Crossroads Group, LLC v. Cleveland Heights, Ohio

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

THE CROSSROADS GROUP, LLC, ) Case No. 1:23-cv-00184

et al., )

) Judge J. Philip Calabrese

Plaintiffs, )

) Magistrate Judge

v. ) Jennifer Dowdell Armstrong

)

CITY OF CLEVELAND HEIGHTS, )

et al., )

)

Defendants. )

)

OPINION AND ORDER

The City of Cleveland Heights requires homeowners that lease their property

to register and apply for a certificate of occupancy. If the homeowner resides outside

Cuyahoga County, the owner must also pay a $100.00 fee. Plaintiffs The Crossroads

Group, LLC, Andrew Strigle, and Sole Houses LLC allege that this additional fee

imposed only on owners of property in Cleveland Heights who reside outside

Cuyahoga County (1) violates their rights to due process and equal protection and (2)

constitutes an unconstitutional condition and taking. In bringing these claims,

Plaintiffs seek to represent a class of over 1,000 homeowners. (ECF No. 13.) For the

reasons that follow, the Court GRANTS IN PART Plaintiffs’ motion for class

certification.

STATEMENT OF FACTS

Property in Cleveland Heights is subject to municipal housing and business

maintenance codes. (ECF No. 15-1; ECF No. 15-2.) Section 1347.02 of the Housing

Code requires homeowners that rent or lease their property to hold a certificate of

occupancy issued by the Building Commissioner. See Cleveland Hts. Codified

Ordinances § 1347.02 (2022); ECF No. 15-1, PageID #225. A certificate of occupancy

ranges in annual cost between $200.00 to $1,225.00 depending on the number of units

in the building. Cleveland Hts. Codified Ordinances § 1347.06 (2022); ECF No. 15-1,

PageID #228. Additionally, homeowners that are not residents of Cuyahoga County

but rent their property must also pay an annual $100.00 fee. (See, e.g., ECF No. 1-3,

PageID #46.) From January 2019 to February 2022, the City collected over

$400,000.00 in these fees from over 1,300 owners who reside outside Cuyahoga

County. (ECF No. 13-1, PageID #159; see also ECF No. 5, ¶¶ 36–38, PageID #61;

ECF No. 16, ¶ 36, PageID #296–97; ECF No. 13-2; ECF No. 24-3.)

The record before the Court establishes the following facts relevant to

Plaintiffs’ motion for class certification. Plaintiff Sole Houses LLC, based outside

Cuyahoga County in Richfield, Ohio, owns at least a dozen properties in Cleveland

Heights (ECF No. 13-2, PageID #183–84; ECF No. 23-1, PageID #411) and paid the

$100 fee at issue for several properties (see, e.g., ECF No. 24-3, PageID #486–87). In

registering some of them, Sole Houses failed to list an authorized agent with a

physical address in Cuyahoga County. (ECF No. 23-3, ¶ 4, PageID #445.) The

Cleveland Heights Building Code requires owners of residential rental properties

who do not reside in Cuyahoga County to designate a natural person who does to

receive notices of violations. Cleveland Hts. Codified Ordinances § 1351.34(a); ECF

No. 15-1, PageID #248.

Plaintiff The Crossroads Group, LLC is the sole member and owner of Sole

Houses. (ECF No. 23-1, PageID #400 & #402.) In turn, Plaintiff Andrew Strigle owns

10% of The Crossroads Group. (Id., PageID #402–03.) Tapa Properties LLC holds

title to six of the properties at issue. (ECF No. 23-3, ¶ 3, PageID #444; ECF No. 25-1,

¶ 2, PageID #588.) The Crossroads Group is the sole member of Tapa Properties

(ECF No. 25-1, ¶ 3, PageID #588), but does not hold title to any real property in

Cleveland Heights (ECF No. 23-1, PageID #410–11 & #414–16). Mr. Strigle does not

directly own any of the properties at issue either. (ECF No. 23-1, PageID #410–11.)

STATEMENT OF THE CASE

On January 31, 2023, Plaintiffs filed suit challenging the City’s imposition of

an additional $100 fee on owners of rental properties who reside outside of Cuyahoga

County. (ECF No. 1.) In their amended complaint, Plaintiffs allege that the fee (1)

violates their rights to due process and equal protection; (2) constitutes an

unconstitutional condition and taking; and (3) unjustly enriches the City. (ECF No. 5,

¶¶ 52–154, PageID #63–78.) In doing so, Plaintiffs rely on the United States and

Ohio Constitutions and State law. (Id.) As relief, Plaintiffs request a declaratory

judgment, injunctive relief, and restitution. (Id., ¶¶ 47–51 & 139–48, PageID #62–63

& #77–78.)

Shortly after filing their complaint, Plaintiffs moved for a preliminary

injunction. (ECF No. 6.) During briefing on that motion, Plaintiffs also moved for

class certification (ECF No. 12; ECF No. 13), and Defendants moved to dismiss and,

alternatively, for the judgment on the pleadings (ECF No. 15). Following conferences

to discuss how to proceed, and in what order, in resolving these competing motions,

the Court notified the parties that will treat the dispositive motions as cross-motions

for summary judgment, which it will decide after disposing of the motion for class

certification. (ECF No. 22, PageID #361–63.) Accordingly, the parties conducted

discovery and otherwise prepared the record for class certification.

