theCPLRblog

A Class Denied

CPLR § 901 Prerequisites to a class action

Corsello v Verizon N.Y., Inc., 2010 NY Slip Op 06563 (App. Div., 2nd 2010)

Contrary to the plaintiffs' contentions, the Supreme Court properly denied their motion, inter alia, for class action certification. The Supreme Court properly found that the proposed class definition was overbroad (see Klein v Robert's Am. Gourmet Food, Inc., 28 AD3d 63, 71). Furthermore, the plaintiffs failed to establish that questions of law or fact common to the class predominate over any questions affecting only individual members (see CPLR 901[a][2]; Morrissey v Nextel Partners, Inc., 72 AD3d 209; Solomon v Bell Atl. Corp., 9 AD3d 49, 53; Hazelhurst v Brita Prods. Co., 295 AD2d 240, 241-242; Small v Lorillard Tobacco Co., 252 AD2d 1, 9, affd 94 NY2d 43; Mitchell v Barrios-Paoli, 253 AD2d 281, 291), and that their claims or defenses were typical of those of the class (see CPLR 901[a][3]; Dimich v Med-Pro, Inc., 34 AD3d 329, 330; Ross v Amrep Corp., 57 AD2d 99, 102-103).

The NYLJ has something special for you.

My week started off with the littlest child breaking my glasses into two.  As you can see, I fixed it with a mix of crazy glue and sewing thread.  Now when I wear them I look like Sloth and it makes my vision all crazy like.  And today, while I was walking home I walked past an electronics store with a Pickachu statute on the outside and I swear, it looked like it was flipping me the bird.  I blame that on my lack of sleep.  What I can't explain is that for second, I was genuinely pissed at Pickachu.¹

And onto the law.  Yesterday's Law Journal had one of those special fancy pants pull out sections: Court of Appeals and Appellate Practice.  One of the sections, indeed, the most important section is, Civil Practice: Substantive Impact of the CPLR.  Sure, there are other sections, but you didn't come here for them.  You can here to see if I would actually fight a statue of a cartoon character and read about the CPLR.

The section covers, among other things CPLR CPLR § 205(a), CPLR § 5511, CPLR § 5304, CPLR § 901(a).

The discussion of CPLR 205(a) revolved around Matter of Goldstein v New York State Urban Dev. Corp., 13 NY3d 511 (Ct. App., 2009), a case I posted way back when.  Next is CPLR 5511.  The author, Thomas F. Gleason, starts with Batavia Turf Farms v. County of Genesee, 91 NY 2d 906 (Ct. App. 1998), a remarkably terse decision.  From there he moves to Adams v Genie Indus., Inc., 14 NY3d 535 (Ct. App. 2010), a case I didn't post.  Adams, Mr. Gleason writes, rejected the "more restrictive premise of Batavia, viz., "a stipulation on one issue (such as damages) would foreclose an appeal on other unrelated issues, because a party who had consented to an order could not claim to be aggrieved by any part of it within the meaning of CPLR 5511."²

 In his discussion of class actions, namely CPLR 901(a), he refers to City of New York v Maul, 14 NY3d 499 (Ct. App. 2010), another case I managed to miss.

There's more. But you have to go read it for yourself.

Norman A. Olch, blogger and appellate guru, provides a several book reviews, including Making Your Case, by Scalia and Garner.  Everyone should read it.  You shouldnt need him to tell you to, but, if it that's what it takes, then fine.

Harry Steinberg has a must read section on how not to completely screw up your appeal.  Part of it involves preserving the issues for appeal.  A decision came out today on just that issue: Arrieta v Shams Waterproofing, Inc., 2010 NY Slip Op 06508 (App. Div., 1st 2010). 

I might add some more later.

 

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1.  I'm recycling facebook updates today.

2.  For more cases discussing what it means to be "aggrieved" click HERE.  I think all of them are from the Appellate Division, Second Department.  Mixon v TBV, Inc., 2010 NY Slip Op 05521 (App. Div., 2nd, 2010) is the most recent and probably the most useful.

UPDATE (after argument): SCOTUS grants cert on CPLR § 901(b) issue

The Civil Procedure & Federal Courts Blog is on top of it.  The SCOTUS blog is all over it as well.

I posted about this case a little while ago here  and it was in the NYLJ Wrap-Up. I’m sure you’ve been wondering about it. I have.

