Gattozzi v. Sheehan , 2016 Ohio 5230 ( 2016 )

[Cite as Gattozzi v. Sheehan, 2016-Ohio-5230.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 103246
MARY LYNN GATTOZZI
PLAINTIFF-APPELLEE
vs.
WILLIAM N. SHEEHAN, III, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-14-831933
BEFORE: Boyle, J., McCormack, P.J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: August 4, 2016
ATTORNEYS FOR APPELLANTS
Robert E. Triozzi
Director of Law
Cuyahoga County Law Department
BY: Ruchi V. Asher
Amy E. Marquit Renwald
Assistant Law Directors
2079 East Ninth Street
Cleveland, Ohio 44115
ATTORNEYS FOR APPELLEE
Charles R. Watkins
Guin, Stokes & Evans, L.L.C.
321 S. Plymouth Court, Suite 12
Chicago, Illinois 60604
Robert D. Gary
Thomas R. Theado
Gary Naegele & Theado, L.L.C.
401 Broadway Avenue, Unit 104
Lorain, Ohio 44052-1745
John R. Wylie
Barrett Wylie, L.L.C.
30 N. LaSalle Street, Suite 3
Chicago, Illinois 60602
MARY J. BOYLE, J.:
{¶1} Defendants-appellants, Cuyahoga County Executive, Cuyahoga County
Treasurer, and Cuyahoga County (collectively referred to as “the county”), appeal from
the trial court’s judgment granting plaintiff-appellee, Mary Lynn Gattozzi’s, motion for
class certification. The county raises two assignments of error for our review:
1. The trial court erred and abused its discretion in granting plaintiff’s
motion for class certification.
2. The trial court erred and abused its discretion in failing to conduct a
rigorous analysis into whether the prerequisites of Civ.R. 23 had been
satisfied.
{¶2} Finding no merit to the county’s appeal, we affirm.
I. Procedural History and Factual Background
{¶3} Gattozzi brought a class action complaint against the county in August 2014.
According to the complaint, Gattozzi’s lender foreclosed on her home in 1995.1 After
her home was sold at a sheriff’s sale, there was a remaining balance of $14,687.86 after
all expenses were paid to the appropriate parties. Gattozzi asserts that the county held
these monies, which at all time remained her “private property,” in its general fund.
{¶4} In August 2010, the Cuyahoga County Court of Common Pleas ordered the
county to release the funds to Gattozzi. Although Gattozzi received a check from the
county in the amount of $14,687.86, she did not receive any interest or income that had
accrued on the funds during the time that it was in the county’s possession.
1
See Park View Fed. Sav. f.k.a. Park View Fed. SA v. Colak, Cuyahoga C.P. No.
CV-95-292650; Gattozzi’s former name was Colak.
{¶5} Gattozzi further alleged that the county has a “uniform practice” of holding
other people’s funds until the owner claims them, and releasing those funds to the owner
once claimed, but retaining the interest that was earned on the funds during the time the
county held the funds. Gattozzi asserts that this amounts to an unconstitutional taking
of private property without compensation pursuant to Sogg v. Zurz, 121 Ohio St. 3d 449,
2009-Ohio-1526, 905 N.E.2d 187. Gattozzi’s complaint sought declaratory and
injunctive relief, as well as compensatory damages.
{¶6} Gattozzi moved for class certification pursuant to Civ.R. 23(A) and (B)(2).2
She proposed the following class definition:
All persons or entities, excluding members of the federal or state of Ohio
judiciary assigned to adjudicate in this action, who received funds on or
after August 28, 2010, that were held by defendant, whether or not
denominated as unclaimed funds or property, and who, upon receipt of
such funds, were not paid the actual interest or earnings or constructive
interest earned on those funds or just compensations for such.
{¶7} The county opposed the class certification, asserting that the putative class
was ambiguously defined and was “so broad as to include many categories of individuals
who have no factual or legal allegations that are in any way similar to the plaintiff’s
claims.”
{¶8} After discovery and full briefing of the issues, the trial court granted
Gattozzi’s motion for class certification, finding that the class was readily identifiable,
2
As an alternative, Gattozzi further asserted that the class could be certified under Civ.R.
23(B)(1)(a).
unambiguous, and that Gattozzi’s class definition met all of the requirements under
Civ.R. 23. It is from this judgment that the county appeals.
II. Sogg v. Zurz
{¶9} Although we do not reach the merits of a plaintiff’s claim when reviewing
the question of whether a trial court properly certified a class, this examination “often
requires looking into the enmeshed legal and factual issues” to determine whether the
plaintiff has satisfied Civ.R. 23. Ojalvo v. Bd. of Trustees, 12 Ohio St. 3d 230, 233, 466
N.E.2d 875 (1984); Felix v. Ganley Chevrolet, 145 Ohio St. 3d 329, 2015-Ohio-3430, 49
N.E.2d 1224, ¶ 26. Therefore, a review of Sogg is necessary in this case to determine
whether Gattozzi met her burden under Civ.R. 23.
