Jacobs v. FirstMerit Corp.

[Cite as Jacobs v. FirstMerit Corp., 2013-Ohio-4308.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

LAKE COUNTY, OHIO

EMILY JACOBS AND JAMES GLAVIC, : OPINION
INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED, :

Plaintiffs-Appellees, :
CASE NO. 2013-L-012
- vs - :

FIRSTMERIT CORPORATION, et al., :

Defendants-Appellants. :

Civil Appeal from the Lake County Court of Common Pleas, Case No. 11CV000090.

Judgment: Affirmed in part; reversed in part and remanded.

Patrick J. Perotti and Nicole T. Fiorelli, Dworken & Bernstein Co., L.P.A., 60 South
Park Place, Painesville, OH 44077; Hassan A. Zavareei and Andrea R. Gold, Tycko &
Zavareei, LLP, 2000 L Street, N.W., Suite 808, Washington, D.C. 20036; and Stuart E.
Scott and Daniel Frech, Spangenberg Shibley & Liber, LLP, 1001 Lakeside Avenue,
East, Suite 1700, Cleveland, OH 44114 (For Plaintiffs-Appellees).

David F. Adler, Michael A. Platt, Robert E. Haffke, and Amanda R. Parker, Jones Day,
North Point, 901 Lakeside Avenue, Cleveland, OH 44114; and Chad A. Readler,
Jones Day, 325 John H. McConnell Boulevard, Columbus, OH 43215 (For
Defendants-Appellants).

CYNTHIA WESTCOTT RICE, J.

{¶1} Appellants, FirstMerit Corporation, et al. (“FM”), appeal the judgment of

the Lake County Court of Common Pleas granting the motion of appellees, Emily

Jacobs and James Glavic, for class certification. For the reasons that follow, we affirm
in part; reverse in part for the trial court to modify the class definition and remand for this

limited purpose.

{¶2} Appellees alleged in their First Amended Class Action Complaint that they

opened a joint checking account with FM. Appellees were automatically enrolled in FM’s

overdraft program so that if they did not have sufficient funds in their account to pay for

a transaction, FM paid the item, processed an overdraft without advising appellees, and

charged them $35 per overdraft.

{¶3} Appellees alleged that FM adopted a bookkeeping device pursuant to

which it reordered its customers’ debit card transactions using a “high-to-low” posting

method. Under this posting method, FM paid its customers’ debit card transactions in

descending order from the highest to the lowest amount, rather than in the actual order

in which they occurred. Under this posting method, the account’s balance was depleted

as quickly as possible, unlawfully increasing the number of transactions that would

result in overdrafts.

{¶4} Appellees alleged that, at the same time FM adopted its new posting

method, FM also began to “commingle” its customers’ debit card transactions with their

checks and other customer-authorized transactions. By commingling all debit

transactions and then reordering them from high to low, FM wrongfully charged its

customers, including appellees, additional overdraft fees. Further, FM did not disclose

to its customers its manipulations or that they would greatly increase overdrafts and

overdraft fees. Also, FM misrepresented to appellees on their monthly account

statements that their transactions were posted chronologically and that appellees owed

overdraft fees, which, in fact, appellees did not owe.

2
 {¶5} Appellees alleged that, as a result of FM’s illegal reordering and

commingling scheme, their accounts and those of all putative class members were

placed in overdraft status before they were actually overdrawn and the accounts were

assessed more overdraft fees than legally permitted. As a result of FM’s reordering and

commingling scheme, FM has improperly charged its Ohio customers millions of dollars.

{¶6} Appellees asserted claims for fraud, unjust enrichment, and breach of

contract, and prayed for disgorgement by FM of all illegally held monies, damages in an

unspecified amount to be determined at trial, and injunctive relief.

{¶7} Subsequently, appellees moved for class certification of their claims, and

FM filed its brief in opposition. The parties submitted evidentiary materials, including

deposition transcripts, experts’ reports, and exhibits in support of their respective

positions. The trial court held an oral hearing on the motion for certification.

