               IN THE SUPREME COURT OF IOWA
                              No. 14–0691

                         Filed January 22, 2016

                         Amended April 5, 2016


DARLA LEGG and JASON T. LEGG, on Behalf of Themselves and All
Persons Similarly Situated,

      Appellees,

vs.

WEST BANK,

      Appellant.

_______________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Bradley

McCall, Judge.



      Defendant moves for interlocutory appeal from a district court

ruling certifying class action status. DECISION OF DISTRICT COURT

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.



      Wade R. Hauser III, Jason M. Craig, Lindsay A. Vaught, and

Michael J. Streit of Ahlers & Cooney, P.C., Des Moines, for appellant.



      Ann E. Brown-Graff, Brad J. Brady, and Matthew L. Preston of

Brady Preston Brown PC, Cedar Rapids, for appellees.
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ZAGER, Justice.

      In this interlocutory appeal, we are asked to determine whether the

district court properly certified a class action based on the plaintiffs’

usury and sequencing claims involving one-time nonsufficient fund (NSF)

fees charged by the bank.     This case is a companion case to another

opinion we file today, Legg v. West Bank, 873 N.W.2d 763, 765 (Iowa

2016). Because we concluded in that case that the district court erred in

denying the bank’s motions for summary judgment except as to the

good-faith claim involving the sequencing of overdrafts, we likewise find

that the district court erred in certifying the class action on all claims

except for the good-faith claim based on sequencing.

      I. Background Facts and Proceedings.

      Because the background facts and proceedings are the same in

both cases, we incorporate them here by reference.

      II. Standard of Review.

      “Our review of the district court’s ruling granting or denying

certification of a class action is limited because the district court enjoys

broad discretion in the certification of class action lawsuits.” Vos v. Farm

Bureau Life Ins. Co., 667 N.W.2d 36, 44 (Iowa 2003).         We reverse a

district court’s ruling granting certification only if we find the decision

was based upon an abuse of discretion. Kragnes v. City of Des Moines,

810 N.W.2d 492, 498 (Iowa 2012). An abuse of discretion is found only

when the district court’s grounds for certifying a class action are clearly

unreasonable. Anderson Contracting, Inc. v. DSM Copolymers, Inc., 776

N.W.2d 846, 848 (Iowa 2009). “Our class-action rules are remedial in

nature and should be liberally construed to favor the maintenance of
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class actions.” Id. (quoting Comes v. Microsoft Corp., 696 N.W.2d 318,

320 (Iowa 2005)).

      III. Class Action Status.

      West Bank challenged the district court’s certification of class

action status on both the usury and sequencing subclasses. It raised

challenges to class action status under both the Iowa Consumer Credit

Code (ICCC) and the Iowa Rules of Civil Procedure. One of the challenges

West Bank made to the usury subclass arose under Iowa Code section

537.5201 (2009), part of the ICCC. Because we found in the companion

case that the usury claims could not proceed under the ICCC, we

likewise choose not to address the arguments against class action status

that arise under the ICCC in this opinion.

      Iowa Rules of Civil Procedure 1.261 and 1.262 govern the

commencement of a class action and the certification of a class. Rule

1.261 provides that:

      One or more members of a class may sue or be sued as
      representative parties on behalf of all in a class action if both
      of the following occur:

            1.261(1) The class is so numerous or so constituted
      that joinder of all members, whether or not otherwise
      required or permitted, is impracticable.

             1.261(2) There is a question of law or fact common to
      the class.

Iowa R. Civ. P. 1.261.

      Our rules require the class to be “either so numerous or

constituted in such a way that joinder is impracticable and there is a

question of law or fact common to the class.” Anderson Contracting, 776

N.W.2d at 848. We have “adopted the general rule . . . that if the class is
                                         4


large, numbers alone are dispositive to show impracticability.”       City of

Dubuque v. Iowa Trust, 519 N.W.2d 786, 792 (Iowa 1994). A class with

forty or more members is within the range where impracticability is

presumed. Id. As noted by the district court in its ruling, West Bank

has conceded numerosity is satisfied.

      The second prong under rule 1.261 requires a “question of law or

fact common to the class,” sometimes referred to as “predominance.”

Iowa R. Civ. P. 1.261. Predominance or commonality asks whether the

class members have common issues that predominate over individual

issues.   Anderson Contracting, 776 N.W.2d at 852.             The test for

predominance or commonality

      is a pragmatic one, which is in keeping with the basic
      objectives of the [class action rule].          When common
      questions represent a significant aspect of the case and they
      can be resolved for all members of the class in a single
      adjudication, there is a clear justification for handling the
      dispute on a representative rather than an individual basis. .
      . . [C]ourts have held that a [class action] can be brought . . .
      even though there is not a complete identity of facts relating
      to all class members, as long as a “common nucleus of
      operative facts” is present. . . .

