The consolidated lawsuit In re Wal-Mart ATM Fee Notice Litigation, No. 2:11-md-02234 (W.D. Tenn.), was filed in 2011 based upon allegations that certain Wal-Mart stores failed to post adequate external fee notices on ATMs located on those store premises. Plaintiffs filed a motion for class certification in February 2013, and the Court granted summary judgment against the six named Plaintiffs on their individual claims in April 2014. On appeal, the Sixth Circuit reversed and remanded because the defendants had failed to authenticate the business records that they relied upon to support summary judgment.
"Today is a lesson that the Rules of Evidence must be followed, even––and perhaps especially––when the rule encompasses a historically low standard."Fambrough v. Wal-Mart Stores, Inc., No. 14-5663, 15a0350n.06, Slip Op. at 5 (6th Cir. 5/11/2015) (unpublished). The Sixth Circuit specifically faulted (1) the lack of testimony to qualify specific records of defendants' business partners as bona fide business records (id., at 7-8), and the lack of testimony to qualify defendants' witnesses as familiar with their companies' recordkeeping practices (id., at 9-10). "We ... decline to admit business records under Rule 803(6) based on declarations of upper management employees who never claim to be a “witness ... familiar with the record keeping system” (id., at 10).
After remand, the District Court determined to resolve class certification issues before considering additional dispositive motions. 6/23/2015 Telephonic Status Conf. TR (Dkt. 175), at 9. On Nov. 3, 2015, the District Court certified six classes of ATM users pursuant to Fed. R. Civ. P. 23(a) and 23(b)(3) (Dkt. 196). The Court found the alleged classes to be sufficiently identifiable and limited because the Plaintiffs identified specific ATM locations for a specific period of time (Slip Op. at 12). The class members also were identifiable through a specific alleged injury; namely, being charged an ATM fee at a terminal which did not have a fee notice posted on or at the terminal location. Id., at 13.
The Court also found a likelihood of numerosity sufficient for class-based adjudication, based upon Plaintiffs' allegations that at least thousands of transactions were conducted at each terminal during the class period. Id., at 17-18. The Court identified answers to common questions of law or fact that may be likely "to drive the resolution of the litigation." Id., at 19, quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). Specifically, the Court found that Plaintiffs had alleged common questions of whether each Defendant was a statutory "operator" of ATM machines and "operated" the specific ATMs at issue in the case; whether each Defendant complied with the ATM notice requirements in effect at the time for each machine; whether each Defendant had any statutory defenses to liability; and whether whether Plaintiffs and members of the Class would be entitled to statutory damages, costs and attorney’s fees. Id., at 20-21. For purposes of class certification, these questions -- and likely answers -- were deemed to predominate over individualized questions such as the timing of Defendants' specific alleged violations. Id., at 22.
Similarly, the Court found that the named Plaintiffs' claims were typical of the class because "all engaged in transactions at an allegedly noncompliant ... ATM and were charged an ATM fee[.]" Slip Op., at 24. Plaintiffs and their counsel were deemed adequate representatives because all of the named Plaintiffs "used one of the ATMs at issue and have an interest in recovering statutory damages stemming from Defendant’s alleged noncompliance with the EFTA." Id., at 26. "Plaintiffs’ counsel has diligently litigated this case since its inception and has significant experience handling class-action matters." Id., at 27.
After finding for the Plaintiffs on each of the elements of Rule 23(a), the Court recognized a Rule 23(b)(3) class action. "[T]he Court must find that 'the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.'" Slip Op. at 27-28,quoting Fed. R. Civ. P. 23(b)(3).
In opposing predominance, Defendants primarily argued that individualized questions would have to be addressed regarding (1) usage of the ATMs to access business compared to consumer accounts, and (2) the timing of whether a statutory notice actually was posted on each ATM at the time of each transaction.Id., at 30. The Court brushed aside the first argument as "more theoretical than real," and the second as "incorrect. ... Common proof will, in fact, resolve the question of when the ATM fee notice ceased to be posted on or in close proximity to each ATM at issue." Id., at 30-31 (citations omitted).
The Court concluded its Rule 23(b)(3) analysis by determining that a class action would be superior to individual actions because of the small amounts in controversy for each individual claim; the potential number of individual claims, and the likelihood of common issues and proof to resolve the action on a class-wide basis, Id., at 34-36.
So-called "external notice" litigation is fading quickly because the Electronic Funds Transfer Act was amended in December 2012 to remove the external notice requirement. Consequently, the chief lesson of Wal-Mart may be its application of evidentiary rules to information systems and third-party business relationships. On remand, Defendants stated that their opposition to class certification incorporated the same testimony and reliance upon business records that the 6th Cir. faulted for a lack of authentication (Nov. 3 Slip Op., at 4-5). Counsel attributed the prior lapses in the authentication of evidence to a “drafting issue with the declaration that caused it to have a problem.” 6/23/2015 Telephonic Status Conf. TR (Dkt. 175), at 7.
But the Sixth Circuit seemingly has carried forward a lingering concern in the law with the reliability of evidence contained in business information systems. See also, In re Vee Vinhnee (Vinhnee v. Am. Express Trav. Related Services Co.), 336 Bankr. 437, 445 (9th Cir. B.A.P. 2005) (a "proponent of computerized evidence has the burden of laying a proper foundation by establishing its accuracy") (citation omitted); Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 559 (D. Md . 2007) (“If it is critical … to admit into evidence computer stored records, it would be prudent to plan to authenticate the record by the most rigorous standard that may be applied").