{¶8} Larry Shoff, FM’s representative, testified in deposition that “posting” is the

procedure followed by all banks to process debit items presented for payment against

accounts. Each night after midnight, all debit items presented for payment during the

preceding business day are posted by computer and subtracted from the account

balance. The order in which items are posted is determined by computer programming.

These items are typically debit-card transactions, checks, and other customer-

authorized transactions. If the account balance is sufficient to cover all items presented

for payment, there will be no overdrafts, regardless of the posting method used.

However, if the account balance is insufficient to cover every debit item, the account will

be overdrawn. When an account is overdrawn, the posting sequence can have a

dramatic effect on the number of overdrafts incurred by the account, even though the

3
total sum overdrawn will be the same. The number of overdrafts drives the amount of

overdraft fees.

{¶9} Prior to March 2005, the bank sorted transactions by different groups.

Checks were posted by number and non-check items were posted “low-to-high.” Under

the low-to-high posting method, the bank posted items from lowest to highest dollar

amount. The smallest purchases were deducted first and the balance was used as

slowly as possible, minimizing the number of overdrafts and overdraft fees.

{¶10} Mr. Shoff testified that in March 2005, in order to increase FM’s revenue, it

adopted a change in its posting method, pursuant to which all customers’ transactions

were commingled and all transactions were posted and paid in order of highest to

lowest dollar amount. Under this posting method, large dollar items were posted and

paid first, even if they were received last, and the account balance was depleted as

quickly as possible, thus maximizing the number of overdrafts and overdraft fees.

{¶11} Mr. Shoff testified that when a customer opens an account, he receives a

copy of the “Terms and Conditions,” which are drafted solely by FM and not subject to

any change by the customer. Thereafter, he receives a monthly account statement.

{¶12} After FM changed its posting order in March 2005, it advised its existing

customers in their April 2005 account statement, as follows:

{¶13} FirstMerit Bank may pay items drawn on your account in any order.

Our current practice is to pay items received on any one day in the

order of the highest dollar amount to the lowest dollar amount. * * *

The order in which items are paid is important if there is not enough

money in your account to pay all of the items that are presented.

4
 FirstMerit’s current practice will cause your largest * * * items to be

paid first * * *, but may increase the overdraft * * * fees you have to

pay if collected funds are not available to pay all of the items.

FirstMerit may change the order in which it generally pays items at

any time and from time to time without giving you prior notice of the

change.

{¶14} This same notice was given to new customers in the “Terms and

Conditions” they received when they opened their accounts after March 2005.

{¶15} Elizabeth Barber, an FM senior vice president, testified that a customer

could not determine from his monthly checking account statements the order in which

multiple transactions were posted on any given day. She said that the amount of the

overdraft fee is $35, regardless of the amount of the overdraft, and that FM limits the

amount of overdrafts it will charge a customer to seven per day. Thus, one minimal

overdraft could result in as many as seven separate overdraft fees of $35 each.

{¶16} Following the oral hearing on appellees’ motion for certification, the trial

court entered its judgment granting the motion.

{¶17} FM appeals the trial court’s ruling, asserting three assignments of error.

Because the first two are related, they are considered together. They allege:

{¶18} “[1.] The trial court abused its discretion by granting Plaintiffs’ class-

certification motion without conducting the required rigorous analysis of the Civ.R. 23

prerequisites.

{¶19} “[2.] The trial court abused its discretion in concluding that Plaintiffs

satisfied each of the Civ.R. 23 prerequisites and that the class should be certified.”

5
 {¶20} The Supreme Court of Ohio has held that “[a] trial judge has broad

discretion in determining whether a class action may be maintained and that

determination will not be disturbed absent a showing of an abuse of discretion.” Marks

v. C.P. Chem. Co., Inc., 31 Ohio St.3d 200 (1987), syllabus. Thus, appellate courts

generally give trial courts broad discretion in deciding whether to certify a class.

