Garibian & Associates Accountancy Corporation v. Republic Services Inc

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

Buffalo Seafood House LLC, et al., Case No. 7:22-cv-1242-RMG

Plaintiffs,

v.

ORDER AND OPINION

Republic Services, Inc., et al.,

Defendants.

This matter is before the Court on five separate motions. First, Plaintiffs moved for class

certification. (Dkt. No. 213). Defendants responded in opposition to that motion (Dkt. No. 219),

and Plaintiffs replied (Dkt. No. 223). Second, Defendants moved for partial summary judgment

for lack of personal jurisdiction. (Dkt. No. 217). Plaintiffs responded in opposition to that motion

(Dkt. No. 225), and Defendants replied (Dkt. No. 228). Third, Defendants moved to exclude expert

testimony. (Dkt. No. 215). Plaintiffs responded in opposition to that motion (Dkt. No. 224), and

Defendants replied (Dkt. No. 230). The Court held a hearing on the three motions. (Dkt. No. 252).

After the hearing, Plaintiffs moved to transfer the claims of certain named Plaintiffs. (Dkt. No.

257). Defendants responded to that motion (Dkt. No. 260), and Plaintiffs replied (Dkt. No. 263).

The Plaintiffs also moved for the Court to set a briefing schedule and to hold Plaintiffs’ initial

motion for class certification in abeyance. (Dkt. No. 262). For the reasons set forth below, the

Court denies Plaintiffs’ motion for class certification and terminates as moot Defendants’ motion

for partial summary judgment and Defendants’ motion to exclude expert testimony. The Court

grants Plaintiffs’ motion to transfer. And lastly, the Court grants-in-part and denies-in-part

Plaintiffs motion to set briefing schedule and to hold their initial motion for class certification in

abeyance.

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I. Background

Plaintiffs brought this putative class action asserting state law claims for breach of contract,

breach of the duty of good faith and fair dealing, and unjust enrichment, as well as claims under

California and Florida unfair trade practices acts. (Dkt. No. 126 at 29-50). Plaintiffs asserted these

claims by alleging that Republic Services, Inc. (“RSI”) and its subsidiaries raised their service

rates and charged fees exceeding those permitted by their form contracts. (Id. at 1-3).

The specific provision that Plaintiffs allege Defendants breached is the “Rate Adjustments”

provision:

Company may, from time to time by notice to Customer, increase

the rates provided in this Agreement to adjust for any increase in (a)

disposal costs; (b) transportation costs due to a change in location of

Customer or the disposal facility used by Company; (c) the

Consumer Price Index for all Urban Consumers; (d) the average

weight per cubic yard of Customers Waste Materials above the

number of pounds per cubic yard upon which the rates provided in

this Agreement are based as indicated on the cover page of this

Agreement; or (e) Company’s costs due to change in Applicable

Laws. Company may increase rates for reasons other than those set

forth above with Customer’s consent, which may be evidenced

verbally, in writing or by the parties’ actions and practices.

(Dkt. No. 213-5 at 2).

Discovery related to the filing of these motions is complete, and the Parties have now filed

class certification, Daubert, and dispositive motions. The Court addresses the motions below.

II. Plaintiffs’ Motion for Class Certification (Dkt. No. 213).

Plaintiffs seek certification under Federal Rule of Civil Procedure 23 for the following two

classes:

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The Rate Increase Class: All entities and people who reside in the

Untied States who, from January 1, 2017 through the date of class

notice, entered into a Rate Adjustments provision that allows for

increases to “adjust for” increases in costs or CPI and paid rates to

Republic in excess of those originally listed in the written contract

as a result of Republic’s YMP policy.

The Fees Class: All entities and people who reside in the United

States who, from January 1, 2017 through the date of class notice,

entered into a Rate Adjustments provision that allows for increases

to “adjust for” increases in costs or CPI and paid Fuel Recovery Fees

and/or Environmental Recovery Fees to Republic.

(Dkt. No. 213 at 28-29). Plaintiffs also seek certification of two subclasses for entities and people

who reside in California and Florida. (Id. at 29). Excluded from these Classes are entities and

people who reside in Alabama, Arkansas, Missouri, New Jersey, Oklahoma, and Kentucky.

Excluding those states from the 41 in which RSI conducts business means Plaintiffs seek to certify

a class action that covers 36 states. (Id. at 3).