             The common questions need not be dispositive of the
      entire action. In other words, “predominate” should not be
      automatically equated with “determinative” or “significant.”
      Therefore, when one or more of the central issues in the
      action are common to the class and can be said to
      predominate, the [class] action will be considered proper . . . .
      Typically, this situation arises in antitrust or securities fraud
      cases. . . . [I]n these actions the courts generally hold that if
      defendant’s activities present a “common course of conduct”
      so that the issue of statutory liability is common to the
      class, the fact that damages . . . may vary for each party
      does not require that the class action be terminated.

Luttenegger v. Conseco Fin. Servicing Corp., 671 N.W.2d 425, 437 (Iowa

2003) (emphasis omitted) (quoting 7AA Charles Alan Wright, Arthur R.
                                         5


Miller, & Mary Kay Kane, Federal Practice and Procedure § 1778, at 121–

25 (2d ed. 1986) (footnotes omitted)).

      The Leggs argue the sequencing subclass has overarching issues of

law that are identical.    The sequencing subclass has questions of law

regarding high-to-low sequencing and whether the sequencing resulted

in unjust enrichment or violated an implied or express duty of good faith.

The Leggs further assert that West Bank’s finance charges and

sequencing protocol were identical for all customers during the same

time period.    Because we conclude that the district court erred in

denying the bank’s motion for summary judgment on the unjust

enrichment claims, we only address the good-faith claims based on

sequencing.    We conclude that the district court did not abuse its

discretion in finding commonality was met for the good-faith sequencing

subclass.

      West Bank argued that individual issues would predominate

because the plaintiffs would have to prove the date of the overdraft, the

amount of the overdraft, the amount of the NSF fee, and the date on

which the NSF fee was paid for each class member.        Therefore, West

Bank claims ascertaining the damage claims of each individual class

member would be onerous and make management of the claims as a

class action impossible.    This court has previously held that the mere

fact that there may be damage issues unique to different class members

does not preclude class certification where there are common issues of

liability. See, e.g., Vignaroli v. Blue Cross of Iowa, 360 N.W.2d 741, 745

(Iowa 1985). We conclude common issues predominate in the case at bar

because the members of the sequencing subclass share common issues

of liability with regard to high-to-low sequencing. We find no abuse of
                                         6


discretion by the district court in finding that the commonality

requirement was met.

      Once the requirements of rule 1.261 are met, rule 1.262 covers the

certification of class actions:

      The court may certify an action as a class action if it finds all
      of the following:

            a. The requirements of rule 1.261 have been satisfied.

          b. A class action should be permitted for the fair and
      efficient adjudication of the controversy.

         c. The representative parties fairly and adequately will
      protect the interests of the class.

Iowa R. Civ. P. 1.262(2). As discussed above, the requirements of rule

1.261 have been met.       We now turn to a discussion of the other two

sections.

      “Rule 1.263(1) sets forth a number of factors that the district court

is to consider and weigh in determining whether the prerequisite of rule

1.262(2)(b) . . . has been met.” Luttenegger, 671 N.W.2d at 437. The

relevant factors are:

          a. Whether a joint or common interest exists among
      members of the class.

             b. Whether the prosecution of separate actions by or
      against individual members of the class would create a risk
      of inconsistent or varying adjudications with respect to
      individual members of the class that would establish
      incompatible standards of conduct for a party opposing the
      class.

             c. Whether adjudications with respect to individual
      members of the class as a practical matter would be
      dispositive of the interests of other members not parties to
      the adjudication or substantially impair or impede their
      ability to protect their interests.
                                         7

            d. Whether a party opposing the class has acted or
      refused to act on grounds generally applicable to the class,
      thereby making final injunctive relief or corresponding
      declaratory relief appropriate with respect to the class as a
      whole.

           e. Whether common questions of law or fact
      predominate over any questions affecting only individual
      members.

            f. Whether other means of adjudicating the claims and
      defenses are impracticable or inefficient.

           g. Whether a class action offers the most appropriate
      means of adjudicating the claims and defenses.

            h. Whether members who are not representative
      parties have a substantial interest in individually controlling
      the prosecution or defense of separate actions.

            i. Whether the class action involves a claim that is or
      has been the subject of a class action, a government action,
      or other proceeding.

           j. Whether it is desirable to bring the class action in
      another forum.

           k. Whether management of the class action poses
      unusual difficulties.

           l. Whether any conflict of laws issues involved pose
      unusual difficulties.

              m. Whether the claims of individual class members
      are insufficient in the amounts or interests involved, in view
      of the complexities of the issues and the expenses of the
      litigation, to afford significant relief to the members of the
      class.

Iowa R. Civ. P. 1.263(1)(a)–(m).

      Courts are allowed to “give appropriate weight” to the factors. Id.

r. 1.263(1). No specific weight is to be given to any one factor; rather, the

trial court has broad discretion in weighing the above-listed factors.

Vignaroli, 360 N.W.2d at 744. The district court concluded that a class
                                       8


action would permit a “fair and efficient adjudication of the controversy.”