You can read the transcript HERE. Or, if you don’t want to get it from me, you can go over to The Civil Procedure & Federal Courts Blog, and get it from them.

This post is a work in progress.  There will be additions and commentary as I continue to review the case and receive (or find) additional information.

CPLR 901(b) Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action¹, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.

FRCP 23 Class Actions

The Supreme Court of the United States recently granted cert in Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 129 S.Ct. 2160, 173 L.Ed.2d 1155, 77 USLW 3472, 77 USLW 3605, 77 USLW 3609 (U.S. May 04, 2009) (NO. 08-1008).  It made its way there through the Eastern District (466 F.Supp.2d 467) and the Second Circuit Court of Appeals (549 F.3d 137)

What's this all about? 

The short version:

Shady Grove (a Maryland corporation) brought a class action against Allstate (a Illinois corporation)  in Federal court suing for interest that is overdue from no-fault claims.  The underlying lawsuit involved a New York policy.  Those claims were paid, but for the interest.  Shady Grove argued that it could get into Federal Court through 28 U.S.C. § 1332(d)(2)(A), which gives the federal courts original jurisdiction in a class action where the amount in controversy is more that five-million dollars and diversity exists, and FRCP 23 allows class certification.

Allstate moved to dismiss, arguing that because interest is a "penalty", CPLR § 901(b) expressly prohibits such a class action² and that because CPLR § 901(b) is a substantive rule, the Federal Court must apply it. Shady Grove argued that (1) it is a procedural rule and it is in conflict with FRCP 23 (the federal equivalent of CPLR § 901), which contains no identical or similar restriction;  (2) because it is a procedural rule, an Erie³ analysis requires that the Federal Court apply its own rule; and (3) it argued that the "unless clause" (see FN 1) of CPLR § 901(b) permits the lawsuit, even if the court finds it to be a substantive rule.

The district court agreed with Allstate and dismissed the action. It found that CPLR § 901(b) is substantive and therefore does not invoke either the Supremacy Clause⁴ or Erie.  Without class certification, Shady Grove was unable to maintain diversity jurisdiction.

At the Second Circuit, Shady Grove added an argument⁵ (a request really) in its reply brief; that the Court should certify the following question to the New York Court of Appeals: whether the interest provision is a "penalty within the meaning of CPLR § 901(b)."  The Second Circuit, upon Allstate's motion, struck that portion of the brief, because it should have been brought up in the initial brief.

The Second Circuit discussed each of Shady Grove's arguments.

The Court first addressed the Erie situation.  It found that FRCP 23 does not conflict with CPLR § 901(b); that there is no "direct collision" with § 901.  It reasoned that, because FRCP 23 does not determine which actions can or cannot be brought, "it leaves room for the operation of § 901(b)," finding it to be a substantive rule. 

But would the application of CPLR § 901(b) "serve the twin aims⁶ of Erie?  The Court answered in the affirmative. Not applying the rule would, according to the Court, encourage plaintiff' to file in the Federal Courts, rather than in New York.  And it would allow them to recover in Federal Court, when they could not in New York.

The Court then discussed Shady Grove's argument that under N.Y. Ins. Law § 5106(a)⁷ the lawsuit can be maintained via class action because 11 NYCRR § 65-3.9(c)⁸ contemplated class actions in this context, and therefore satisfies the exception clause of CPLR § 901(b).  In rejecting this argument, the Court found that § 65-3.9(c) did not specifically authorize⁹ class actions.  "At most,[the] regulation contemplates the recovery of a penalty in a class action."

The "questions presented" in the petition for cert are:

1. Can a state legislature properly prohibit the federal courts from using the class action device for state
law claims?

2. Can state legislatures dictate procedure in the federal courts?

3. Could state-law class actions eventually disappear altogether, as more state legislatures declare them offlimits to the federal courts?

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1.  This is the unless clause.

2.  "...an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action."  CPLR § 901(b)

3.  Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938).  Under Erie, when a Federal Court sits in diversity jurisdiction, it must apply a states substantive law and the federal procedural law.  It's more complicated than it seems.  More information can be found on the case and the issue on wikipedia.

4. U.S. Const. art. VI, Cl. 2

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.

5. Shady Grove cited to Sperry v. Crompton Corp., 8 N.Y.3d 204 (Ct. App., 2007) in support of its request for certification.