Hamilton v. Ohio Savings Bank, 82 Ohio St.3d 67, 70 (1998). The Ohio Supreme Court

stated that “the appropriateness of applying the abuse-of-discretion standard in

reviewing class action determinations is grounded * * * in the trial court’s special

expertise and familiarity with case-management problems and its inherent power to

manage its own docket.” Id., citing Marks, supra, at 201.

{¶21} However, “the trial court’s discretion in deciding whether to certify a class

action is not unlimited, and indeed is bounded by and must be exercised within the

framework of Civ.R. 23. The trial court is required to carefully apply the class action

requirements and conduct a rigorous analysis into whether the prerequisites of Civ.R.

23 have been satisfied.” Hamilton, supra.

{¶22} In reviewing a motion for class certification, the court must take the

substantive allegations of the complaint as true and not reach the merits of those

allegations and claims. Ojalvo v. Bd. of Trustees of Ohio State Univ., 12 Ohio St.3d

230, 233 (1984).

{¶23} Throughout its brief, FM argues that the trial court did not engage in the

“rigorous analysis” required by Hamilton, as evidenced by the fact that, according to FM,

the court did not make sufficient findings. In Hamilton, the Supreme Court stated that,

while there is no explicit requirement in Civ.R. 23 that the trial court make formal

6
findings to support its decision on a motion for class certification, there are compelling

reasons for doing so. Id. at 70. The Court stated that a trial court’s failure to make such

findings impedes appellate inquiry into whether the relevant factors were properly

applied and given appropriate weight. Id. at 71. The Court then “suggested” that a trial

court make separate written findings as to each of the class requirements, and specify

its reasons for each finding. Id. Thus, while a fully articulated decision is preferable, it is

not essential to a class certification. Appellate courts have held that “nothing in

Hamilton requires us to find an abuse of discretion solely because the trial court did not

comply with this recommendation.” Pyles v. Johnson, 143 Ohio App.3d 720, 731 (4th

Dist.2001). In fact, in Hamilton, supra, although the trial court did not rule on each

class-action requirement or provide any rationale for its class-certification decision, the

Supreme Court addressed the merits of the trial court’s class certification based on the

Court’s review of the record.

{¶24} The following seven requirements must be satisfied before an action may

be maintained as a class action under Civ.R. 23: (1) an identifiable class must exist and

the definition of the class must be unambiguous; (2) the named representatives must be

members of the class; (3) the class must be so numerous that joinder of all members is

impracticable; (4) there must be questions of law or fact common to the class; (5) the

claims or defenses of the representative parties must be typical of the claims or

defenses of the class; (6) the representative parties must fairly and adequately protect

the interests of the class; and (7) one of the three Civ.R. 23(B) requirements must be

met. Civ.R. 23(A) and (B); Warner v. Waste Mgt., Inc., 36 Ohio St.3d 91 (1988).

7
 {¶25} In the instant case, the trial court prepared detailed findings of fact,

concluding that each of the seven class-action requirements was satisfied. While the

court’s discussion of some of the requirements was more extensive than others, the

court provided reasons for each of its findings.

{¶26} First, FM challenges the trial court’s definition of the class. The trial court

defined the class, as follows: “(1) all people who live in Ohio and had or have an

account with the defendants; (2) who had more than one account transaction in a single

day; (3) whose transactions were re-ordered by the defendants to occur from largest to

smallest debits; and, (4) whose accounts were charged overdraft fees on one or more of

the days on which the defendants re-ordered their accounts.”