In Kragnes, this court noted:

            The litigation of this case has resulted in two Supreme
      Court opinions, a forty-nine page district court decision after
      a fourteen-day bench trial involving the testimony of twenty-
      eight witnesses, including eight experts—three for the City
      and five for Kragnes. The record fills five bankers’ boxes.
      However, Kragnes’s claim standing alone would likely fall
      within the jurisdictional limit of the small claims court. We
      think this case demonstrates the very necessity and
      importance of class action litigation both for the plaintiffs
      and for the City. The likelihood of a plaintiff bringing such a
      complex suit requiring substantial resources to litigate in
      small claims is highly unlikely. And if she, and scores of
      thousands of others like her, did bring their claims
      individually, it could easily overwhelm the legal department
      of the City and the resources of the Polk County district
      court, and would likely result in inconsistent adjudications.

Kragnes, 810 N.W.2d at 503. Similarly, the district court found in regard

to West Bank that “West Bank’s claim that individual customers have

adequate remedies to pursue their claims without the benefit of class

representation is undermined by the zealous nature with which West

Bank has defended this action, including three summary judgment
motions and an interlocutory appeal to the Iowa Supreme Court.”

      This supports subsection (m) of the pertinent rule.     See Iowa R.

Civ. P. 1.263(1)(m) (“Whether the claims of individual class members are

insufficient in the amounts or interests involved, in view of the

complexities of the issues and the expenses of the litigation, to afford

significant relief to the members of the class.”).       It also supports

subsection (b) of the same rule.        Id. r. 1.263(1)(b) (“Whether the

prosecution of separate actions by or against individual members of the

class would create a risk of inconsistent or varying adjudications with

respect to individual members of the class.”).     The district court also
                                           9


addressed at length subsection (e), concluding that common questions of

law predominate over any individual claims. Id. r. 1.263(1)(e) (“Whether

common questions of law or fact predominate over any questions

affecting only individual members.”). The district court did not abuse its

discretion in finding that certification on the good-faith sequencing claim

was “permitted for the fair and efficient adjudication of the controversy.”

Id. r. 1.262(2)(b).

      The last question is whether the class representatives “fairly and

adequately will protect the interests of the class.” Id. r. 1.262(2)(c). Rule

1.263(2) lists factors for courts to consider in determining whether the

class representatives will fairly and adequately protect the interests of

the class:

           a. The attorney for the representative parties will
      adequately represent the interests of the class.

            b. The representative parties do not have a conflict of
      interest in the maintenance of the class action.

           c. The representative parties have or can acquire
      adequate financial resources, considering rule 1.276, to
      ensure that the interests of the class will not be harmed.

Id. r. 1.263(2).      The district court determined that all of these factors
were met.
      West Bank argues that the Leggs are not adequate representatives
and that they have a conflict of interest because they are no longer
customers of West Bank. The district court found that the Leggs were
suitable representatives for the class action because they have “a
personal interest in the litigation and have alleged that they were
injuriously affected by the actions of West Bank.” The court found that
                                         10


their injuries were sufficiently tied to the claims being asserted by the
class.
         When a court denies a class certification based on a representative
being inadequate, “there are usually special circumstances or a
combination of factors involved.”      Stone v. Pirelli Armstrong Tire Corp.,
497 N.W.2d 843, 847 (Iowa 1993). Though not an exhaustive list, special
circumstances this court has found in the past include when other
members of the class lack confidence in the representative and when the
representatives lack credibility. Id. The district court did not find, nor
did West Bank advance, any special circumstances that would make the
Leggs inadequate as representatives. The district court did not abuse its
discretion in finding that this prong was met.
         The district court also found that the attorneys for the Leggs would
adequately represent the class. The district court found that the record
before it

         reflects that the attorneys for the Plaintiffs   are skilled,
         competent, and well qualified to represent the   interests of
         the class. At oral argument they expressed       an ongoing
         willingness to advance the costs necessary to    pursue the
         claims of the class.

There is nothing in the record to suggest this is not true. The district
court did not abuse its discretion in determining that the attorneys for
the Leggs could adequately represent the class on the good-faith
sequencing claim.
         IV. Conclusion.
         We conclude that the district court did not abuse its discretion in
granting the Motion for Certification of Class Action filed in this matter.
However, based on our opinion in Legg v. West Bank, 873 N.W.2d 763
                                        11


(Iowa 2016), the class action certification will only apply to the good-faith
sequencing claim. Therefore, the class shall be as follows:

      Sequencing Class: All West Bank customers who were
      charged additional NSF fees between July 1, 2006, and
      September 30, 2010, as a result of West Bank changing the
      sequencing order for Bank Card Transactions from low-to-
      high sequencing to high-to-low sequencing on July 1, 2006.

      DECISION      OF    DISTRICT     COURT      AFFIRMED       IN   PART,
REVERSED IN PART, AND REMANDED.