{¶10} In Sogg, 121 Ohio St. 3d 449, 2009-Ohio-1526, 905 N.E.2d 187, the
appellant made two claims for unclaimed funds to the director of the Ohio Department of
Commerce. The director supervises and administers the Division of Unclaimed Funds
under R.C. Chapter 169 (the Unclaimed Funds Act). Sogg received a check from the
director for the amount of his claims (minus an administrative fee), plus interest earned
on the funds through July 26, 1991. “The amount that Sogg received did not include
interest earned after July 26, 1991, because R.C. 169.08(D) was amended effective July
26, 1991, to provide, ‘Interest is not payable to claimants of unclaimed funds held by the
state.’” Sogg at ¶ 2.
{¶11} Sogg brought a class action suit against the director for retaining the
interest on the funds, alleging that R.C. 169.08(D) was unconstitutional and void because
it denied “the protection of the property owner’s private property rights afforded by Art.
I, § 19 of the Ohio Constitution and the Fifth and Fourteenth Amendments to the United
States Constitution.” Id. at ¶ 5. Sogg was certified as the representative for the class
under Civ.R. 23(B)(2). The class was defined as “[a]ll persons or entities who filed, or
will file, claims for unclaimed funds with * * * the Division of Unclaimed Funds of the
Ohio Department of Commerce * * *, and who have recovered unclaimed funds but not
been paid interest on such funds for any period after July 26, 1991.” Id.
{¶12} The Ohio Supreme Court explained in Sogg that unclaimed funds never
become the property of the state. Id. at ¶ 10. In framing the question, the court stated,
“[w]hat we are left with is the state’s control over and use of the interest earned on the
property of another.” Id. The court ultimately held that unclaimed funds and the
interest earned on those funds belong to the owner of the funds, and that when the state
releases the funds to the owner, but retains the interest, it amounts to an unconstitutional
taking. Id. at ¶ 16 (“‘Unclaimed funds’ are not abandoned; they are the property of
their owner. Accordingly, the state may not appropriate for its own use, against the
owner of the underlying property, interest earned on that property. The first sentence of
R.C. 169.08(D) is unconstitutional.”).
{¶13} In Sogg, 121 Ohio St. 3d 449, 2009-Ohio-1526, 905 N.E.2d 187, the
Supreme Court also addressed the question of statute of limitations. Sogg’s two claims
involved funds that dated back to 1989 and 1998. See Sogg v. White, 139 Ohio Misc.2d
58, 2006-Ohio-4223, 860 N.E.2d 163, ¶ 2 (C.P.). Sogg filed his claim for the funds
early in 2004. Id. The Supreme Court held:
R.C. 2305.09 states that a claim “[f]or the recovery of personal property, or
for taking or detaining it” must “be brought within four years after the
cause thereof accrued.” We consider this the appropriate statute of
limitations because this case and the [Unclaimed Funds Act] are concerned
with the recovery of personal property. Accordingly, Sogg may recover
interest earned on his property in the four years preceding the date of his
claim.
Sogg, 121 Ohio St. 3d 449, 2009-Ohio-1526, 905 N.E.2d 187, at ¶ 15.
{¶14} Thus, Sogg could recover interest on the 1989 and 1998 funds dating back
to four years from the date he filed his claim for the funds. He filed his claims for the
funds in early 2004. He was, therefore, entitled to interest on those funds from early
2000 to early 2004.
III. Standard of Review
{¶15} At the outset, we are mindful that a trial judge has broad discretion when
deciding whether to certify a class action. In re Consol. Mtge. Satisfaction Cases, 97
Ohio St. 3d 465, 2002-Ohio-6720, 780 N.E.2d 556, ¶ 5, citing Marks v. C.P. Chem. Co.,
31 Ohio St. 3d 200, 509 N.E.2d 1249 (1987), syllabus. Absent a showing of abuse of
discretion, a trial court’s determination as to class certification will not be disturbed.
Id. “‘The term discretion itself involves the idea of choice, of an exercise of the will, of
a determination made between competing considerations.’” State v. Jenkins, 15 Ohio
St.3d 164, 222, 473 N.E.2d 264 (1984), quoting Spalding v. Spalding, 355 Mich. 382,
384-385, 94 N.W.2d 810 (1959). To find that a trial court abused that discretion, “the
result must be so palpably and grossly violative of fact or logic that it evidences not the
exercise of will but the perversity of will, not the exercise of judgment but the defiance
of judgment, not the exercise of reason but instead passion or bias.” Nakoff v. Fairview
Gen. Hosp., 75 Ohio St. 3d 254, 256, 662 N.E.2d 1 (1996).
{¶16} The appropriateness of applying the abuse of discretion standard in
reviewing class action determinations is grounded not in credibility assessment, but in
the trial court’s special expertise and familiarity with case-management problems and its
inherent power to manage its own docket. Hamilton v. Ohio Sav. Bank, 82 Ohio St. 3d
67, 70, 694 N.E.2d 442 (1998), citing Marks. Nonetheless, the trial court’s discretion is
not unlimited and must be bound by and exercised within the framework of Civ.R. 23.
Id. at 70. Thus, the trial court is required to carefully apply the class action
requirements and conduct a rigorous analysis into whether the prerequisites of Civ.R. 23
have been satisfied. Id.
