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United States ex rel. Terry v. Wasatch Advantage Group, LLC

United States District Court, E.D. California

January 14, 2020

UNITED STATES OF AMERICA, ex rel. DENIKA TERRY and ROY HUSKEY III, and each of them for themselves individually, and for all other persons similarly situation and on behalf of the UNITED STATES OF AMERICA, Plaintiffs/Relators,


         Plaintiffs' motion seeking (1) clarification, or in the alternative, amendment of the class definition, (2) compilation of the class list, (3) approval of the proposed class notice, and (4) amendments to the scheduling order is before the court. Mot., ECF No. 107. Defendants oppose the motion only to the extent it seeks to redefine the operative class period previously certified by the court. Opp'n, ECF No. 108. All other forms of relief sought by plaintiffs are unopposed. Id. On the issue of class definition, plaintiffs have lodged a reply. Reply, ECF No. 112. On August 23, 2019, the court heard oral argument on the matter; counsel Laura Ho appeared for plaintiffs and counsel Ryan Matthews appeared for defendants. For the reasons explained below, plaintiffs' motion is GRANTED in its entirety.

         I. BACKGROUND

         Given the lengthy history of this case, the court need not rehash the factual and procedural background beyond what is relevant to the present motion.[1] Plaintiffs initiated this putative class action on April 14, 2015. Compl., ECF No. 1. Since then, the complaint has undergone four rounds of amendment. See First Am. Compl., ECF No. 25; Second Am. Compl., ECF No. 66; Third Am. Compl. (“TAC”), ECF No. 71-2; Fourth Am. Compl. (“FAC”), ECF No. 98. From inception, plaintiffs have consistently described the relevant class period “as the time period starting [four or six] years prior to the date of filing of this Complaint.” See Compl. ¶¶ 39, 41 (six-year class period); First Am. Compl. ¶¶ 39, 41 (same); Second Am. Compl. ¶¶ 41, 43 (same); TAC ¶¶ 44, 47 (four-year class period); FAC ¶¶ 47, 50 (same).

         On July 30, 2018, citing to plaintiffs' Third Amended Complaint, the court certified the Rule 23(b)(3) “reimbursement class”[2] as follows:

All persons who, in the time period starting four years prior to the date of filing this Complaint through the final resolution of this matter, (1) have been tenants at any of Defendants' California properties; (2) have participated in the “Section 8” Housing Choice Voucher Program in connection with their tenancies at the California properties; and (3) have paid additional charges set forth in Additional Services Agreements in excess of their individual portions of the contract set forth in the HAP Contracts.

Class Cert. Order at 13 (citing TAC ¶ 44).

         What is meant by “the time period starting four years prior to the date of filing this Complaint” is the subject of dispute here. Plaintiffs contend this four-year class period begins April 14, 2011, exactly four years prior to the filing of the initiating complaint. Mot. at 9; Reply at 2. Defendants believe the four-year class period runs from the date of the operative Fourth Amended Complaint. See generally Opp'n. As discussed below, the court GRANTS plaintiffs' motion in its entirety and defines the class period to begin April 14, 2011.


         A. Plaintiffs' Arguments

         Plaintiffs ask the court to clarify that when certifying the class period as “starting four years prior to the date of filing this Complaint, ” the court meant from the initial complaint, and thus the class period begins April 14, 2011. Mot. at 9. Alternatively, if the court's certification order ambiguously defines the class period, plaintiffs ask the court to adopt their interpretation because it relates the class claims back to the filing of the original complaint. Id.

         As to the latter argument, plaintiffs rely on the relation-back doctrine rooted in Federal Rule of Civil Procedure 15(c) and apply the Ninth Circuit's three-part test set forth in In re Syntex Corp. Sec. Litig., 95 F.3d 922, 935 (9th Cir. 1996), for expanding the class scope. The Syntex test requires: “(1) the original complaint gave the defendant adequate notice of the claims of the newly proposed plaintiff; (2) the relation back does not unfairly prejudice the defendant; and (3) there is an identity of interests between the original and newly proposed plaintiff.” 95 F.3d at 935. Applying this test, plaintiffs contend (1) defendants had adequate notice “because the original complaint . . . alleged violations based on general conduct and practices by Wasatch that Wasatch knew applied to its Section 8 tenants across California” and “the complaint directly referred to the scope of Defendants' entire portfolio of residential properties and explicitly reserved the right to amend the class definition if supported by discovery”; (2) defendants will not be prejudiced “because the expanded class's claims are identical to the claims set forth in the original complaint, and depend on common methods of proof”; and (3) “members of the expanded certified class based on the Third Amended Complaint share an identity of interests with members of the putative class in the original complaint because they are bringing identical claims.” Mot. at 10-11.

         To the extent “four years prior to the date of filing this Complaint” is ambiguous, plaintiffs reason their interpretation is consistent with the nature of the class certification pleadings and, moreover, defendants “were on notice of the temporal scope of Plaintiffs' class claims based on the parties' earlier discovery dispute . . . and although they discussed the proposed class definition in their opposition to class certification, they did not suggest that it temporally limited the class period . . . .” Id. at 12.

         Alternatively, plaintiffs argue that if the court determines the current class period is limited to the four years preceding the Third Amended Complaint, the court should exercise its discretion to amend the class definition exercising its authority under Rule 23. Id. Plaintiffs assert that modifying the class-period definition “would not change a single element of the Court's Rule 23 analysis from its July 30, 2018 [class certification] order[, ]” would not prejudice defendants who have been on notice of state-wide claims and received voluminous discovery dating back to 2011, and will not meaningfully affect the nature of the litigation because the claims of property residents prior to 2014 verse current residents are nearly identical. Id. Finally, plaintiffs maintain they expeditiously moved for amendment of the class definition upon discovering defendants' divergent interpretation. Id.

         B. Defendants' Arguments

         Defendants counter that the plain language of the court's certification order and the Third and Fourth Amended Complaints clearly define the class period as limited by the four years prior to “that Complaint, ” meaning the operative complaint, not the original complaint. Opp'n at 2-4 (emphasis in original). Defendants argue that “complaint” is not synonymous with “action” or “matter”; thus, when plaintiffs' own definition refers to ...

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