                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 DENISE P. EDWARDS, individually                  No. 13-55542
 and on behalf of all others similarly
 situated,                                          D.C. No.
                   Plaintiff-Appellant,          2:07-cv-03796-
                                                    SJO-FFM
                     v.

 THE FIRST AMERICAN                                 OPINION
 CORPORATION; FIRST AMERICAN
 TITLE INSURANCE COMPANY,
              Defendants-Appellees.


        Appeal from the United States District Court
            for the Central District of California
         S. James Otero, District Judge, Presiding

                  Argued and Submitted
            March 3, 2015—Pasadena, California

                     Filed August 24, 2015

      Before: Michael R. Murphy,* Ronald M. Gould,
         and Richard C. Tallman, Circuit Judges.

                    Opinion by Judge Gould

 *
   The Honorable Michael R. Murphy, Senior Circuit Judge for the U.S.
Court of Appeals for the Tenth Circuit, sitting by designation.
2            EDWARDS V. FIRST AMERICAN CORP.

                           SUMMARY**


                        Class Certification

     The panel affirmed in part and vacated in part the district
court’s order denying class certification in a case in which
Denise P. Edwards, seeking to represent a class of similarly-
situated home buyers, alleges that First American Corporation
and its wholly owned subsidiary First American Title
Insurance Company, engaged in a national scheme of paying
title agencies things of value in exchange for the title
agencies’ agreement to refer future title insurance business to
First American, in violation of the Real Estate Settlement
Procedures Act (RESPA).

    The panel held that in determining the propriety of class
certification, the district court erred in holding that the safe
harbor in 12 U.S.C. § 2607(c)(2) requires Edwards to prove
that First American overpaid for its ownership interests in
each of the title agencies. The panel explained that the
ownership interests purchased by First American are equity
shares—not goods, services or facilities within the meaning
of § 2607(c)(2). The panel also held that the district court
abused its discretion in denying class certification on the
ground that 12 U.S.C. § 2607(a) requires an individual
inquiry, on each transaction, to determine whether First
American’s purchase prices of the ownership interests
exceeded their fair market value. The panel held that cases
involving illegal kickbacks in violation of § 2607(a) are not
necessarily unfit for class adjudication.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
            EDWARDS V. FIRST AMERICAN CORP.                    3

    Applying Fed. R. Civ. P. 23(b)(3), the panel held that
issues relating to the alleged common scheme predominate
over individual issues. The panel wrote that Edwards need
only prove the existence of an exchange involving a referral
agreement, which does not require inquiry into individual
facts across all 38 captive title agencies, and that the proposed
class members also share common questions of fact. The
panel concluded that the alleged common scheme, if true,
presents a significant aspect of First American’s transactions
that warrant class adjudication: Whether First American paid
a thing of value to get its agreement for exclusive referrals.
The panel therefore vacated the district court’s denial of class
certification in part as to these transactions that involved the
common scheme presented to First American’s board of
directors.

    The panel disagreed with the district court’s holding that
influences by third parties constitute individual issues that
render class adjudication improper. The panel wrote that
other sources of referral do not defeat the predominant
common questions of fact, i.e., whether the title agencies
have contractual obligations to refer their customers to First
American.

     The panel held that the district court erred in determining
that individual inquiries are required in connection with
twelve title agencies that are affiliated business arrangements
and in connection with certain agencies that are majority-
owned by First American. The panel agreed with the district
court that First American’s transactions with newly-formed
title agencies do not raise common issues sufficient for class
action adjudication, and affirmed the district court’s denial of
certification as to the newly-formed title agencies.
4          EDWARDS V. FIRST AMERICAN CORP.

    Remanding for further proceedings, the panel wrote that
the remaining prerequisites of class certification, which the
district court declined to address, are best addressed by the
district court.


                        COUNSEL

James W. Spertus (argued), Ezra D. Landes, Spertus, Landes
& Umhofer, LLP, Los Angeles, California; Cyril V. Smith
(argued), William K. Meyer, Zuckerman Spaeder LLP,
Baltimore, Maryland; David A. Reiser, Zuckerman Spaeder
LLP, Washington, D.C.; Richard S. Gordon, Martin E. Wolf,
Gordon & Wolf, Chtd., Towson, Maryland, for Plaintiffs-
Appellants.

Brian J. Murray (argued), Nathaniel P. Garrett, Leigh A.
Krahenbuhl, Jones Day, Chicago, Illinois; Matthew A. Kairis,
Jones Day, Columbus, Ohio, for Defendants-Appellees.