6. (1) to discourage forum shopping and (2) inequitable administration of the laws.

7. § 5106(a) provides:

(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month. If a valid claim or portion was overdue, the claimant shall also be entitled to recover his attorney's reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations.

8. § 65-3.9(c) provides:

(c) If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken. If any applicant is a member of a class in a class action brought for payment of benefits, but is not a named party, interest shall not accumulate on the disputed claim or element of claim until a class which includes such applicant is certified by court order, or such benefits are authorized in that action by Appellate Court decision, whichever is earlier. (emphasis added)

9.  The Court is referring to this portion of CPLR § 901(b) (which is quoted in its entirety at the top of this post): "Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action." (emphasis added).  See FN 1.

Sufficiently particular but individual issues predominate: CPLR R. 3016; CPLR § 901

CPLR R. 3016 Particularity in specific actions

CPLR § 901 Prerequisites to a class action

Dobroshi v Bank of Am., N.A., 2009 NY Slip Op 06382 (App. Div., 1st, 2009)

...

Contrary to defendant's claim, the second cause of action pleads fraud with sufficient particularity to satisfy CPLR 3016(b) (see Lanzi v Brooks, 43 NY2d 778, 780 [1977]). It informs defendant that plaintiff complains of the significant increase in settlement costs between the Good Faith Estimate of Settlement Services (GFE) and the HUD-1 statement, and of the fact that she was informed about this increase only one day before the closing. 

Plaintiff's allegation that defendant deliberately underestimated settlement costs to induce her to obtain a loan from it, rather than from a competing lender states a claim for fraud (see Wright v Selle, 27 AD3d 1065, 1067-1068 [2006]). The GFE was not a mere statement of future intent (see Watts v Jackson Hewitt Tax Serv., Inc., 579 F Supp 2d 334, 352 [ED NY 2008]), and the issue of material misrepresentation is not subject to summary disposition (see e.g. Brunetti v Musallam, 11 AD3d 280, 281 [2004]).

...

The motion court should have stricken the class action allegations. First, individual issues will predominate because all claims under General Business Law § 349 will require [*3]analysis of whether the ultimate closing costs were so unreasonable as to amount to a deceptive practice (cf. Weil v Long Island Savings Bank, FSB, 200 FRD 164, 174 [ED NY 2001] [distinguishing a case where each plaintiff would have to provide evidence of the services performed compared to a case where the plaintiffs claim that the alleged scheme was illegal per se]). Moreover, plaintiff contends that defendant's bad faith in making estimates is actionable. However, to determine if defendant acted in bad faith, it will be necessary to individually examine each of the tens of thousands of transactions at issue. Finally, plaintiff's proposed class would number in the thousands and would have individually tailored written disclosures, different types and amounts of fees and different reasons for the increase in closing costs. These circumstances negate the possibility that common questions would predominate (see Rose v SLM Fin. Corp., 254 FRD 269, 272-73 [WD NC 2008]).

The bold is mine.

CPLR § 901(a) Class certified; 10 is not enough, unless there is no union

CPLR § 901 Prerequisites to a class action

Kudinov v Kel-Tech Constr. Inc., 2009 NY Slip Op 06292 (App. Div., 1st, 2009)

The party seeking class certification bears the burden of establishing the criteria prescribed in CPLR 901(a) (CLC/CFI Liquidating Trust v Bloomingdale's, Inc., 50 AD3d 446, 447 [2008]). This burden must be met by providing an evidentiary basis for class certification (Matros Automated Elec. Const. Corp. v Libman, 37 AD3d 313 [2007]; Nachbaur v American Tr. Ins. Co., 300 AD2d 74, 75 [2002], lv dismissed 99 NY2d 576 [2003], cert den sub nom Moore v American Tr. Ins. Co., 538 US 987 [2003]).

