L.J. GIBSON, BEAU BLIXSETH; AMY KOENIG, DEAN FRESONKE, VERN JENNINGS, TERRI FROEHLICH, MONIQUE LEFLEUR, and GRIFFEN DEVELOPMENT, LLC, each individually, and on behalf of PROPOSED Plaintiff
CREDIT SUISSE AG, a Swiss corporation; CREDIT SUISSE SECURITIES (USA), LLC, a Delaware limited liability company, CREDIT SUISSE FIRST BOSTON, a Delaware limited liability corporation; CREDIT SUISSE CAYMAN ISLAND BRANCH, an entity of unknown type; CUSHMAN & WAKEFIELD, INC., a Delaware corporation and DOES 1 through 100 inclusive, Defendants. CLASS Members of Tamarack Resort, Yellowstone Club, Lake Las Vegas and Ginn Sur Mer, Plaintiffs,
ORDER ON REPORT AND RECOMMENDATION
EDWARD J. LODGE, District Judge.
On August 16, 2013, United States Magistrate Ronald E. Bush issued a Report and Recommendation ("Report"), recommending that Plaintiffs' Motion to Certify Class be and Defendants' Motion to Exclude Expert Report and Testimony be denied. (Dkt. 409.) Any party may challenge the Magistrate Judge's proposed recommendation by filing written objections within fourteen days after being served with a copy of the Report. 28 U.S.C. § 636(b)(1)(C). The district court must then "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. The district court may accept, reject, or modify in whole or in part, the findings and recommendations made by the magistrate. Id.; see also Fed.R.Civ.P. 72(b).
Plaintiffs filed objections to the Report arguing it erred in denying its Motion for Class Certification in several respects. (Dkt. 411, 412.) Alternatively Plaintiffs request that this Court grant a limited class certification as to the liability issues and reserve decision as to class certification for the damages issues. Defendants also filed objections to the Report arguing it should have: 1) found the Plaintiffs' claims lack the class certification requirements for typicality and commonality, 2) concluded that none of the Plaintiffs satisfy the adequacy requirement, and 3) rejected the Plaintiffs' the "fail-safe class definition." (Dkt. 413.) Both sides have filed responses to the others' objections. (Dkt. 415-417.) The Court has considered the parties' contentions and conducted a de novo review of the record and, upon that basis, finds as follows.
STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 636(b)(1)(C), this Court "may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate judge." Where the parties object to a report and recommendation, this Court "shall make a de novo determination of those portions of the report which objection is made." Id. Where, however, no objections are filed the district court need not conduct a de novo review. In United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003), the court interpreted the requirements of 28 U.S.C. 636(b)(1)(C):
The statute [28 U.S.C. § 636(b)(1)(C)] makes it clear that the district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise. As the Peretz Court instructed, "to the extent de novo review is required to satisfy Article III concerns, it need not be exercised unless requested by the parties." Peretz, 501 U.S. at 939 (internal citation omitted). Neither the Constitution nor the statute requires a district judge to review, de novo, findings and recommendations that the parties themselves accept as correct. See Ciapponi, 77 F.3d at 1251 ("Absent an objection or request for review by the defendant, the district court was not required to engage in any more formal review of the plea proceeding."); see also Peretz, 501 U.S. at 937-39 (clarifying that de novo review not required for Article III purposes unless requested by the parties)....
See also Wang v. Masaitis, 416 F.3d 993, 1000 & n.13 (9th Cir. 2005). Furthermore, to the extent that no objections are made, arguments to the contrary are waived. See Fed.R.Civ.P. 72; 28 U.S.C. § 636(b)(1) (objections are waived if they are not filed within fourteen days of service of the Report and Recommendation). "When no timely objection is filed, the Court need only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation." Advisory Committee Notes to Fed.R.Civ.P. 72 (citing Campbell v. United States Dist. Court, 501 F.2d 196, 206 (9th Cir.1974)).
In this case, both parties have filed objections and, therefore, the Court has conducted a de novo review of those portions of the Report. The Court has also reviewed the entire Report as well as the record in this matter for clear error on the face of the record and finds as follows.
I. Plaintiffs' Objections
The Report concluded that class resolution of this case is not superior to other methods for adjudication of the controversy. (Dkt. 409 at 30.) Plaintiff objects to this conclusion arguing the Report failed to recognize the time and resources of the Court and both parties that would be necessary to separately adjudicate the number of potential cases by the 2, 284 class members. (Dkt. 411 at 13.) Plaintiffs also challenge the Report's statement that Plaintiffs admit they are seeking "$8 billion in actual damages for the approximately 3, 000 Class members - on average, approximately $2, 666, 666 per Class member." (Dkt. 411 at 5.)