A. Rule 23 Standards

There are two parts to Rule 23 class certification. A plaintiff must establish the

prerequisites to certification, which are found in Rule 23(a), FRCP, and also satisfy at least one

subsection of Rule 23(b), FRCP. As recently reiterated by the Fourth Circuit Court of Appeals,

“[a] party seeking class certification must affirmatively demonstrate his compliance with the Rule

and must do so with ‘evidentiary proof.’” In re Zetia (Ezetimibe) Antitrust Litig., No. 20-2184,

2021 WL 3379035, at *2 (4th Cir. Aug. 4, 2021) (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S.

338, 350 (2011) and Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013)). It is well established that

“Rule 23 does not set forth a mere pleading standard.” Dukes, 564 U.S. at 350.

The four prerequisites to certification are set forth in Rule 23(a):

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One or more members of a class may sue or be sued as representative

parties on behalf of all members only if (1) the class is so numerous

that joinder of all members is impracticable; (2) there are questions

of law or fact common to the class; (3) the claims or defenses of the

representative parties are typical of the claims or defenses of the

class; and (4) the representative parties will fairly and adequately

protect the interests of the class.

Fed. R. Civ. P. 23(A). These four prerequisites are commonly referred to as “numerosity,

commonality, typicality, and adequacy of representation.” Amgen Inc. v. Conn. Ret. Plans and

Trust Funds, 568 U.S. 455, 460 (2013).

In addition to establishing all four Rule 23(a) prerequisites, a plaintiff must also meet the

Rule 23(b) requirements for maintenance of a class action. Plaintiffs here are seeking certification

pursuant to Rule 23(b)(3), meaning they must show that “the questions of law or fact common to

the 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.” Fed R. Civ. P. 23(b)(3). The two Rule 23(b)(3) requirements are often referred to as

“predominance” and “superiority.” The factors pertinent to assessing the predominance and

superiority requirements include:

(A) the class members’ interests in individually controlling the

prosecution or defense of separate actions; (B) the extent and nature

of any litigation concerning the controversy already begun by or

against class members; (C) the desirability or undesirability of

concentrating the litigation of the claims in the particular forum; and

(D) the likely difficulties in managing a class action.

Fed. R. Civ. P. 23(b)(3)(A)-(D).

Certification is only proper if the court, after conducting a “rigorous analysis,” is satisfied

that the Rule 23 prerequisites have been met. Dukes, 564 U.S. at 350–51. Often, that “‘rigorous

analysis’ will entail some overlap with the merits of the plaintiff's underlying claim.” Id. at 351.

However, “the merits of a claim may be considered only when ‘relevant to determining whether

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the Rule 23 prerequisites for class certification are satisfied.’” Brown v. Nucor Corp., 785 F.3d

895, 903 (4th Cir. 2015) (quoting Amgen, 568 U.S. at 466). Because the class-action device is “an

exception to the general rule that a party in federal court may vindicate only his own interests,”

“the district court is required to make findings on whether the plaintiffs carried their burden.”

Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 317–18 (4th Cir. 2006) (citation omitted).

B. Rule 23(b) Analysis

The Court has carefully considered the requirements of Rule 23 and the record in this case.

For the reasons discussed in this section, Plaintiffs motion is denied because, even if the Court

assumes (without deciding) that Plaintiffs can meet the requirements of Rule 23(a), Plaintiffs have

failed to meet the requirements of Rule 23(b).

1. Predominance

In cases implicating a multiplicity of state laws, “the party seeking certification . . . must

. . . provide an extensive analysis of state law variations to reveal whether these pose insuperable

obstacles.” Cole v. Gen. Motors Corp., 484 F.3d 717, 724 (5th Cir. 2007); Sacred Heart Health

Sys., Inc. v. Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1180 (11th Cir. 2010);

accord Gariety v. Grant Thornton, LLP, 368 F.3d 356, 370 (4th Cir. 2004) (“The plaintiffs have

the burden of showing that common questions of law predominate, and they cannot meet this

burden when various laws have not been identified and compared.”). It is “the court’s duty to

determine whether the plaintiffs have borne their burden where a class will involve multiple

jurisdictions and variations in state law.” Sacred Heart, 601 F.3d at 1180. “In a multi-state class

action, variations in state law may swamp any common issues and defeat predominance.” Castano

v. Am. Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996).

