental fee, the sales representative could use a computer to access a description of the fee that the representative could then share with the customer. Although some U-Haul locations do not use electronic terminals, the respondents allege that the rental process proceeds in a similar manner to the extent that an environmental fee is automatically added to the customer's bill, which is unrelated to the optional donation to the "Conservation Fund."

         When making a reservation through, U-Haul alleges that the customer can learn about the environmental fee by searching for it on a "website-specific search engine" or by clicking on a link near the end of the online reservation process, which takes the customer to a screen with a description of the fee. Telephonic reservations are made by a customer speaking with a U-Haul representative who views screens similar to those available online. A customer can also reserve a truck through a U-Haul dealer, whose employee uses a computer program called "WebBEST" that only the employee views. U-Haul states that the WebBEST program includes a "clickable" prompt titled "What is the Environmental Protection Fee?"

         Regarding the respondents' rental experiences, Amanda Ferrell made three truck rentals by telephone. She testified during her deposition that her second truck rental was made at a U-Haul facility where she had to sign a small, electronic pad on which she thought she had declined the environmental fee.[6] After signing the electronic pad, she was handed a folder that contained a one-page contract with itemized charges, which she later reviewed and noted that she had been charged a $3.00 "Environmental Fee." Ms. Ferrell wrote a letter to U-Haul in which she complained about this fee. When Ms. Ferrell rented a U-Haul truck a third time, she proceeded through a similar rental process.[7]

         During John Stigall's deposition, he testified concerning his telephone reservations. He did not have any interaction with a U-Haul dealer or center employee regarding the environmental fee in those rental experiences. When he looked at his paperwork sometime later, he saw that he had been charged a $5.00 "Environmental Fee, " although he had declined all optional environmental donations. He testified that he wrote a letter to U-Haul attempting to recover the $5.00 fee, but received no response to his letter. After the instant litigation was filed, he accompanied a friend who was renting a truck from U-Haul and asked about the environmental fee. A U-Haul employee responded it was a "government fee."

         Respondent Misty Evans testified during her deposition that she first reserved a truck by calling a U-Haul center. She did not have any interaction with any U-Haul employees concerning the environmental fee but later noticed it on her bill after her first truck rental. She was uncertain regarding how her second truck reservation was made, although the equipment contract for that transaction listed as a line item an estimated "Environmental Fee" of $1.00, which was later included on the finalized contract when she returned the truck. She was unaware that this fee had been added to her bill until after she had returned the rental.

         A class certification hearing was held after which the circuit court entered an order on November 2, 2017, finding the respondents had met the prerequisites for class certification under Rule 23(a).[8] The circuit court noted that "the dispositive question is not whether the plaintiff has stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 have been met." Syl. Pt. 7, in part, In re W.Va. Rezulin Litig., 214 W.Va. 52, 585 S.E.2d 52 (2003).

         Regarding the numerosity requirement under Rule 23(a)(1), the circuit court stated that the class must be so numerous that joinder of all members is impracticable; however, there is no "magic minimum number[.]" Rezulin, 214 W.Va. at 65, 585 S.E.2d at 65 (quotation and citation omitted). The circuit court found that there are approximately 238, 040 potential class members, making joinder impractical. See id. at 56-57, 585 S.E.2d at 56-57, syl. pt. 9, in part ("The numerosity provision . . . requires that a class be so numerous that joinder of all of its members is 'impracticable.' It is not necessary to establish that joinder is impossible; rather, the test is impracticability.").

         In addressing the commonality prerequisite under Rule 23(a)(2), the circuit court again looked to Rezulin for guidance:

"[C]ommonality" . . . requires that the party seeking class certification show that "there are questions of law or fact common to the class." A common nucleus of operative fact or law is usually enough to satisfy the commonality requirement. The threshold of "commonality" is not high, and requires only that the resolution of common questions affect all or a substantial number of class members.