Whether a particular lawsuit qualifies as a class action rests within the sound discretion of the trial court. In exercising this discretion, a court must be mindful of our holding that the class certification statute should be liberally construed (Englade v HarperCollins Publs., 289 AD2d 159 [2001]). [*2]

Here, the evidence is sufficient to establish numerosity, without determining the precise number, given the number of projects, the certified payroll records and the testimony and affidavits regarding the number of workers potentially affected by the allegations (see, Globe Surgical Supply v Gieco Ins. Co., 59 AD3d 129 [2008]; Pesantez v Boyle Envtl. Servs., 251 AD2d 11 [1998]). While it is true that the exact number of the putative class has not been determined, and that some members of the putative class have submitted affidavits affirmatively stating that they were not aggrieved by the allegations against defendants, the number of workers alleged to have been underpaid was high enough to justify the court's exercise of its discretion in certifying the class. This is particularly true in light of the fact that many workers were not members of any union, and were of different trades than that of the main plaintiff.

Moreover, the commonality of claims predominates, given the same types of subterfuges allegedly employed to pay lower wages. The fact that different trades are paid on a different wage scale and thus have different levels of damages does not defeat certification (see Englade, at 160). The ability to resolve such inquiries by referring to payroll and other documentary evidence distinguishes this case from those in which individualized inquiries defeat commonality (see e.g. Batas v Prudential Ins. Co., 37 AD3d 320, 322 [2007]; Gaidon v Guardian Life Ins. Co. Of Am., 2 AD3d 130 [2003]).

While it is appropriate in determining whether an action should proceed as a class action to consider whether a claim has merit, this "inquiry is limited" (see Bloom v Cunard Line, 76 AD2d 237, 240 [1980]), and such threshold determination is not intended to be a substitute for summary judgment or trial.

NARDELLI, J. (dissenting in part)

...

Three projects at issue on this appeal were bonded by Fidelity and Deposit Company of Maryland. The class representative certified by the court on those projects was Alexander Kudinov, a union carpenter. He testified that aside from himself, five or six carpenters worked at P.S. 104, one worked at P.S. 114, and four or five worked at P.S. 198. Of this maximum total of 13 carpenters, 3 of them submitted affidavits stating, "I have always been paid the wages due, and all of my benefits have been paid to my union." Thus, at best, there are 10 carpenters in the aggregate on these three projects who have wage grievances. I respectfully submit that 10 does not meet the numerosity requirement required by the statute. Furthermore, when the projects are viewed on an individual basis, at best there are five other similarly situated carpenters on some of the projects, and as few as one other on the P.S. 114 project. I see no reason why resort to class action status is required to resolve any of the grievances that Kudinov or other carpenters may have regarding their wages on these particular projects.

...

Under such circumstances, where the number of people in the class is not identified, where members of the putative class have sworn that they do not have any grievances, and where the nature of the claims requires evidence on an individual basis, it is difficult to discern how a class action is a superior, or even an appropriate, vehicle for resolution of the claims.

The bold is mine. 

Looks like the controlling factor here is that there are no union workers.

CPLR § 901: App. Div. can make de novo review of class certification decision

CPLR § 901 Prerequisites to a class action

Yeger v E*Trade Sec. LLC, 2009 NY Slip Op 06077 (App. Div., 1st, 2009)

In April 2008, Justice Cahn granted class certification and found the Yegers to be proper class representatives. Noting that the "minuscule" nature of the damages sought did not bar the claim, the court found the requisite class action element of commonality based on the allegations that "the same practices were done" to all members of the class. Aware that plaintiffs had accepted a refund, the court stated there were "other deductions from the account for [m]aintenance [f]ees which plaintiffs contend were deducted early and which were not returned or accepted." After motion practice about the proper term of the class period, the parties eventually stipulated, without prejudice to this appeal, to a class period "commencing with the third quarter of 2003 and ending with the fourth quarter of 2003" as to all customers charged an AMF "in violation of their customer agreement."

The Appellate Division may exercise de novo review of a class certification decision, "even when there has been no abuse of discretion as a matter of law by the nisi prius court" (Small v Lorillard Tobacco Co., 94 NY2d 43, 53 [1999]). To determine whether a lawsuit [*3]qualifies as a class action, a court applies the five criteria of CPLR 901(a) (numerosity, commonality, typicality, adequacy of representation and superiority) to the facts (see Hazelhurst v Brita Prods Co., 295 AD2d 240, 242 [2002])^[FN1]. "[T]hat wrongs were committed pursuant to a common plan or pattern does not permit invocation of the class action mechanism where the wrongs done were individual in nature or subject to individual defenses" (Mitchell v Barrios-Paoli, 253 AD2d 281, 291 [1999]).