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The Court analyzes predominance for Plaintiffs’ (a) breach of contract claim, (b) breach of

good faith and fair dealing claim, and (c) unjust enrichment claim.1

a. Breach of Contract Claim

For multi-state breach of contract class actions, courts have required Plaintiffs to analyze

the variation in the state law under which any extrinsic evidence would have to be scrutinized.

Advance Trust & Life Escrow Servs., LTA v. Security Life of Denver Insurance Company, 1:18-

cv-01897-DDD-NYW, 2020 WL 8186476, at *3-4 (D. Colo. Apr. 13, 2020). Even if it is “unlikely

that extrinsic evidence [i]s relevant to interpreting unambiguous form contract terms,” a district

court, to certify a nationwide class, must “conduct an extensive analysis of whether any state-law

variations exist[ ]” and, if they do, “determine whether those variations defeat[] predominance.”

Cruson v. Jackson Nat'l Life Ins. Co., No. 18-40605, 2020 WL 1443531, at *10 (5th Cir. Mar. 25,

2020) (noting that class certification is generally proper where the outcome will not depend on

extrinsic evidence that would be different for each putative class member, but that predominance

may be defeated if there is “considerable variation in the state law under which any extrinsic

evidence would have to be scrutinized” (quoting Sacred Heart Health Sys., 601 F.3d at 1180)).

Plaintiffs argue predominance is met because elements of breach of contract do not vary

between the states and because RSI’s conduct of illegally increasing prices was standardized

among putative class members. (Dkt. No. 213 at 24, 37-40). Plaintiffs argue that the putative class

members were subject to a common Yield Management Process Algorithm and a universal

Fee/Rate Adjustment Policy that violated the form contract. (Id.) Plaintiffs argue that those

1 The Court does not analyze Plaintiffs’ Florida and California unfair trade practices claims under

Rule 23 because the Court, as discussed below, severs and transfers the Florida and California

Plaintiffs’ cases to their respective home districts.

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common questions of fact predominate over any variations that may exist among class members.

(Id.)

Defendants argue that Plaintiffs did not conduct the required conflict-of-laws analysis for

a multi-state class and failed to meet their burden in showing common questions of law

predominate. (Dkt. No. 219 at 31-34). Defendants note that a rigorous analysis is required even

when considering a form contract because admissibility of extrinsic evidence varies across the

states. (Id.) Defendants specifically cite California’s liberal parol evidence rule as an issue that this

Court would have to address if Plaintiffs’ proposed classes are certified. (Id.)

In their reply, Plaintiffs argue that extrinsic evidence, even if allowed, is not relevant

because there is no dispute as to the meaning of the rate adjustment provisions in the form

contracts. (Dkt. No. 223 at 15-16). Plaintiffs argue that extrinsic evidence is not relevant because

no party has claimed that the rate adjustment provision in the contract is ambiguous and that the

only dispute is whether or not RSI’s conduct violates the provision. (Id.) Plaintiffs further argue

that if any extrinsic evidence is relevant here it would be common to the class because it would be

related to the form contract. (Id.)

At the motions hearing, the Court questioned the parties regarding differences in state laws.

Plaintiffs admitted that there was a difference among the states in the use of extrinsic evidence but

argued that ambiguity is not an issue in this case. Defendants confirmed to the Court that they do

not waive their ability to argue that the contract is ambiguous. Specifically, Defendants identified

that the meaning of the consent clause in the Rate Adjustment Provision is at issue and may require

extrinsic evidence to interpret. Additionally, Defendants indicated that there is a variance among

states on whether consent to a price change can be shown by payment.

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Here, Plaintiffs have not met this burden on their breach of contract claim. Plaintiffs did

not satisfy the Court in showing that the differences in the states’ extrinsic evidence standards were

immaterial. Defendants here will likely attempt to introduce extrinsic evidence regarding the

consent clause of the Rate Adjustment Provision. “But the laws of the 50 states vary as to the

admissibility of extrinsic evidence—sometimes drastically so.” Rapp v. Green Tree Serv., LLC,

302 F.R.D. 505, 510 (D. Minn. 2014). Because differences among states’ extrinsic evidence

standards could greatly affect how important provisions of the form contract are interpreted and

ultimately whether there was a breach of those provisions, the Court finds that common questions

of law do not predominate here.

