## Facts

- A consumer leased a Ford Taurus from a bank using the bank’s preprinted lease form, used the vehicle primarily for personal purposes, completed the five-year term, and purchased the vehicle for its residual value.
- The total lease payments were under $25,000.
- The lessee sued the bank under the Consumer Leasing Act (CLA) and Regulation M, alleging noncompliance with disclosure requirements.
- The complaint sought statutory penalties and attorney’s fees, not actual damages.
- The plaintiff moved to certify a Rule 23(a) and Rule 23(b)(3) class of similarly situated consumer lessees.
- The bank asserted counterclaims against putative class members alleging (a) lease defaults and/or (b) false statements in lease applications.
- The district court denied class certification, granted summary judgment to the plaintiff on one CLA claim, and granted summary judgment to the bank on three other CLA claims.
- The plaintiff appealed the denial of class certification and adverse summary judgment rulings; the bank cross-appealed the ruling favorable to the plaintiff.

## Issues

1. Whether the district court abused its discretion in denying Rule 23(b)(3) class certification based on the bank’s counterclaims and resulting predominance and manageability concerns.
2. Whether the bank’s counterclaims were properly considered in the class certification analysis, including whether they were compulsory under Rule 13(a).
3. Whether the district court properly resolved the parties’ CLA and Regulation M disclosure claims on summary judgment.

## Decision

- The Eleventh Circuit affirmed the denial of class certification.
- The court held that the district court did not abuse its discretion because it conducted a rigorous Rule 23 analysis and relied on proper factors.
- The court agreed that the bank’s counterclaims were within the court’s jurisdiction and were treated as compulsory because they arose from the same leasing transactions.
- The court largely affirmed the district court’s summary judgment rulings on the CLA disclosure claims.

## Legal Principles

- A district court’s class certification decision is reviewed for abuse of discretion and is upheld when the court performs a rigorous analysis of Rule 23, considers relevant factors, and avoids impermissible considerations.
- Under Rule 23(b)(3), certification requires that common questions predominate and that the class action be superior, including as to manageability.
- The presence of counterclaims may justify denial of Rule 23(b)(3) certification when adjudicating the counterclaims would require numerous individualized factual determinations.
- Counterclaims arising from the same transaction or occurrence as the plaintiff’s claims may be compulsory under Rule 13(a), making them difficult to disregard in assessing class action feasibility.

## Conclusion

The Eleventh Circuit upheld the denial of Rule 23(b)(3) class certification because the bank’s compulsory counterclaims for default and misrepresentation would have required many individualized factual adjudications, defeating predominance and creating unmanageable litigation, and the district court’s analysis fell within its discretion.


Heaven v. Tr. Co. Bank, 118 F.3d 735 (11th Cir. 1997)