Plaintiffs bring their claims on behalf of a class of similarly situated

homeowners who do not reside in Cuyahoga County spanning a time period from

January 1, 2019 to present. (ECF No. 5, ¶¶ 149–54, PageID #78 & #79.) Specifically,

Plaintiffs allege that Defendants received annual payments from approximately

1,377 non-residents. (Id., ¶ 149, PageID #78.) In their motion for class certification,

Plaintiffs request that the Court certify a class of persons who “paid one or more $100

annual assessments to the City of Cleveland Heights” after January 1, 2019 “in

response to the City’s surcharge on those who lease dwellings while residing beyond

the boundaries of Cuyahoga County.” (ECF No. 13, PageID #141.) Plaintiffs’ motion

attaches a 29-page spreadsheet which they refer to as a “preliminary schedule of class

members.” (ECF No. 13-2.) Also, the record contains a spreadsheet that lists

homeowners residing outside the county who paid the $100 fee after July 19, 2019.

(ECF No. 24-3; see also ECF No. 24-2, PageID #468.) Defendants oppose class

certification. (ECF No. 23.)

STANDING

“Article III does not give federal courts the power to order relief to any

uninjured person, class action or not.” TransUnion LLC v. Ramirez, 594 U.S. 413,

431 (2021). Therefore, “[a] litigant must be a member of a class which he or she seeks

to represent at the time the class action is certified.” Sosna v. Iowa 419 U.S. 393, 403

(1975).

Defendants argue that the Court should deny certification because The

Crossroads Group and Mr. Strigle lack standing under Article III. (ECF No. 23,

PageID #381–82.) The record shows that neither directly owns property in Cleveland

Heights or paid the $100.00 fee imposed on homeowners who are non-residents of

Cuyahoga County. (See ECF No. 13-2; ECF No. 24-3.) Accordingly, these two

Plaintiffs are not members of the class Plaintiffs seek to certify, which Plaintiffs

define by reference to payment of the non-resident fee.

But Defendants do not argue that Sole Houses lacks standing or is not a

member of the class so defined. Even though the record shows that Tapa Properties

holds title to approximately six of Plaintiffs’ properties in Cleveland Heights (ECF

No. 23-3, ¶ 3, PageID #444; ECF No. 25-1, ¶ 2, PageID #588), Sole Houses owns the

others, and Defendants do not contend otherwise (see ECF No. 23, PageID #381–82).

Moreover, according to the City’s records, Sole Houses paid the fee at issue. (ECF

No. 24-3, PageID #486–87.) For example, Sole Houses holds title to the house at 827

Caledonia Avenue—not Tapa Properties (ECF No. 23-3, ¶ 2, PageID #444; ECF

No. 13-2, PageID #183)—and paid the $100 fee for that property because it is not a

resident of Cuyahoga County (ECF No. 24-3, PageID #486 (cross-referencing the

same license or permit number for the parcel); see also ECF No. 30-4, PageID #703).

Accordingly, the City’s records leave no doubt that Sole Houses is a member of the

class it seeks to certify and has standing to prosecute the claims at issue, unlike The

Crossroads Group and Mr. Strigle.

ANALYSIS

Due process protects an individual’s right “to have his own day in court” and

affords litigants the right to participate in and control lawsuits affecting their

interests. See, e.g., Ortiz v. Fibreboard Corp., 527 U.S. 815, 846–47 (1999) (citations

omitted); Logan v. Zimmerman Brush Co., 455 U.S. 422, 428–29 (1982). A class

action is “an exception to the usual rule that litigation is conducted by and on behalf

of the individual named parties only.” Califano v. Yamasaki, 442 U.S. 682, 700–01

(1979). Because it binds absent class members to judgments in actions in which they

did not participate, and about which they might not even be aware, representative

litigation violates due process unless the person seeking to proceed on behalf of a

class demonstrates compliance with all the requirements of Rule 23. See, e.g.,

Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (citing Wal-Mart Stores, Inc. v.

Dukes, 564 U.S. 338, 350 (2011)); Hansberry v. Lee, 311 U.S. 32, 42 (1940).

Formerly, a court was foreclosed from inquiry into the merits of the case at the

class certification stage. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974).

However, “[r]ecent Supreme Court precedent clearly holds that ‘plaintiffs wishing to

proceed through a class action must actually prove—not simply plead—that their

proposed class satisfies each requirement of Rule 23.” Rikos v. Procter & Gamble Co.,

799 F.3d 497, 527–28 (6th Cir. 2015) (Cook, J., dissenting) (quoting Halliburton Co.

v. Erica P. John Fund, Inc., 573 U.S. 258, 275 (2014)). Under this more recent

authority, a court may certify a class only where the plaintiff presents “evidentiary

proof” sufficient to withstand “rigorous analysis” under Rule 23. Comcast, 569 U.S.

at 33. Rule 23’s “rigorous analysis” more often than not “will entail some overlap

with the merits of the plaintiff’s underlying claim.” Dukes, 564 U.S. at 350–51.

To obtain class certification, Sole Houses must prove that it satisfies the

procedural requirements in Rule 23(a) and at least one requirement in Rule 23(b).

Comcast, 569 U.S. at 33.

I. Rule 23(a)

Rule 23(a) requires numerosity, commonality, typicality, and adequacy.

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997). Additionally, the Sixth

Circuit has adopted an implicit ascertainability requirement. See Cole v. City of

Memphis, 839 F.3d 530, 541 (6th Cir. 2016) (citing, among other authorities, Young

v. Nationwide Mut. Ins. Co., 693 F.3d 532 (6th Cir. 2012)). Although Defendants

challenge the ability of Sole Houses to meet all the prerequisites for class

certification, usually not a sign of a winning argument, they focus on the

ascertainability of the class based on its definition. Accordingly, the Court begins its

rigorous analysis there.

