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Jordan v. Freedom National Insurance Services Inc.

United States District Court, D. Arizona

September 26, 2016

Sarah Jordan, Plaintiff,
v.
Freedom National Insurance Services Incorporated, Defendant.

          ORDER

          Douglas L. Rayes United States District Judge

         Plaintiff has filed a motion for class certification. (Doc. 22.) The motion is fully briefed. For the reasons stated below, the motion is granted.[1]

         BACKGROUND

         On February 10, 2015, Plaintiff Sarah Jordan entered into an agreement with Defendant Freedom National Insurance Services Incorporated (Freedom) to purchase car insurance. (Doc. 1, ¶ 14.) In connection with the agreement, Jordan signed an “Authorization Agreement for Auto-Debit Payment Method” (Authorization Agreement), which set up automatic recurring “preauthorized electronic fund transfers” out of her bank account. (Id., ¶¶ 15-16.) By signing the Authorization Agreement, Jordan agreed that Freedom “will not be responsible for claims relating to the debit or credit of my account[.]” (Id., ¶ 18; Doc. 1-1 at 2.) Jordan alleges that the Authorization Agreement is based on a template that Freedom has used in contracting with over forty other individuals in the United States. (Doc. 1, ¶¶ 23-24.)

         On February 9, 2016, Jordan brought suit alleging that the Authorization Agreement violates the Electronic Funds Transfer Act (EFTA), 15 U.S.C. § 1693 et seq. (Id., ¶ 19.) EFTA provides that “[n]o writing or other agreement between a consumer and any other person may contain any provision which constitutes a waiver of any right conferred or cause of action created by this subchapter.” 15 U.S.C. § 1693l. Jordan alleges that the Authorization Agreement's provision that Freedom shall not be responsible for any claims relating to the debit or credit her account violates § 1693l. She now seeks to certify the following class under Fed. R. Civ. P 23: “All individuals in the United States who, in the year prior to the filing of this complaint, signed an agreement with Defendant based on the Template.” (Doc. 22 at 6.)

         LEGAL STANDARD

         “The decision to grant or deny class certification is within the trial court's discretion.” Bateman v. Am. Multi-Cinema, Inc., 623 F.3d 708, 712 (9th Cir. 2010). Pursuant to Fed.R.Civ.P. 23, “[a] class action may be maintained if two conditions are met: The suit must satisfy the criteria set forth in subdivision (a) (i.e., numerosity, commonality, typicality, and adequacy of representation), and it must also fit into one of the three categories described in subdivision (b).” Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 398 (2010). Rule 23(a) requires that the moving party demonstrate: (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims and defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a)(1)-(4). Where, as here, the plaintiff seeks certification under Rule 23(b)(3), she must also demonstrate “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997).

         “Before certifying a class, the trial court must conduct a ‘rigorous analysis' to determine whether the party seeking certification has met the prerequisites of Rule 23.” Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001) (quoting Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1233 (9th Cir. 1996)). The party seeking certification bears the burden of demonstrating that she has met the requirements of Rule 23, see id., and the court “will not consider whether the plaintiff will prevail on the merits, ” Winkler v. DTE, Inc., 205 F.R.D. 235, 239 (D. Ariz. 2001).

         ANALYSIS

         Jordan argues the putative class should be certified because it satisfies all the requirements of Rule 23(a) and (b)(3). Freedom concedes that the numerosity and adequacy requirements of Rule 23(a) are met. (Doc. 29 at 7.) It argues the remaining requirements cannot be satisfied because an individualized analysis is required to determine whether each class member waived her rights under EFTA by signing the Authorization Agreement. The Court will address the waiver issues before turning to the requirements of Rule 23.

         I. Waiver

         The crux of Jordan's case is that by signing the Authorization Agreement, she waived her right to sue Freedom for violating EFTA. Under Arizona law, waiver is the “intentional relinquishment or abandonment of a known right.” United States v. Park Place Assocs., Ltd., 563 F.3d 907, 921 (9th Cir. 2009). Freedom asserts that under Arizona law, the Court will have to individually determine whether each class member knew of her EFTA rights and intended to relinquish those rights by signing the Authorization Agreement. (Doc. 29 at 9.) It asserts testimony on these issues must be taken from each class member, thereby negating the benefits of a class action.

         EFTA prohibits any “agreement[s] between a consumer and any other person . . . contain[ing] any provision which constitutes a waiver of any right conferred for cause of action created by this subchapter.” 15 U.S.C. § 1693l. Commonly referred to as the “anti-waiver provision, ” see, e.g., Bultemeyer v. Fitness Alliance, LLC, No. CV-12-2619-PHX-LOA, 2014 WL 667585, at *2 (D. Ariz. Feb. 20, 2014), the statute prohibits agreements that preclude consumers from exercising rights conferred under EFTA, see Murphy v. Law Offices of Howard Lee Schiff, P.C., No. 13-10724-RWZ, 2014 WL 710959, at *2 (D. Mass. Feb. 25, 2014) (finding that the plaintiff stated a claim under § 1693l where the agreement in question prohibited consumer from asserting his “EFTA-conferred rights”). The use of such an agreement by any party is an actionable violation. 15 U.S.C. § 1693m(a).

         In its attempt to defeat class certification, Freedom frames the issue incorrectly, shifting the focus from the provision in the Authorization Agreement to the consumer's knowledge and intent at the time of signing. The issue, however, is not whether each class member that signed the Authorization Agreement knowingly and intentionally decided to waive their rights under EFTA. Rather, the issue is whether the Authorization Agreement contained a provision requiring the consumer to give up, whether voluntarily or not, their EFTA-conferred rights. Jordan argues that by simply signing the agreement, she gave up her EFTA right to bring suit against Freedom for disputes arising out of the debit or ...


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