{¶27} ‘“The requirement that there be a class will not be deemed satisfied unless

the description of it is sufficiently definite so that it is administratively feasible for the

court to determine whether a particular individual is a member.”’ Hamilton, supra, at 71-

72, quoting 7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice

and Procedure (2 Ed.1986) 120-121, Section 1760. Thus, the class definition must be

precise enough “‘to permit identification within a reasonable effort.’” Hamilton, supra,

quoting Warner, supra, at 96. “An identifiable class must exist before certification is

permissible. The definition of the class must be unambiguous.” Warner, paragraph two

of the syllabus. Where a class is overbroad and could include a substantial number of

people who have no claim under the theory advanced by the named plaintiff, the class

is not sufficiently definite. Miller v. Painters Supply & Equip. Co., 8th Dist. Cuyahoga

No. 95614, 2011-Ohio-3976, ¶24.

8
 {¶28} FM argues the trial court abused its discretion in defining the class as it

did because the trial court adopted the definition proposed by appellees in their original

complaint, although appellees revised the definition in their amended complaint. The

revised definition, with the change emphasized, provided as follows: “All customers in

the State of Ohio and who had one or more accounts with Defendants and who incurred

an overdraft fee as a result of Defendants’ practice of reordering debit card transactions

from highest dollar amount to lowest dollar amount.”

{¶29} FM argues it only addressed appellees’ revised class definition at the

hearing and that, because the trial court adopted appellees’ original definition of the

class, FM was prevented from presenting its reasons in opposition to appellees’ original

definition. Further, in their Answer and Affirmative Defenses, FM presented detailed

allegations in opposition to appellees’ original definition of the class. Moreover, “Warner

not only permits but encourages the trial court to modify what is otherwise an

unidentifiable class.” Ritt v. Billy Blanks Enters., 8th Dist Cuyahoga No. 80983, 2003-

Ohio-3645, ¶20, discretionary appeal not allowed by the Ohio Supreme Court at 100

Ohio St.3d 1486, 2003-Ohio-5992. In any event, FM does not indicate what, if any,

additional arguments it would have made in opposition to appellees’ original definition of

the class.

{¶30} However, the class certified by the trial court is overbroad and thus does

not meet the first requirement of Civ.R. 23, i.e., that its definition be unambiguous. As a

result, the class requires modification in four particulars.

{¶31} First, the class is not limited in terms of a specific time period in which the

class members were harmed by FM’s alleged misconduct. As defined, the class is

9
open-ended in terms of time frame. We note that in Gutierrez v. Wells Fargo Bank,

N.A., 704 F.3d 712 (9th Cir.2012), a case strikingly similar to the one before us, the

Ninth Circuit affirmed class certification where the class period was specified. Id. at

718.

{¶32} Second, in their proposed amended class definition, appellees proposed

to limit the relevant transactions of class members to debit card transactions. However,

the trial court in its definition did not so limit the class and its members include

customers having any type of transactions. Thus, the class as defined is not consistent

with appellees’ theory of recovery and is overbroad. In Gutierrez, supra, the class

definition was limited to debit card transactions. Id. at 718. The same was also true in

Larsen v. Union Bank, N.A., 275 F.R.D. 666 (S.D.Fla.2011), another similar case.

{¶33} Third, the class definition adopted by the trial court does not limit the class

to customers who were charged multiple overdraft fees on the same day. Rather, it

includes customers who were charged multiple overdraft fees on several days due to an

overdraft, which could be interpreted to mean that on several days, a customer was

charged one fee. Appellees conceded at the oral hearing that one overdraft fee per day

would be proper. For this additional reason, the present class definition is overbroad as

it includes within the class customers who have no claim under appellees’ theory of

recovery.

{¶34} Fourth, while appellees proposed to include a reference to a causal

connection (“as a result of”) between FM’s alleged misconduct and the imposition of

overdraft fees in their proposed amended definition of the class, there is no such

reference in the definition adopted by the trial court.

10
 {¶35} In Gutierrez, supra, the Ninth Circuit implicitly approved the class definition

that included the phrase “as a result of” (“all Wells Fargo customers * * * who incurred

overdraft fees on debit-card transactions as a result of the bank’s practice of

sequencing transactions from highest to lowest”). Id. Further, in Larsen, supra, the

plaintiffs’ proposed class consisted of all bank customers who incurred an overdraft fee

“as a result of” the bank’s practice of sequencing debit card transactions from high to

low. The district court in Larsen held that the class definition was clear. Id. at 673.

