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Kerrie Stone, Justina Rodriguez, and v. Advance America

December 9, 2011

KERRIE STONE, JUSTINA RODRIGUEZ, AND FRANK BRIGHTWELL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
PLAINTIFFS,
v.
ADVANCE AMERICA, CASH ADVANCE CENTERS INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge

ORDER DENYING MOTION FOR CLASS CERTIFICATION, DENYING MOTION TO STRIKE, AND SETTING REMAINING PRETRIAL DATES

[Docs. 130, 142]

Plaintiffs' motion to certify a class of consumers was fully briefed last year -- before the case was transferred to the undersigned. [# 173] The Supreme Court's June 2011 decision in Wal-Mart v. Dukes, 131 S. Ct. 241 (2011), impacted Ninth Circuit case law. The Court heard argument on the first available date, November 14, 2011. For the reasons stated below, the Court DENIES Defendants' motion to strike the expert report of Dr. Krosnick, and DENIES Plaintiffs' motion to certify a class of Spanish-language claims.

Background

Plaintiffs Kerrie Stone, Justina Rodriguez, and Frank Brightwell are customers of Defendants Advance America, Cash Advance Centers of California, LLC, and its parent, Advance America, Cash Advance Centers Inc. Defendants provide short-term cash advances -- commonly known as payday loans. The industry is regulated by the California Deferred Deposit Transaction Law ("CDDTL"). Cal. Fin. Code § 23005. Among other requirements, the licensee must keep certain financial records, the governing agency may conduct an audit, and, most important to this motion, the notice of rights and the written agreement must be "in the language principally used by the customer." Id. §§ 23024, 23046, 23035(f) & (g). If a lender violates the CDDTL, it forfeits the fee collected. Id. § 23064. Other remedies include equitable relief (e.g., injunction, disgorgement, restitution); compensatory damages; treble damages; attorney's fees; and, if the violation is shown to be willful, punitive damages. Id.

Plaintiffs allege that Defendants' misconduct also constitutes unfair competition. Cal. Bus. & Prof. Code § 17200 ("UCL"). California's UCL provides for an injunction or other relief as necessary to restore money acquired by unfair competition. Id. § 17203; ABC Int'l Traders, Inc. v. Matsushita Elec. Corp., 931 P.2d 290 (Cal. Sp. Ct. 1997) (remedy includes restitution of money lost by plaintiff or gained by defendant as a result of unfair competition); cf. United States v. Sequel Contractors, Inc., 402 F. Supp. 2d 1142 (C.D. Cal. 2005) (compensatory damages are not available under § 17203).

Plaintiffs seek to certify a class defined as: "All individuals who received a payday loan from an Advance America branch in the State of California at any time since July 16, 2004 and who principally spoke Spanish in the discussion or negotiations leading to the loan but whose payday loan documents were not in that language." Pls.' Mot. at 2.

Rodriguez is the Class Representative for the proposed class. The parties identified 54 loans. Rodriguez recalls that she predominately spoke Spanish in 18 to 21 of those transactions. Defs.' Ex. 14. All of her loan documents were in English.

Plaintiff proffers evidence to show that Defendants' liability can be determined on a classwide basis. Marlo v. United Parcel Serv., Inc., 251 F.R.D. 476, 485 n.7 (C.D. Cal. 2008). Plaintiffs submitted 25 declarations from frequent customers who state they obtained payday loans at various branches, they principally spoke Spanish, they understand very little or no English, but that none received documents in Spanish. E.g., Alejandrez Dec.; Avina Decl.; Cardenas Decl.; Pls.' Supp. Decls. 1-5; Dilts v. Penske Logistics, LLC, 267 F.R.D. 625, 638 (S.D. Cal. 2010) (accepting declarations from drivers as sufficient evidence to certify a class). Defendants' employees estimated that 5% to 50% of the customers spoke Spanish during the transaction. E.g., Defs.' Ex. J; Pls.' Ex. 5 (Madrid testified 40 to 60% spoke Spanish at Downey store). Employees did not understand the purpose of the policy to explain the terms first in English, even when the customer does not understand English. Defs.' Ex. L. At a Los Angeles branch, an employee told the investigator that Spanish forms were only available if the customer requested one, but that none of the tellers spoke Spanish. Defs.' Ex. Q; see Defs.' Ex. M; Pls.' Ex. 5 (Madrid Dep.).

The California Department of Corporations conducted periodic examinations and found violations of the language requirement for several Spanish-speaking customers in 2006, 2008, and 2009. Pls.' Exs. 32 (identifying two violations), 33 ("Our examination disclosed that the written agreement was not provided in the same language principally used in discussing and negotiating deferred deposit transactions with your Spanish-speaking customers."), & 34 (same, "at some licensed locations").

Plaintiffs presented evidence that Defendants advertise in Spanish in Hispanic neighborhoods and recruit bilingual employees because "it was just good business." Defs.' Ex. J; Pls.' Exs. 11 (Newman Dep.), 16 (Weisel Dep.), & 24 (media broadcast summary). Defendants opened 88 stores in predominately Hispanic neighborhoods. Pls.' Exs. 12 (Riedel Dep.) & 28.

In addition, Plaintiffs hired investigators to visit some of the 88 stores that received Spanish documents and to record the number of transactions conducted in a language other than English. The investigators observed employees giving English forms to customers who spoke more than 50% Spanish. E.g., Defs.' Ex. O.

Plaintiffs' expert, Dr. Krosnick, took the data from those randomly selected visits and extrapolated that 23% of the transactions in the 88 stores are performed predominately in Spanish.

Defendants admit that they did not print their documents in Spanish until October 2009. See Defs.' Exs. 2, 3, & 5 (Spanish forms dated May 2009); Pls.' Exs. 5 (Madrid Dep.) & 11 (Newman Dep.). In October 2009, Defendants distributed the Spanish forms to 88 of their 300 stores. There is a sign stating, in Spanish, that the forms are available in Spanish. Defs.' Ex. 7 (Newman Depo. at 221). However, Defendants argue that they have always complied with the CDTTL because they have a corporate policy that requires the employee to orally discuss the key terms of the loan with the customer in English. This policy is designed to ensure that the essential negotiations leading up to the loan are communicated in English, even if a customer speaks some Spanish during the ten-minute transaction. Defs.' Ex. 7 (Newman Depo. at 198-200); see Defs.' Ex. 6 (Riedel Depo. at 69, 90-91). If the employee also spoke Spanish, the employee would nonetheless explain the terms first in English, and then a second time in Spanish. Defs.' Ex. 7 (Newman Depo. at 198-99); Defs.' Ex. 8 (Weisel Depo. at 40-41). Defendants follow this same procedure in stores that now have the Spanish language contracts. Defs.' Ex. 7 (Newman Depo. at 198-99). The employee has the discretion whether to provide the customer with a Spanish or English form. Id. (Newman Depo. at 221-22); but see Defs.' Ex. 10 (Lazaro Depo. at 94-95) (stating that applications were on the counter, and the customer chose whether to complete a Spanish version or an English version); Defs. Ex. 11 (Madrid Depo. at 70) (same).

On the question of fact, Defendants dispute that Rodriguez primarily spoke Spanish at the payday centers. They note that Rodriguez was not able to consistently and reliably identify which of the 54 loan transactions were conducted mainly in Spanish. Employee Adriana Lazaro states that Rodriguez always spoke English and that Rodriguez spoke better English than she did. Defs.' Ex. 10; see e.g., Defs.' Exs. 19, 20, 21, 22, & 23.

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