Additionally, the Court finds that the variation among states regarding consent also

precludes a finding of predominance. Defendants here will likely argue that their customers agreed

and consented to the increased price of services by paying the increasing invoices. Some states,

such as Louisiana, find that payment of increasing invoices show consent to modification of the

contract. See Horizon Sec. & Vault Complex v. BFI Waste Sys. Of N. Am., No. 03-cv-1214 (ML),

2003 22872097, at *2 (E.D. La. Dec. 1, 2003) (finding that defendant's payment of

“periodically increasing invoices without question or complaint for nine years”

showed consent to modification). Other states may not find the same. See Paolella v. Browning-

Ferris, Inc., 973 F.Supp. 508, 514 (E.D. Pa. 1997), aff’d, 158 F.3d 183 (3d Cir. 1998) (“It is a

matter of common sense, and of general knowledge of human nature, that people are not inclined

knowingly to consent to being economically gouged. For example, suppose that there is opaque,

misleading language in a contract which has been slipped under the eye, and pen, of a customer.

When that business unilaterally seeks to modify monetary and contractual terms in an agreement

containing misleading, confusing language and formula, undiscernible by any but the most wary,

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vigilant, and sophisticated consumer, it cannot be said that the person who did not catch the fraud

consented to be bilked.”).

b. Breach of Good Faith and Fair Dealing Claim

For similar reasons, predominance is not met for Plaintiffs’ breach of good faith and fair

dealing claim. At the motions hearing, the Court noted the variance in implied covenant claims

across the states. Plaintiffs acknowledged the difficulties in showing predominance for implied

covenant claims and responded that they would concede their breach of good faith and fair dealing

claim for a nationwide class on breach of contract.

Here, Plaintiffs failed to provide any analysis of state law variations for their breach of

good faith and fair dealing claim and, for that reason alone, Plaintiffs motion should be denied.

See, e.g., Cochran v. Volvo Grp. N. Am., LLC, 2013 WL 1279103, at *4 (M.D.N.C. Apr. 22, 2013)

(“This case involves state law causes of action for breach of warranty. Plaintiffs have not shown

that the law applicable to proving a breach of warranty, or even an element of a breach of warranty,

is the same across the country, nor have Plaintiffs shown that the law of one state should apply. In

the absence of this showing, the Court cannot tell whether the resolution of the defect and repair

questions would resolve an issue that is central to the validity of the warranty claim. Therefore,

Plaintiffs have failed to establish that there are questions of law or fact common to the class which

predominate over any questions affecting individual members and that a class action is superior to

other available methods for fairly and efficiently adjudicating the dispute. The motion for class

certification should be denied.”)

Moreover, the Court, conducting its own research, finds that predominance would not be

met for Plaintiffs’ breach of good faith and fair dealing claims because of the variance in state

laws. Some states, for example, require a breach of an express term of the contract and other states

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require a special relationship between the parties. See Gustafson v. BAC Home Loans Serv., LP,

294 F.R.D. 529, 547 (C.D. Cal. 2013) (comparing Florida implied covenant requirements with

Texas implied covenant requirements). States also differ on whether the standard for good faith is

subjective or objective. See Lane v. Wells Fargo Bank, N.A., No. C 12-4026 WHA, 2013 WL

3187410, at *4 (N.D. Cal. June 21, 2013) (comparing California intent requirements for implied

covenant claims with Iowa). Accordingly, adjudicating Plaintiffs’ claim for breach of good faith

and fair dealing would require applying a multitude of different state law standards. The variations

in state law here swamp the common issues and defeat predominance.

c. Unjust Enrichment Claim

Plaintiffs argue that, under South Carolina choice of law rules, Arizona law should apply

to the proposed class’s unjust enrichment claims. (Dkt. No. 213 at 25-27). Defendants argue that

laws of the proposed class members’ home states apply and, because the law of unjust enrichment

varies among the states, class certification is not appropriate. (Dkt. No. 219 at 34-36).