{¶17} “[A]ny doubts about adequate representation, potential conflicts, or class
affiliation should be resolved in favor of upholding the class, subject to the trial court’s
authority to amend or adjust its certification order as developing circumstances demand,
including the augmentation or substitution of representative parties.” Baughman v. State
Farm Mut. Auto. Ins. Co., 88 Ohio St. 3d 480, 487, 727 N.E.2d 1265 (2000).
IV. Class Action Certification
{¶18} The class action is an invention of equity. Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 613, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997). Class
certification in Ohio is based upon Civ.R. 23, which is nearly identical to Rule 23 of the
Federal Rules of Civil Procedure. As the United States Supreme Court explained in
Amchem Prods., Inc. at 617:
The policy at the very core of the class action mechanism is to overcome
the problem that small recoveries do not provide the incentive for any
individual to bring a solo action prosecuting his or her rights. A class
action solves this problem by aggregating the relatively paltry potential
recoveries into something worth someone’s (usually an attorney’s) labor.
{¶19} Civ.R. 23 (A) sets forth the prerequisites to a class action. It provides that
“[o]ne or more members of a class may sue or be sued as representative parties on behalf
of all members only if:
(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 or defenses of the representative parties are typical of the
claims or defenses of the class, and class.
(4) the representative parties will fairly and adequately protect the interests
of the class.
{¶20} Civ.R. 23(B)(2), which is at issue here, provides that a class action may be
maintained if Civ.R. 23(A) is satisfied, and if “the party opposing the class has acted or
refused to act on grounds that apply generally to the class, so that final injunctive relief
or corresponding declaratory relief is appropriate respecting the class as a whole[.]”
{¶21} The Ohio Supreme Court has held that in addition to the four threshold
requirements under Civ.R. 23(A) and one of the three Civ.R. 23(B) requirements, the
class must meet two other, implicit requirements: (1) an identifiable class must exist and
the definition of the class must be unambiguous, and (2) the named representatives must
be members of the class. Warner v. Waste Mgt., Inc., 36 Ohio St. 3d 91, 96-98, 521
N.E.2d 1091 (1988).
{¶22} Before certifying the class, the trial court must find that the plaintiff has
proven by a preponderance of the evidence that each of the seven requirements of Civ.R.
23 are met. Ritt v. Billy Blanks Ents., 171 Ohio App. 3d 204, 2007-Ohio-1695, 870
N.E.2d 212, ¶ 34 (8th Dist.).
{¶23} In this appeal, the county does not challenge all of the Civ.R. 23
requirements. In its first assignment of error, the county raises five issues. It contends
that the proposed class (1) is overly broad, (2) ambiguous, (3) fails the typicality
requirement, (4) encompasses individuals who suffered no injury, and (5) does not meet
the requirements under Civ.R. 23(B)(2) because the relief requested is predominately
money damages, rather than declaratory or injunctive relief. In its second assignment
of error, the county contends that the trial court failed to conduct a “rigorous analysis”
into the Civ.R. 23 requirements before certifying the class. We will only address the
issues raised by the county.
V. Identifiable Class
{¶24} The county first argues that “[t]he class is impermissibly broad.” It
maintains that “the certified class includes individuals and entities who received any
funds * * * for reasons unrelated to [Gattozzi’s] claims in this litigation.” (Emphasis
sic.) It further contends that “[w]ithout limiting the definition to funds ‘denominated as
unclaimed funds or property,’ and broadly including ‘all persons or entities * * * who
received funds on or after August 28, 2010, that were held by defendant,’” the definition
necessarily includes “any payment to any person or entity, from any funds held by the
county, including employee salaries, rent payments, payment of utility bills, or payments
for the purchase of goods and services.”
{¶25} The county also argues that the class as defined is ambiguous. It contends
that “as defined,” the court “cannot identify whether a particular individual is a member
of the class or not” because the county’s records do not “readily demonstrate whether the
recipient owned the funds prior to payment or whether the funds included a payment of
interest.”
{¶26} We will address the county’s first two issues together as they are
interrelated. The county’s arguments that the class definition is overly broad and
ambiguous are relevant to the question of whether the class — as defined — is
identifiable. An “identifiable class” requires that the class definition be sufficiently
definite so that it is administratively feasible for the court to determine whether a
particular individual is a member. Hamilton, 82 Ohio St. 3d at 71-72, 694 N.E.2d 442.
In other words, “the class definition must be precise enough ‘to permit identification
within a reasonable effort.’” Id. at 72, quoting Warner, 36 Ohio St. 3d 91, 521 N.E.2d
1091.
{¶27} Contrary to the county’s assertion, the class definition here is not overly
broad or ambiguous. The class definition is limited to people who received funds (i.e.,
their “private property”) from the county — funds that had been “held” by the county —
without also receiving interest that the funds earned while in the county’s possession.
This in and of itself defies the county’s arguments that the definition would include
payments made by the county to employees, venders, and utility companies. The
county’s argument is illogical — especially considering Gattozzi’s complaint in light of
the Ohio Supreme Court’s holding in Sogg, 121 Ohio St. 3d 449, 2009-Ohio-1526, 905
N.E.2d 187 (“the state may not appropriate for its own use, against the owner of the
underlying property, interest earned on that property”).
