United States District Court, S.D. Indiana, Indianapolis Division
RED BARN MOTORS, INC., PLATINUM MOTORS, INC., and MATTINGLY AUTO SALES, INC., Plaintiffs,
NEXTGEAR CAPITAL, INC. f/k/a DEALER SERVICES CORPORATION, COX ENTERPRISES, INC., COX AUTOMOTIVE, INC., and JOHN WICK, Defendants.
ORDER ON PENDING MOTIONS
WALTON PRATT, JUDGE
matter is before the Court on a Motion to Reconsider and/or
Modify Class Certification Order (“Motion to
Reconsider”) filed by Defendants NextGear Capital,
Inc., formerly known as Dealer Services Corporation
(“NextGear”), Cox Automotive, Inc., and John Wick
(collectively, “Defendants”) (Filing No.
228); Defendants' Motion to Modify Class
Certification Order to Narrow Class (“Motion to Narrow
Class”) (Filing No. 237); Defendants'
Objections to Magistrate Judge's Orders (Filing No.
240; Filing No. 255); and a Motion to Proceed
with Class Notice filed by Plaintiffs Red Barn Motors, Inc.,
Platinum Motors, Inc., and Mattingly Auto Sales, Inc.
(collectively, “Plaintiffs”) (Filing No.
Plaintiffs each executed a separate contract with NextGear,
whereby the Plaintiffs were provided lines of credit for
financing their used car dealership operations. After the
Plaintiffs discovered that they had been charged interest and
fees on money that had not yet actually been paid on their
behalf, they initiated this lawsuit against the Defendants,
asserting claims for breach of contract, constructive fraud,
unjust enrichment, tortious interference, violation of the
Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. § 1961 et seq.,
and a RICO conspiracy. Following the Defendants' motion
to dismiss the Plaintiffs' claims, the Court dismissed
the unjust enrichment, tortious interference, and RICO
conspiracy claims. The Court also dismissed the breach of
contract and constructive fraud claims against Cox Automotive
and Mr. Wick and all claims against Defendant Cox
Enterprises, Inc. (Filing No. 186 at 42).
Plaintiffs sought class certification on their claims for a
class involving “[a]ll used car dealers in the United
States of America that were parties to a Floorplan Agreement
with DSC, n/k/a NextGear, effective during the time period of
January 2005 through July 2013.” (Filing No. 165 at
2.) The Court granted class certification on the
Plaintiffs' breach of contract claim against NextGear and
the substantive RICO claim against NextGear, Cox Automotive,
and Mr. Wick, but class certification was denied on the
constructive fraud claim. The certified class was defined as
“all used car dealers in the United States of America
that were parties to a Floorplan Agreement with DSC, n/k/a
NextGear, effective during the time period of January 2005
through July 2013, ” with a subclass for “all
California used car dealers that were parties to a Floorplan
Agreement with DSC, n/k/a NextGear, effective during the time
period of January 2005 through July 2013, which Floorplan
Agreement requires the application of California law.”
(Filing No. 220 at 40.)
their Motion to Reconsider, the Defendants ask the Court to
decertify the class, arguing that the Court failed to
consider evidence and arguments presented after the initial
class certification briefing. In their Motion to Narrow
Class, the Defendants ask the Court to modify the class to
exclude any car dealers that entered into floorplan
agreements in 2013, which supersede prior agreements and
require arbitration and waive participation in class actions.
In their Objections to Magistrate Judge's Orders, the
Defendants ask the Court to vacate the Magistrate Judge's
Orders denying a stay of class discovery and denying a stay
of class notice. In the Plaintiffs' Motion to Proceed
with Class Notice, they ask the Court for permission to move
forward with providing notice to class members. The Court
will address each Motion in turn.
the Defendants filed their Motion to Reconsider under Rule
59(e) of the Federal Rules of Civil Procedure, the Motion is
properly classified as a motion to reconsider under Rule
54(b) because no final judgment has been entered in this
case. See Fed. R. Civ. P. 54(b) (“any order or
other decision, however designated, that adjudicates fewer
than all the claims or the rights and liabilities of fewer
than all the parties does not end the action as to any of the
claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the
parties' rights and liabilities”). Regardless, the
Court applies a similar standard as applied to motions to
alter or amend a judgment under Rule 59(e). See
Katz-Crank v. Haskett, 2014 U.S. Dist. LEXIS 95144, at
*6 (S.D. Ind. July 14, 2014); Woods v. Resnick, 725
F.Supp.2d 809, 827- 28 (W.D. Wis. 2010).
to reconsider filed pursuant to Rule 54(b) or Rule 59(e) are
for the purpose of correcting manifest errors of law or fact
or to present newly discovered evidence not available at the
time of briefing. Cincinnati Life Ins. Co. v.
Beyrer, 722 F.3d 939, 954 (7th Cir. 2013); State
Farm Fire & Cas. Co. v. Nokes, 263 F.R.D. 518, 526
(N.D. Ind. 2009). The motion is to be used “where the
Court has patently misunderstood a party, or has made a
decision outside the adversarial issues presented to the
Court by the parties, or has made an error not of reasoning
but of apprehension.” Bank of Waunakee v. Rochester
Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990)
(citation omitted). A manifest error “is not
demonstrated by the disappointment of the losing party. It is
the wholesale disregard, misapplication, or failure to
recognize controlling precedent.” Oto v.
Metropolitan Life Ins. Co., 224 F.3d 601, 606 (7th Cir.
2000) (citation and quotation marks omitted). Additionally,
“[r]econsideration is not an appropriate forum for
rehashing previously rejected arguments or arguing matters
that could have been heard during the pendency of the
previous motion.” Ahmed v. Ashcroft, 388 F.3d
247, 249 (7th Cir. 2004) (citation and quotation marks
this is a class action, the Court balances the above standard
with Rule 23(c)(1)(C), which states, “[a]n order that
grants or denies class certification may be altered or
amended before final judgment.” “[A] district
court has broad discretion to determine whether certification
of a class is appropriate.” Retired Chicago Police
Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir.
1993). Under Rule 23(c)(1)(C), the Court retains authority to
modify or vacate a class certification at any time prior to
final judgment. “[T]he district court has the power at
any time before final judgment to revoke or alter class
certification if it appears that the suit cannot proceed
consistent with Rule 23's requirements.”
Alliance to End Repression v. Rochford, 565 F.2d
975, 977 (7th Cir. 1977).
favorable class determination by the court is not cast in
stone. If the certification of the class is later deemed to
be improvident, the court may decertify, subclassify, alter
the certification, or permit intervention.”
Eggleston v. Chicago Journeymen Plumbers' Local
Union No. 130, 657 F.2d 890, 896 (7th Cir.
1981) (citations omitted); see also Ellis v. Elgin
Riverboat Resort, 217 F.R.D. 415, 419 (N.D.
Ill. 2003) (“the court's initial certification of a
class ‘is inherently tentative'”) (citation
Classes are certified early in a suit. Fed.R.Civ.P.
23(c)(1)(A). All certifications are tentative. Fed.R.Civ.P.
23(c)(1)(C). If the evidence calls into question the
propriety of defining a class in a particular way, then the
definition must be modified or subclasses certified. A class
defined early in a suit cannot justify adjudicating
hypothetical issues rather than determining the legality of
what actually happens.
Fonder v. Sheriff of Kankakee Cty., 823 F.3d 1144,
1147 (7th Cir. 2016).
resolution of four of the pending motions-Motion to Narrow
Class, the two Objections to Magistrate Judge's Orders,
and Motion to Proceed with Class Notice-can be determined by
the resolution of the Motion to Reconsider. Therefore, ...