“[I]t is unclear whether South Carolina would apply the First or Second Restatement’s

choice of law analysis to unjust enrichment claims.” In re Blackbaud, Inc., Customer Data Breach

Litigation, 567 F.Supp.3d 667, 677 (D.S.C. 2021). Under the First Restatement of Conflict of

Laws, “[w]hen a person is alleged to have been unjustly enriched, the law of the place of

enrichment determines whether he is under a duty to repay the amount by which he has been

enriched.” RESTATEMENT (FIRST) OF CONFLICT OF LAWS § 453. Alternatively, the Second

Restatement provides that “[i]n actions for restitution, the rights and liabilities of the parties with

respect to the particular issue are determined by the local law of the state which, with respect to

that issue, has the most significant relationship to the occurrence and the parties under the

principles stated in § 6.” RESTATEMENT (SECOND) OF CONFLICT OF LAW § 221. Factors to consider

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under this approach include: (1) “the place where a relationship between the parties was centered”;

(2) the place where the benefit was received; (3) the place where the acts conferring the benefit

were done; and (4) the domicile, place of incorporation and place of business of the parties. Id. at

§ 221(2). These contacts are to be evaluated according to their relative importance with respect to

the particular issue. Id. at § 221. The Second Restatement also notes that “[t]he place where a

relationship between the parties was centered . . . is the contact that, as to most issues, is given the

greatest weight in determining the state of the applicable law.” Id. at cmt. d.

The Court finds that the rigid approach under the First Restatement should not apply to

multi-state class actions. The First Restatement would not allow a court to consider the competing

polices of the states implicated by the lawsuit or the constitutional limitations on choice of law.

Additionally, the Court notes that most of the states have adopted the Second Restatement of

Conflict of Laws. For these reasons and because South Carolina has not clearly adopted an

approach, the Court applies the Second Restatement to this case.

Here, RSI and its customers’ relationships are centered in the customers’ home state. The

customers’ home state is where the waste hauling services occur, and they are where the customers

conferred the alleged benefit to RSI. Accordingly, under the Second Restatement, the law of the

proposed class members’ home states would apply. This would be the law of 36 different states.

Courts have long held that the laws of unjust enrichment vary from state to state and

therefore are not appropriate for nationwide class action treatment. See, e.g., Vulcan Golf, LLC v.

Google, Inc., 254 F.R.D. 521 (N.D.Ill.2008); Ronat v. Martha Stewart Living O'mnimedia, No.

05-520-GPM, 2008 WL 4963214 (S.D. Ill. Nov.12, 2008); Siegel v. Shell Oil Co., 256 F.R.D. 580,

2008 WL 4378399 (N.D. Ill. Sept.23, 2008); Lilly v. Ford Motor Co., No. 00 C 7372, 2002 WL

507126 (N.D. Ill. Apr.3, 2002); Clay v. American Tobacco, Co., 188 F.R.D. 483 (S.D.Ill.1999).

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The Court here follows the reasoning of those cases and finds that, because the laws of

unjust enrichment will vary between the 36 states, predominance is not met for Plaintiffs’ unjust

enrichment claims.

2. Superiority

Plaintiffs cannot meet the superiority requirement for any claim. The superiority

requirement asks whether a “class action is superior to other available methods for fairly and

efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). It aims to “achieve economies

of time, effort, and expense, and promote . . . uniformity of decision as to persons similarly situated,

without sacrificing procedural fairness or bringing about other undesirable results.” Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997). The “matters pertinent” to a finding of

superiority include: “(A) the class members’ interests in individually controlling the prosecution .

. . of separate actions; (B) the extent and nature of any litigation concerning the controversy already

begun by or against class members; (C) the desirability or undesirability of concentrating the

litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class

action.” Fed. R. Civ. P. 23(b)(3).

An analysis of relevant state law is necessary not only to show predominance, but also to

show superiority to alternative venues. Attempting to apply the law of a multiplicity of

jurisdictions can present problems of manageability for class certification under Rule 23(b)(3). See

In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1018 (7th Cir. 2002) (“[b]ecause these claims

must be adjudicated under the law of so many jurisdictions, a single nationwide class is not

manageable”); In re Am. Med. Sys., Inc., 75 F.3d 1069, 1085 (6th Cir.1996) (“[i]f more than a few

of the laws of the fifty states differ, the district judge would face an impossible task of instructing

a jury on the relevant law”).

