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Murphy v. Gospel for Asia, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

September 10, 2018

GARLAND D. MURPHY, III, M.D., and PHYLLIS MURPHY, Individually and on behalf of all others similarly situated PLAINTIFFS
v.
GOSPEL FOR ASIA, INC.; GOSPEL FOR ASIA-INTERNATIONAL; K.P. YOHANNAN; GISELA PUNNOSE; DANIEL PUNNOSE; DAVID CARROLL; and PAT EMERICK DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED-STATES DISTRICT JUDGE

         Currently before the Court is Plaintiffs' Motion to Certify Class Action (Doc. 48), along with Defendants' Response (Doc. 70), Plaintiffs' Reply (Doc. 88), and additional briefing.[1] Although the motion was initially set for oral argument on June 15, 2018, the parties notified the Court that they wished to forego a hearing and submit the motion on the briefs. Having considered the Motion and the Objections, which are now ripe for decision, the Court GRANTS IN PART AND DENIES IN PART the Motion to Certify Class (Doc. 48). For the reasons explained below, the Court will certify the proposed nationwide class (as modified) for the Civil RICO claim and will certify the proposed Arkansas subclass for the Arkansas Deceptive Trade Practices Act ("ADTPA"), fraud, and unjust enrichment claims.

         I. BACKGROUND

         The Court has previously given an exhaustive recounting of the facts of this case in its prior Orders (Docs. 44, 60, 63, 67, 119, and 125) and during several hearings that have been held to resolve a months-long discovery dispute (Docs. 26, 37, and 65). Thus, it repeats here only those facts necessary to establish context for the Court's ruling.

         GFA is a Christian missionary organization operating in South Asia, mainly in India. To fulfill its charitable purposes, GFA solicits donations from donors across the world. Each year, according to the Complaint, over one million unique donations are made to GFA from tens of thousands of donors in the United States alone. (Doc. 1, ¶ 15). GFA then works with its overseas agents and international field partners (many of which are entities closely affiliated with and/or controlled by the named Defendants) to ensure that the designated money reaches its intended purposes in Asia ("the field").[2] To maintain its ability to send sufficient funds to the field, GFA arranges fundraising pitches in several mediums, including in-person solicitations at churches in the United States, on its own website, and through advertising efforts on social media and in various mailings and radio broadcasts.

         Because the needs of the poor in Asia are so many, GFA allows potential donors to specify for what purpose(s) their field donations will be spent. For instance, donors who give online or in response to catalogues may direct their donations to any of 179 different donation categories, including everything from "Jesus wells" to water buffaloes. Donors make these designations by either checking boxes on order forms or, if ordering online, by adding the item (which lists the corresponding price) to their shopping cart.[3] At other times, GFA directly solicits donations for particular items, including "emergency grams" sent in the wake of natural disasters soliciting donations for items related to disaster relief and advertisements sent around the holidays asking for donations for blankets because "the weather outside is frightful, but this blanket is so delightful." (Doc. 1, pp. 9, 11) (cleaned up).

         Plaintiffs allege that throughout the proposed class period, whether the advertisements were made by GFA representatives at in-person church presentations, through catalogue mailings, on GFA's website, or in GFA's radio presentations, GFA included a similar promise to its donors that 100% of the money given by donors would be sent to the field and ultimately spent in accordance with the donor's wishes rather than being applied to cover administrative costs or overhead. In fact, even beyond the alleged promises made in these solicitations, potential donors or casual scrollers who stumbled upon GFA's website could learn in the FAQ section not only that 100% of what you give for chickens goes for chickens but also how GFA could ensure that the donated money designated for the field ultimately went there. (Doc. 53-5, pp. 3, 4). Moreover, Defendants acknowledge that every GFA donor received receipts that contained a representation that "[o]ne hundred-percent of all contributions designated for use on the mission field are sent to the mission field." (Beers Decl., Doc. 77-1, pp. 9, 10).

         This lawsuit centers on Plaintiffs' claims that, despite these numerous representations, GFA did not, in fact, spend the donated-and designated-money in accordance with the donors' wishes or with GFA's representations. All told throughout the proposed class period, the parties agree that approximately $375 million in donations are at issue.[4] As a result, Plaintiffs have asserted a number of causes of action against GFA, including Civil RICO, fraud, unjust enrichment, and an Arkansas-specific claim under the ADTPA. For the Civil RICO, fraud, and unjust enrichment causes of action, Plaintiffs now seek to certify a nationwide class as follows:

All persons in the United States who donated money to GFA from January 1, 2009 through the date the Class is certified for Project Codes 1000-4900. Excluded from the Class are unknown donors; Defendants and their subsidiaries and affiliates; all persons who make a timely election to be excluded from the Class; governmental entities; and the Judge to whom this case is assigned and his/her immediate family.

(Doc. 49, p. 20). The proposed ADTPA subclass is identical, except that "Arkansas" is substituted for "the United States." They also request that the Court designate Dr. Garland Murphy and Phyllis Murphy as Class Representatives and approve the Stanley Law Group as Lead Class Counsel and the Bassett Law Firm as Class Counsel.

         II. LEGAL STANDARD

         The party seeking class certification bears the burden of proving that Rule 23's requirements are satisfied. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). The district court retains "broad discretion in determining whether to certify a class, recognizing the essentially factual basis of the certification inquiry and ... the district court's inherent power to manage and control pending litigation." In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011) (internal quotations and citations omitted). Nevertheless, a district court must undertake "a rigorous analysis" to ensure that the requirements of Rule 23 are met. Gen. Tel. Co. of the Sw. v. Falcon, 467 U.S. 147, 161 (1982). "Frequently that 'rigorous analysis' will entail some overlap with the merits of the plaintiff's underlying claim." Dukes, 564 U.S. at 351. The district court may "resolve disputes going to the factual setting of the case" if necessary to the class certification analysis. Blades v. Monsanto Co., 400 F.3d 562, 567 (8th Cir. 2005).

