{ "id": 5570412, "name": "JOHNSON'S SALES COMPANY, INC., Kent Johnson's Warehouse Showroom, Inc., Johnson's Warehouse Showroom, Inc., and Best Buy Home Furnishings, Inc. v. Wanda HARRIS, on Behalf of Herself and Those Similarly Situated, and Decorrien Flemming", "name_abbreviation": "Johnson's Sales Co. v. Harris", "decision_date": "2007-06-28", "docket_number": "06-1237", "first_page": "387", "last_page": "397", "citations": [ { "type": "official", "cite": "370 Ark. 387" }, { "type": "parallel", "cite": "260 S.W.3d 273" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "364 Ark. 59", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 3034641 ], "weight": 2, "year": 2005, "opinion_index": 0, "case_paths": [ "/ark/364/0059-01" ] }, { "cite": "359 Ark. 402", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 3712796 ], "weight": 2, "year": 2004, "opinion_index": 0, "case_paths": [ "/ark/359/0402-01" ] }, { "cite": "349 Ark. 518", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1513779 ], "weight": 2, "year": 2002, "opinion_index": 0, "case_paths": [ "/ark/349/0518-01" ] }, { "cite": "365 Ark. 610", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 3286519 ], "weight": 10, "year": 2006, "opinion_index": 0, "case_paths": [ "/ark/365/0610-01" ] }, { "cite": "370 Ark. 310", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 5568575 ], "weight": 23, "year": 2007, "pin_cites": [ { "page": "317" }, { "page": "450" } ], "opinion_index": 0, "case_paths": [ "/ark/370/0310-01" ] }, { "cite": "347 Ark. 89", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 683172 ], "weight": 2, "year": 2001, "pin_cites": [ { "page": "101" }, { "page": "436" } ], "opinion_index": 1, "case_paths": [ "/ark/347/0089-01" ] }, { "cite": "339 Ark. 322", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 130704 ], "weight": 2, "year": 1999, "pin_cites": [ { "page": "333" }, { "page": "430" } ], "opinion_index": 1, "case_paths": [ "/ark/339/0322-01" ] }, { "cite": "306 Ark. 173", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1900940 ], "weight": 3, "year": 1991, "pin_cites": [ { "parenthetical": "emphasis added" } ], "opinion_index": 1, "case_paths": [ "/ark/306/0173-01" ] }, { "cite": "890 S.W.2d 240", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 1455857, 1453606 ], "year": 1994, "pin_cites": [ { "page": "242" } ], "opinion_index": 1, "case_paths": [ "/ark/318/0880-01", "/ark/319/0075-01" ] }, { "cite": "319 Ark. 75", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1453606 ], "year": 1994, "pin_cites": [ { "page": "77" } ], "opinion_index": 1, "case_paths": [ "/ark/319/0075-01" ] }, { "cite": "223 Ark. 938", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1650437 ], "weight": 2, "year": 1954, "pin_cites": [ { "parenthetical": "\"our cases hold that the transaction is to be judged at the time the contract is entered into, and not thereafter.\"" }, { "parenthetical": "\"our cases hold that the transaction is to be judged at the time the contract is entered into, and not thereafter.\"" } ], "opinion_index": 1, "case_paths": [ "/ark/223/0938-01" ] } ], "analysis": { "cardinality": 804, "char_count": 21120, "ocr_confidence": 0.765, "pagerank": { "raw": 2.0193029147921805e-07, "percentile": 0.745208697495491 }, "sha256": "00fdf8bb32b23ca947225d57e01a0181fe6f184650e64063589de0d76923f542", "simhash": "1:2bd0c1ed6e88f231", "word_count": 3417 }, "last_updated": "2023-07-14T22:32:56.927728+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Hannah, C.J., and Glaze, J., dissent.", "Hannah, C.J., joins." ], "parties": [ "JOHNSON\u2019S SALES COMPANY, INC., Kent Johnson\u2019s Warehouse Showroom, Inc., Johnson\u2019s Warehouse Showroom, Inc., and Best Buy Home Furnishings, Inc. v. Wanda HARRIS, on Behalf of Herself and Those Similarly Situated, and Decorrien Flemming" ], "opinions": [ { "text": "Donald L. Corbin, Justice.\nAppellants Johnson\u2019s Sales Company, Inc., Kent Johnson\u2019s Warehouse Showroom, Inc., Johnson\u2019s Warehouse Showroom, Inc., and Best Buy Home Furnishings, Inc. (collectively \u201cJohnson\u2019s\u201d), appeal from the Hemp-stead County Circuit Court\u2019s order granting class certification under Ark. R. Civ. P. 23. On appeal, Johnson\u2019s raises three arguments for reversal: the circuit court abused its discretion in finding that the elements of (1) commonality, (2) predominance, and (3) superiority supported class certification. Because this is an interlocutory appeal pursuant to Ark. R. App. P.-Civ. 2(a)(9), our jurisdiction is proper under Ark. Sup. Ct. R. l-2(a)(8). We find no error and affirm.\nAppellees Wanda Harris and Decorrien Flemming (collectively \u201cHarris\u201d), as individuals who entered into and held purchase agreements with Johnson\u2019s retail stores to purchase furniture through periodic payments, filed a class-action complaint against Johnson\u2019s. Specifically, Harris claimed that, under the purchase agreements, Johnson\u2019s charged an interest rate in excess of that allowed by article 19, section 13 of the Arkansas Constitution. Harris further alleged that class certification was proper because Johnson\u2019s eight retail stores also charged other customers usurious rates during the same time period.