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Here, Plaintiffs have not shown that a multi-state class action is a superior method of

adjudication. Plaintiffs argue that superiority is met because the claims concern a common practice

or policy affecting all proposed members of the class. Even considering the common factual

questions presented here, Plaintiffs have not shown that combining claims under 36 different state

laws is superior to separating them into different forums. Nor have they explained how, at trial,

the Court can avoid confusing the jury with a parade of different jury instructions and witnesses

whose testimony may be relevant to some claims but forbidden from consideration in others.

Because Plaintiffs’ claims implicate the laws of so many jurisdictions, the Court finds that a single

multi-state class action is not manageable and is not a superior method of adjudication.

Because there are predominance and superiority issues based on the application of different

state laws, the Court denies Plaintiffs’ motion to certify a multi-state class. Plaintiffs are not,

however, precluded from seeking a South Carolina only class. See, e.g., Anderson v. Central

Reserve Life Ins. Co., 3:08-cv-4011-CMC, 2010 WL 11652379, at *18-19 (D.S.C. May 13, 2010)

(denying certification of multi-state class because plaintiff failed to “offer any foundation for a

determination that there are no material variances in the law applicable to the claims of the putative

class members from different states,” but accepting Plaintiff’s proposed alternative of a statewide

class.)

III. Defendants’ Motion to Exclude Expert Testimony (Dkt. No. 215).

Defendants moved to exclude testimony and to strike the declaration of Plaintiffs’ damages

expert Patrick Kilbourne. (Dkt. No. 215). Mr. Kilbourne’s report provides a damages model by

aggregating enterprise-wide price increases and costs. (Dkt. No. 213-1 at 15-18, 22-23). Based on

the Court’s rulings above, Plaintiffs may now only seek certification of a South Carolina class.

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Because Mr. Kilbourne’s report and testimony addresses the near-nationwide class, the viability

of his report is now moot. Accordingly, the Court terminates this motion.

IV. Defendants’ Motion for Partial Summary Judgment (Dkt. No. 217).

Defendants moved for partial summary judgment for claims arising out of Defendants’

activities outside of South Carolina. (Dkt. No. 217 at 1). Defendants argued that this Court lacks

personal jurisdiction over Plaintiffs’ claims arising from contracts with Defendant Allied Waste

Services of North America, LLC, Defendant Consolidated Disposal Service, LLC, and dozens of

unnamed RSI subsidiaries. (Id.) Plaintiffs argued that RSI and its subsidiaries operate as a single

enterprise in such a way that gives the Court jurisdiction over RSI and its subsidiaries out-of-state

conduct. (Dkt. No. 225 at 1-2).

Because the Court denied Plaintiffs’ motion for class certification of the requested multi-

state class, whether the Court has jurisdiction over Plaintiffs’ out-of-state claims is moot.

Accordingly, the Court terminates this motion.

V. Plaintiffs’ Motion to Transfer (Dkt. No. 257)

After the motions hearing, where the Court indicated its intention to deny certification of

the nationwide class, Plaintiffs Garibian & Associates Accountancy Corporation (“Garibian”) and

Budget Inns of Pensacola, Inc. (“Budget Inns”) moved to transfer their cases to the Central District

of California and the Northern District of Florida, respectively. (Dkt. No. 257 at 1). In their

response, Defendants point out that Garibian’s and Budget Inns’ motion is a request for a transfer

of venue that first requires a severance. (Dkt. No. 260 at 1). Defendants also indicated that they

do not oppose Plaintiffs’ motion, but, out of concern that Garibian or Budget Inns may seek a

nationwide class in either of the transferee courts, requested that the Court enter its order on the

multi-state class and simultaneously direct Garibian and Budget Inns to either file a new motion

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to sever or supplement its current motion to sever with new proposed complaints. (Dkt. No. 260

at 2). Plaintiffs, in their reply, indicated that they will not pursue multi-state certification in either

transferred case and will only seek certification of state classes. (Dkt. No. 263 at 1-2).

A. Severance

Rule 21 provides that the court “may . . . sever any claim against a party.” Fed. R. Civ. P.

21. Commonly, Rule 21 is invoked to sever parties improperly joined or where venue is improper

as to some but not all defendants. See C.L. Ritter Lumber Co., Inc. v. Consolidation Coal Co., 283

F.3d 226 (4th Cir. 2002); Sehler v. Prospect Mortg., LLC, 2013 WL 6145705, at *2 (E.D. Va. Nov.