{¶36} By certifying the class as defined, we hold the trial court abused its

discretion. However, the Supreme Court of Ohio has stated that if the appellate court

finds an abuse of discretion by the trial court in its definition of the class, the appellate

court should not proceed to formulate the class itself. Rather, the court should remand

the matter to the trial court. Stammco, L.L.C. v. United Tel. Co. of Ohio, 125 Ohio St.3d

91, 2010-Ohio-1042, ¶12. This is because “the trial judge who conducts the class

action and manages the case must be allowed to craft the definition with the parties.”

Id. Thus, rather than attempt to redefine the class ourselves, we remand the case to

the trial court to do so.

{¶37} Next, FM argues the trial court failed to make a rigorous analysis

regarding the predominance requirement under Civ.R. 23(B)(3), and abused its

discretion in finding that common legal or factual issues predominated over individual

issues.

{¶38} Pursuant to Civ.R. 23(B)(3), a class action is appropriate if:

{¶39} the questions of law or fact common to the members of the class

predominate over any questions affecting only individual members,

11
 and that a class action is superior to other available methods for the

fair and efficient adjudication of the controversy. The matters

pertinent to the findings include: (a) the interest of members of the

class in individually controlling the prosecution or defense of

separate actions; (b) the extent and nature of any litigation

concerning the controversy already commenced by or against

members of the class; (c) the desirability or undesirability of

concentrating the litigation of the claims in the particular forum; (d)

the difficulties likely to be encountered in the management of a

class action.

{¶40} The purpose of Civ.R. 23(B)(3) was to bring within the fold of class actions

cases in which the efficiency and economy of common adjudication outweigh the

interests of individual autonomy. Warner, supra, at 96. Thus, “this portion of the rule

also was expected to be particularly helpful in enabling numerous persons who have

small claims that might not be worth litigating in individual actions to combine their

resources and bring an action to vindicate their collective rights.” 7A Wright, Miller &

Kane, Federal Practice and Procedure, supra, at 518, Section 1777.

{¶41} Before granting class certification under Civ.R. 23(B)(3), the court must

first find that the questions of law or fact common to members of the class predominate

over individual questions. For common questions of law or fact to predominate, it is not

sufficient that such questions merely exist; rather, the common questions must

represent a significant aspect of the case and they must be capable of resolution for all

12
members in a single adjudication. Schmidt v. Avco Corp., 15 Ohio St.3d 310, 313

(1984).

{¶42} Here, the trial court found that common issues constitute a significant

aspect of this case because, if it is determined that FM’s practice of reordering debits

from high to low is unlawful, the case would be resolved for all members of the class in

one adjudication. Further, the court found that, once FM provides class-wide data,

appellees would be able to perform an analysis of damages for the entire class.

{¶43} FM argues the trial court’s analysis was deficient because the court was

required, but failed, to determine in its judgment entry whether common issues

predominated over the individual issues raised by FM with respect to each of appellees’

claims. However, in addition to the judgment entry, the record shows the trial court

conducted a lengthy oral hearing on appellees’ motion for certification at which FM

identified the individual issues and argued that they predominated as to each of

appellees’ claims. While the court did not expressly discuss in its findings the individual

issues with respect to each of appellees’ claims, it was not required to do so. Hamilton,

supra, at 70. However, the court carefully considered FM’s arguments; listed the

individual issues asserted by FM in its judgment entry; and concluded that the common

issues predominated over the individual issues identified by FM. The trial court thus

satisfied its obligation to make a rigorous analysis of the predominance requirement.

{¶44} Specifically, with respect to appellees’ claim for fraud, they alleged that

FM misrepresented to them and to the putative class members in their monthly account

statements that their transactions had occurred chronologically and that certain

overdraft fees were owed when, in fact, they did not represent actual overdrafts. In

13
contrast, FM argues the trial court failed to recognize that proving fraud will require

individualized evidence concerning, e.g., each class member’s understanding of the

account statements, reliance, and damages.