Whether E*Trade's conduct in assessing AMFs a day early caused an individual class member to suffer actual damages depends upon facts so individualized that it is impossible to prove them on a class-wide basis. The motion court concluded that class certification was appropriate because there was a common question as to whether E*Trade collected the AMF too early, ie, before the date permitted in E*Trade's contracts. However, this is only half the question. A breach of contract claim only exists if E*Trade's common conduct actually damaged a customer. Therefore, to recover, each class member would have to show that he or she would have avoided the fee had E*Trade collected it at the proper time. There were several actions that customers could have taken to avoid the assessment (such as depositing additional funds or executing additional securities trades), as well as other conditions not under their control that could have prevented it, such as when E*Trade, as a courtesy, refunded those customers who paid the AMF. It is this aspect of proof that would be subject to a host of factors peculiar to the individual. This aspect of proof is critical. To allow the Yegers, or any class member, to recover the fee merely because E*Trade collected it early—without proof that each member of the class would have taken steps to avoid the fee had collection occurred at its proper time—would result in a windfall to those plaintiffs who would not have taken corrective action. In certain cases, it could also result in writing the AMF out of the agreement entirely, a fee the parties had agreed to freely. Accordingly, individualized issues, rather than common ones, predominate (CPLR 901[a][2]).

In addition, plaintiffs are not proper class representatives because their rejection of E*Trade's offer to refund the fee renders their claim atypical (CPLR 901[a][3]). We have considered the plaintiffs' remaining contentions and find them unavailing.

The bold is mine.

CPLR § 901; § 902 Class certification

CPLR § 901 Prerequisites to a class action

CPLR § 902 Order allowing class action

Globe Surgical Supply v GEICO Ins. Co., 2008 NY Slip Op 10583 (App. Div., 2nd)

On March 3, 2006, Globe moved, inter alia, pursuant to CPLR 901 and 902 for class certification on behalf of a class of all persons who had reimbursement payments of claims for medical equipment and supplies subject to former Part E adjusted or reduced by GEICO to an amount less than the amount charged in the proof of claim,^[FN3] specifically to a "reasonable reimbursement of 150%" of either the "industry average" or "of the average retail price." GEICO opposed the motion. The Supreme Court denied the motion and, upon granting that branch of Globe's subsequent motion which was for leave to reargue, adhered to the original determination.

Article 9 of the CPLR is to be "liberally construed" (Beller v William Penn Life Ins. Co. of N.Y., 37 AD3d 747, 748; Wilder v May Dept. Stores Co., 23 AD3d 646, 649; Jacobs v Macy's E, Inc., 17 AD3d 318, 319; Kidd v Delta Funding Corp., 289 AD2d 203; Friar v Vanguard Holding Corp., 78 AD2d 83, 91; see generally 3 Weinstein Korn & Miller, New York Civil Practice CPLR, Lexis-Nexis (MB)(2008) at 901.04, 901.05, and 901.20) in favor of the granting of class certification if all of the prerequisites of CPLR 901(a)(1)-(5) (see Matter of Colt Indus. Shareholder Litig., 77 NY2d 185, 194; Klein v Robert's Am. Gourmet Food, Inc., 28 AD3d 63, 69; Ackerman v Price Waterhouse, 252 AD2d 179, 191; Friar v Vanguard Holding Corp., 78 AD2d at 90-91) and CPLR [*5]902(1)-(5) (see Ackerman v Price Waterhouse, 252 AD2d at 191) are met.

The prerequisites articulated in CPLR 901(a) include proof that the proposed class is so numerous that joinder of all members is impracticable, that common questions of law and fact applicable to the class predominate over questions affecting only individual members, that claims or defenses of the representative parties are typical of the claims or defenses of the class, and that the class action is superior to other available methods for the fair and efficient adjudication of the controversy.

The proposed class action must also meet the prerequisites of CPLR 902(1)-(5). The relevant factors articulated in CPLR 902(1) ("[t]he interest of members of the class in individually controlling the prosecution or defense of separate actions"), CPLR 902(2) ("[t]he impracticality or inefficiency of prosecuting or defending separate actions") and CPLR 902(3) ("[t]he extent and nature of any litigation concerning the controversy already commenced by or against members of the class") may, under the circumstances of this case, be subsumed under the prerequisite of superiority (see CPLR 901[a][5]). CPLR 902(4) requires consideration of "[t]he desirability or undesirability of concentrating the litigation of the claim in the particular forum."