Nandan M. Joshi (argued), Senior Litigation Counsel,
Meredith Fuchs, General Counsel, To-Quyen Truong, Deputy
General Counsel, David M. Gossett, Assistant General
Counsel, Consumer Financial Protection Bureau,
Washington, D.C., for Amicus Curiae Consumer Financial
Protection Bureau.
            EDWARDS V. FIRST AMERICAN CORP.                  5

                         OPINION

GOULD, Circuit Judge:

    We must decide whether the district court abused its
discretion in denying Plaintiff Denise P. Edwards’s motion
for class certification, in her action against Defendants First
American Corporation and its wholly owned subsidiary First
American Title Insurance Company (collectively, “First
American”). Edwards, seeking to represent a class of
similarly-situated home buyers, alleged that First American
engaged in a national scheme of paying the title agencies
things of value in exchange for the title agencies’ agreement
to refer future title insurance business to First American, in
violation of the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. §§ 2601–2617. We affirm in part,
vacate in part, and remand.

                              I

    Edwards bought a home in Cleveland, Ohio. Edwards
used Tower City Title Agency, LLC (“Tower City”) as her
settlement agent, and by referral of Tower City, she used First
American as her title insurer. Prior to Edwards’s home
purchase, First American and Tower City entered into a
transaction: First American acquired a 17.5% ownership
interest in Tower City for $2 million and, in the same
transaction, Tower City agreed to refer future title insurance
business to First American. First American also entered into
similar transactions with various other title agencies. In each
of these transactions, First American paid the title agency a
lump sum of money in exchange for (1) a minority ownership
interest in the title agency and (2) the title agency’s
6           EDWARDS V. FIRST AMERICAN CORP.

agreement to refer future title insurance business to First
American.

     Edwards filed a putative class action against First
American, alleging that the transactions between First
American and the captive title agencies violated RESPA’s
anti-kickback provision, 12 U.S.C. § 2607. Edwards
originally moved to certify a class of home buyers referred to
First American by any of the 180 title agencies that First
American partially owned. The district court declined to
certify that class but ordered discovery to determine whether
it should certify the Tower City class, consisting of all home
buyers who were referred to First American by Tower City.

    After completing discovery, Edwards moved to certify the
Tower City class. The district court denied certification. We
reversed and held that “there is a single, overwhelming
common question of fact: whether the arrangement between
Tower City and First American violated” RESPA. Edwards
v. The First Am. Corp., 385 F. App’x 629, 631 (9th Cir. 2010)
(“Edwards I”). We ordered nationwide discovery on remand
and gave Edwards an opportunity to renew her motion to
certify a nationwide class. Id. After further discovery,
Edwards moved to certify a nationwide class consisting of all
home buyers who entered into a federally-related mortgage
transaction using one of thirty-eight title agencies that sold a
minority ownership interest to First American and, in the
same transaction, agreed to refer future title insurance
business to First American.

    The district court again denied certification, now on the
basis that common issues did not predominate over individual
issues for the nationwide class. First, the district court
concluded that individual inquiries were required to
            EDWARDS V. FIRST AMERICAN CORP.                     7

determine whether First American overpaid for its ownership
interests in each title agency. Second, the district court found
that common issues did not predominate over individual
issues of reliance and causation for referrals. Third, the
district court concluded that transaction-specific inquiries as
a result of the different types of title agencies will not require
common proof related to First American’s liability. Edwards
appeals the district court’s order denying class certification.

                               II

    We review the district court’s determination of class
certification for abuse of discretion and consider “whether the
district court correctly selected and applied Rule 23’s
criteria.” Parra v. Bashas’, Inc., 536 F.3d 975, 977 (9th Cir.
2008). The underlying legal questions, however, are
reviewed de novo, and “any error of law on which a
certification order rests is deemed a per se abuse of
discretion.” Conn. Ret. Plans & Trust Funds v. Amgen Inc.,
660 F.3d 1170, 1175 (9th Cir. 2011).