I.A. Ascertainability

Ascertainability requires that a class definition be “sufficiently definite so that

it is administratively feasible for the court to determine whether a particular

individual is a member of the proposed class.” Young, 693 F.3d at 537–38 (citation

omitted). “[C]ourts must be vigilant to ensure that a certified class is properly

constituted.” Powers v. Hamilton Cnty. Pub. Def. Comm’n, 501 F.3d 592, 619 (6th

Cir. 2007). “Plaintiffs seeking certification are obligated to propose an identifiable,

unambiguous class in which they are members.” Anderson v. United Fin. Sys. Corp.,

281 F.R.D. 292, 295 (N.D. Ohio 2012) (quotation omitted).

A class definition must provide objective criteria for the court and class

members to determine membership in the class without the need for individualized

fact finding. Young, 693 F.3d at 538–39; Crosby v. Social Sec. Admin., 796 F.2d 576,

580 (1st Cir. 1986). “If a court must make a determination of the merits of individual

claims to decide if a particular individual is a member of the class, then the class

definition is inadequate.” Carter v. PJS of Parma, Inc., No. 1:15-cv-1545, 2016 WL

3387597, at *2 (N.D. Ohio June 20, 2016) (citation omitted).

“[I]mportant elements of defining a class include: (1) specifying a particular

group that was harmed during a particular time frame, in a particular location, in a

particular way; and (2) facilitating a court's ability to ascertain its membership in

some objective manner.” Bentley v. Honeywell Int’l., Inc., 223 F.R.D. 471, 477 (S.D.

Ohio 2004) (citing Crosby, 796 F.2d at 580); see also Givens v. Van Devere, Inc.,

No. 5:11-cv-666, 2012 WL 4092738, at *5 (N.D. Ohio Sept. 17, 2012).

Sole Houses seeks certification of a class of homeowners in the City of

Cleveland Heights who rent out homes in the City and live outside Cuyahoga County

such that the City imposed its additional $100 out-of-county owner registration fee.

Specifically, Sole Houses requests certification of a class defined as:

All individuals and businesses who, subsequent to January 1, 2019,

have paid one or more $100 annual assessments to the City of Cleveland

Heights in response to the City’s surcharge on those who lease dwellings

while residing beyond the boundaries of Cuyahoga County.

(ECF No. 13, PageID #141.) Defendants contend that this definition is vague and

ambiguous and extends the class period beyond the applicable limitations period.

(ECF No. 23, PageID #378–81.) The Court considers each argument in turn.

I.A.1. Vague and Ambiguous

Defendants argue that use of the terms “assessment” and “surcharge” in the

class definition create confusion and defeat a showing of ascertainability because

those terms do not appear in the City’s Building Maintenance Code. (Id., PageID

#378–79.) They base this argument on, among other things, the definition of an

“assessment” under Ohio law. (ECF No. 27, PageID #596.) But this argument misses

the mark for two reasons.

First, notwithstanding any claimed or actual vagueness and ambiguity in the

terms used to define the class, the record shows that Defendants had little difficulty

identifying homeowners who paid the out-of-county owner registration fee at issue.

For example, Defendants produced spreadsheets identifying who paid those amounts

(ECF No. 13-2; ECF No. 24-3) and provided testimony at deposition about the class

definition and those who fall within it, despite some disagreements about the proper

terminology (ECF No. 24-1, PageID #458).

Second, the City relies on a problem of its own making. The monetary exaction

at issue, whatever it is called, is not named in the City’s ordinances, at least not

explicitly. Therefore, some imprecision in terminology is to be expected.

Additionally, in their pleadings and motion papers, Plaintiffs’ counsel—like all good

lawyers—attempt to define the playing field using terms like “assessment” and

“surcharge,” an effort the Court takes more as a rhetorical exercise than a precisely

technical or legal one. At times, perhaps, Plaintiffs take that practice too far. In any

event, this problem—to the extent it is one—is easily solved.

To avoid any confusion, the Court exercises its “broad discretion to modify class

definitions.” Powers, 501 F.3d at 619. In corresponding about the amounts at issue,

the City refers to them as “fees” (ECF No. 1-3, PageID #43), and in discovery and at

oral argument as “out-of-county owner registration fees” (ECF No. 24-1, PageID

#459). Therefore, the class definition will do the same. As modified, the class

definition identifies a particular group (owners of residential rental property in

Cleveland Heights who reside outside Cuyahoga County) that was allegedly harmed

(by paying an additional $100 registration fee) during a particular time frame (within

the applicable limitations period before the filing of the complaint). Further, it

facilitates ascertaining membership in the class using objective means. Therefore,

the class definition as modified is sufficiently definite for certification. Because this

revised language simply reflects the same language the City has used, modifying the

class definition in this case does not present a circumstance where the Court

intervenes to relieve Plaintiffs of their burden on a motion to certify a class.

This clarification in the class definition leaves one other objection from the

City. Defendants maintain that the difficulty in identifying the proper owner of

Plaintiffs’ properties in Cleveland Heights makes ascertaining membership in any

class depend on individualized inquiries that defeat certification. After all, The

Crossroads Group paid the fees at issue (ECF No. 30-3), even though it does not

actually own residential property in the City, and title remains variously with Tapa

Properties or Sole Houses. But the record provides an objective and easily

administrable identification of class members—out-of-county owners of residential

property in Cleveland Heights who paid the $100 fee at issue. (See ECF No. 24-3.)

Further, it demonstrates that the City has the ability with marginal effort to refine

this list according to the Court’s modifications to the class definition. Even if others

actually paid the fee at issue, the City accepted that payment on behalf of the

property owner it identifies in its records, making this class definition reflect the real-

world substance of administration and collection of the fee. Accordingly, the record

provides an ascertainable class definition appropriate for certification.

