Ford Motor Credit Co. v. Ferrell

WRIGHT, J. John and Sarah Shumaker, appellees, 1 filed a class action complaint in the Circuit Court for Howard County against Ford Motor Credit Company (“FMC”), appellant, for alleged violations of the following statutes: 1) Maryland’s Credit Grantor Closed End Provisions (“CLEC”), Md.Code (1975, 2005 Repl.Vol.), Commercial Law Article (“CL”) § § 12-1001 et seq.; 2) Maryland’s Consumer Protection Act (“CPA”), CL § § 13-101 et seq.; and 3) Maryland’s Retail Installment Sales Act (“RISA”), CL §§ 12-601 et seq. The circuit court certified the action as a class action. Appellant then filed this appeal, presenting four issues 2 for our review, which we will summarize and combine for clarity as follows: ⁷⁰⁹ 1) Whether the collateral order doctrine permits an interlocutory appeal from a class certification order in this case. 2) Whether the trial court abused its discretion in certifying the Ford Credit Subclass under Maryland Rule 2-231. Appellees moved to dismiss the appeal for lack of jurisdiction and also filed a general response to the appeal.

We hold that the class action certification order in this case is not appealable under the collateral order doctrine and, accordingly, dismiss the appeal for lack of jurisdiction. We therefore do not reach the second issue presented and shall not address whether the trial court abused its discretion in certifying the Ford Credit Subclass. FACTUAL BACKGROUND Appellees allege that Koons Dealerships of Marlow Heights, Maryland (“Koons”) violated Maryland law by “concocting a scheme” to overcharge its customers for the costs of title, tags, and registration (“government fees”) in connection with motor vehicle purchases. Appellees allege that Koons represented to its customers that they were charged the actual cost of government fees and that Koons collected the money only to pass it along to the Maryland Vehicle Administration (“MVA”).

Appellees further allege that Koons intentionally inflated the government fees by approximately $25.00 to $55.00 per transaction, submitted to the MVA only the government fees actually due, and retained the balance. Appellees argue that FMC is likewise responsible for this “scheme” because it financed numerous sales that included these overcharges. ⁷¹⁰ John and Sarah Shumaker traded in their 1999 Hyundai automobile and purchased a 2002 GMC Sonoma truck from Koons on February 7, 2002. Koons assigned the Shumakers’ contract to FMC. Although Koons did obtain a duplicate title for the Hyundai, it is disputed whether Sarah Shumaker signed the application for the duplicate title and whether Koons disclosed the fee for the title.

The fee for a duplicate title was $20.00 in 2002. Koons also issued a temporary registration plate for the GMC Sonoma. The fee for the registration plate was $15.00 in 2002. The parties agree that Koons charged $157.00 for government fees.

Appellees allege that Koons only paid the MVA $132.50 and “pocketed” the difference. Appellant, however, argues that the duplicate title fee and temporary registration fee must be included in the cost of the government fees; therefore, the total due was $167.50 and the Shumakers were actually undercharged. PROCEDURAL BACKGROUND On October 31, 2003, appellees filed a complaint and request for jury trial. An amended complaint was filed on January 15, 2004.

Appellees filed a third amended complaint on August 10, 2005, seeking damages from appellant for alleged violations of the Maryland CLEC, CPA, and RISA, as described above. Appellant denied the allegations of the complaint, moved to dismiss all claims, and moved for summary judgment as to the Shumakers. On July 10, 2008, the circuit court denied the motion to dismiss and for summary judgment with respect to all claims applicable to appellant. 3 Appellees filed a renewed motion for certification of the class on September 9, 2005. The court held a hearing on the motion, and the parties submitted extensive memoranda and exhibits.