...

On a motion for class certification, the court must be convinced that the proposed class is capable of being identified (see Colbert v Rank Am., 1 AD3d 393, 394-395; Lichtman v Mount Judah Cemetery, 269 AD2d 319, 320-321; Mitchell v Barrios-Paoli, 253 AD2d 281, 291; Canavan v Chase Manhattan Bank, 234 AD2d at 494). Here, the class has been clearly defined as "all persons who had reimbursement payments of claims for medical equipment and supplies subject to [former] Part E of the Twenty-Third Amendment to Regulation No. 83 (11 NYCRR 68) adjusted or reduced by GEICO based upon an industry average' to a reasonable reimbursement of 150%' of the industry average' or of the average retail price,' to an amount less than the amount charged in the proof of claim."

CPLR 901(a) provides that a class action may be maintained if, inter alia, "(1) the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable." GEICO did not challenge numerosity in its opposition to Globe's original motion, but instead first raised the issue in its opposition to Globe's motion for leave to reargue. As such, GEICO has waived any challenge to numerosity (cf. Friar v Vanguard Holding Corp., 78 AD2d at 96).

[T]he courts have uniformly certified breach of contract class actions, notwithstanding differing individual damages (see discussion below on damages within the context of the requirements of CPLR 901[a][2]), where, as here, there is uniformity in contractual agreements and/or statutorily imposed obligations.  (I took out the cites).

This Court held, in Friar v Vanguard Holding Corp. (78 AD2d at 97), that the determination of whether there is a common predominating issue of fact or law should be based on "whether the use of a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated" (id. at 97).

GEICO contends that the following individual issues predominate over any common questions of law or fact: (1) whether GEICO had individual defenses to the various claims of putative class members, based on the timeliness of its coverage determinations or lack of coverage in the first instance, (2) whether the DME claims arose from a fraudulent accident, (3) whether the DME class member can prove its "documented costs," and (4) individual damages.

...

[C]ontrary to GEICO's contention, it follows that, in the instant case, GEICO would not be able to present a defense based on fraudulent billing or the inability of the class members to establish "documented costs." In the proposed class action it is clear that the factor common to all potential class members is that the DME claims were denied because GEICO found them to be in excess of the industry average. As this Court and the Court of Appeals have made clear, overbilling and invoice recycling do not give rise to a lack of coverage defense. GEICO's failure to claim the fraud defenses within the required 30-day period thus precludes it from raising it in the class action (see e.g. Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312).

Globe correctly contends that the potential for different individual damages claims is not a valid reason for denying class action status, because damages are easily calculated based on the information contained in the denial-of-claim forms. GEICO argues that the calculation of damages is not subject to a simple formula, and that the trier of fact will have to determine if each claim is excessive or if it meets 150% of documented costs. Contrary to GEICO's assertions, the calculation of individual damages within a breach of contract class action is not dispositive of the issue of class certification, and is clearly manageable in the instant controversy (see Englade v HarperCollins Publs., 289 AD2d 159, 160 ["That individual authors may have differing levels of damages does not defeat class certification"]; Broder v MBNA Corp., 281 AD2d 369, 371 ["particular damages of each individual class member can be easily computed"]; Godwin Realty Assoc. v CATV Enters., 275 AD2d 269, 270 ["To the extent that there may be differences among the class members as to the degree in which they were damaged, the court may try the class aspects first and have the individual damage claims heard by a Special Master"]; see also Weinberg v Hertz Corp., 116 AD2d 1, 6-7, affd 69 NY2d 979; LaMarca v Great Atl. & Pac. Tea Co. Inc., 16 Misc 3d 1115[A], *3, affd 55 AD3d 487; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], *4; Cox v Microsoft Corp., 10 Misc 3d 1055[A], *5; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A]; Gilman v Merrill Lynch, Pierce, Fenner & Smith, 93 Misc 2d 941, 944; Guadagno v Diamond Tours & Travel, 89 Misc 2d 697, 699). 

...