I.A.2. Applicable Limitations Period

In their amended complaint, Plaintiffs bring constitutional claims that seek

monetary and injunctive relief and a claim for unjust enrichment. The parties

dispute the applicable limitations period for these claims and remedies, which will

define the outer boundaries for any class period. Sole Houses argues for a six-year

limitations period based on various decisions from the Northern and Southern

Districts of Ohio. (ECF No. 25, PageID #578–81.) In arguing for a two-year

limitations period, Defendants rely on Sixth Circuit precedent. (ECF No. 23, PageID

#379–81.)

In Janosek v. City of Cleveland, 718 F.3d 579, 581–82 (6th Cir. 2013), the

plaintiff sued an Ohio political subdivision for overcharges in his water bills, alleging

violations of procedural due process, a taking under the Ohio Constitution,

negligence, and unjust enrichment. Under Ohio law, the Sixth Circuit recognized

that, “an action against a political subdivision must be brought ‘within two years after

the cause of action accrues.’” Id. at 581 (quoting Ohio Rev. Code § 2744.04). Indeed,

the State statute on which the Janosek Court relied applies broadly to “[a]n action

against a political subdivision to recover damages for . . . loss . . . to property allegedly

caused by any act or omission in connection with a governmental or proprietary

function.” Ohio Rev. Code § 2744.04(A). Additionally, a two-year-limitations period

generally applies to claims under Section 1983, see Browning v. Pendleton, 869 F.2d

989, 992 (6th Cir. 1989), including due process and takings claims, see Banks v. City

of Whitehall, 344 F.3d 550, 553–54 (6th Cir. 2003); Kuhnle Bros., Inc. v. County of

Geauga, 103 F.3d 516, 519 (6th Cir. 1997). Generally, a cause of action accrues when

the wrongful act is committed. Janosek, 718 F.3d at 581 (citing Flagstar Bank, F.S.B.

v. Airline Union’s Mortg. Co., 128 Ohio St. 3d 529, 2011-Ohio-1961, 947 N.E.2d 672,

¶ 27).

Plaintiffs offer no response to the Sixth Circuit’s decision in Janosek, which

specifically applied a two-year limitations period to a claim for unjust enrichment and

did so in a case treating allegedly wrongful overcharges as a “loss to property” within

the meaning of Section 2744.04(A). In fairness, the plaintiff’s claims in Janosek

accrued some eight years before filing suit, easily making the claim untimely without

much further analysis. Instead, Plaintiffs cite numerous federal decisions. (ECF

No. 25, PageID #579–81.) Only one applies a six-year limitations period for unjust

enrichment claims under Ohio law. In Thompson v. City of Oakwood, Ohio, 307 F.

Supp. 3d 761, 768–69 (S.D. Ohio 2018), the plaintiff brought a class action against a

political subdivision alleging, among other claims, unjust enrichment due to a

municipal fee for point-of-sale inspections for property transfers. Based on

Section 2305.07 of the Ohio Revised Code, the district court applied a six-year

limitations period to that claim. Id. at 784. It did so without mentioning the Sixth

Circuit’s decision in Janosek. Plaintiffs also rely on Baker v. City of Portsmouth, No.

1:14-cv-512, 2015 WL 5822659, at *8 (S.D. Ohio Oct. 2015). But that case does not

address the limitations period or Janosek. None of the other cases on which Plaintiffs

rely address the limitations period.

In 2021, the Ohio General Assembly amended Section 2305.07. At the time of

Thompson, the statute provided that “an action upon a contract not in writing,

express or implied, or upon a liability created by statute other than a forfeiture or

penalty, shall be brought within six years after the cause thereof accrued.” Ohio Rev.

Code § 2305.07 (2018). In the amended version of the statute, claims for unjust

enrichment based on a contract theory are subject to a four-year statute of limitations

period: “[A]n an action upon a contract not in writing, express or implied, shall be

brought within four years after the cause of action accrued.” Ohio Rev. Code

§ 2305.07(A). For a six-year limitations period to apply, a claim must either be “[a]n

action upon a liability created by statute other than a forfeiture or penalty” or arise

out of a consumer transaction. Ohio Rev. Code § 2305.07(B) & (C).

For a claim to qualify as “an action upon a liability created by statute,” it must

be a statutory cause of action that was not “available at common law.” McAuliffe v.

Western States Import Co., 72 Ohio St. 3d 534, 538, 1995-Ohio-201, 651 N.E.2d 957,

960 (discussing language that remains unchanged in the amended version of the

statute). But Plaintiffs’ claim for unjust enrichment ultimately traces to the common

law. And it does not arise here from a consumer transaction. Therefore, at most, the

four-year statute of limitations for “an action upon a contract not in writing, express

or implied” applies. Ohio Rev. Code § 2305.07(A). But the facts underlying Plaintiffs’

claims do not support a quasi-contractual theory of recovery. Instead, Plaintiffs

allege a violation off their civil rights, best characterized as a species of tort law.

Cooey v. Strickland, 479 F.3d 412, 416 (6th Cir. 2007).

When faced with conflicting statutes of limitations, “courts must look to the

actual nature or subject matter of the case, rather than to the form in which the action

is pleaded.” Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 183, 465 N.E.2d 1298,

1302 (1984). Based on the actual nature of Plaintiffs’ claims and their substance,

Plaintiffs seek to recover money that they contend the City unlawfully charged them

and those similarly situated. In this respect, their civil-rights claims most closely

resemble torts, making the appropriate statute of limitations two years. See

Browning, 869 F.2d at 992; see also Triplett v. Benton, 2003-Ohio-5583, 2003 WL

22390065, at ¶ 6 (Ohio Ct. App.) (citation omitted) (applying a one-year statute of

limitations instead of the six-year statute of limitations supplied by Section 2305.07

because the “gist of the complaint” suggested that the plaintiff asserted malpractice

claims and not quasi-contractual claims).