{¶28} There is simply no way that county employees, venders, or utility
companies would be included in the class as it is defined. County payroll is not money
“held” for employees; it is paid to employees for work they provide to the county. The
employees have no property interest in the payroll money before they performed the
work for the county. Likewise, money paid for goods or services is not funds that the
venders or utility companies had a property right to prior to providing the good or
service. Although Gattozzi states for the sake of argument that the county’s claims
could be easily addressed by modifying the class definition to exclude funds paid to
employees, vendors, or utility companies, we see no reason to do so because the class as
defined under the facts of this lawsuit does not include those persons or entities.
{¶29} The county’s argument that the class should be limited to “funds
denominated as unclaimed funds or property” is also without merit. Unclaimed funds
in the state of Ohio are held by the Ohio Department of Commerce. Gattozzi’s funds
were not “unclaimed funds” as defined in R.C. Chapter 169 (the Unclaimed Funds Act).
Rather, Gattozzi’s “unclaimed funds” were held by the county pursuant to R.C. 9.39,
and were kept in the county’s “general fund.”
{¶30} R.C. 9.39 provides:
All public officials are liable for all public money received or collected by
them or by their subordinates under color of office. All money received or
collected by a public official under color of office and not otherwise paid
out according to law shall be paid into the treasury of the public office with
which he is connected to the credit of a trust fund and shall be retained
there until claimed by its lawful owner. If not claimed within a period of
five years, the money shall revert to the general fund of the public office.
{¶31} Under the Unclaimed Funds Act, “[m]oney received or collected under
section 9.39 of the Revised Code” is not “unclaimed funds.” Although Sogg, 121 Ohio
St.3d 449, 2009-Ohio-1526, 905 N.E.2d 187, specifically addressed funds that are held
by the state under the Unclaimed Funds Act, Gattozzi alleges that the same constitutional
principles apply here. Gattozzi asserts that Sogg “is not limited to that narrow context.”
She contends that just as in Sogg, the county’s retention of the interest earned on her
private property was an unconstitutional taking. And indeed, this is the question that is
central to this case, i.e., the question that must be determined on a class-wide basis here;
the merits of the action. Whether she is correct goes to the merits of this case, but this
is not a reason to deny class certification. Thus, to properly include Gattozzi’s (and
others’) funds that were “held” by the county in the county’s “general fund,” the class
definition here necessarily must include funds that may not have been “denominated” in
the county’s “general fund” as “unclaimed funds.”
{¶32} We further find that the class can be easily ascertained, is identifiable, and
not ambiguous. In her interrogatories to the county, Gattozzi asked the following
questions:
1. For the period beginning on August 27, 2010, through and including
the date of your answer to this interrogatory, state (a) the number of
persons who have received a refund of unclaimed funds held in custody by
the Cuyahoga County Treasurer, and (b) the aggregate amount of all such
funds.
2. For the period beginning on August 27, 2010, through and including
the date of your answer to this interrogatory, state (a) the number of
persons who have received a refund of unclaimed foreclosure moneys held
in custody, pursuant to Ohio R.C. 9.39, by the Cuyahoga County Treasurer,
and (b) the aggregate amount of all such funds.
{¶33} The county responded to the first question by stating that it had made 812
disbursements (although in some instances, had made disbursements to the same person
on different days) during the relevant time period, amounting to $5,317,910.71. It
replied to the second question by stating that it had made 651 total disbursements (with
the same caveat), amounting to $4,064,222.29.
{¶34} The county argues that these numbers are just dollar amounts, but they do
not “readily demonstrate whether the recipient owned the funds prior to payment or
whether the funds included a payment of interest.” We disagree. If the county has
released the funds to a person who has made a claim against the funds, then the issue of
ownership has been determined. Additionally, from those same records, it will not be
difficult to determine whether a payment of funds to a claimant-owner included interest.
{¶35} After review, we conclude that the parties can easily determine, by looking
at the county’s records, what funds were held by the county, and who the county released
funds to without paying interest on those funds.
{¶36} The county’s first two issues are without merit.
VI. Typicality
{¶37} In its third issue presented, the county contends that the proposed class does
not satisfy the typicality requirement. The county maintains that its “unique defenses”
against Gattozzi’s claims are atypical from a large portion of the defined class.
{¶38} “The requirement of typicality serves the purpose of protecting absent class
members and promoting the economy of class action by ensuring that the interests of the
named plaintiffs are substantially aligned with those of the class.” Baughman, 88 Ohio
St.3d at 484, 727 N.E.2d 1265, citing 5 Moore, Federal Practice, Section 23.24[1], at
23-92 to 23-93 (3d Ed.1977).
{¶39} While the defenses or claims of the class representative must be typical of
the class members, they need not be identical. Id. at 485, citing Planned Parenthood
Assn. of Cincinnati, Inc. v. Project Jericho, 52 Ohio St. 3d 56, 556 N.E.2d 157 (1990).
The requirement for typicality is met where there is no express conflict between the class
representatives and the class. Hamilton, 82 Ohio St. 3d at 77, 694 N.E.2d 442.
{¶40} The Ohio Supreme Court has explained:
“The rationale for this provision is that a plaintiff with typical
claims will pursue his or her own self-interest in the litigation and in so
doing will advance the interests of the class members, which are aligned
with those of the representative. In such a case, the adjudication of the
plaintiff’s claim regarding defendant’s wrongdoing would require a
decision on the common question of the defendant’s related wrongdoing to
the class generally.