21, 2013); see also 7 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §

1689 (3d ed. 2020). However, even where the parties are appropriately joined and venue is proper,

a court may sever any claim and proceed with it separately or transfer it to a more convenient

forum. See 7 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1689.

Courts in the Fourth Circuit wield “virtually unfettered discretion” in determining whether

and when to sever a claim. Grayson Consulting, Inc. v. Cathcart, 2014 WL 1512029, at *2 (D.S.C.

Apr. 8, 2014) (citing 17th St. Assocs., LLP v. Markel Int'l Ins. Co. Ltd., 373 F. Supp. 2d 584, 604

n.9 (E.D. Va. 2005)); see also Hanna v. Gravett, 262 F. Supp. 2d 643, 647 (E.D. Va. 2003) (citing

Saval v. BL, Ltd., 710 F.2d 1027, 1031-32 (4th Cir. 1983)) (“A district court possesses broad

discretion in ruling on a requested severance under Rule 21.”). That discretion similarly allows for

the severance and transfer of parties in the interest of justice. See Spencer White & Prentis, Inc. v.

Pfizer, Inc., 498 F.2d 358, 361-62 (5th Cir. 1974).

Courts in the Fourth Circuit weigh multiple factors when determining whether to sever

claims under Rule 21. These factors include:

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(1) whether the issues sought to be tried separately are significantly

different from one another; (2) whether the separable issues require

different witnesses and different documentary proof; (3) whether the

party opposing severance will be prejudiced if it is granted; and (4)

whether the party requesting severance will be prejudiced if the

claims are not severed.

Fed. R. Civ. P. 21.

Here, the first and second factor weigh in favor of severance because, as outlined above,

the laws of the states differ; therefore, issues, such as extrinsic evidence, are significantly different

and may require different documentary proof. Factor three weights in favor of severance because

Defendants agree with Plaintiffs request to sever and transfer the cases. Factor four weighs in favor

of severance because Plaintiffs Garibian and Budget Inns would be deprived of the opportunity to

assert claims under their home state unfair trade practices acts as well as state common law claims.

Accordingly, the Court exercises its discretion and finds that severance of Garibian and Budget

Inns is appropriate.

B. Transfer

Section 1404(a) of Title 28 of the United States Code provides: “[f]or the convenience of

parties and witnesses, in the interest of justice, a district court may transfer any civil action to any

other district or division where it might have been brought or to any district or division to which

all parties have consented.” 28 U.S.C. § 1404(a). District courts have wide discretion to transfer

an action under 1404(a) “to prevent the waste ‘of time, energy and money’ and ‘to protect litigants,

witnesses and the public against unnecessary inconvenience and expense.’” Van Dusen v. Barrack,

376 U.S. 612, 616 (1964) (quoting Cont'l Grain Co. v. The Barge FBL-585, 364 U.S. 19, 26-27

(1960)).

A court determining the propriety of a motion to transfer under § 1404(a) follows a two-

step inquiry. Hill-Green v. Experian Info. Sols., No. 3:19CV708, 2020 WL 5539042, at *4 (E.D.

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Va. Sept. 15, 2020). First, the court must determine whether the claims at issue could have

originally been brought in the transferee forum. Id. Thus, “a movant must establish that both venue

and jurisdiction with respect to each defendant is proper in the transferee district.” Koh v Microtek

Int’l, Inc., 250 F. Supp. 2d 627, 631 (E.D. Va. 2003). Second, a court must conduct a balancing

test to determine whether transfer is warranted, considering the following four factors: (1)

plaintiff's choice of forum; (2) the convenience of the parties; (3) witness convenience and access;

and (4) the interests of justice. Heinz Kettler GMBH & Co. v. Razor USA, LLC, 750 F. Supp. 2d

660, 667 (E.D. Va. 2010) (citing JTH Tax, Inc. v. Lee, 482 F. Supp. 2d 731, 736 (E.D. Va. 2007)).

Here, the Court finds that Garibian and Budget Inns’ claims could have originally been

brought in California and Florida, respectively. Additionally, the transfer factors weigh in favor of

transfer. Specifically, the Court finds that the interests of justice would be served for three reasons.

First, California and Florida courts would be deciding state law issues. Second, those forums will

be more familiar with the state laws that govern the case. And third, problems regarding conflict

of laws and the application of another state’s laws would be avoided.