\nOn May 21, 2004, and July 29, 2004, hearings were held on the issue of class certification. After full consideration of all the evidence, briefs, and arguments submitted in support of and in opposition of the motion for class certification, the circuit court granted class certification and entered specific findings of fact and conclusions of law respecting class certification. Furthermore, the circuit court defined the class as follows:\nAll persons who entered into or held purchase agreements with eight (8) retail stores owned by Defendants to finance goods through periodic payments from July 24, 1997, to present and whose purchase agreements state on their face an \u201cAnnual Percentage Rate\u201d in excess of the Discount Rate on 90-Day Commercial Paper as promulgated by the Federal Reserve Bank in St. Louis, Missouri, in effect on the date that their purchase agreements were signed.\nOn appeal, both parties and the circuit court have stipulated that the proposed class was intended to state:\nAll persons who entered into or held purchase agreements with eight (8) retail stores owned by Defendants t\u00f3 finance goods through periodic payments from July 24, 1997, to present and whose purchase agreements state on their face an \u201cAnnul Percentage Rate\u201d in excess of five percent (5%) per annum above the Discount Rate on 90-Day Commercial Paper as promulgated by the Federal Reserve Bank in St. Louis, Missouri, in effect on the date that their purchase agreements were signed. [Emphasis supplied.]\nOn appeal, Johnson\u2019s argues that the circuit court erred in certifying the underlying case as a class action. Specifically, it asserts that the circuit court abused its discretion in finding that the Rule 23 requirements of (1) commonality, (2) predominance, and (3) superiority were met.\nCircuit courts are given broad discretion in matters regarding class certification and we will not reverse a circuit court\u2019s decision to grant or deny class certification absent an abuse of discretion. Beverly Enters.-Ark., Inc. v. Thomas, 370 Ark. 310, 259 S.W.3d 445 (2007). When reviewing a circuit court\u2019s class-certification order, this court reviews the evidence contained in the record to determine whether it supports the circuit court\u2019s decision. Id. This court does not delve into the merits of the underlying claims at this stage, as the issue of whether to certify a class is not determined by whether the plaintiff has stated a cause of action for the proposed class that will prevail. Id.\nRule 23 provides the requirements for class certification. Specifically, the following six requirements must be met before a lawsuit can be certified as a class action under Rule 23: (1) numerosity; (2) commonality; (3) typicality; (4) adequacy; (5) predominance; and (6) superiority. See Beverly, 370 Ark. 310, 259 S.W.3d 445. As stated above, Johnson\u2019s is only challenging the circuit court\u2019s ruling as to three of these criteria: commonality, predominance, and superiority.\nCommonality\nRule 23(a)(2) requires the circuit court to make a determination that \u201cthere are questions of law or fact common to the class.\u201d Ark. R. Civ. P. 23(a)(2). This court\u2019s case law establishes that this requirement be case specific. See Van Buren Sch. Dist. v. Jones, 365 Ark. 610, 232 S.W.3d 444 (2006). Rule 23(a)(2) does not require that all questions of law or fact be common, but rather the standard is that there need be only a single issue common to all members of the class. Id. Moreover, when the party opposing the class has engaged in some course of conduct that affects a group of persons and gives rise to a cause of action, one or more of the elements of that cause of action will be common to all of the persons affected. Id.\nHere, the class is defined as all persons who entered into or held purchase agreements with Johnson\u2019s and whose purchase agreements state on their face an Annual Percentage Rate (APR) in excess of five percent per annum above the discount rate on 90-day commercial paper. Thus, there clearly is a common usury claim that runs amongst all class members. Consequently, the circuit court did not abuse its discretion in finding that the commonality element was satisfied.\nFurthermore, Johnson\u2019s argument that the threshold question of whether or not a prospective class member actually paid interest in excess of the maximum lawful rate cannot be answered by the common questions of law or fact found by the circuit court is without merit. This argument fails for two reasons. First, Johnson\u2019s has not challenged the class definition and the class definition is very clear that class members are individuals who have entered into purchase agreements that, on their face, contain an APR in excess of five percent above the discount rate. Second, just as the circuit court determined, Johnson\u2019s argument would require this court to go to the merits of the case and this is simply not proper in determining if class certification was proper. See Beverly, 370 Ark. 310, 259 S.W.3d 445. Therefore, the circuit court did not abuse its discretion in finding that the element of commonality supported class certification.