                               III

                                A

     Federal Rule of Civil Procedure 23 allows a
representative to litigate on behalf of a class of similarly-
situated individuals who are too numerous to join the
litigation. The party seeking class certification bears the
burden of establishing that the proposed class meets the
requirements of Rule 23. See Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541, 2551 (2011); Zinser v. Accufix Research
Inst., Inc., 253 F.3d 1180, 1186 (9th Cir.), amended by
273 F.3d 1266 (9th Cir. 2001). To be certified, a proposed
8           EDWARDS V. FIRST AMERICAN CORP.

class must satisfy all requirements in Rule 23(a) and at least
one of the requirements in Rule 23(b). Rule 23(a) requires
that plaintiffs demonstrate (1) numerosity, (2) commonality,
(3) typicality, and (4) adequacy of representation. Fed. R.
Civ. P. 23(a). Rule 23(b) lists three alternative requirements
for class certification, and where, as here, plaintiffs seek class
certification under subsection (b)(3), they must demonstrate
the superiority of maintaining a class action and show “that
the questions of law or fact common to class members
predominate over any questions affecting only individual
members.” Fed. R. Civ. P. 23(b)(3); see also Zinser,
253 F.3d at 1189–92.

    A court, when asked to certify a class, is merely to decide
a suitable method of adjudicating the case and should not
“turn class certification into a mini-trial” on the merits. Ellis
v. Costco Wholesale Corp., 657 F.3d 970, 983 n.8 (9th Cir.
2011). But Rule 23(a)(2) is not a pleading standard, so to the
extent necessary, our determination of commonality will
inevitably touch upon the merits of plaintiffs’ underlying
RESPA claims. See, e.g., Amgen Inc. v. Conn. Ret. Plans &
Trust Funds, 133 S. Ct. 1184, 1194 (2013); Wal-Mart Stores,
131 S. Ct. at 2551; Stockwell v. City & Cty. of S.F., 749 F.3d
1107, 1111–12 (9th Cir. 2014).

    In 1974, Congress passed RESPA to protect consumers
from “unnecessarily high settlement charges caused by
certain abusive practices.” 12 U.S.C. § 2601(a). One of the
consumer-protection provisions is RESPA § 8, 12 U.S.C.
§ 2607, which furthers Congress’s goal of “eliminat[ing] . . .
kickbacks or referral fees that tend to increase unnecessarily
the costs of certain settlement services.” Id. § 2601(b)(2); see
also Freeman v. Quicken Loans, Inc., 132 S. Ct. 2034, 2038
(2012). Paying kickbacks or referral fees to induce referrals
            EDWARDS V. FIRST AMERICAN CORP.                  9

of title insurance underwriting is part of the serious problem
Congress sought to remedy in RESPA. See S. Rep. No. 93-
866 (1974), reprinted in 1974 U.S.C.C.A.N. 6546, 6551.

    The national title insurance industry is highly
concentrated, with most states dominated by two or three
large title insurance companies.           See U.S. Gov’t
Accountability Office, Title Insurance: Actions Needed to
Improve Oversight of the Title Industry and Better Protect
Consumers 3 (Apr. 2007). A “factor that raises questions
about the existence of price competition is that title agents
market to those from whom they get consumer referrals, and
not to consumers themselves, creating potential conflicts of
interest where the referrals could be made in the best interest
of the referrer and not the consumer.” Id. Kickbacks paid by
the title insurance companies to those making referrals lead
to higher costs of real estate settlement services, which are
passed on to consumers without any corresponding benefits.

    Section 8(a) of RESPA aims to eliminate these unlawful
kickbacks. It prohibits any exchange of a thing of value
pursuant to real estate referrals:

       No person shall give and no person shall
       accept any fee, kickback, or thing of value
       pursuant to any agreement or understanding,
       oral or otherwise, that business incident to or
       a part of a real estate settlement service
       involving a federally related mortgage loan
       shall be referred to any person.

12 U.S.C. § 2607(a). RESPA defines a “thing of value”
broadly to include “any payment, advance, funds, loan,
service, or other consideration.” Id. § 2602(2). Courts
10          EDWARDS V. FIRST AMERICAN CORP.

commonly find a violation of § 2607(a) when (1) a payment
or thing of value was exchanged, (2) pursuant to an
agreement to refer settlement business, and (3) there was an
actual referral. See Galiano v. Fid. Nat’l Title Ins. Co., 684
F.3d 309, 314 (2d Cir. 2012); see also Egerer v. Woodland
Realty, Inc., 556 F.3d 415, 427 (6th Cir. 2009); Culpepper v.
Irwin Mortg. Corp., 491 F.3d 1260, 1265 (11th Cir. 2007).
Notwithstanding the general prohibition of exchanging any
thing of value for a referral, a statutory safe harbor exempts
a payment from RESPA violation if the payment—despite
being made simultaneously with a referral—was “for goods
or facilities actually furnished or for services actually
performed.” See id. § 2607(c)(2).