On July 10, 2008, the court issued a memorandum opinion and order granting appellees’ motion for class certification under Maryland Rules 2—231(b)(2) and 2—231 (b)(3). The court certified the following class and subclasses: ⁷¹¹ “Overcharge Class” All Koons Customers who: (1) purchased or leased a new or used motor vehicle from Koons Dealerships and (2) as part of the transaction paid more to the Koons Dealerships for Governmental Charges than the amount which the dealerships paid to the government for those charges. “In House Subclass ” The In-House Subclass consists of all Customers who financed all or part of their vehicle purchase from Koons Dealerships by a credit contract with Koons Dealerships, which the Koons Dealerships did not assign to a licensed third party lender. “Ford Credit Subclass ” The Ford Credit Subclass consists of all Customers who: (1) are part of the Overcharge Class, and (2) financed all or part of their vehicle purchase price through a credit contract which Koons Dealerships assigned to Ford Credit. The court also ordered the parties to “prepare for the Court’s approval ... an Administrative Order setting forth the form and manner of providing notice to the class, consistent with this Order and pursuant to Md. Rule 2-231(c).” The docket entries reflect that appellees filed a motion for entry of administrative order and appellants filed an opposition to the motion. The circuit court has not ruled on the motion.

DISCUSSION 1. Appellate review of non-final judgments Ordinarily, a party may appeal only from a final judgment. Rohrbeck v. Rohrbeck, 318 Md. 28, 41 , 566 A.2d 767 (1989). The final judgment rule is paramount in avoiding disfavored piecemeal appeals.

The application of the rule “results in a single review of all claims of error throughout an entire proceeding, thus both expediting and conserving judicial and other resources.” Philip Moris v. Angeletti, 358 Md. 689, 713 , 752 A.2d 200 (2000) (citations omitted). ⁷¹² A final judgment exists when “(1) the court intends for the judgment to constitute an unqualified final disposition of the matter; (2) the court adjudicates all of the claims of the parties; and (3) the clerk properly records the judgment in accordance with Maryland Rule 2-601.” Royal Fin. Servs., Inc. v. Eason, 183 Md.App. 496, 499 , 961 A.2d 1161 (2008) (citing Rohrbeck, supra, 318 Md. at 41 , 566 A.2d 767 ). As this Court recently noted in Royal Financial, a final judgment does not exist when a circuit court certifies a class action because, in doing so, the circuit court “[does] not intend the order to constitute a final disposition of the matter and the court [does] not adjudicate any of the parties’ liability or damages claims.” Id. Appellant correctly acknowledges that the class certification order is not a final judgment and that the appeal is interlocutory.

Maryland law is clear that appellate jurisdiction over interlocutory orders is appropriate only in very limited circumstances. Bd. of Educ. v. Bradford, 387 Md. 353, 382-83 , 875 A.2d 703 (2005). A party may appeal a non-final judgment: (1) from the specific orders enumerated in Md. Code (1973, 2006 Repl.Vol.), Courts & Judicial Proceedings Article (“CJP”) § 12-303; (2) when the court acts pursuant to Maryland Rule 2-602(b) 4 ; or (3) from orders that fall under the collateral order doctrine. Id.

(footnote not in original). See also Royal Financial, supra, 183 Md.App. at 499 , 961 A.2d 1161 . 2. The Collateral Order Doctrine Appellant argues that the collateral order doctrine applies to this case and, accordingly, vests this Court with jurisdiction. The collateral order doctrine is best character ⁷¹³ ized as a limited exception to the final judgment rule.

Shoemaker v. Smith, 353 Md. 143, 165 , 725 A.2d 549 (1999). The Court of Appeals remarked that it is applied “gingerly” 5 to a “narrow” class of interlocutory orders in “extraordinary circumstances,” where expeditious review is a “perceived necessity.” Hudson v. Housing Auth., 402 Md. 18, 25 , 935 A.2d 395 (2007) (citations omitted). Maryland courts adopted requirements, originally articulated by the United States Supreme Court, 6 which a non-final order must satisfy to fall within the scope of the collateral order doctrine. See, e.g., Shoemaker, supra, 353 Md. at 165 , 725 A.2d 549 ; Anne Arundel County v. Cambridge Commons, 167 Md.App. 219, 228 , 892 A.2d 593 (2005).

