Rilley v. MoneyMutual, LLC

Background

The plaintiffs brought a proposed class action on behalf of Minnesota residents who used moneymutual.com or another MoneyMutual-branded website to obtain payday loans. They alleged that MoneyMutual, Selling Source, and PartnerWeekly violated Minnesota statutes and common law by arranging consumer short-term loans with unlicensed lenders and failing to provide disclosures required by Minnesota’s payday-lending laws.

The claims for which certification was sought were: violating Minnesota Statute § 47.601; violating the Minnesota Consumer Fraud Act; violating the Minnesota Uniform Deceptive Trade Practices Act; unjust enrichment; civil conspiracy; aiding and abetting; and alter ego or piercing the corporate veil. The plaintiffs did not seek certification of their Minnesota False Statement in Advertising Act claim.

The proposed class covered all individuals residing in Minnesota who, from August 1, 2009 through January 11, 2019, (1) received a loan of $1,000 or less from a lender, (2) were required to make a minimum payment within 60 days of loan origination exceeding 25 percent of the principal balance, and (3) used moneymutual.com or a MoneyMutual-branded website.

Class-certification requirements

Under Federal Rule of Civil Procedure 23, a plaintiff seeking class certification must show, among other things, that the class is numerous, has common legal or factual questions, that the representatives’ claims are typical of the class, and that the representatives and their lawyers will adequately protect the class. For a class seeking damages under Rule 23(b)(3), common questions must predominate over individual questions, and a class action must be superior to other methods of resolving the dispute.

The defendants did not dispute numerosity or the adequacy of proposed class counsel. They argued that the named plaintiffs were inadequate representatives and that questions about required disclosures, reliance, causation, damages, and the named plaintiffs’ credibility required individualized inquiries.

Court’s analysis

The court concluded that the central liability questions could be resolved with common evidence. Those questions included whether the defendants arranged consumer short-term loans under Minnesota law; whether they violated § 47.601 by arranging loans without the required licensing or disclosures; whether their conduct was deceptive under the Consumer Fraud Act; whether it created a likelihood of confusion under the Deceptive Trade Practices Act; whether they were unjustly enriched; whether they conspired with or aided and abetted the lenders; and whether the defendant companies were alter egos of one another.

The court rejected the argument that individual reliance issues defeated certification. It stated that § 47.601 did not require consumers to rely on a misrepresentation that a lender was licensed. For the consumer-protection claims, the court found that the proposed class members proceeded under the same basic legal theory concerning the defendants’ alleged arrangement of consumer short-term loans.

The court recognized that determining amounts paid by individual borrowers would require individual inquiry. It nevertheless found that plaintiffs had proposed a feasible method: tracking the sale of a consumer’s information to a lender through the defendants’ lead-acquisition spreadsheet and then cross-referencing that information with the consumer’s bank records. The court concluded that this process would not overwhelm the common liability and damages issues. It also noted that statutory damages, amounts lenders paid defendants for leads, and punitive damages could be addressed through class-wide evidence, subject to the separate procedural matter concerning defendants’ appeal of the order allowing a punitive-damages claim.

The court found the named plaintiffs’ claims typical because they arose from the same process as the absent class members’ claims: visiting the website from Minnesota, submitting Minnesota address and banking information, and being matched with a lender that provided a loan with a principal below $1,000. The court also rejected the defendants’ attacks based on the named plaintiffs’ financial difficulties, later payday loans, and other credibility concerns. It found that the named plaintiffs understood their roles, had participated in the litigation, and had no conflict with absent class members at that stage.

Finally, the court found that a class action was superior because individual class members had little interest in controlling separate lawsuits, there was no showing of other litigation involving the same claims, concentrating the case in one forum would avoid inconsistent results, and the court was not aware of unusual management difficulties.

Disposition

The court granted the plaintiffs’ motion for class certification. It certified the proposed class under Rule 23, appointed Scott Rilley, Michelle Kunza, Venus Colquitt-Montgomery, Jonathon Aldrich, and Kendra Buettner as class representatives, and appointed E. Michelle Drake, John G. Albanese, and Mark Heaney as class counsel. The parties were ordered to negotiate and submit proposed class-notice materials within the deadlines set in the order. The order did not decide whether the defendants were ultimately liable on the certified claims.