\nPredominance\nRule 23(b) requires that \u201cthe questions of law or fact common to the members of the class predominate over any questions affecting only individual members[.]\u201d Ark. R. Civ. P. 23 (b). This court has explained that the starting point in examining the predominance issue is whether a common wrong has been alleged against the defendant. See Beverly, 370 Ark. 310, 259 S.W.3d 445. If a case involves preliminary, common issues of liability and wrongdoing that affect all class members, the predominance requirement of Rule 23 is satisfied even if the circuit court must subsequently determine individual damage issues in bifurcated proceedings. Id. Moreover, this court has recognized that a bifurcated process of certifying a class to resolve preliminary, common issues and then decertifying the class to resolve individual issues, such as damages, is consistent with Rule 23. Id. Moreover, this court has repeatedly stated:\n[t]he predominance element can be satisfied if the preliminary, common issues may be resolved before any individual issues. In making this determination, we do not merely compare the number ofindividual versus common claims. Instead, we must decide if the issues common to all plaintiffs \u201cpredominate over\u201d the individual issues, which can be resolved during the decertified stage of bifurcated proceedings.\nId. at 317, 259 S.W.3d at 450; see also Van Buren, 365 Ark. 610, 232 S.W.3d 444. Thus, the question is whether there are overarching issues that can be addressed before resolving individual issues. Beverly, 370 Ark. 310, 259 S.W.3d 445. However, if preliminary issues are individualized, then the predominance requirement is not satisfied. See id. Indeed, a case that presents numerous individual issues regarding the defendants\u2019 conduct, causation, injury, and damages will best be resolved on a case-by-case basis. Id.\nIn the present case, as stated above, a common wrong \u2014 the usury claim \u2014 is alleged against Johnson\u2019s. Johnson\u2019s claims that predominance cannot be met because the usury question for each prospective class member will require the court to examine the payment history of each customer to determine the actual interest rate at which he repaid his loan. This argument is flawed.\nFirst, as this court has explained, if a case involves preliminary, common issues of liability and wrongdoing that affect all class members, the predominance requirement is satisfied even if the circuit court must subsequently determine individual damage issues in bifurcated proceedings. See id. Here, there is clearly an overlying common wrong alleged against Johnson\u2019s. Second, the fact that Johnson\u2019s may bring affirmative defenses and counterclaims against individual members of the class does not disqualify the case from certification. The predominance element can be satisfied if the preliminary, common issues may be resolved before individual issues, and the question is whether this is an overarching issue that can be addressed before resolving individual issues. Here, the usury claim is such an overarching issue. Lastly, Johnson\u2019s predominance argument, much like its commonality argument, would require this court to delve into the merits of the case, which we will not do. Consequently, the circuit court did not abuse its discretion in concluding that the need to resolve the usury question common to each class member outweighed the possibility of individual defenses, such that the predominance requirement was satisfied.\nSuperiority\nRule 23(b) requires \u201cthat a class action is superior to other available methods for fair and efficient adjudication of the controversy.\u201d Ark. R. Civ. P. 23(b). This court has repeatedly held that the superiority requirement is satisfied if class certification is the more \u201cefficient\u201d way of handling the case, and it is fair to both sides. See Beverly, 370 Ark. 310, 259 S.W.3d 445; Van Buren, 365 Ark. 610, 232 S.W.3d 444. Where a cohesive and manageable class exists, we have held that real efficiency can be had if common, predominating questions of law or fact are first decided, with cases then splintering for the trial of individual issues, if necessary. Id. This court has further stated that when a circuit court is determining whether class-action status is the superior method for adjudication of a matter, it may be necessary for the circuit court to evaluate the manageability of the class. Id. Furthermore, the avoidance of multiple suits lies at the heart of any class action. Beverly, 370 Ark. 310, 259 S.W.3d 445.\nHere, the circuit court found that the superiority requirement was satisfied because real efficiency will be achieved in this case if the common, predominating question of usury is decided first, with consideration of individual claims to be taken up later. Johnson\u2019s argument is primarily that the circuit court is unable to determine the amount of interest charged from the face of the purchase agreements and, consequently, each and every class member would have to come forth to prove the amount \u201ccharged.