Worledge v. Riverstone Residential Group, LLC

Worledge v. Riverstone Residential Group, LLC, 2015 MT 142 (May 26, 2015) (Baker, J.) (5-0, aff’d)

Issue: (1) Whether the district court abused its discretion by admitting new evidence submitted with Plaintiffs’ reply brief; and (2) whether the district court properly certified Plaintiffs’ class under Rule 23(a); and (3) Rule 23(b)(3).

Short Answer: (1) No; (2) yes; and (3) yes.

Affirmed

Facts: Appellants Creekside, Wildlflower, Shiloh Glen and Mullan (Owners) own multi-unit apartment buildings in Missoula and Billings. Appellant Riverstone and its predecessor, HSC, managed Owners’ apartment complexes during the relevant times. Appellees are current or former tenants of Owners’ apartment complexes who signed leases for their apartments through Riverstone (Tenants).

In June 2013, Tenants filed a complaint on behalf of themselves and other unnamed plaintiffs who entered into rental agreements with Riverstone to rent apartments at Owners’ complexes. Tenants alleged that the rental agreements are all four complexes were almost identical, and contained provisions that violate the Montana Residential Landlord and Tenant act, and the Montana Security Deposit Act.

In March 2014, Tenants moved to certify a class under Rule 23 of the Montana Rules of Civil Procedure. In April 2014, Tenants moved to amend their first amended complaint by removing one plaintiff and adding two more. They also filed a reply brief on their motion to certify to which they attached four additional exhibits – a spreadsheet identifying each potential class member, his or her move-in and move-out dates, the apartment complex she he or she lived, and the specific prohibited provisions in his or her lease; an affidavit from the CEO of the company that drafted the spreadsheet; an affidavit from Klaus Sitte testifying to the legislative intent of the committee that drafted the Landlord-Tenant Act; and several filings in lawsuits brought by Owners against tenants in which Owners sought to enforce attorneys’ fees provisions in leases. Riverstone and Owners opposed the motion to amend and moved to strike the exhibits. 

Procedural Posture & Holding: In June 2014, the district court denied the motion to strike and gave Riverstone and Owners 14 days to file surreply briefs, which they did, and 21 days to request further hearings, which they did not. The district court granted Tenants’ motion for class certification in July 2014, and granted Tenants’ motion to amend their first amended complaint. Riverstone and Owners appeal, and the Supreme Court affirms. 

Reasoning: (1) The Supreme Court has said many times it will not address the merits of an issue raised for the first time in a reply brief; however, it has not previously addressed a case where a plaintiff presents new evidence in response to a defendant’s challenge that the plaintiff has not met her evidentiary burden. The primary concern is fairness to the defendants. Here, Riverstone and Owners filed surreplies without asking for additional time or hearings. The district court did not abuse its discretion in denying he motion to strike.

(2) Under Rule 23, the party seeking class certification must establish that the class meets the requirements of numerosity, commonality, typicality and adequate representation. Riverstone and Owners dispute commonality, typicality and adequate representation, but do not dispute numerosity.

Commonality requires questions of law or fact common to the class. Because Tenants’ allege the general business practice of Riverstone and Owners is to use leases with allegedly prohibited provisions, the district court determined that slight differences among the leases did not preclude commonality. The Supreme Court agrees. Additionally, Tenants are seeking statutory damages, not actual damages. The proposed class satisfies Rule 23(a)’s commonality requirement under Wal-Mart.

Typicality tends to merge with Commonality, and is not a demanding standard. The district court concluded that Owners’ use of the Riverstone leases constituted an event, practice or course of conduct that the class representatives share with the class. It did not abuse its discretion in holding that Tenants satisfied the typicality requirement.

Defendants do not dispute the qualifications of Tenants’ attorneys, but contend the named parties do not adequately represent the interests of the class insofar as Riverstone has not yet deducted anything from their security deposits. Because Tenants seek a declaratory judgment, not actual damages, the class interests are not antagonistic to the class representatives’ interests. The district court did not abuse its discretion in holding Tenants can adequately represent the class.

(3) Under Rule 23(b)(3), Tenants must show that the questions of law or fact common to class members predominate over questions affecting only individual members, and that a class action is superior to other available methods for adjudicating the controversy. The district court did not abuse its discretion in determining that Tenants made a sufficient showing.