Accordingly, the Court will also modify the class period to reflect the applicable

limitations period. Because the question arose at oral argument, the Court notes

that, in its view, certification to the Ohio Supreme Court to determine the applicable

limitations period is not appropriate for two reasons. First, Section 2744.04. is

sufficiently clear on its face that the question does not justify the time and expense

attending certification, even it meets the standard in Rule 9.01(A) of the Rules of

Practice of the Supreme Court of Ohio, which the Court doubts. Second, in any event,

the limitations period for an action under Section 1983 presents a question of federal

law, see Wilson v. Garcia, 471 U.S. 261, 268–70 (1985), albeit one determined by

reference to State law.

I.B. Numerosity

Numerosity requires that the class be “so numerous that joinder of all members

is impracticable.” Fed. R. Civ. P. 23(a)(1). Defendants make the conclusory argument

that “Plaintiffs have failed to satisfy their heavy burden to show that the numerosity

requirement has been met[.]” (ECF No. 23, PageID #382.) But the record belies this

claim. (ECF No. 24-3, PageID #472–504 & #505–39 (in part).) The City’s records

show payments from sufficiently numerous persons who paid the out-of-county owner

registration fee during the applicable limitations period that their joinder in this

action is impracticable. See Daffin v. Ford Motor Co., 458 F.3d 549, 552 (6th Cir.

2006); Snelling v. ATC Healthcare Servs. Inc., No. 2:11-cv-00983, 2012 WL 6042839,

at *5 (S.D. Ohio Dec. 4, 2012) (noting that a class of 40 or more is generally sufficiently

numerous).

I.C. Commonality

Commonality requires the class to share common questions of law or fact. Fed.

R. Civ. P. 23(a)(2). To assess commonality, courts consider whether there is a common

contention that, if resolved, would address all claims “in one stroke.” Dukes, 564 U.S.

at 350. Defendants tie their commonality argument to the class definition. (ECF No.

23, PageID #382.) As already explained, those issues do not prevent a finding of

ascertainability. Each class member’s claim turns primarily on a common issue:

whether the City’s collection of a $100 fee from persons who own residential rental

property in Cleveland Heights but do not reside within Cuyahoga County violates the

Constitution or otherwise unjustly enriches the City. Because the answer to that

question will likely drive resolution, the class satisfies Rule 23’s commonality

requirement.

I.D. Typicality

Typicality requires “the claims or defenses of the representative parties [to be]

typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). A named

plaintiff’s claim is typical if “it arises from the same event or practice or course of

conduct that gives rise to the claims of other class members, and if his or her claims

are based on the same legal theory.” Beattie v. CenturyTel, Inc., 511 F.3d 554, 561

(6th Cir. 2007) (citing In re American Med. Sys., Inc., 75 F.3d 1069, 1082 (6th Cir.

1996)). Defendants direct their typicality arguments to The Crossroads Group and

Mr. Strigle. (ECF No. 23, PageID #383.) Because they are not members of the class

they seek to represent, the Court need not address their typicality further. As for

Sole Houses, its conduct gives rise to the same sort of claims that Plaintiffs bring and

are typical of the legal theories that apply broadly to those similarly situated.

Accordingly, its claims are typical of the class.

I.E. Adequacy

Adequacy requires “the representative parties [to] fairly and adequately

protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). The Sixth Circuit

articulates two criteria for determining adequacy: “(1) the representative must have

common interests with unnamed members of the class; and (2) it must appear that

the representative[] will vigorously prosecute the interests of the class through

qualified counsel.” Senter v. General Motors Corp., 532 F.2d 511, 524 (6th Cir. 1976)

(citations omitted). Also, the Sixth Circuit recognizes that, “[t]o judge the adequacy

of representation, courts may consider the honesty and trustworthiness of the named

plaintiff.” Gooch v. Life Invs. Ins. Co. of Am., 672 F.3d 402, 431 (6th Cir. 2012)

(citation omitted).

Based on its honesty and trustworthiness, Defendants attack the adequacy of

Sole Houses as a class representative. (ECF No. 23, PageID #383–84; ECF No. 27,

PageID #600–03.) Primarily, Defendants base this argument on alleged

noncompliance with Ohio law stemming from a failure to record the transfer of six

properties from Tapa Properties to Sole Houses and continuing to list Tapa Properties

as the owner in out-of-county owner registration applications. (ECF No. 23, PageID

#383–84; ECF No. 23-3, ¶¶ 2 & 3, PageID #444.) Even taking this argument as

establishing the inadequacy of Sole Houses with respect to these properties, a

conclusion about which the Court harbors doubts, the company still owns some six or

twelve additional properties for which it paid the fee at issue. (ECF No. 5, ¶ 9, PageID

#56–57; ECF No. 24-3, PageID #486–87.) These issues fail to establish that

Defendants have unique defenses as against Sole Houses—because it owns other

properties that do not appear to be subject to these arguments, which likely apply to

other class members given the nature of the market and fee at issue. Even if these

facts gave rise to unique defenses, the record provides no indication that Sole Houses

would not adequately protect the interests it has in common with members of the

class.