    Congress gave the Department of Housing and Urban
Development (“HUD”) authority to regulate under RESPA,
and HUD promulgated the corresponding regulations known
as Regulation X. See Pub. L. No. 94-205 § 10, 89 Stat. 1157,
1159 (1976). The Dodd-Frank Wall Street Reform and
Consumer Protection Act transferred the regulatory authority
of RESPA from HUD to the Consumer Financial Protection
Bureau (“CFPB”), and CFPB later republished Regulation X
without material changes. See 76 Fed. Reg. 78,977 (Dec. 20,
2011); 12 C.F.R. § 1024.1

    Under Regulation X, a “referral” includes “any oral or
written action directed to a person which has the effect of
affirmatively influencing the selection by any person of a
provider of a settlement service for which the home buyer
will pay a charge”; and an exchange of a “thing of value” is
used as synonymous with a payment and does not require a

    1
      Because this case arose when HUD was the regulatory agency,
citations to Regulation X will still be to 24 C.F.R. § 3500.
               EDWARDS V. FIRST AMERICAN CORP.                        11

transfer of money.2 24 C.F.R. § 3500.14(d), (f)(1).
Regulation X further explains the safe harbor in § 2607(c)(2).
See id. § 3500.14(g)(2) (“If the payment of a thing of value
bears no reasonable relationship to the market value of the
goods or services provided, then the excess is not for services
or goods actually performed or provided.”).

                                    B

    We first address whether individual inquiries on each of
the transactions are required due to the safe harbor in
§ 2607(c)(2) and 24 C.F.R. § 3500.14(g)(2). The district
court held that the statute and the regulation require Edwards
to prove that First American overpaid for its ownership
interests in each of the title agencies, and these individual
inquiries render class action improper.

     CFPB submitted an amicus brief interpreting RESPA and
its own Regulation X. CFPB contends that § 2607(c)(2) does
not apply to the transactions here because First American’s
payment for ownership interests is not a payment for goods,
facilities, or services. CFPB urges us to give deference to its
interpretation.

    As a threshold matter, we must consider the proper level
of deference to be given to the agency interpretation. Our
analytical framework depends on whether the agency is
interpreting the statute or the regulation. An agency’s
interpretation of an ambiguous statute is entitled to Chevron
deference when the interpretation is promulgated in the
exercise of the agency’s formal rule-making authority. See
Chevron, U.S.A., Inc. v. Nat’l Res. Def. Council, Inc.,

 2
     Here, we use the terms “thing of value” and payment interchangeably.
12          EDWARDS V. FIRST AMERICAN CORP.

467 U.S. 837, 843 (1984). An agency’s interpretation of its
own ambiguous regulation is generally entitled to Auer
deference. See Auer v. Robbins, 519 U.S. 452, 461 (1997)
(holding that an agency’s interpretation of its own ambiguous
regulation is controlling unless “plainly erroneous or
inconsistent with the regulation”) (internal citation omitted).

    Here, CFPB is interpreting the statute, not the regulation.
An agency’s interpretation of the statute—when presented in
an amicus brief—is not promulgated in the exercise of its
formal rule-making authority, so no Chevron deference is
warranted. See United States v. Mead Corp., 533 U.S. 218,
226–27 (2001); Price v. Stevedoring Servs. of Am., Inc.,
697 F.3d 820, 826 (9th Cir. 2012) (en banc). Even if the
terms “goods,” “services,” and “facilities” also appear in the
regulation, see 24 C.F.R. § 3500.14(g)(1)(iv), CFPB is in fact
interpreting Congress’s words in the statute, so we give no
deference to CFPB’s interpretation. Chase Bank USA, N.A.
v. McCoy, 562 U.S. 195, 210 (2011). In addition, because the
statutory terms at issue are not ambiguous, no deference is
merited. See Chevron, 467 U.S. at 842–43; United States v.
Able Time, Inc., 545 F.3d 824, 835–36 (9th Cir. 2008).

    We nevertheless agree with CFPB’s interpretation, which
is consistent with the language of the statute. Neither RESPA
nor Regulation X defines “goods,” “facilities,” or “services,”
see 12 U.S.C. § 2602; 24 C.F.R. § 3500.2, so we begin with
the statutory text and “end[] there as well if the text is
unambiguous.” Satterfield v. Simon & Schuster, Inc.,
569 F.3d 946, 951 (9th Cir. 2009). Here, the meanings of
“goods,” “facilities,” and “services” are plain. “Goods” are
“tangible movable personal property having intrinsic value
excluding money”; a “facility” is “something (as a hospital,
machinery, plumbing) that is built, constructed, installed, or
              EDWARDS V. FIRST AMERICAN CORP.                          13

established to perform some particular function or to serve or
facilitate some particular end”; and “service” is “the
performance of work commanded or paid for by another.”
See Webster’s Third New International Dictionary (1993);
see also American Heritage Dictionary (defining “goods” as
“product that is bought and sold” or “portable personal
property”; “facility” as “[a] building, room, array of
equipment, or a number of such things, designed to serve a
particular function”; and “service” as “[w]ork that is done for
others as an occupation or business” or “[a]n act or a variety
of work done for others, especially for pay”).