In Royal Financial, supra, 183 Md.App. at 499-500 , 961 A.2d 1161 , this Court restated those requirements as follows: The collateral order doctrine provides jurisdiction over non-final orders if the order (1) conclusively determines the ⁷¹⁴ disputed question, (2) resolves an important issue that is completely separate from the merits of the action, and (3) is effectively unreviewable on appeal from a final judgment. (Citing Cambridge Commons, supra, 167 Md.App. at 228 , 892 A.2d 593 ). Appellant argues that the above requirements are met because: (1) the class certification order conclusively determines the disputed question of whether the action should proceed as a class action; (2) it resolves the important issue, separate from the merits of the action, of whether a class action is the appropriate vehicle to resolve the claims asserted; and (3) litigating the case as a class action will impose an “extraordinary and irreparable burden” on appellant which would be effectively unreviewable on appeal from a final judgment. We address each of these points in turn and conclude that none of the requirements are satisfied.

The non-final order in this case does not fall within the scope of the collateral order doctrine. With respect to the first and second requirements, it is difficult to imagine a class certification order that does not, at least initially, determine that the action will proceed as a class action, and also that class action is the proper avenue to resolve the claims. See Md. Rule 2-231(c). In this case, the circuit court entered a class certification order over appellant’s objection.

As appellant points out, class certification “escalated” the suit to include thousands of potential claims. While the number of potential claims varies with each case, appellant’s case has this in common with all class actions. The very goal of a class action suit is to “overcome the impracticalities of overtly cumbersome joinder requirements,” Kirkpatrick v. Gilchrist, 56 Md.App. 242, 249 , 467 A.2d 562 (1983), and thus “escalate” the suit to include other potential claims. If this Court were to agree with appellant’s interpretation of these first two requirements, virtually all class certification orders would be appealable.

Maryland case law compels a different result. We explain. ⁷¹⁵ In Snowden v. Baltimore Gas & Electric Co., 300 Md. 555 , 479 A.2d 1329 (1984), the Court of Appeals held that a denial of class certification is not appealable under the collateral order doctrine. Id. at 559 , 479 A.2d 1329 . The Snowden Court cited Coopers & Lybrand v. Livesay, 437 U.S. 463 , 98 S.Ct. 2454 , 57 L.Ed.2d 351 (1978), with approval, noting that the Livesay Court held that refusal to certify a class is not appealable under the collateral order doctrine.

Snowden, supra, 300 Md. at 562 , 479 A.2d 1329 . Likewise, in Royal Financial, we held that the collateral order doctrine does not apply to the circuit court’s certification of a class action, in part because a class certification order can be revised. Royal Financial, supra, 183 Md.App. at 500 , 961 A.2d 1161 (citing Maryland Rule 2-231(c)). We also determined that class certification orders are incapable of resolving important issues separate from the merits because “class certification involves considerations ‘enmeshed in factual and legal issues comprising the plaintiffs cause of action.’” Id.

(quoting Snowden, supra, 300 Md. at 562 , 479 A.2d 1329 ). Appellant argues that the third requirement for review under the collateral order doctrine is satisfied because class action status will impose an “extraordinary and irreparable burden.” In particular, the circuit court’s “broad and unstructured” definition of the class, and the individualized nature of each vehicle purchase, will force it to spend considerable time and expense reviewing thousands of transactions to identify which customers were overcharged. Appellant further argues that the order will be effectively unreviewable because the additional time and expense required for class action cannot be effectively undone. However, this Court stated in Royal Financial that “class certification orders, which do not decide other issues, are ordinarily capable of effective review on appeal from a final judgment.” Royal Financial, supra, 183 Md.App. at 500 , 961 A.2d 1161 .

(citing Angeletti, supra, 358 Md. at 714-15 , 752 A.2d 200 ). Presumably, the defendant in a class action suit—as opposed to a single plaintiff suit—will always incur additional time and expenses that cannot be undone. ⁷¹⁶ Appellant contends that our holding in Royal Financial is not inconsistent with its position because [t]he class ... [was] relatively small, presented] a relatively small number of issues, and it [was] unlikely that the expended resources of the judiciary or appellant will be wasted or so substantial, if class certification is ultimately ruled to be inappropriate, that we should take the extraordinary step of recognizing this appeal. Id. at 501 , 961 A.2d 1161 . That statement, however, is related to our discussion in Royal Financial of the Angeletti case, and must be read in context with our discussion of Angeletti .

There, the circuit court certified two classes of Maryland residents who were current or former users of tobacco products. Angeletti, supra, 358 Md. at 702 , 752 A.2d 200 . The defendants filed a writ of