“Typicality determines whether a sufficient relationship exists
between the injury to the named plaintiff and the conduct affecting the
class, so that the court may properly attribute a collective nature to the
challenged conduct. In other words, when such a relationship is shown, a
plaintiff’s injury arises from or is directly related to a wrong to a class, and
that wrong includes the wrong to the plaintiff. Thus, a plaintiff’s claim 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. When it is alleged that the same unlawful
conduct was directed at or affected both the named plaintiff and the class
sought to be represented, the typicality requirement is usually met
irrespective of varying fact patterns which underlie individual claims.”
Baughman at 485, quoting 1 Newberg, Class Actions, Section 3.13, at 3-74 to 3-77 (3d
Ed.1992).
{¶41} The county argues that the defined class includes “all money paid by the
county to any individual or entity, regardless of the source of the money, regardless of
whether the payee had a claim to the money prior to receipt, and regardless of whether
the money was designated as unclaimed funds.” The county asserts once again that this
would necessarily include money paid to county employees as payroll and to venders
who provide goods and services to the county. Again, we disagree that the class as
defined would include persons or companies — employees, vendors, and utility
companies — that the county paid money to for goods and services. As we stated
previously, this argument is illogical in the light of Gattozzi’s complaint and the Sogg
decision.
{¶42} The county also argues several issues “unique to [Gattozzi’s] claims remain
in dispute, including whether she owned the funds during the various phases of her
foreclosure proceeding, and whether the excess funds from the sale were held for her
benefit during that time.” The county maintains that answers to these questions will not
determine whether every individual who received funds is entitled to interest.
{¶43} Unique defenses, however, will not destroy typicality or adequacy of
representation unless it is “so central to the litigation that it threatens to preoccupy the
class representative to the detriment of the other class members.” Hamilton, 82 Ohio
St.3d at 78, 694 N.E.2d 442, citing 5 Moore, Federal Practice, 23-126, Section
23.25[4][b][iv], at 23-98, and Section 23.24[6]. We do not find that this is the case
here.
{¶44} After review, we conclude that Gazzotti’s claims against the county are
typical of the class as defined. The plaintiff’s claim — that the county appropriated
interest that it earned on her private property — is typical of the class as it arises from
the same uniform practice or course of conduct by the county. Moreover, her claims
are based on the same legal theory, which affected not only her, but potentially hundreds
of people. We therefore find that Gazzotti’s claims meet the typicality requirement of
Civ.R. 23(A)(3).
{¶45} Accordingly, we find no merit to the county’s third issue.
VII. Injury to Class Members
{¶46} In its fourth issue raised, the county contends that the trial court abused its
discretion in certifying the class because the defined class includes individuals who did
not suffer any injury. Within this argument, the county maintains, as it did in its first
issue, that the class definition is overly broad and ambiguous. In support of this
argument, the county again claims that the class as defined includes any individual who
furnished goods or services to the county and received funds from the county treasurer,
as well as 4,500 employees who receive their salaries from funds held by the county
treasurer. The county even asserts that the class would include the county treasurer and
executive as well. But we have already disposed of this argument, and we need not
address it again.
{¶47} The county raises two additional arguments within this issue. It argues
that some of the individuals of the class may not be entitled to interest because their
funds were held “for such a short period of time that they did not accrue interest.” It
also maintains that some of the individuals of the class may not own the funds held by
the county and, thus, have suffered no injury.
{¶48} With respect to individuals whose funds were held for such a short period
of time that interest did not accrue, we disagree with the county’s argument. Even if
the county held a person’s funds for one day, those funds accrued a finite amount of
interest. Likewise, the county’s remaining argument, that the defined class could
include persons who may or may not own the funds, simply has no merit. The class as
defined includes “[a]ll persons * * * who received funds on or after August 28, 2010,
that were held by defendant[.]” Thus, the issue of ownership has already been decided
because the county has already released the funds to the owner. Presumably, the county
would not release funds to persons who were not entitled to the funds.
{¶49} Thus, we find no merit to the county’s fourth issue.
VIII. Certification under Civ.R. 23(B)(2)
{¶50} The final issue raised by the county in its first assignment of error is that it
contends the trial court improperly certified the class under Civ.R. 23(B)(2) because the
plaintiff’s request for money damages predominates over “any requested injunctive relief
or declaratory relief.”
{¶51} Civ.R. 23(B)(2) provides that a class may be maintained when “the party
opposing the class has acted or refused to act on grounds that apply generally to the
class, so that final injunctive relief or corresponding declaratory relief is appropriate
respecting the class as a whole[.]” Courts have ruled that this provision is inapplicable
where the primary relief requested is damages and not injunctive relief. Wilson v.
Brush Wellman, Inc., 103 Ohio St. 3d 538, 2004-Ohio-5847, 817 N.E.2d 59, ¶ 16, citing
Marks, 31 Ohio St. 3d 200, 509 N.E.2d 1249.
{¶52} The Advisory Notes to Civ.R. 23(B)(2) state:
This subdivision is intended to reach situations where a party has taken
action or refused to take action with respect to a class, and final relief of an
injunctive nature or of a corresponding declaratory nature, settling the
legality of the behavior with respect to the class as a whole, is appropriate.