         In performing this rigorous analysis, "[a] court is not bound by the proposed definitions of the class, Smith v. Brown & Williamson Tobacco Corp., 174 F.R.D. 90, 92 n.2 (W.D. Mo. 1997) (citation omitted), and "has the authority to redefine a proposed class in such a way as to allow the class action to be maintained." In re Zurn Pex Plumbing Prods. Liability Litig., 267 F.R.D. 549, 558 (D. Minn. 2010); see also Davoll v. Webb, 194 F.3d 1116, 1146 (10th Cir. 1999) (courts have "broad discretion" to "modify the definition" of the class); In re Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004) ("[H]olding plaintiffs to the plain language of their definition would ignore the ongoing refinement and give-and-take inherent in class action, particularly in the formation of a workable class definition."). The Court's discretion to redefine the proposed class extends to the ability to create partial class actions as to particular issues and subclasses. See, e.g., Newberg on Class Actions § 7:30 (5th ed. 2018); Charles A. Wright and Arthur R. Miller, 7AA Federal Practice & Procedure §1790 (3d ed. 2018). But, any such subclass must still meet the requirements for class certification under Rule 23. Paxton v. Union Nat'l Bank, 688 F.2d 552, 559 (8th Cir. 1982).

         An implicit requirement for any class certification inquiry involves a court's assessment as to the ascertainability of the class. The description of a proposed class must be sufficiently definite to permit class members to be identified by objective criteria. See Sandusky Wellness Ctr, LLC v. Medtox Sci., Inc., 821 F.3d 992, 996-97 (8th Cir. 2016). "The requirement that a class be clearly defined is designed primarily to help the trial court manage the class. It is not designed to be a particularly stringent test, but plaintiffs must at least be able to establish that the general outlines of the membership of the class are determinable at the outset of the litigation." Bynum v. Dist. of Columbia, 214F.R.D. 27, 31 (D.D.C. 2003).

         Under Rule 23, certifying a class action requires a two-step analysis. First, the Court must determine whether:

• the class is so numerous that joinder of all members is impracticable (unumerosity");
• there are questions of law or fact common to the class ("commonality");
• the claims or defenses of the representative parties are typical of the claims or defenses of the class ("typicality"); and
• the representative parties will fairly and adequately protect the interests of the class ("fair and adequate representation").

         Rule 23(a)(1)-(4). Second, because Plaintiffs seek to maintain the classes under Rule 23(b)(3), the Court must determine whether:

• questions of law or fact common to class members predominate over questions affecting only individual members ("predominance"); and
• a class action is superior to other available methods for fairly and efficiently adjudicating the controversy ("superiority").

Rule 23(b)(3).

         III. DISCUSSION

         Because the class and any subclass must independently meet the requirements of Rule 23, the Court considers separately whether the proposed nationwide class and Arkansas subclass satisfy the requirements of Rule 23.

         A. Nationwide Class

         1. Numerosity (Rule 23(a)(1)) and Ascertainability

         The Court begins by assessing whether the class is so numerous that joinder of all members is impracticable, and, relatedly, whether the members of the class are readily ascertainable. The Eighth Circuit, "unlike most other courts of appeals, has not outlined a . . . separate, preliminary requirement" of ascertainability that would require plaintiffs to demonstrate a method of identifying class members that is administratively feasible. See Sandusky Wellness, 821 F.3d at 996. Rather, the Eighth Circuit simply adheres to a rigorous analysis of the Rule 23 factors, and while it recognizes that this analysis necessarily entails that a class be "adequately defined and clearly ascertainable," the focus of this threshold inquiry is on whether the proposed class definition identifies class members by objective criteria, rather than on the administrative concerns that are already taken into account by the Rule 23(b)(3) factors of predominance and superiority. See id.

         GFA does not seriously dispute that the proposed nationwide class is readily ascertainable and so numerous that joinder of all members would be impracticable. After all, by GFA's own count, the proposed nationwide class would consist of 185, 414 individual members. (Doc. 80-4, p. 3). Clearly, the class is ascertainable by objective criteria. Additionally, given the size of the putative nationwide class, the numerosity requirement is satisfied as well.

         2. Commonality (Rule 23(a)(2))

         Commonality does not require "that every question of law or fact be common to every member of the class." Paxton v. Union Nat'l Bank, 688 F.2d 552, 561 (8th Cir. 1982). In fact, commonality does not even require more than one common question. For, as the Supreme Court noted in Dukes, "[e]ven a single [common] question will do." 564 U.S. at 359 (alterations in original, internal quotation marks and citation omitted). To establish commonality, the putative class members must have "suffered the same injury," and "[t]heir claims must depend upon a common contention." Id. at 349-50. In other words, the contention must "be of such a nature that it is capable of class-wide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each of the claims in one stroke." Id. at 350.

         The putative class members in this case share many common questions of law and fact. First, they all assert similar injuries based on the same allegedly fraudulent conduct of the Defendants. In particular, the Court notes the following non-exhaustive list of common questions:

1) What GFA promised throughout the class period;
2) Whether GFA acted in accordance with those promises;
3) Whether GFA committed a pattern of racketeering ...

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