{¶45} The Supreme Court of Ohio addressed this argument in Hamilton, supra.

There, the plaintiffs brought an action to challenge certain methods used to amortize

their residential mortgage loans. The bank argued the elements of inducement and

reliance must be proven on an individual basis. The trial court accepted the bank’s

argument and denied class certification. The Supreme Court reversed the trial court's

decision, and allowed the action to proceed on the plaintiffs’ fraud claim.

{¶46} In support of its holding, the Court in Hamilton stated that cases which

involve common questions of law and fact arising from identical or similar form contracts

and the use of standardized procedures present the classic case for treatment as a

class action, and cases involving similar claims or similar circumstances are routinely

certified as such. Id. at 80.

{¶47} The Court in Hamilton stated that claims containing a necessary element

of reliance are not per se excluded from class action treatment because, if the drafters

of Civ.R. 23 wanted to exclude them, they could have easily done so. Id. at 83. In

rejecting the bank’s argument, the Court stated, “‘a fraud perpetrated on numerous

persons by the use of similar misrepresentations may be an appealing situation for a

class action. * * * On the other hand, although having some common core, a fraud case

may be unsuited for treatment as a class action if there was material variation in the

representation made or in the kinds or degrees of reliance by the persons to whom they

14
were addressed.’” (Emphasis omitted.) Id. at 83-84, quoting the 1966 Advisory

Committee Notes to Fed.R.Civ.P. 23(b)(3).

{¶48} Further, the Court in Hamilton stated that “class action treatment is

appropriate where the claims arise from standardized forms or routinized procedures,

notwithstanding the need to prove reliance.” Id. at 84. The Court stated that in such

cases, “proof of reliance will not require separate examination of each prospective class

member. Instead, proof of reliance in this case may be sufficiently established by

inference or presumption.” Id.

{¶49} Moreover, the Supreme Court of Ohio in Cope v. Metropolitan Life Ins.

Co., 82 Ohio St.3d 426 (1998), stated that predominance is “‘a test readily met in certain

cases alleging consumer * * * fraud * * *.’” Id. at 429, quoting Amchem Products, Inc. v.

Windsor, 521 U.S. 591, 625 (1997). The Court in Cope stated that a claim meets the

predominance requirement when there exists generalized evidence that proves or

disproves an element on a simultaneous class-wide basis. Id. at 429-430.

{¶50} Further, the Court in Cope stated that “[c]ourts generally find that the

existence of common misrepresentations obviates the need to elicit individual testimony

as to each element of a fraud * * * claim, especially where written misrepresentations or

omissions are involved. They recognize that when a common fraud is perpetrated on a

class of persons, those persons should be able to pursue an avenue of proof that does

not focus on questions affecting only individual members. If a fraud was accomplished

on a common basis, there is no valid reason why those affected should be foreclosed

from proving it on that basis.” (Emphasis added.) Id. at 430.

15
 {¶51} Moreover, the Court in Cope noted that courts considering the reliance

issue often decide the certification question based on whether the alleged

misrepresentations were varied or oral, as opposed to uniform or written. Id. at 434-435.

The court stated that the plaintiffs’ claims presented “the classic case for treatment as a

class action because they [were] based on written documents that uniformly indicate[d]

the omission of standard disclosure warnings.” Id. at 435.

{¶52} Thus, if appellees can establish by common proof and/or form documents

that FM misrepresented that it posted appellees’ debit transactions chronologically,

rather than in high-to-low order, then an inference of inducement and reliance would

arise as to the entire class, thereby obviating the need for individual proof on these

issues. Hamilton, supra; Cope, supra, at 436.

{¶53} FM argues that appellees’ fraud claim lacks any common

misrepresentation because each class member would have his or her own transactions

listed in his or her account statement. However, the fact that each class member has

his own transactions does not detract from the standardized information in each class

member’s statement. The way in which the account information is posted is the basis

for the claim and it is the same for all class members.