Defendants also argue that the record shows Sole Houses is a zombie entity

because it has no employees and is totally controlled by The Crossroads Group,

making it an alter ego for the real party in interest. (ECF No. 27, PageID #601.) But

the authority on which Defendants rely for this proposition makes it inapplicable

here. In Norman v. Arcs Equities Corp., 72 F.R.D. 502, 506 (S.D.N.Y. 1976), the court

recognized that certification is not appropriate where a class representative “a

mere alter ego for one too embarrassed or otherwise constrained from suing in his

own right.” There, the facts demonstrated that the class representative sued on

behalf of an aggrieved customer of an unrelated stockbroker who did not want to get

directly involved in litigation over a tender offer. In contrast, The Crossroads Group

is not a similarly unrelated party. Nor does the record show that it or Mr. Strigle has

been fundamentally dishonest about the business dealings or corporate relationships

that matter for purposes of this case. Indeed, the record shows that Plaintiffs paid

the fees at issue.

But this is not a case where an alter ego theory, even if true, gives rise to a

conflict that would compromise the adequacy of Sole Houses as the representative of

the class. Under Defendants’ argument, The Crossroads Group or Mr. Strigle would

be the real party in interest, and each joined this suit as a Plaintiff. Indeed,

Defendants simultaneously challenge their standing and membership in the class

they seek to represent. But Defendants cannot eat their cake (standing or

membership in the class) and have it (adequacy) too. Either The Crossroads Group

and/or Mr. Strigle are the real parties in interest and, therefore, have standing to

represent the class of which they are members and Sole Houses is inadequate to do

so or the opposite holds.

Having accepted Defendants argument that the class defines its members by

reference to payment of the fee at issue, as a formal matter, the Court finds that Sole

Houses is an adequate representative which will vigorously prosecute its claims on

behalf of a class. Further, “[o]nly when attacks on the credibility of the representative

party are so sharp as to jeopardize the interests of absent class members should such

attacks render a putative class representative inadequate.” Gooch, 672 F.3d at 431

(quoting Pasternak v. Colonial Equities Corp./U.S.A., No. H-90-829 (JAC), 1993 U.S.

Dist. LEXIS 10884, 1993 WL 306526, at *5 (D. Conn. Feb. 10, 1993)). Indeed, prior

admissions to the facts establishing insurance fraud do not by themselves create a

credibility problem that will defeat a showing of adequacy. Gooch, 672 F.3d at 431.

Any issues or concerns to which Defendants point fall far short of this high standard.

The Court will address the adequacy of class counsel in connection with Rule 23(g)

below.

II. Rule 23(b)

In addition to the prerequisites under Rule 23(a), class certification requires

that Plaintiffs also establish at least one requirement in Rule 23(b). Comcast, 569

U.S. at 33. Plaintiffs contend that they meet all three subsections of the Rule. The

Court addresses each in turn, but out of order.

II.A. Injunctive and Declaratory Relief (Rule 23(b)(2))

In addition to monetary damages, Plaintiffs seek declaratory relief and an

injunction (ECF No. 5, PageID #78–79) and monetary damages (id., ¶ 148, PageID

#78). Plaintiffs move for certification of a class under Rule 23(b)(2). Under this Rule,

a plaintiff may maintain a class action if the defendant “has acted or refused to act

on grounds that apply generally to the class, so that final injunctive relief or

corresponding declaratory relief is appropriate respecting the class as a whole.” Fed.

R. Civ. P. 23(b)(2). Certification of this sort of class action depends on “the indivisible

nature of the injunctive or declaratory remedy warranted—the notion that the

conduct is such that it can be enjoined or declared unlawful only as to all of the class

members or as to none of them.” Dukes, 564 U.S. at 360 (quoting Richard A.

Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132

(2009)). Put another way, Rule 23(b)(2) only permits certification where a single

injunction or declaratory judgment will apply to every class member. Id. This is so

because of the indivisible nature of the declaratory relief at issue, which will apply to

all class members or none of them. Id.

Two features of Rule 23(b)(2) make certification of a class under this Rule

improper here. First, according to the Supreme Court, Rule 23(b)(2) “does not

authorize class certification when each class member would be entitled to an

individualized award of monetary damages.” Dukes, 564 U.S. at 360–61.

“[I]ndividualized monetary claims belong in Rule 23(b)(3).” Id. at 362. Second, the

Supreme Court held that Rule 23(b)(2) does not permit class certification where “the

monetary relief is not incidental to the injunctive or declaratory relief.” Id. at 360.

To be sure, “[c]ivil rights cases against parties charged with unlawful, class-

based discrimination are prime examples” of cases where certification under Rule

23(b)(2) is proper. Amchem Prods., 521 U.S. at 614. In fact, challenges to racial

segregation, in which a single class-wide injunction provided a remedy, motivated

enactment of the Rule. Dukes, 564 U.S. at 361. But that history confirms that

certification under Rule 23(b)(2) is not appropriate where, as here, class members

combine an individualized request for damages with class-wide injunctive or

declaratory relief. Id. (discussing advisory committee note to 1966 amendment). In

this case, however, Plaintiffs seek monetary relief that is not incidental to the

injunction or declaratory judgment they also seek and is individualized in that each

class member paid the same fee for differing numbers of properties in differing

numbers of years. Therefore, the due process concerns the Supreme Court identified

in Dukes foreclose class certification under Rule 23(b)(2).

II.B. Incompatible Standards (Rule 23(b)(1))

Class certification is appropriate under Rule 23(b)(1) in circumstances in which

individual actions would (1) establish incompatible standards of conduct, Fed. R. Civ.

P. 23(b)(1)(A), or (2) dispose of the interests of those not parties as a practical matter,

Fed. R. Civ. P. 23(b)(1)(B), such as where a limited fund is involved. Under the law

of this Circuit, the same considerations that limit certification of a class seeking

monetary relief under Rule 23(b)(2) and Dukes apply under Rule 23(b)(1). Clemons

v. Norton Healthcare Inc., 890 F.3d 254, 281 (6th Cir. 2018) (citing William B.

Rubenstein, Newberg on Class Actions § 4:13 (5th ed. 2017)).

