Ripp v. Okla. Commc'ns Sys., Inc.

525 P.3d 52

Sabrina RIPP and C. Rash Construction, Plaintiffs/Appellees,

v.OKLAHOMA COMMUNICATIONS SYSTEMS, INC., a/k/a TDS, Defendant/Appellant.

Case No. 119,127

Court of Civil Appeals of Oklahoma, Division No. 4.

Filed: April 22, 2022

Mandate Issued: February 16, 2023

Will K. Wright, Jr., WRIGHT LAW, PLC, Claremore, Oklahoma, for Plaintiffs/Appellees

Jon E. Brightmire, Lewis N. Carter, Lauren R. Myers, DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Tulsa, Oklahoma, and Eric S. Mattson (pro hac vice), Angelo J. Suozzi (pro hac vice), SIDLEY AUSTIN LLP, Chicago, Illinois, for Defendant/Appellant

OPINION BY JOHN F. FISCHER, CHIEF JUDGE:

¶1 The defendant, Oklahoma Communications Systems, Inc., a/k/a TDS (TDS), appeals an Order Regarding Class Action Certification, which certified two classes in an action brought by the plaintiffs, Sabrina Ripp and Rash Construction, Inc. (RCI). TDS focuses its appellate argument on the weight of the evidence introduced at the class certification evidentiary hearing and argues that the Plaintiffs failed to prove the allegations necessary to obtain certification. This focus is improper under the applicable standard of review. The issue to be resolved in this appeal is a legal one: does the Plaintiffs' petition, not the evidence produced at the class certification hearing, "contain[ ] factual allegations sufficient to demonstrate a plausible claim for relief. ..." 12 O.S. Supp. 2013 § 2023(B). We hold that it does and affirm the order appealed.

BACKGROUND

¶2 TDS is a provider of internet services in small Oklahoma communities and rural areas. Ripp and RCI were internet customers of TDS. Since the inception of this lawsuit, both moved to other locales and are no longer customers. Ripp was a residential customer and RCI was a business customer.

¶3 Business customers have a written contract with TDS, residential customers do not. TDS checks its system for internet speed when accepting a new customer but does not routinely run speed tests on its system. TDS also retains recordings of customer calls regarding service. While they were customers, both Ripp and RCI had continual complaints about their internet speed. They allege that they did not receive the internet speeds that TDS was contractually obligated to provide. They filed this case to recover damages for that alleged breach of contract and sought to certify a class of similarly situated plaintiffs.

¶4 The district court conducted an evidentiary hearing on the Plaintiffs' class certification motion. At that hearing, Carl Rash, owner of RCI, testified that RCI had a written contract with TDS which provided that RCI would receive an internet speed of "up to" 10 mbps. Rash interpreted this provision to mean that 10 mbps was one tier and that TDS had other tiers which had higher or lower internet speeds. He expected to receive 10 mbps speed and was billed for that speed. The contract also contained a warranty that the service would be provided in a good and workmanlike manner. Rash testified that the initial service was satisfactory, but when he moved his office from town to a rural location, the internet speed was often zero or 1 mbps. Rash registered many complaints with TDS and his company lost business because of low or no internet service. He stated that the service was not provided in a good and workmanlike manner.

¶5 Ripp's testimony and records show that she did not have a written contract with TDS. TDS billed her monthly for the contracted rate. The "up to" language in TDS's business contracts was not on the invoices Ripp received. Initially, she purchased the lowest tier of service but upgraded several times, eventually to the 5 mbps tier. Ripp experienced substantially lower speeds than 5 mbps. Ripp complained on numerous occasions without satisfaction. Ripp testified that TDS representatives told her their system was overloaded. Ripp kept records of her own speed tests which showed that TDS did not provide the 5 mbps she contracted to receive. Ripp investigated and learned that other customers also experienced low internet speeds.

¶6 TDS admitted that only its written contracts contained the "up to" language but argued that was a term of its residential customer contracts as well because its advertisements contained that language. In addition, TDS introduced evidence to show that the internet speed a customer received was the result of many factors, including the customer's own equipment and other factors over which TDS had no control.