214 W.Va. at 57, 585 S.E.2d at 57, syl. pt. 11, in part. The circuit court observed that "(c)ommonality requires that class members share a single common issue"; that "not every issue in the case must be common to all class members"; and that "one significant common question of law or fact will satisfy this requirement." Id. at 67, 585 S.E.2d at 67 (quotation and citation omitted). Upon finding that the "[p]laintiffs have alleged the existence of a common business practice that affects putative class members in a like manner as the named Plaintiffs[, ]" the circuit court identified the primary common questions of fact as "whether the Defendant's business conduct constitutes a breach of contract, fraudulent concealment and/or an unfair or deceptive act or practice in violation of the WVCCPA." The circuit court further found that these "common questions of fact give rise to precisely the same common question of law" and "outweigh any potential individual claims that each individual member of the class may have against Defendant."

         As for the typicality prerequisite under Rule 23(a)(3), the circuit court again relied upon Rezulin:

"[T]ypicality" . . . requires that the "claims or defenses of the representative parties [be] typical of the claims or defenses of the class." A representative party's claim or defense is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based on the same legal theory. Rule 23(a)(3) only requires that the class representatives' claims be typical of the other class members' claims, not that the claims be identical. When the claim arises out of the same legal or remedial theory, the presence of factual variations is normally not sufficient to preclude class action treatment.

214 W.Va. at 57, 585 S.E.2d at 57, syl. pt. 12, in part. The circuit court found that "all of the class members' claims raise from the same business practice and course of conduct that underlies the named Plaintiffs' claims" and that the "harm suffered by the named Plaintiffs may "differ in degree from that suffered by other members of the class so long as the harm suffered is of the same type." (Citations omitted). The circuit court concluded that "the claims of the named Plaintiffs are typical of the putative class."

         The final prerequisite under Rule 23(a) is whether "the representative parties will fairly and adequately protect the interests of the class." See Rezulin, 214 W.Va. at 57, 585 S.E.2d at 57, syl. pt. 13, in part ("The 'adequacy of representation' requirement . . . requires that the party seeking class action status show that the 'representative parties will fairly and adequately represent the interests of the class.' First, the adequacy of representation inquiry tests the qualifications of the attorneys to represent the class. Second, it serves to uncover conflicts of interest between the named parties and the class they seek to represent."). The circuit court determined that this prerequisite was met because "each individual and class claim flows from the same conduct of Defendant" and that the interests of the class and of the respondents are "coincident since both seek to prove the existence of the Defendant's practice of breach of contract, fraudulent concealment, and/or unfair or deceptive acts or practices in violation of the WVCCPA." There was no challenge as to the ability of the respondents' counsel to represent the class.

         Having determined that Rule 23(a) prerequisites were met, the circuit court next addressed the predominance and superiority requirements under Rule 23(b)(3) of the West Virginia Rules of Civil Procedure. [9] It found that the questions of law or fact common to the members of the class predominated over any questions affecting only individual members, such that a class action was superior to other available methods for the fair and efficient adjudication of the controversy. As the circuit court explained,

"[t]he predominance criterion in Rule 23(b)(3) is a corollary to the 'commonality' requirement found in Rule 23(a)(2). While the 'commonality' requirement simply requires a showing of common questions, the 'predominance' requirement requires a showing that the common questions of law or fact outweigh individual questions." In re W.Va. Rezulin Litig., 214 W.Va. at 71, 585 S.E.2d at 71.

         The circuit court observed that the primary question for predominance is "whether 'adjudication of the common issues in the particular suit has important and desirable advantages of judicial economy compared to all other issues, or when viewed by themselves." (citation omitted). Explaining further, the circuit court stated that

[a]n action that satisfies the Rule 23(a) requirements may also be maintained as a class action under Rule 23(b)(3) if the trial court finds "that the questions of law or fact common to all members of the class predominate over any questions affecting only individual members, " and that a class action "is superior to other available methods for the fair ...

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