    The ownership interests purchased by First American are
equity shares, not goods, services, or facilities. First
American contends that two of the thirty-eight transactions at
issue also contained acquisitions of facilities, such as a title
plant3 and buildings. This misses the point. The purchase of
ownership interests—which are not goods, services, or
facilities—disqualified First American’s transactions from the
exemption under § 2607(c)(2), regardless of whether the
acquisitions may have also included facilities. We conclude
that § 2607(c)(2) cannot apply to First American’s
transactions as a matter of law, so the district court erred in
relying on § 2607(c)(2) to determine the propriety of class
certification.

                                    C

   We next address whether individual inquiries are required
because of § 2607(a). The district court interpreted the “thing



  3
    A title plant, according to First American, is “title records assembled
and maintained for the purpose of issuing title insurance.”
14            EDWARDS V. FIRST AMERICAN CORP.

of value”4 in § 2607(a), as applied to the transactions at issue,
to be the amount that First American overpaid for its
ownership interests in each of the captive title agencies. The
district court relied on decisions of our circuit, as well as
those of other circuits, to conclude that the determination of
kickback amount requires individual comparisons between
the payment and the services provided. See, e.g., Lane v.
Residential Funding Corp., 323 F.3d 739, 745 (9th Cir.
2003); Bjustrom v. Trust One Mortg. Corp., 322 F.3d 1201,
1208 (9th Cir. 2003); Schuetz v. Banc One Mortg. Corp.,
292 F.3d 1004, 1014 (9th Cir. 2002); see also Howland v.
First Am. Title Ins. Co., 672 F.3d 525, 530 (7th Cir. 2012);
Glover v. Standard Fed. Bank, 283 F.3d 953, 963–64 (8th
Cir. 2002). As a result, it concluded that an individual
inquiry on each transaction will be required to determine
whether First American’s purchase prices of the ownership
interests exceeded their fair market value.

    The cases relied on by the district court are inapplicable
here, because they interpreted the statutory exemption under
§ 2607(c)(2), which we have concluded does not apply to
First American’s transactions. See Lane, 323 F.3d at 742;


  4
    CFPB, in its amicus brief, offers its own interpretation of the phrase
“thing of value” under Regulation X. 24 C.F.R. § 3500.14(d). As a
general rule, an agency’s interpretation of its own ambiguous regulation,
even if presented in an amicus brief, is controlling unless “plainly
erroneous or inconsistent with the regulation.” Auer, 519 U.S. at 461
(internal citation omitted). But no Auer deference is due when the
regulation at issue is unambiguous. See Christensen v. Harris Cty.,
529 U.S. 576, 588 (2000); Bray v. Comm’r of Soc. Sec. Admin., 554 F.3d
1219, 1225 (9th Cir. 2009). Here, the regulation’s definition of a “thing
of value” is unambiguous, see 24 C.F.R. § 3500.14(d), so we decline to
give Auer deference and interpret the regulation in accordance with its
plain meaning.
            EDWARDS V. FIRST AMERICAN CORP.                  15

Schuetz, 292 F.3d 1012. Also, these cases adopted and
applied HUD’s two-prong test interpreting § 2607(c)(2): first,
there must be actual performance of compensable services;
and second, the total compensation must be reasonably
related to the goods or services provided. See, e.g., Schuetz,
292 F.3d at 1012 (explaining that the HUD two-part test
reflects the statutory safe harbor in § 8(c)). But the two-prong
HUD test is also inapplicable here, because no services were
provided by the title agencies to First American. We hold
that the district court abused its discretion in denying class
certification based on an erroneous interpretation of
§ 2607(a), Conn. Ret. Plans, 660 F.3d at 1175, and that cases
alleging illegal kickbacks in violation of § 2607(a) are not
necessarily unfit for class adjudication.