The statement concerning the approximated amount of damages was made in reference to the Report's discussion concerning Rule 23(b)(3)'s superiority requirement. (Dkt. 409 at 30.) There, the Report concluded that a class action in this case is not superior to other methods for adjudication given the sizeable amount of damages each class member may individually be seeking. Plaintiffs dispute the accuracy of the figure arguing the average loss is more likely $582, 379.70. (Dkt. 411 at 6.) The Report accurately calculated the representations as to damages as made by the Plaintiffs in their Third Amended Complaint. (Dkt. 409 at 30) (citing Dkt. 131 at ¶¶ 48, 172.) Regardless of the precise damage figure, this Court does not find the approximated damages figure to have been the driving factor in denying class certification. The Report clearly goes on to state:
Furthermore, while Plaintiffs' claims share common threads, the resolution of which could reduce litigation costs and promote greater efficiency (see supra), they are nevertheless not without the need for individual causation determinations vital to the progression of the two Class-wide claims (see supra). In other words, because individual issues predominate, Plaintiffs' proposed class cannot be superior to other methods of adjudication absent a practical way for this Court to readily resolve the individual factual issues that bear on causation and damage. While no single forum (Idaho, Montana, Nevada, or the Bahamas) is obviously best (or worst, as the case may be) equipped to address these significant concerns, their management is made unsurmountably difficult by the complexity and multiplicity of the issues regardless. This also recommends against certifying the Class.
(Dkt. 409 at 31.) This Court has reviewed the superiority question de novo and agrees with the Report's analysis on this issue and will adopt the same. For the reasons stated in the Report, the Court denies the Plaintiffs' objection and agrees with the Report that class certification is not the superior method for adjudicating this case.
B. Disqualification of Three Class Representatives
In considering the adequacy of representation requirement of Rule 23(a)(4), the Report concluded that proposed class representatives Beau Blixseth, Amy Koenig, and Judy Land were not adequate representatives. (Dkt. 409 at 10-18.) Plaintiffs object to the disqualification of these three from representing their respective classes. Plaintiffs argue the possible defenses asserted by the Defendants against three of the proposed class representatives are non-existent and should not preclude class certification. (Dkt. 411 at 6.) Further, Plaintiffs point out that the three have been "extremely active in representing the interests" of the class and are otherwise appropriate to do so. (Dkt. 411 at 13.)
The Report properly laid out, and Plaintiffs do not dispute, the law governing adequacy of representation of a class. (Dkt. 409 at 10-11.) The objection here challenges the Report's application of that law to these three representatives. This Court has reviewed the materials relating to this issue de novo and finds it is in agreement with the conclusions reached in the Report.
1. Beau Blixseth
As to Beau Blixseth, Plaintiffs contend that the reasons given for his disqualification are "suppositions and nothing more" flowing from his connections with his father and the Yellowstone Club. (Dkt. 411 at 18.) Plaintiffs argue Mr. Blixseth was deposed at length and there is no evidence that he was involved in the "arrangements for the procurement of the Credit Suisse loan to Yellowstone Club, no interface with anyone from Cushman or Credit Suisse, and had no knowledge of the Cushman appraisals. There is no evidence that he had any control over the development, ownership, and management of the Yellowstone Club MPC." (Dkt. 411 at 18-19.) Further, Plaintiffs assert that Mr. Blixseth was not part of the Yellowstone Club management team at the time of the loans, did not receive control of his interest in BFI until after the alleged fraud, and is simply a owner of two parcels of real estate who suffered the same type of losses as other putative class members.
The Report's disqualification of Mr. Blixseth is based on two grounds: 1) his connection with his father and 2) that he was too directly connected to the development, ownership, and management of the Yellowstone Club MPC. (Dkt. 409 at 12-13.) On the first ground, Plaintiffs argue Mr. Blixseth's father is not a defendant to this action and there is no reason that he should have to or would refuse to assign blame to a non-defendant. The Report quotes from Mr. Blixseth's deposition wherein he acknowledges that the lack of interest payments started the foreclosure process. (Dkt. 409 at 13.) Mr. Blixseth is not, as Plaintiffs contend, merely a property owner who lost money on two parcels at Yellowstone Club MPC. Mr. Blixseth was much more involved in and with a greater knowledge of Yellowstone Club MPC than other possible class members who had purchased property. See e.g. (Dkt. 286, Att. 9, Blixseth Dec. at ...