Although certification of a class seeking damages might be appropriate under

Rule 23(b)(1)(A), id., this case does not risk varying adjudications that might result

in incompatible standards of conduct for the City. In individual actions, some class

members might prevail while others might not, but such a result does not make

certification under Rule 23(b)(1) appropriate. Pipefitters Loc. 636 Ins. Fund v. Blude

Cross Blue Shield of Mich., 654 F.3d 618, 633 (6th Cir. 2011). That law or public

policy might obligate the City to treat all owners of residential rental property who

reside outside of Cuyahoga County the same, making inconsistent judgments

impermissible for such a reason does not make certification of a mandatory class

under Rule 23(b)(1) appropriate.

To support certification of a class under Rule 23(b)(1), Plaintiff relies on cases

involving shareholder disputes, public nuisances, landowners, and those seeking to

invalidate a bond issue. (ECF No. 13, PageID #150–51.) Those sorts of cases present

situations more conductive to certification under Rule 23(b)(1). In each, adjudication

effectively disposes of a specific asset or resource or determines available rights or

remedies in a way that forecloses a contrary determination. Such is not the case here.

Indeed, some class members might for their own reasons or no reason at all decide

that they are not interested this litigation or recovery of monetary damages.

Accordingly, certification in this case does not satisfy the demands of due process for

litigation of Plaintiffs’ claims on a mandatory aggregate basis.

II.C. Money Damages (Rule 23(b)(3))

To certify a class, Rule 23(b)(3) requires the Court to 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.” In making these

findings, the following matters are pertinent: (A) the interests of class members in

individually controlling the litigation; (B) the extent and nature of any litigation

concerning the dispute class members have already initiated; (C) the desirability of

concentrating litigation of the claims in the particular forum; and (D) the likely

difficulties in managing the class action. Fed. R. Civ. P. 23(b)(3).

II.C.1. Predominance

Predominance “tests whether [the] proposed classes are sufficiently cohesive

to warrant adjudication by representation.” Amchem Prods., 521 U.S. at 623. “To

meet the predominance requirement, a plaintiff must establish that issues subject to

generalized proof and applicable to the class as a whole predominate over those issues

that are subject to only individualized proof.” Young, 693 F.3d at 544 (quotation

omitted). Plaintiffs in class actions must demonstrate that they can prove through

common evidence that a defendant’s actions injured all class members. In re Rail

Freight Fuel Surcharge Antitrust Litig.—MDL No. 1869, 725 F.3d 244, 252 (D.C. Cir.

2013) (citing Amchem Prods., 521 U.S. at 623–24). Moreover, that common evidence

must establish that the class members suffered the same injury. Id. In other words,

to find predominance, common questions must not only exist, but they must also

represent a significant aspect of the case capable of resolving the questions for all

class members in a single adjudication.

In establishing predominance, “[a] plaintiff class need not prove that each

element of a claim can be established by classwide proof.” Glazer v. Whirlpool Corp.

(In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig.), 722 F.3d 838, 858

(6th Cir. 2013) (citing Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S.

455, 468 (2013)). Where predominance is satisfied, if a plaintiff cannot prove at trial

a common question that predominates over individual issues, the claim will fail on

the merits as to the entire class. Id.

Further, “the fact that a defense may arise and may affect different class

members differently does not compel a finding that individual issues predominate

over common ones.” Young, 693 F.3d at 544 (quoting Beattie v. CenturyTel, Inc., 511

F.3d 554, 564 (6th Cir. 2007)). Although individual damages calculations will

generally not defeat proof of predominance, Olden v. Lafarge Corp., 383 F.3d 495,

508–09 (6th Cir. 2004), Rule 23 still requires a damages model that functions on a

class-wide basis, Rodney v. Northwest Airlines, Inc., 146 F. App'x 783, 791 (6th Cir.

2005) (citing Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 303 (5th Cir. 2003)). In

this way, the predominance inquiry “prevent[s] the class from degenerating into a

series of individual trials.” Taylor v. CSX Transp., Inc., 264 F.R.D. 281, 294 (N.D.

Ohio 2007) (citation omitted).

Applying these standards, the Court finds that common questions predominate

over individual issues. At bottom, the claims of the class members will turn on the

same body of constitutional law and the defenses the City raises. These constitutional

questions will apply similarly to the City’s ordinance and administration of it and

drive a common resolution to this dispute regardless of individual issues that may

arise in the case of any particular class member. Defendants oppose largely on the

basis of Plaintiffs’ characterization of the exactments at issue as “assessments” not

“fees” already discussed with respect to ascertainability. (ECF No. 23, PageID #388.)

Modification of the class definition mitigates any such concern here. Finally, any

variability in the damages sought is easily administrable by identifying which class

members paid the $100 fee in which years and for how many properties. For these

reasons, the Court finds that Plaintiffs carried their burden to show predominance.

II.C.2. Superiority

Superiority requires courts to analyze whether a class action “is a better way

than individual litigation to adjudicate a claim.” Calloway v. Caraco Pharm. Labs.,

Ltd., 287 F.R.D. 402, 407 (E.D. Mich. 2012) (citing Daffin, 458 F.3d at 554). Rule 23

considers “whether any alternative methods exist for resolving the controversy and

whether the class action method is in fact superior.” Ealy v. Pinkerton Gov’t Servs.,

514 F. App’x 299, 308 (4th Cir. 2013) (citation omitted). This analysis seeks to

determine whether the burdens and costs of a class action justify certification given

the alternatives.

“The policy at 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.” Young, 693 F.3d at 545 (quoting Amchem

Prods., 521 U.S. at 617 (citation omitted)). Without a class action, then, “[w]here it

is not economically feasible to obtain relief within the traditional framework of a

multiplicity of small individual suits for damages, aggrieved persons may be without

any effective redress.” Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980).