CPLR 901(a)(3) provides that the "claims and defenses of the representative parties are typical of the claims or defenses of the class." Typical claims are those that arise from the same facts and circumstances as the claims of the class members (see Ackerman v Price Waterhouse, 252 AD2d at 181 [claims "arose out of the same course of conduct and are based on the same theories as the other class members, they are plainly typical of the entire class"]; Pruitt v Rockefeller Ctr. Props., 167 AD2d 14, 22; Friar v Vanguard Holding Corp., 78 AD2d at 99; Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A]; Cox v Microsoft Corp., 10 Misc 3d 1055[A], *2; Fiala v Metropolitan Life Ins. Co., NYLJ, June 2, 2006, at 22, col 1). Typicality can overlap with the predominance of common questions of law or fact (see CPLR 901[a][2]) and the adequacy of representation (see CPLR 901[a][4]; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A], *12; 3 Weinstein Korn & Miller, New York Civil Practice, CPLR at 901.24).

The three essential factors to consider in determining adequacy of representation are potential conflicts of interest between the representative and the class members, personal characteristics of the proposed class representative (e.g. familiarity with the lawsuit and his or her financial resources), and the quality of the class counsel (see generally Ackerman v Price Waterhouse, 252 AD2d at 179; Pruitt v Rockefeller Ctr. Props., 167 AD2d at 25-26; Matter of Coordinated Tit. Ins. Cases, 2 Misc 3d 1007[A], *12).

...

Therefore, Globe failed to show that it is an adequate representative of the class. "Other [appellate courts] emphasize, as do we, the challenge presented by a defense unique to a class representative—the representative's interest might not be aligned with those of the class, and the representative might devote time and effort to the defense at the expense of issues that are common and controlling for the class" (Beck v Maximus, Inc., 457 F3d 291, 297). In other words, a class should not be certified if Globe is the class representative, as "there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it" (Hanon v Dataproducts Corp., 976 F2d 497, 508 [internal citations omitted]; see Koos v First Natl. Bank, 496 F2d 1162, 1165; Folding Cartons, Inc. v America Can Co., 79 FRD 698; Weisman v Darneille, 78 FRD 669, 671; Di Pace v Linsco/Private LedgeR Corp., 2004 WL 1410046 [Cal App 2004]; Benzing v Farmers Ins. Exch., 179 P3d 103 [Colo App 2007], cert grantedP3d, 2008 WL 434677 [Colo 2008]; cf. LaMarca v Great Atl. & Pac. Tea Co. Inc., 16 Misc 3d 1115[A]; Galdamez v Biordi Constr. Corp., 13 Misc 3d 1224[A], affd 50 AD3d 357).
Superiority

CPLR 901(a)(5) provides that a class may be certified only if "a class action is superior to other available methods for the fair and efficient adjudication of the controversy." The No-Fault Law provides claimants with the option of commencing a plenary action or submitting the dispute to arbitration (see Insurance Law § 5106[b]). In addition, the No-Fault Law provides that the claimant may recover penalty interest at a rate of 24% (see Insurance Law § 5106[a]), a remedy [*11]not available in a class action. However, the availability of an arbitration alternative does not mean such a proceeding is superior to a class action which, through the aggregation of many similar claims, provides an incentive to the legal profession to expend the resources necessary to fully litigate often complex cases such as the instant matter, including the pursuit of this very appeal. The "very core of the class-action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights" (Amchem Products, Inc., v Windsor, 521 US 591, 617; see Pruit v Rockefeller Ctr. Props., 167 AD2d at 21; Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d 604, 607-608; Yollin v Holland Am. Cruises, 97 AD2d 720, 721; Friar v Vanguard Holding Corp., 78 AD2d at 98-99; Matter of Arroyo v State of New York, 12 Misc 3d 1197[A], *6; see also Bell v Superior Court, 69 Cal Rptr 3d 328, 349 [Cal App 2007]). In addition, should individual class members wish to pursue arbitration, and thereby recover statutory penalties unavailable in a class action, they may do so by opting out of the class sought to be certified (see Cox v Microsoft Corp., 8 AD3d at 40; Ridge Meadows Homeowner's Assn. v Tara Dev. Co., 242 AD2d 947, 947; Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d at 606).

Moreover, as with the requirements of CPLR 901(a)(2), referable to the issues of liability and damages calculations, the prosecution of this proposed class action is fairly straightforward and quite manageable. Thus, although the motion to certify a class was properly denied because of Globe's inadequacy as a class representative, upon reargument, the denial of the motion should have been without prejudice to renewal.

The bold is mine. I took out some of the longer string cites.