    But the question remains: Are there individual issues here
that could predominate over common issues such that class
action certification is inappropriate? See Fed. R. Civ. P.
23(b)(3). We hold that the answer to this question is no.
RESPA does not—as the district court held—require
Edwards to pinpoint how much money First American paid
for the referral agreement as opposed to the equity interest.
Rather, she can state a claim under RESPA § 8(a) by alleging
that First American paid a lump sum of money to each
captive title agency (the thing of value), and—in exchange for
that money—each title agency agreed to refer First American
future insurance (business agreement).

    Absent § 8(c), nothing in the statute requires Edwards to
prove First American gave money to the title agencies only in
consideration for the referral agreement. The statute merely
prohibits the exchange of a “thing of value” for a referral
agreement. 12 U.S.C. § 2607(a). It and the regulation define
“thing of value” broadly to include a wide variety of
16          EDWARDS V. FIRST AMERICAN CORP.

considerations, and an exchange of a thing of value need not
involve a transfer of money solely as a kickback. See
12 U.S.C. § 2602; 24 C.F.R. § 3500.14(d). Here, Edwards
alleges that First American paid the title agency a lump sum
of money; in return, First American obtained two items: the
title agency’s equity interest and the title agency’s agreement
to refer future title insurance business. Whether this
transaction violates RESPA § 8(a) does not require inquiry
into individual issues of payment.

    This conclusion comports with our understanding of
contract law. There is a “presumption that when parties enter
into a contract, each and every term and condition is in
consideration of all the others, unless otherwise stated.” Am.
Sav. Bank, F.A. v. United States, 519 F.3d 1316, 1324 (Fed.
Cir. 2008) (quoting Stone Forest Indus., Inc. v. United States,
973 F.2d 1548, 1552 (Fed. Cir. 1992)). Although the contract
terms were silent on how much of First American’s monetary
consideration was attributed to the referrals, the law does not
require every term of the contract to have a separately stated
consideration. Sarnoff v. Am. Home Products Corp.,
798 F.2d 1075, 1080 (7th Cir. 1986), superseded on other
grounds by Gardynski-Leschuck v. Ford Motor Co., 142 F.3d
955, 958 (7th Cir. 1998). The undivided monetary
consideration paid by First American must be treated in law
as consideration for both the equity interests and referrals.
See Restatement (Second) of Contracts § 80, cmt. a (Am. Law
Inst. 1981) (“A single performance or return promise may
thus furnish consideration for any number of promises.”); 3
Williston on Contracts § 7:51 (4th ed.) (discussing that one
consideration may support several promises). An example
clarifies: Assume that if one buys a bottle of water and a
bottle of soda from a grocery store, and pays $5 in total, the
payment is for both the water and the soda, and value is being
             EDWARDS V. FIRST AMERICAN CORP.                         17

given for both. We decline to conclude that in this assumed
case, value has been given for only one and not for the other.
In other words, Edwards need only prove the existence of an
exchange involving a referral agreement. Such proof does
not require inquiry into individual facts across all thirty-eight
captive title agencies.

    Moving on to the commonality inquiry under Rule
23(a)(2),5 we ask whether the proposed class members share
a common question of law or fact, the answer to which “will
resolve an issue that is central to the validity of each one of
the [class members’] claims.” Wal-Mart, 131 S. Ct. at 2551.
We have previously held that there was an overwhelming
common question of fact concerning the Tower City class.
Edwards I, 385 F. App’x. at 631. There is also a common
question of fact concerning some of the transactions here:
whether First American’s pattern of conducts in entering into
similar transactions with the title agencies violates RESPA.6

    The district court erred in concluding that the common
issue does not predominate over individual issues for the
proposed class members. “The Rule 23(b)(3) predominance
inquiry tests whether proposed classes are sufficiently
cohesive to warrant adjudication by representation.” Amchem
Prod., Inc. v. Windsor, 521 U.S. 591, 623 (1997). Common
issues predominate over individual issues when the common
issues “represent a significant aspect of the case and they can


  5
   The district court did not address the commonality issue under Rule
23(a)(2) but seemed to have concluded that there was a common issue.
 6
    We hold in Part V that First American’s transactions with the newly-
formed title agencies do not share common issues of fact with the
transactions with the preexisting title agencies. See infra Part V.
18          EDWARDS V. FIRST AMERICAN CORP.