Declaratory relief “corresponds” to injunctive relief when as a practical
matter it affords injunctive relief or serves as a basis for later injunctive
relief. The subdivision does not extend to cases in which the appropriate
final relief relates exclusively or predominantly to money damages.
Action or inaction is directed to a class within the meaning of this
subdivision even if it has taken effect or is threatened only as to one or a
few members of the class, provided it is based on grounds which have
general application to the class.
(Emphasis added.)
{¶53} Thus, the notes make it clear that this subsection certainly permits plaintiffs
to seek money damages in their class action complaint, as long as money damages are
not “the exclusive or predominant” relief requested, and courts have held as much. In
Hamilton, 82 Ohio St. 3d 67, 694 N.E.2d 442, the Ohio Supreme Court explained:
“Disputes over whether the action is primarily for injunctive or
declaratory relief rather than a monetary award neither promote the
disposition of the case on the merits nor represent a useful expenditure of
energy. Therefore, they should be avoided. If the Rule 23(a)
prerequisites have been met and injunctive or declaratory relief has been
requested, the action usually should be allowed to proceed under
subdivision (b)(2). Those aspects of the case not falling within Rule
23(b)(2) should be treated as incidental. Indeed, quite commonly they
will fall within Rule 23(b)(1) or Rule 23(b)(3) and may be heard on a class
basis under one of those subdivisions. Even when this is not the case, the
action should not be dismissed. The court has the power under
subdivision (c)(4)(A), which permits an action to be brought under Rule 23
‘with respect to particular issues,’ to confine the class action aspects of a
case to those issues pertaining to the injunction and to allow damage issues
to be tried separately.”
Id. at 87, quoting Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure, Section 1775, at 470 (2d Ed.1986)
{¶54} Here, the county asserts that class certification under Civ.R. 23(B)(2) is not
appropriate because “[t]he requested compensatory relief would require individualized
calculations” to determine (1) when a class member became vested in the funds, (2) how
long the county held the class member’s funds, and (3) how the funds ended up in the
county’s possession. It maintains that these individualized calculations as to “how
much interest is owed on those funds would predominate over the declaratory relief
requested.”
{¶55} The county cites to Coleman v. GMAC, 296 F.3d 443 (6th Cir.2002), in
support of its argument. In Coleman, the plaintiff alleged that GMAC’s retail credit
pricing system for automobile purchases had a disparate impact on her and other African
Americans under the Equal Credit Opportunity Act (“ECOA”). Plaintiff sought
injunctive relief and compensatory damages under the ECOA, and further sought class
certification under Fed.R.Civ.P. 23(b)(2). Defendant opposed certification of the class
because, in its view, “the individualized issues regarding liability and damages
render[ed] the suit inappropriate” for class certification under Fed.R.Civ.P. 23(b)(2).
Id. at 446.
{¶56} The court in Coleman agreed with the defendant, stating that the
compensatory damages requested were not appropriate for Rule 23(b)(2) class
certification for several reasons. It explained:
First, the inclusion of this claim undermines the assumption of
homogeneity because each member of the class has an individual stake in
the outcome of the litigation that could be protected by the opportunity to
opt out of the class. See [Holmes v. Contintental Can Co., 706 F.2d 1144,
1156 (11th Cir. 1983)] (“money damages are directly related to the
disparate merits of individual claims and are not generally applicable to the
claims of the class as a whole”) (internal quotations omitted). Second, the
individualized determinations necessary to calculate the amount of
damages each class member would be entitled to eliminates the efficiencies
created by adjudicating these claims on a classwide basis. See, e.g.,
Buycks-Roberson v. Citibank Federal Savings Bank, 162 F.R.D. 322, 335
(N.D. Ill. 1995) (denying certification of compensatory damages claims
under Rule 23(b)(2) in a class action asserting discrimination under the
ECOA because of the inability to apply a classwide formula to their
calculation). Finally, the primary justification for class treatment of these
claims is largely absent in this case because the ECOA’s provision for the
award of attorney’s fees and costs to successful plaintiffs eliminates any
potential financial bar to pursuing individual claims. 15 U.S.C. §
1691e(d).
Coleman at 449.
{¶57} After reviewing the facts set forth in Coleman, we fail to see how it is
analogous to the present case. The complex issues that the court faced in Coleman
regarding class certification under Fed.R.Civ.P. 23(b)(2) simply do not exist in this case.
{¶58} In the present case, Gattozzi alleges that the county retained and continues
to retain interest earned on class members’ private property (funds the county held),
which amounted to a constitutional taking under Sogg, 121 Ohio St. 3d 449,
2009-Ohio-1526, 905 N.E.2d 187. We disagree with the county that the court will have
to determine when a class member became vested in the funds. Again, if the county has
released the funds to the owner — a prerequisite to being included in the class — that
has already been determined. We further disagree that the court will have to determine
how the funds ended up in the county’s possession. The fact that the county “held” the
funds is sufficient. And determining how long the county held the funds, which is
relevant to determining damages, will be easily ascertainable by looking at the county’s
records.