{¶54} Further, FM argues the common issues in this case do not predominate

because the amount of each class member’s damages will require individual evidence.

However, the Supreme Court in Hamilton held that a trial court should not deny class

certification solely on the basis of disparate damages. Id. at 81. The court stated that,

while some courts have denied certification where the calculation of damages is very

complex or burdensome, certification should not be denied where damages can be

16
calculated by a mathematical formula or statistical analysis. Id. at 81-82. Here,

appellees’ expert Mr. Curtin stated in his report that a computerized method of

analyzing FM’s data can be used to determine the amount of harm suffered by each

class member. Thus, the disparate amount of damages sustained by each class

member is insufficient to defeat class certification.

{¶55} Here, the alleged misrepresentations and omissions are contained in FM’s

account statements. Thus, appellees’ fraud claim is based on standardized documents

that were given to all customers, not their own understanding of these documents, their

differing levels of knowledge, any oral misstatements, or their individual reliance. This

documentary evidence supports a finding that common issues predominate as to

appellees’ fraud claim. The same is also true as to appellees’ claim for unjust

enrichment as that claim is also based on FM’s alleged fraud.

{¶56} With respect to appellees’ breach-of-contract claim, they alleged that their

account agreement with FM only provided for overdraft fees if appellees actually

overdrew their account. Appellees alleged that FM breached their account agreement

by charging overdraft fees, although appellees had not actually overdrawn their

account. Further, appellees alleged that FM breached their account agreement of

adhesion by unilaterally amending their agreement to adopt the high-to-low posting

order. In contrast, FM argues that common issues do not predominate with respect to

appellees’ breach-of-contract claim because such claim would require an inquiry into

each class member’s understanding of the terms of his or her account agreement,

account statements, etc.

17
 {¶57} In Hamilton, supra, the Supreme Court held that in a class action alleging

breach of contract, individual inquiries into knowledge were unnecessary. Id. at 82.

The Court stated:

{¶58} “We have a uniform class of borrowers who were submitted an

identical (insofar as material here) adhesion contract under strictly

regimented procedures. The only unknown factor is the knowledge

of each borrower concerning the use of the deposits by defendant

for its own purposes. It is our conclusion that the proof here

indicates that it is ‘unlikely’ that ‘numerous’ members of the class

possessed such knowledge or that the subject of the beneficial

interest in the funds even occurred to them. It is therefore proper

that this proceeding continue as a class action. In answer to the

possible argument that no claims arising out of separate contractual

situations are proper for class action treatment, we acknowledge

that there is no doubt they present special problems. However, had

it been the intention of the legislature to exclude contractual

situations from class action relief, we believe it would have said so.”

Hamilton, supra, at 82-83, quoting Derenco, Inc. v. Benjamin

Franklin Fed. S. & L. Loan Assn., 281 Ore. 533, 572-573 (1978).

{¶59} Here, appellees’ contract claim is based on FM’s contract, rather than

appellees’ knowledge. This evidence supports a finding that common issues

predominate as to appellees’ contract claim. The same is also true as to appellees’

18
claims for breach of the covenant of good faith and fair dealing and unconscionability

since both claims are included in appellees’ claim for breach of contract.

{¶60} Next, FM argues a class action is not the superior method of adjudication

based on its argument that common issues do not predominate. However, FM’s

argument fails in light of the trial court’s finding that common issues predominate.

Moreover, in support of the trial court’s finding that a class action is the superior method

of adjudication, the court addressed the pertinent superiority factors in Civ.R. 23(B)(3).

Specifically, the court noted that no parallel, individual actions are pending, which

weighs in favor of certification. Further, the court noted that the potential for recovery

for each action brought individually would be limited, i.e., under $500 for each named

plaintiff, and expensive, while a class action would permit class members to

economically assert their rights. The purpose of Civ.R. 23(B)(3) was to allow class-

action treatment for such claims. Warner, supra, at 96. Further, the trial court found the

class is numerically substantial, i.e., over 40 members, but not so large as to be

unwieldy, another factor in the superiority analysis.