be resolved for all members of the class in a single
adjudication.” 7AA Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1778 (3d ed. 1998). Here,
Edwards contends that First American utilized a nationwide
scheme of buying minority interests in the title agencies in
order to secure remittance streams from the agencies’ future
referrals. Edwards points to evidence showing this common
scheme, including several memoranda submitted to First
American’s board of directors asking for approval of these
transactions (referred to by the parties as the “Smoking Gun
Memos”). Some of these Smoking Gun Memos described
First American’s common strategy to purchase certain title
agencies’ minority interests to secure their exclusive
agreement to provide future referrals, and other Smoking Gun
Memos revealed that the primary motivation underlying these
transactions was not to gain returns from the ownership
interests but to lock up remittance streams from future
referrals. For example, in the documentation for the purchase
of a minority interest in Doral Title, LLC, First American
presented to its board a justification reciting in part, “[b]uying
a minority interest now will ensure that we capture the
Company’s u/w remittance streams.”                 Similarly, in
connection with purchase of a minority interest in Equity
Land Title LLC, First American told its board that “the u/w
remittance stream is the primary source of our economic
returns for this investment.” Pointing in the same direction,
on purchase of minority share of Equity Title Insurance
Agency, Inc., First American presented to its board that “[a]s
a condition to closing the proposed transaction, [First
American] and Equity will execute an exclusive agency
agreement.” Besides the Smoking Gun Memos, Edwards also
points to the standard contract terms that First American
imposed on the captive title agencies to prohibit the agencies
              EDWARDS V. FIRST AMERICAN CORP.                            19

from issuing policies for First American’s competitors,
subject to limited exceptions.

    We emphasize that at this stage of the litigation we are
making no conclusions on whether the evidence cited
above—including the Smoking Gun Memos and the alleged
standard contract terms imposed by First American—resolves
the merits of Edward’s underlying RESPA claims. Our focus
now is to decide whether the issues relating to the alleged
common scheme predominate over individual issues for the
proposed class, so that the case should be certified for class
adjudication. See Stockwell, 749 F.3d at 1111–12 (holding
that a common contention need not be one that will prevail on
the merits) (internal citation and quotation omitted). We cite
First American’s alleged practices not as bearing on the
merits but as bearing on First American’s common
scheme—as alleged in the complaint—that predominates over
individual issues for certain class members. This common
scheme, if true, presents a significant aspect of First
American’s transactions that warrant class adjudication:
Whether First American paid a thing of value to get its
agreement for exclusive referrals. We vacate the district
court’s denial of class certification in part as to these
transactions that involved the common scheme presented to
First American’s board of directors.7


  7
    We do not hold that common issues predominate over individual issues
on claims of the entire proposed class relating to all thirty-eight title
agencies. As explained in Part V, we affirm in part the denial of
certification as to the newly-formed agencies. See infra Part V. As to the
preexisting title agencies, we remand for the district court to decide in the
first instance which of these title agencies’ transactions with First
American fit into the common scheme, including the transactions
approved by First American’s board of directors pursuant to the “Smoking
Gun Memos.”
20          EDWARDS V. FIRST AMERICAN CORP.

                              IV

    First American showed that on some occasions someone
other than the captive title agencies—such as lenders,
mortgage brokers, realtors, and other title agencies—
affirmatively influenced the home buyers’ choice of First
American as their title insurance underwriter. The district
court held that the third parties’ influences constituted
individual issues that render class adjudication improper. We
disagree. Other sources of referral do not defeat the
predominant common question of fact, i.e., whether the title
agencies have contractual obligations to refer their customers
to First American.

    For a referral to violate RESPA, it need not be the
exclusive or even the primary reason that influenced a home
buyer’s choice of a real estate service provider. See 24
C.F.R. § 3500.14(f)(1) (defining a referral as “any oral or
written action directed to a person which has the effect of
affirmatively influencing the selection” of a real estate service
provider”) (emphasis added); see also 12 U.S.C. § 2607(d)(2)
(imposing joint and several liability on all of those who
affirmatively influenced the selection of a title insurance
provider). Here, Edwards contends that First American used
standard, written contracts to impose an obligation on the
captive title agencies to refer future title insurance business,
subject to some limited exceptions. If this is true, the title
agencies’ contractual obligations affected the entire class of
home buyers as a result of First American’s standard terms.
See Fed. R. Civ. P. 23(b)(3) advisory committee note (“[A]
fraud perpetrated on numerous persons by the use of similar
misrepresentations may be an appealing situation for a class
action . . . .”). Even if other service providers may have also
influenced the home buyers’ decision to choose First
            EDWARDS V. FIRST AMERICAN CORP.                   21

American, there remains a predominant, common question of
whether the title agencies’ contractual obligations
affirmatively influenced the home buyer’s choice of First
American.

                               V

    The district court denied certification on the additional
ground that the different types of title agencies will require
individual, case-by-case proof on First American’s liability.
First American contends that in the proposed class, there are
three unique types of title agencies, so that separate inquiries
on each type will be required.