Without question, the fees at issue present a textbook example for a class action in

this regard.

But the superiority inquiry advances other goals as well. Courts consider, for

example, “the difficulties likely to be encountered in the management of a class

action.” Beattie, 511 F.3d at 567. “Where many individual inquiries are necessary, a

class action is not a superior form of adjudication.” Young, 693 F.3d at 545. But this

case presents no such issues. Superiority also asks whether class adjudications will

“achieve economies of time, effort, and expense.” Amchem Prods., 521 U.S. at 615.

Because much of the work identifying potential class members is already done and

the class appears to be a manageable size, the burdens of managing a class action are

not substantial, particularly compared to the amounts involved.

Nor does the availability of fee-shifting under Section 1988—should Plaintiffs

prevail—affect superiority in this case. In some cases, the ability of civil-rights

plaintiffs to recover fees might overcome the problem of small recoveries or individual

litigation preferable to proceeding on a class basis. See Abby v. City of Detroit, 218

F.R.D. 544, 549 (E.D. Mich. 2003). Here, however, where an individual class member

might recover less than the filing fee, statutory fee shifting does not solve the inherent

difficulties associated with small recoveries. Accordingly, the Court finds that a class

action is the superior means of adjudication in this case.

III. Rule 23(g) Counsel

Because the Court determines that certification of a class under Rule 23(b)(3)

is appropriate, it must appoint class counsel. Fed. R. Civ. P. 23(g)(1). A court may

appoint class counsel “only if the applicant is adequate under Rule 23(g)(1) and (4).”

Fed. R. Civ. P. 23(g)(2). Under Rule 23(g)(1)(A), the Court must consider “(i) the work

counsel has done in identifying or investigating potential claims in the action; (ii)

counsel’s experience in handling class actions, other complex litigation, and the types

of claims asserted in the action; (iii) counsel’s knowledge of the applicable law; and

(iv) the resources that counsel will commit to representing the class.” Fed. R. Civ. P.

23(g)(1)(A). Also, the Court may consider “any other matter pertinent to counsel’s

ability to fairly and adequately represent the interests of the class.” Fed. R. Civ.

P. 23(g)(1)(B). Finally, Rule 23(g)(4) requires class counsel to “fairly and adequately

represent the interests of the class.” Fed. R. Civ. P. 23(g)(4). Although Defendants

do not challenge the adequacy of counsel, the Court independently examines counsel

for appointment pursuant to Rule 23(g) under this standard.

As to the first factor, briefing on class certification and Plaintiffs’ requested

preliminary injunction demonstrate that counsel has thoroughly analyzed the

potential claims of class members. The second factor also favors appointment,

Plaintiffs’ counsel appears well-qualified, experienced, and capable of conducting

class action litigation. The 1851 Center for Constitutional Law has previously

litigated class actions involving taxpayers and homeowners. (See ECF No. 13, PageID

#148–49 (collecting cases).) Moreover, the briefing on class certification indicates

that Plaintiffs’ counsel has more than adequate knowledge of the applicable

procedural and substantive law.

As to the third factor, counsel’s pleadings and briefing have demonstrated

sufficient knowledge of the constitutional jurisprudence involved in the parties’

claims and defenses. Finally, counsel has committed significant resources to

represent the class, specifically, three attorneys who have, it is apparent to the Court,

invested considerable time in this case already. On this record, and because counsel

has vigorously represented Plaintiffs, the Court further finds that Plaintiffs’ counsel

of record have and will fairly and adequately represent the class.

Accordingly, the Court APPOINTS Plaintiffs’ counsel of record—Maurice

Thompson, Michael Rasor, and Morgan Schweighoefer—as class counsel.

IV. Individual Defendants

Finally, Defendants contend that the class action should not be certified

against the two individual defendants because the individual defendants are entitled

to qualified immunity. (ECF No. 23, PageID #389 (citing Citizens in Charge, Inc. v.

Husted, 810 F.3d 437, 441 (6th Cir. 2016).) However, Rule 23 does not grant the

Court “license to engage in free-ranging merits inquiries at the certification stage.”

Amgen, 568 U.S. at 466. Class determinations “should be predicated on evidence

presented by the parties concerning the maintainability of the class action,” rather

than the substantive merits of the case itself. In re Whirlpool Corp. Front-Loading

Washer Prods. Liab. Litig., 722 F.3d at 851.

At this point, the Court has no opinion on whether the individual defendants

are entitled to qualified immunity because that substantive inquiry has no bearing

on class certification. The Court will consider Defendants’ qualified immunity

argument and any other merits-based defense at the appropriate time. While the

Court understands, and has a certain amount of sympathy for, the concerns about

including the individual Defendants in any class certification order that defense

counsel raised, there are ways to address those issues other than by fast forwarding

to a ruling on the merits now. To that end, the Court will not identify the individual

Defendants in notice to potential class members. Doing so will avoid at least some

concerns bearing on the circumstances of the individual Defendants without

prejudice to class members, who likely will not recognize the names of these

individuals in any event.

CONCLUSION

For the foregoing reasons, the Court GRANTS IN PART Plaintiffs’ motion

and CERTIFIES the following class:

All individuals and businesses who own residential rental property in

the City of Cleveland Heights and, while residing outside of Cuyahoga

County, on or after January 31, 2021, paid to the City of Cleveland

Heights one or more $100 annual out-of-county owner registration fees.

After any appeal, the Court will schedule further proceedings.

SO ORDERED.

Dated: April 11, 2024

J.Philip Calabrese —~™S

United States District Judge

Northern District of Ohio

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