{¶61} Thus, the trial court’s finding that a class action was the superior method

of adjudication was supported by the court’s judgment and the record.

{¶62} Next, the bank argues the trial court abused its discretion in finding the

typicality and adequate-representation requirements were satisfied. “The requirement

for typicality is met where there is no express conflict between the class representatives

and the class.” Hamilton, supra, at 77. Similarly, a representative is deemed adequate

so long as “his or her interest is not antagonistic to that of other class members.” Id. at

77-78.

19
 {¶63} FM argues that appellees’ interests are antagonistic to those of the

putative class members because appellees were already class members when FM

adopted high-to-low posting, while the other class members opened their accounts after

the change was adopted. The trial court found that appellees’ position was comparable

to that of other class members and thus there is no express conflict between appellees

and the putative class members because appellees alleged in the complaint that all

class members were inappropriately charged overdraft fees as a result of an improper

reordering scheme adopted by FM.

{¶64} The Supreme Court of Ohio considered a similar argument in Hamilton,

supra. There the bank argued a conflict existed between borrowers with understated

monthly payments and those with properly stated monthly payments. The Supreme

Court rejected this argument and held that, because each class member sought to

establish that the method of computation and the exaction of additional charges

produced an interest rate in excess of the rate set forth in their notes, there was no

conflict or antagonism between the plaintiffs and the other class members. Id. at 78.

{¶65} With respect to adequacy of representation, FM argued below that,

because not all customers would prefer the type of ordering the plaintiffs desire, the

plaintiffs are antagonistic to the other class members. However, the trial court found

that because plaintiffs’ claim is that they and all other class members were charged

excessive overdraft fees due to the way FM reordered debits, there was no conflict or

antagonism between the plaintiffs and other class members, even if FM could prove that

some customers preferred a different ordering system. The Supreme Court in Hamilton

stated that a unique argument will not destroy typicality or adequacy of representation

20
unless it is so central to the litigation that it threatens to preoccupy the class

representative to the detriment of the putative class members. Id. at 78. Moreover, the

bank has failed to show that any class members would prefer a different method of

reordering, let alone that such preference is so central to the action that it threatens to

preoccupy appellees to the detriment of the putative class members.

{¶66} The trial court’s finding that the typicality and adequacy-of-representation

requirements were met was supported by the court’s judgment entry and the record.

{¶67} Based on our review of the judgment and the record, the trial court

conducted a rigorous analysis of the class action requirements. With the exception of

the requirement that the class definition be unambiguous, the trial court did not abuse

its discretion in deciding that each requirement was met and in certifying the class.

{¶68} The bank’s first assignment of error is overruled. The second assigned

error is sustained in part.

{¶69} For its third and final assigned error, the bank alleges:

{¶70} “The ‘as a result of’ class definition cannot be certified.”

{¶71} FM argues that the alternative class definition in the amended complaint,

which included the phrase “as a result of,” is also insufficient to define the class

because it is a “fail-safe class,” i.e., one whose members cannot be known until after

liability is found on the merits. This argument is based on FM’s contention that

appellees were required, but failed, to identify the proper posting order at the class-

certification stage. However, since the trial court did not adopt this alternative definition,

the argument is moot. In any event, this argument lacks merit because it is for the jury

to choose the appropriate posting method following trial on the merits. Larsen, supra.

21
 {¶72} The bank’s third assignment of error is overruled.

{¶73} For the reasons stated in the opinion of this court, it is the judgment and

order of this court that the judgment of the Lake County Court of Common Pleas is

affirmed in part and reversed in part; and this case is remanded for further proceedings

consistent with the opinion.

DIANE V. GRENDELL, J.,

THOMAS R. WRIGHT, J.,

concur.

22