A California federal district court denied a renewed motion for certification of a nationwide class, holding that the application of California negligence and conversion law would violate the due process rights of non-Californian class members.
Ms. Marsh sought to represent a nationwide class of “payday loan” applicants who were allegedly victimized by unauthorized withdrawals from their bank accounts via “remotely created checks” processed by one Texas-based defendant and deposited with another. Marsh’s initial motion for certification was denied because she failed to show that her causes of action under California law on behalf of a nationwide class met the Rule 23(b)(3) predominance requirement. In particular, the Court found that Marsh failed to demonstrate that the proposed class members’ claims and the parties had sufficient California contacts to justify the application of California law to non-Californians consistent with due process. While the Court granted Marsh leave to renew her motion, it instructed her to do so only if she could support the renewed motion with additional facts pertaining to the claims’ and parties’ California contacts and to the similarity of the applicable laws of other interested states sufficient to show predominance.
Marsh renewed her motion for certification of a nationwide class under California negligence and conversion law, and, alternatively, sought certification of a nationwide class under Texas law and a nationwide class applying the law of each state to that state’s residents.
In denying the renewed motion in its entirety, the Court noted that, for California’s law to be applied to a nationwide class, the class must have a “significant contact or significant aggregation of contacts to the claims asserted by each member of the plaintiff class, contacts creating state interests, in order to ensure that the choice of its law is not arbitrary or unfair” (applying Phillips Petroleum Co. v. Shutts). By failing to provide facts showing that the specific claims against the two Texas-based defendants for which she sought nationwide class treatment had any connection to California, Marsh once again failed to show that a nationwide class based on California negligence and conversion law would comport with due process. And while due process might not be offended by the application of Texas law to such claims, Marsh also failed to provide information about the similarity of the relevant laws and interests of the other states sufficient to explain why the Court should apply Texas law, at the exclusion of others states’ laws, to the claims of a nationwide class. As its final basis for denying the renewed motion, the Court concluded that a nationwide class with 50 subclasses applying the laws of 50 different jurisdictions would be unmanageable, and that, even if that were not the case, Marsh had failed to identify a proper representative for each subclass as previously ordered.