{¶59} Moreover, the proposed class only includes persons who received
unclaimed funds from the county after August 10, 2010. Although the county is correct
that interest rates fluctuate, the reality is that they have not fluctuated that much since the
economic recession of 2008. Therefore, we disagree that calculating the amount of
interest for each individual will be complicated. Rather, the calculation will be a
straightforward mathematical determination, easily determined by today’s technology.
{¶60} Indeed, we find this case more similar to Hamilton, rather than Coleman,
296 F.3d 443. In Hamilton, the plaintiffs brought an action to challenge certain
methods used to amortize their residential mortgage loans. The bank argued, inter alia,
that in proving money damages, the elements of inducement and reliance must be proven
on an individual basis. The Supreme Court held that the class could be certified under
Civ.R. 23(B)(2), disagreeing with the bank that the plaintiff subclasses were primarily
seeking money damages. The court explained:
Their primary object is to terminate Ohio Savings’ alleged practice of
overcharging interest and/or misamortizing its loans. Without such relief,
they would achieve only the recoupment of overpaid interest to date. The
fact that money damages are also sought in addition to injunctive relief
does not defeat certification under Civ.R. 23(B)(2).
Hamilton, 82 Ohio St. 3d at 86-87, 694 N.E.2d 442.
{¶61} Similar to Hamilton, Gattozzi seeks a declaration that the county’s practice
of retaining interest earned on funds when it releases the funds to the owner is
unconstitutional, and she further seeks to prevent the county in the future from retaining
interest on funds when it releases the funds to the owner. The fact that money damages
are also sought in addition to declaratory and injunctive relief does not defeat class
certification under Civ.R. 23(B)(2).
{¶62} We find no merit to the county’s fifth issue. Having dispensed with each
issue raised in the county’s first assignment of error, we therefore overrule it.
IX. Rigorous Analysis by the Trial Court
{¶63} In its second assignment of error, the county argues that the trial court
failed to conduct the required “‘rigorous analysis’ into whether the pre-requisites of
Civ.R. 23 have been satisfied.” The county asserts that the trial court failed to conduct
a “rigorous analysis” because the trial court did not issue formal findings showing why it
certified the class.
{¶64} Although we agree that a “rigorous analysis” is required under Hamilton,
82 Ohio St. 3d 67, 694 N.E.2d 442, and other cases, neither Civ.R. 23 nor the Ohio
Supreme Court mandates that a trial court must make formal findings evidencing that it
did so. In Hamilton, the Ohio Supreme Court stated as much. Id. at 70 (a trial court is
not required to “make formal findings to support its decision on a motion for class
certification”). Although the Ohio Supreme Court acknowledged “there are compelling
policy reasons for doing so,” such as ease of appellate review, “there is no explicit
requirement in Civ.R. 23.” Id.
{¶65} Thus, while a fully articulated decision is preferable, it is not essential to a
class certification. Other courts have also held that “‘nothing in Hamilton requires us to
find an abuse of discretion solely because the trial court did not comply with this
recommendation.’” Jacobs v. FirstMerit Corp., 11th Dist. Lake No. 2013-L-012,
2013-Ohio-4308, ¶ 23, quoting Pyles v. Johnson, 143 Ohio App. 3d 720, 758 N.E.2d
1182 (4th Dist.2001). Indeed, in Hamilton, although the trial court did not rule on each
class-action requirement or provide any rationale for its class-certification decision, the
Supreme Court addressed the merits of the trial court’s denial of class certification based
on the Supreme Court’s review of the record.
{¶66} Although it would have been preferable for our review if the trial court had
made formal findings in support of its class certification, it did not have to do so. And
just as the Supreme Court in Hamilton was able to determine from the record that the
trial court abused its discretion by not certifying the class, we are likewise able to discern
from the record that the trial court’s decision in certifying the class in this case was not
“so palpably and grossly violative of fact or logic that it evidence[d] not the exercise of
will but the perversity of will, not the exercise of judgment but the defiance of judgment,
not the exercise of reason but instead passion or bias[.]” Nakoff, 75 Ohio St. 3d at 256,
662 N.E.2d 1.
{¶67} Accordingly, we overrule the county’s second assignment of error.
{¶68} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment
into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY J. BOYLE, JUDGE
TIM McCORMACK, P.J., CONCURS;
EILEEN T. GALLAGHER, J., DISSENTS (WITH SEPARATE OPINION)
EILEEN T. GALLAGHER, J., DISSENTING:
{¶69} I respectfully dissent from the majority’s opinion because I believe
Gattozzi failed to establish the requirements for class certification under Civ.R. 23. In
my view, the class definition is overly broad and individual questions predominate over
common issues.
{¶70} As noted by the majority, an identifiable class must exist before
certification is permissible. “Where a class is overbroad and could include a substantial
number of people who have no claim under the theory advanced by the named plaintiff,
the class is not sufficiently definite.” Miller v. Painters Supply & Equip. Co., 8th Dist.
Cuyahoga No. 95614, 2011-Ohio-3976, ¶ 24.