¶7 After the evidentiary hearing, the district court entered extensive findings of fact and conclusions of law. The district court found that internet speeds are controlled by several factors. TDS can control some of the factors, some are controlled by the customer, and some are out of the control of both TDS and the customer. The district court found that TDS's commercial and residential customers received less internet speed than they paid for and certified two classes of plaintiffs:

1. Residential. [D]efined as all persons in the State of Oklahoma that are current or former customers of TDS who purchased TDS Oklahoma Internet Service that received speeds less than what they paid for from April 13, 2014, to present.

2. Commercial, [D]efined as all persons in the State of Oklahoma that are current or former customers of TDS who purchased TDS Oklahoma Internet Service under a signed written contract that includes an express written warranty as to received speeds and failed to receive speeds that they paid for from April 13, 2011 to present.

The court named Ripp and RCI as the respective class representatives. TDS appeals the class certification order.

STANDARD OF REVIEW

¶8 Effective September 10, 2013, the Oklahoma Legislature changed the standard of review for orders certifying a class action from the abuse-of-discretion standard to de novo review of the district court's ruling on class certification. See Marshall Cnty. v. Homesales, Inc ., 2014 OK 88, ¶ 6, 339 P.3d 878 (interpreting 12 O.S. Supp. 2013 § 2023(C)(2) ). The legal conclusion that a class should or should not be certified is reviewed independently and without deference to the district court's ruling. However, when the district court engages in "preliminary" fact-finding to resolve the certification issue, we review those findings pursuant to the deferential against-the-clear-weight-of-the-evidence standard. Id . ¶ 7. The "fact" being determined is only a "forecast" of the evidence that actually will be produced at trial. Burgess v. Farmers Ins. Co., Inc ., 2006 OK 66, ¶¶ 15-16, 151 P.3d 92. Consequently, a class certification order "resolves only a question of law and the de novo standard required by Title 12 O.S. Supp. 2013 § 2023(C)(2) is appropriate for appellate review of class certification orders entered after November 1, 2009." Homesales , 2014 OK 88, ¶ 8, 339 P.3d 878.

ANALYSIS

¶9 The Plaintiffs allege that TDS failed to provide the speed of internet service they contracted with TDS to receive, and that breach of contract affected all of TDS's customers, i.e., the members of the prospective class. TDS defends by arguing that its contract only required it to provide "up to" the internet speed stated in its contracts and that providing internet speed less than the stated rate was not, therefore, a breach of contract. TDS also argues that some of its customers' personal equipment, as well as other factors beyond its control, prevented customers from receiving the speed of internet service they contracted to receive.

¶10 In response to the Plaintiffs' motion to certify a class action, the district court conducted an evidentiary hearing during which evidence was introduced, and two witnesses testified, the proposed class representatives Sabrina Ripp and Zach Rash. During argument, Plaintiffs' counsel identified four legal theories warranting class certification: (1) violation of the Oklahoma Consumer Protection Act, (2) unjust enrichment, (3) breach of the implied contract between TDS and its residential customers, and (4) breach of the written contract between TDS and its commercial customers. The district court found that TDS "sold internet service to individuals and businesses on the basis of an ‘up to’ [mbps] basis." According to the district court, that fact issue is common to all of the Plaintiffs' claims. TDS argues its contract required it only to deliver any internet speed "up to" the speed stated in the contract, not the exact amount stated.

¶11 The district court found: "After review of the submitted material, evidence, the contents of the file and arguments of counsel," that the Plaintiffs had stated a plausible claim for relief. The court certified a class of commercial customers and a class of residential customers who claimed to have received internet service at lower speeds than for which they paid. In this appeal, TDS argues that the district court erred because the Plaintiffs have failed to satisfy the commonality requirement of section 2023(A)(2) and the predominance and superiority requirements of section 2023(B)(3).¹ The starting point for the analysis of this argument is the "factual allegations" contained in the Plaintiffs' petition. 12 O.S. Supp. 2013 § 2023(B).

I. Section 2023(A)(2) Commonality: "There are questions of law or fact common to the class."

¶12 "One or more members of a class may sue ... on behalf of all only if: ... (2) There are questions of law or fact common to the class." 12 O.S. Supp. 2013 § 2023(A)(2). The Plaintiffs allege that they, and all members of the class, purchased an internet service and product from TDS "that is not what they bargained for." Plaintiffs allege that this breach of contract resulted from TDS's "common course of conduct" in intentionally over-subscribing the internet service it could provide. The district court identified the central issue in the case as whether TDS was capable of providing the speed of internet service TDS sold to its customers. This is a "core liability...