    First, First American contends that its transactions with
twelve of the thirty-eight title agencies are affiliated business
arrangements (“ABA”) that are exempt from RESPA
violations under § 2607(c)(4). An ABA exemption under
§ 2607(c)(4) permits a person who owns an interest in a
settlement service provider to refer customers to the
settlement service provider if (1) it disclosed the affiliated
relationship; (2) it does not require the person referred to use
any particular service provider; and (3) the only thing of
value received from the arrangement is a return on the
ownership interest. See 12 U.S.C. § 2607(c)(4). The district
court concluded that class adjudication was improper because
it had to take evidence to determine if each of the twelve
agencies fits the ABA exemption.

    When defendants opposing class certification raise a legal
defense that may defeat commonality, the district court
cannot assume its validity but should make a threshold
determination on the legal merits. The district court need not
take evidence to determine the legal merits of defendants’
22          EDWARDS V. FIRST AMERICAN CORP.

defense, because otherwise it would defeat the purpose of
class certification. But if an alleged defense is invalid as a
matter of law, the defense will not give rise to individual
issues and thus cannot be a valid basis for denying class
certification.

    First American’s defense on the basis of § 2607(c)(4) is
invalid as a matter of law. Section 2607(c)(4) exempts a
transaction from a RESPA violation when a person who
partially owns a settlement service provider refers business to
the service provider, and the owner receives nothing other
than a return of the service provider’s shares. But here, First
American—the partial owner of the title agencies—did not
refer business to the title agencies. To the contrary, the
service provider (i.e., the title agencies) referred business to
the partial owner (i.e., First American). In addition, in these
transactions, First American did not receive any payments
from the title agencies as a return on its ownership interests.
No individual inquiries on the twelve title agencies’ ABA
status will be required, because § 2607(c)(4) cannot apply to
these transactions as a matter of law.

    Second, First American contends that certain agencies are
majority-owned by First American, and First American
cannot refer business to itself. First American cites the
Supreme Court’s decision in Freeman, 132 S. Ct. at 2043–44,
which held that to establish a violation of § 2607(b), a
plaintiff must demonstrate that a charge for settlement
services was divided between at least two persons. But
Freeman is inapplicable here: First American and its
majority-owned title agencies are not the same person, but
separate legal entities. No separate inquiries are necessary
merely because First American is the majority owner of
certain captive title agencies.
            EDWARDS V. FIRST AMERICAN CORP.                  23

    Third, the district court concluded that First American’s
transactions with the newly-formed title agencies do not raise
common issues sufficient for class action adjudication. We
agree and affirm the district court’s denial of certification as
to the newly-formed title agencies. First American contends
that twelve of the thirty-eight title agencies were not
preexisting when First American decided to purchase their
ownership interests. Instead, First American and third party
investors formed and invested in these title agencies, and the
investors’ ownership interests were proportional to their
capital investments.

    Edwards alleges in the complaint that First American
engaged in a nationwide scheme of securing referral
agreements by offering to purchase ownership interests of
various title agencies.        However, First American’s
transactions with these newly-formed agencies represent a
different set of facts from the nationwide scheme alleged in
the complaint. We conclude that these transactions do not
share common questions of fact between First American and
the transactions with the preexisting title agencies and thus do
not require common proof to resolve the validity of each of
the class members’ claims. Wal-Mart, 131 S. Ct. at 2551.

                              VI

    Having concluded that common issues did not
predominate over individual issues for the proposed class, the
district court declined to address the remaining prerequisites
of class certification, including whether a class action is a
superior method of adjudication, whether Edwards and her
counsel are adequate, and whether the putative class is
ascertainable. Edwards urges us to consider these questions
in the first instance on appeal and certify the proposed class.
24          EDWARDS V. FIRST AMERICAN CORP.

We decline to do so. Although we have concluded that
common issues predominate over individual issues for a sub
class of home buyers referred by the title agencies that were
subject to First American’s common scheme, the remaining
prerequisites of class certification are best addressed by the
district court, which is “in the best position to consider the
most fair and efficient procedure for conducting any given
litigation.” Stockwell, 749 F.3d at 1116–17 (internal citation
omitted).

    We affirm the district court’s denial of class certification
in part as to the newly-formed title agencies, vacate the
district court’s denial of class certification in part as to the
remaining title agencies, and remand for further proceedings.

     Each party shall bear its own costs on appeal.

  AFFIRMED IN PART, VACATED IN PART, AND
REMANDED.