\u201d This argument is without merit as members of the class are determined based upon what the APR is on the face of the purchase agreement. Johnson\u2019s has not challenged this class definition, thus there is no need for the circuit court to determine the actual amount of interest charged. Moreover, to examine the superiority issue as argued by Johnson\u2019s would again require this court to look into the merits of the case.\nAdditionally, in the spirit of class actions, real efficiency can be had if common, predominating questions of law or fact are first decided, with cases then splintering for the trial of individual claims. This is such a case. As the circuit court stated, because the individual claims amounts may be small, individual suits are inappropriate and a class action is a superior way to resolve the claims of the class members. This was not an abuse of discretion because a class action is the superior method to resolve the overarching usury claim common to all class members. Moreover, a class action is fair to both sides in this case, as it is a means for all class members to have their claims heard, and Johnson\u2019s will not have to defend against the same assertion of liability in a multitude of different lawsuits. As this court has explained, the class-action procedure is judicially efficient in resolving not only common claims but also common defenses. See The Money Place, LLC v. Barnes, 349 Ark. 518, 78 S.W.3d 730 (2002). Therefore, the circuit court did not abuse its discretion in finding that the superiority requirement was satisfied.\nBased upon the foregoing reasons, we affirm the circuit court\u2019s order granting class certification.\nAffirmed.\nHannah, C.J., and Glaze, J., dissent.\nHarris\u2019s original complaint was filed on December 4, 2002. A final amended complaint was filed on July 29,2005.\nHarris\u2019s motion for class certification was originally filed on January 2, 2004. An amended motion for class certification was filed on November 19,2004.\nIt should be noted that in its reply brief, Johnson\u2019s argues that the class definition reaches the underlying merits of the usury claim and must fail in accordance with the reasoning of Southwestern Bell Yellow Pages v. Pipkin Enterprises, Inc., 359 Ark. 402, 198 S.W.3d 115 (2004). While this argument may be considered a response to a portion of Harris\u2019s commonality argument that the class definition does not consider the merits of the underlying usury claim, Johnson\u2019s is essentially raising the class-definition argument for the first time in its reply brief. This court will not consider arguments made for the first time in the appellants\u2019 reply brief because the appellees are not given a chance to rebut the argument. See Coleman v. Regions Bank, 364 Ark. 59, 216 S.W.3d 569 (2005).", "type": "majority", "author": "Donald L. Corbin, Justice." }, { "text": "Tom Glaze, Justice,\ndissenting. I disagree that this is a proper class under Ark. R. Civ. P. 23. The majority correctly posits that, as a general rule, a claim for usury is determined when the \u201ccontract [is] entered into.\u201d Ark. Const, art. 19, \u00a7 13; see also General Contract Corp. v. Duke, 223 Ark. 938, 270 S.W.2d 918 (1954) (\u201cour cases hold that the transaction is to be judged at the time the contract is entered into, and not thereafter.\u201d). The majority, however, mistakenly assumes that the face of the contract alone is all the evidence that is required to determine whether a usurious rate was charged at the time the contract was entered into. I find no case law to suggest this proposition. In fact, Arkansas case law indicates that, in order to determine whether a rate is usurious, the language in the contract must be read in context ofits stated terms and how allocation of payments were made pursuant to the note. See Cooprider v. Security Bank, 319 Ark. 75, 77, 890 S.W.2d 240, 242 (1994). In Cooprider, supra, this court stated:\nThe chancellor found the renewal note usurious because the terms of the loan agreement itself were usurious. Appellants rely on Dillon v. Resolution Trust Corp., 306 Ark. 173, 811 S.W.2d 765 (1991). In Dillon, we said the test of whether the note is usurious is judged as of the time the note was made. Appellants earnestly insist that language must govern in this case. But, as always, it must be read in context, and in Dillon it is clear that by both the terns of the note and the allocation of payments made pursuant to the note, a usurious rate of interest was being collected from the borrower. That did not occur in this case.\nId. (emphasis added). Stated simply, there is nothing in our case law or in article 19, section 13 that requires the examining court to only look at the face of the contract alone in determining whether a usurious interest rate was \u201ccharged.\u201d\nHere, at the time the contract was entered into, the contract did reflect an APR rate that was facially usurious. However, evidence presented to the circuit court also indicated that, in a \u201cretail installment contract with pre-computed interest,\u201d like the contract that Harris entered into in this case, the amount of interest \u201creflected\u201d on the face of the agreement, at the time the contract was formed, might not indicate the actual amount of interest \u201ccharged.