C. Defendants’ Concern

Defendants concern that Plaintiffs Garibian and Budget Inns may seek a nationwide class

in the transferee courts is protected by the Supreme Court’s decision in China Agritech v. Michael

H. Resh, 584 U.S. 732 (2018). The Supreme Court ruled that a pending class action does not toll

the statute of limitations for absent class members who bring subsequent class actions. Id. at 746-

48. The Supreme Court noted that “if the class mechanism is not a viable option for the claims, the

decision denying certification will be made at the outset of the case, litigated once for all would-

be class representatives.” Id. at 740. To hold otherwise, the Supreme Court reasoned, would “allow

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the statute of limitations to be extended time and again; as each class is denied certification, a new

named plaintiff could file a class complaint that resuscitates the litigation.” Id. at 743.

The Court here denies certification on Plaintiffs’ near-nationwide class. That decision

would apply to any subsequent attempt at near-nationwide class, meaning any subsequent attempt

at a near-nationwide class would not benefit from tolling based on the filing of this lawsuit. To

hold otherwise would allow Plaintiffs to resuscitate the litigation in a way that China Agritech

prohibits. Additionally, Plaintiffs indicate that they will not pursue near-nationwide certification

in either transferred case and will only seek certification of Florida and California classes. (Dkt.

No. 263 at 1-2). Accordingly, the Court denies Defendants’ request to direct Plaintiffs to either file

a new motion to sever or supplement its current motion to sever with new proposed complaints.

VI. Plaintiffs’ Motion to Set Briefing Schedule and Hold Motion for Class Certification in

Abeyance (Dkt. No. 262).

At the motions hearing, the Court indicated that it would not certify a national class and

would allow additional briefing and discovery regarding a South Carolina only class. The Court

indicated 90 days may be appropriate for completion of additional briefing and discovery.

Plaintiffs request that the Court set a briefing “set a briefing schedule allowing (a) Plaintiffs

until November 30 (45 days from the last hearing) to file an amended motion for class certification

for South Carolina only class along with a South Carolina only expert report and potentially move

to add additional class representative(s), (b) Defendants until January 21 (51 days) to file a

responsive brief and any responsive expert report, and (c) Plaintiffs until January 28 (7 days) to

file a reply brief.” (Dkt. No. 262 at 2). Defendants agree to this schedule. (Id.)

The Court directs the Parties to submit a joint proposed scheduling order regarding a new

complaint, if necessary; renewed expert reports; Plaintiffs’ motion for class certification of the

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South Carolina class; dispositive motions; Daubert motions; and other pretrial briefing within 7

days of this Order.

Plaintiffs further request “that the Court hold the currently pending motion for class

certification in abeyance pending filing of the amended motion for class certification.” (Id.)

Defendants oppose this request. (Id.)

Because the Court largely previewed its concerns with Plaintiffs’ motion for nationwide

class certification on the record at the motions hearing, the Court finds that no interest would be

served in holding Plaintiffs’ initial motion for class certification in abeyance. Additionally, the

Court is aware of the policy concerns outlined in China Agritech and finds that issuing a written

order on Plaintiffs’ initial motion for class certification best serves those concerns.

VII. Conclusion

For the reasons stated above the Court DENIES Plaintiffs’ motion for class certification

(Dkt. No. 213). The Court TERMINATES AS MOOT Defendants’ motion to exclude expert

testimony (Dkt. No. 215) and Defendants motion for partial summary judgment (Dkt. No, 217).

The Court GRANTS Plaintiffs’ motion to transfer. (Dkt. No. 257). Plaintiffs Garibian’s

and Budget Inns’ claims are SEVERED and TRANSFERRED to the Central District of

California and Northern District of Florida, respectively.

The Court DENIES-IN-PART and GRANTS-IN-PART Plaintiffs’ motion to set briefing

schedule and hold motion for class certification in abeyance (Dkt. No. 262). The Court DIRECTS

the Parties to submit a joint proposed scheduling order regarding a new complaint, if necessary;

renewed expert reports; Plaintiffs’ motion for class certification of the South Carolina class;

dispositive motions; Daubert motions; and other pretrial briefing within 7 days of this Order.

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_s/ Richard Mark Gergel_____

Richard Mark Gergel

United States District Judge

October 28, 2024

Charleston, South Carolina

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