On March 3, 2021, Justice Cohen of the New York County Commercial Division issued a decision in Kalemba v. Oanda Corp., 2021 NY Slip Op. 30707(U), denying class certification because class issues did not predominate over individual ones, explaining:
To satisfy the second prerequisite to certification Plaintiff must show that there are questions of law or fact common to the class which predominate over any questions affecting only individual members. To meet this predominance requirement, it is not enough to show that issues exist that are common to the entire class, or even that they are substantial and significant. Rather, Plaintiff must show that common issues predominate over individualized, unique circumstances affecting each allegedly aggrieved plaintiff in the proposed class. This is where Plaintiffs motion for class certification runs aground.
The focus of the predominance analysis is whether class treatment will achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated. If the court must scrutinize each class member’s case to determine whether the defendant’s conduct injured that person, common issues do not predominate and class certification is inappropriate.
In Yeger, the plaintiffs brought a putative class action alleging that E*Trade breached its customer agreement by assessing an account maintenance fee (“AMF”) on December 24 rather than (as the agreement required) in the last week of the quarter. The trial court certified the class, finding that common issues predominated because the same practices were done to all members of the class. The First Department reversed. In language applicable here, the court held:
Whether E*TRADE’s conduct in assessing AMFs a day early caused an individual class member to suffer actual damages depends upon facts so individualized that it is impossible to prove them on a class-wide basis. The motion court concluded that class certification was appropriate because there was a common question as to whether E*Trade collected the AMF too early, i.e., before the date permitted in E*Trade’s contracts. However, this is only half the question. A breach of contract claim only exists if E*Trade’s common conduct actually damaged a customer. Therefore, to recover, each class member would have to show that he or she would have avoided the fee had E*Trade collected it at the proper time. There were several actions that customers could have taken to avoid the assessment (such as depositing additional funds or executing additional securities trades), as well as other conditions not under their control that could have prevented it, such as when E*Trade, as a courtesy, refunded those customers who paid the AMF. It is this aspect of proof that would be subject to a host of factors peculiar to the individual. This aspect of proof is critical. To allow the Yegers, or any class member, to recover the fee merely because E*Trade collected it early-without proof that each member of the class would have taken steps to avoid the fee had collection occurred at its proper time-would result in a windfall to those plaintiffs who would not have taken corrective action. In certain cases, it could also result in writing the AMF out of the agreement entirely, a fee the parties had agreed to freely. Accordingly, individualized issues, rather than common ones, predominate.
As in Yeger, Plaintiff has not shown that OANDA’s alleged breach of contract caused harm to individual class members or to the class as a whole. OANDA customers who were satisfied with OANDA’ s transaction fee disclosures, or who were able to calculate transactions fees despite any defect in the disclosures, or who would not have acted differently even if they had full knowledge of the transactions fees, would (if they recovered damages in this case) receive the very windfall that concerned the First Department in Yeger.
To separate those class members who suffered a loss (if any) from those who did not would require mini-trials involving individualized discovery and testimony to determine causation of fact-of-damage, which counsels against class certification.
As noted above, this case does not involve claims of excessive overpricing or hidden fees, in which case some economic harm might reasonably be presumed. Here, the OANDA customer agreement expressly states that OANDA sets interest rates in its sole discretion and customers can see financing charges or credits immediately after they are applied to a trade (e.g., online through a customer’s account management portal), as well as on monthly and annual account statements.
Nor does this case involve interest rates that purportedly were above market or otherwise inappropriate, which again might warrant a presumption of class-wide economic harm. Thus, this case is distinguishable from those in which economic loss naturally flowed from the defendant’s conduct.
Finally, this is not a case in which the only individualized question concerns the quantum of damage suffered by each class member, which is not by itself sufficient to preclude class certification. The cases upon which Plaintiff relies are inapposite because, unlike here, they involved conduct that clearly caused some pecuniary loss to all class members.
Here, by contrast, there is a serious question as to whether OANDA’s purported breach of disclosure obligations had any adverse financial impact on absent class members (let alone all of them). As the Court (Scarpulla, J.) noted at an earlier hearing in this case, after asking Plaintiffs counsel which customers would be included in the class:
Well, I’m not sure-I guess that’s my problem, that I’m not even sure that anyone else thinks what you think. You survived a personal pre-answer motion to dismiss. That doesn’t mean that anyone else couldn’t understand the platform and couldn’t get the information, so I don’t know that you-I don’t know. I doubt-I highly doubt, unless you could really show me that there is a sufficient class of people who are going to say that, I highly doubt I’m going to grant class certification.
In sum, class certification is inappropriate here because Plaintiff has not demonstrated that there are questions of law or fact common to the class which predominate over any questions affecting only individual members. To the contrary, the core question of whether there is a viable claim to recover damages for breach of contract (including a showing of at least some harm) must be answered separately for each class member, and would overwhelm the parties and the Court and render the case unmanageable.
(Internal quotations and citations omitted).
Class actions are a way for one member of a large group of potential plaintiffs to vindicate the group’s rights. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding a class action.
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