{¶71} To qualify as an “identifiable class,” the defined class must be “sufficiently
definite so that it is administratively feasible for the court to determine whether a
particular individual is a member.” Hamilton v. Ohio Savs. Bank, 82 Ohio St. 3d 67,
71-72, 694 N.E.2d 442 (1998), quoting 7A Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice and Procedure, Section 1760 (2d Ed.1986). In other
words, the class definition must be precise enough “to permit identification within a
reasonable effort.” Id. at 71-72, quoting Warner v. Waste Mgt., Inc., 36 Ohio St. 3d 91,
96, 521 N.E.2d 1091 (1988).
{¶72} The majority found that the putative class is sufficiently defined and
identifiable because every member of the class received funds on or after August 28,
2010, but did not receive interest on the funds for the period of time the funds were in
the county’s possession. A list of every recipient of funds from the county treasurer or
fiscal officer during a specific period of time would undoubtedly facilitate the
identification of class members. However, the defined class also includes individuals
and entities, who may not have been injured, and whose claims may involve unique
issues, governed by different laws or statutes, and subject to different defenses.
{¶73} The defined class includes “any persons or entities * * * who received
funds * * * that were held by the Defendant * * * whether or not denominated as
unclaimed funds or property.” (Emphasis added.) The county collects and holds
funds from various sources pursuant to R.C. 9.39, which provides, in relevant part:
All money received or collected by a public official under color of office
and not otherwise paid out according to law shall be paid into the treasury
of the public office with which he is connected to the credit of a trust fund
and shall be retained there until claimed by its lawful owner. If not
claimed within a period of five years, the money shall revert to the general
fund of the public office.
{¶74} The funds collected by the fiscal officer pursuant to R.C. 9.39, come from
various sources, including, but not limited to (1) property taxes, (2) sales and use taxes,
(3) licenses and permits, (4) proceeds from the sale of bonds, (4) state subsidy funds, and
(5) sheriff sales of properties in aid of execution on judgments. See R.C. 325.27,
325.31, 325.08, 321.27, 2335.06, 118.17, 5139.34, and 5721.38.
{¶75} The fiscal officer makes payments to individuals and entities for a
multitude of reasons. R.C. 325.17 directs the county treasurer to pay salaries and
benefits to county employees on a biweekly basis “from the county treasury.”
Compensation for employees may also include irregular payments, such as compensation
for unused vacation and holiday time or back pay. R.C. 325.19.
{¶76} Pursuant to R.C. 325.191, employees may also receive “tuition
reimbursement and educational material reimbursement.” Staff development and
continuing education “may include the expenditure of training funds for special teachers,
consultants and educational facilities necessary to implement the program.” Id. The
county is authorized to enter into contracts with third-party professionals, vendors, and
contractors for a variety of goods and services. See R.C. Chapter 9.23 et seq. If the
treasurer makes a payment to a third party in a timely manner, the third-party recipient
would not be injured or entitled to interest.
{¶77} In my view, the class definition certified by the trial court is so broad that it
includes any funds held by the defendant that were received by a class member —
whether or not the class member was entitled to, or was the owner of, the funds prior to
receiving them. Without limiting the definition to funds “denominated as unclaimed
funds or property,” and including “all persons or entities * * * who received funds on or
after August 28, 2010, that were held by the Defendant,” the definition includes any
payment to any person or entity, from any funds held by the county, including
employees’ biweekly paychecks, rent payments, payment of utility bills, or payments for
the purchase of goods and services.
{¶78} Such a broadly defined class opens up a can of worms. For example, the
county retains each employee’s biweekly paycheck for two weeks after the income was
earned. Are those employees entitled to interest for those two weeks? Independent
contractors such as court-appointed counsel, arbitrators and the like receive funds from
the county treasury. Are they entitled to interest when they do not immediately receive
compensation for services rendered? The vast majority of recipients of county funds
are probably not entitled to any interest and have not been injured because they received
funds from the defendants during the normal course of business. But they, too, are
included in the putative class. Under the class definition, employees, independent
contractors, arbitrators and others could argue they are entitled to interest on their funds
and these claims would require separate adjudications.
{¶79} Thus, determining whether a particular individual is truly a member of the
class of injured plaintiffs is not administratively feasible. Civ.R. 23(B)(3) requires that
common questions represent a significant aspect of the case so that they can be resolved
for all members of the class in a single adjudication. Schmidt v. Avco Corp., 15 Ohio
St.3d 310, 313, 473 N.E.2d 822 (1984). An overly broad class definition dramatically
increases the likelihood that individual questions will predominate over common issues.
Under the defined class, the trial court will be forced to separately determine whether
certain groups of people, whether employees, independent contractors, vendors etc., who
received funds from the defendants on or after August 10, 2010, truly belong in the class.
{¶80} Therefore, many of the recipients of county funds included in the defined
class were not injured or entitled to interest on their funds. Those who may be entitled
to interest would likely have unique questions of law and fact, depending on the facts
and circumstances surrounding the funds and their owners. For these reasons, I would
find that the defined class fails to meet the requirements for class certification set forth in
Civ.R. 23 because the class is too broadly defined and individual questions predominate
over common issues.
{¶81} Accordingly, I would sustain both assignments of error, reverse the trial
court’s judgment, and remand the case to the trial court to allow Gattozzi to redefine the
class by limiting it to only those individuals who received unclaimed funds out of the
proceeds of sheriff sales.