\u201d Paula McMahan, an employee of Johnson\u2019s who was responsible for setting the in-house interest rate on the corporate computer system, testified to the following before the circuit court:\nCounsel: Do you know of any difference between what the APR rate shown on the contract is, is there any difference between the percentage of APR and the percentage of interest that\u2019s charged interest rate that\u2019s charged on any contract?\nMs. McMahan: Yes, that\u2019s what I was telling you before.\nPreviously, Ms. McMahan had attested that the APR rate provided on the face of the \u201cinstallment contract with pre-computed interest\u201d was merely an estimate of the amount to be charged at the time the contract was entered into, and not the actual amount \u201ccharged.\u201d Tom Garrison, an employee of the Computer Services Company, corroborated Ms. McMahan\u2019s testimony that the \u201cstated\u201d interest on the contract was only an estimate of the amount to be charged at the time the contract was entered into, and the actual amount \u201ccharged\u201d often varied. In other words, evidence before the circuit court reflected that the amount \u201ccharged\u201d at the time of the contract could not be determined solely from the face of the purchase agreement, and that analysis is consistent with our case law. By the majority\u2019s holding, our judicial hands are forever tied to the contract terms, never being permitted to consider anything beyond the face of the agreement.\nThe superiority requirement contained in Ark. R. Civ. P. 23(b) states that a class action may be maintained if the action is \u201csuperior to other available methods for the fair and efficient adjudication of the controversy.\u201d The superiority requirement for class certification will be satisfied if class certification is the more \u201cefficient\u201d way of handling the case, and it is fair to both sides. Fraley v. Williams Ford Tractor & Equip., 339 Ark. 322, 333, 5 S.W.3d 423, 430 (1999); see also Alba Conte & Herbert Newberg, Newberg on Class Actions \u00a7 4:27 (4th ed. 2002).\nGiven this potential discrepancy between the actual interest stated and the interest ultimately charged, the circuit court would be required, with respect to every individual class member, to determine the difference between the \u201cstated\u201d interest rate and \u201ccharged\u201d interest. Stated simply, the circuit court would have to perform a mathematical analysis on each and every purchase agreement in order to determine whether the interest charged was usurious. Thus, proceeding as a class action would not be an \u201cefficient\u201d method of handling this case. See Williamson v. Sanofi Winthrop Pharm., 347 Ark. 89, 101, 60 S.W.3d 428, 436 (2001) (because the trial court would have to hear each class member\u2019s testimony regarding his or her understanding about which paperwork applied, as well as consider all of the evidence from each plaintiff regarding whether he or she agreed to a contract, a class action could not be superior method of handling the case).\nDespite the majority\u2019s contention otherwise, our analysis does not require delving into the merits; in other words, it does not require determining what the class members ultimately will pay or have paid in interest. Rather, what the majority fails to require, and what the law does require, is that the terms of the contract be examined to reveal whether the contract obligates the borrower to pay a rate in violation of the usury provision of the constitution. The question of what the borrower is obligated to pay is not answered by looking at the face of the contract as the majority concludes.\nBecause I would reverse on the superiority requirement, I respectfully dissent.\nHannah, C.J., joins.\nHarris\u2019s own expert, Andy Terry, Ph.D., also testified regarding the APR stated on the purchase agreement. In essence, Dr. Terry\u2019s testimony that one must \u201cassumfe] that the customers make payments according to the contract\u201d compels a conclusion that the stated interest rate is merely an estimate and is not necessarily equivalent to the amount \u201ccharged.\u201d", "type": "dissent", "author": "Tom Glaze, Justice," } ], "attorneys": [ "Eugene D. Bramblett, for appellants.", "Allen Law Firm, by: H. William Allen and Christian Harris, for appellee Wanda Harris and those similarly situated." ], "corrections": "", "head_matter": "JOHNSON\u2019S SALES COMPANY, INC., Kent Johnson\u2019s Warehouse Showroom, Inc., Johnson\u2019s Warehouse Showroom, Inc., and Best Buy Home Furnishings, Inc. v. Wanda HARRIS, on Behalf of Herself and Those Similarly Situated, and Decorrien Flemming\n06-1237\n260 S.W.3d 273\nSupreme Court of Arkansas\nOpinion delivered June 28, 2007\nEugene D. Bramblett, for appellants.\nAllen Law Firm, by: H. William Allen and Christian Harris, for appellee Wanda Harris and those similarly situated." }, "file_name": "0387-01", "first_page_order": 411, "last_page_order": 421 }