Surgeon v. TKO Shelby, LLC

• Court: Supreme Court of North Carolina
• Decided: May 22, 2026
• Docket: 198A22-2
• Status: Published
• Author: Justice Richard Dietz

Opinion

IN THE SUPREME COURT OF NORTH CAROLINA

No. 198A22-2

Filed 22 May 2026

GARY A. SURGEON and MARLA LEPLEY-STARR, individually and on behalf of those similarly situated

v. TKO SHELBY, LLC, trading as NISSAN OF SHELBY, INTEGRITY AUTOMOTIVE PROMOTIONS, LLC, A TO Z STAFFED EVENTS, INC., BRIAN LEACHMAN, MICHAEL SMITH, and TRAVIS K. OSTROM d/b/a THE TKO GROUP, defendants; DEALER COMPLIANCE SERVICES, INC., cross-claim defendant

Appeal pursuant to N.C.G.S. § 7A-27(a)(4) from an order granting plaintiff’s

motion for class certification entered on 15 November 2024 by Judge Forrest Donald

Bridges in Superior Court, Gaston County. Heard in the Supreme Court on 29

October 2025.

Higgins Benjamin, PLLC, by John F. Bloss, Frederick L. Berry, and Robert N. Hunter Jr., for plaintiff-appellees.

Gray, Layton, Kersh, Solomon, Furr & Smith, P.A., by Michael L. Carpenter and Stratton L. Stone; Lewis Brisbois, by Jeremy A. Stephenson; Barnes, Alford, Stork & Johnson, LLP, by Curtis W. Dowling and Matthew G. Gerrald, for defendant-appellants.

DIETZ, Justice.

This class action case returns to us after we vacated the trial court’s

certification order and remanded the case to resolve conflicting legal analysis. In this

second appeal we are struck with déjà vu. The trial court’s latest order, like the first,

contains a conflict between the definition of the class and the court’s analysis SURGEON V. TKO SHELBY, LLC

Opinion of the Court

concerning a named plaintiff.

In the first appeal, defendants argued that there were deeper ascertainability

problems that precluded class certification. We declined to reach those issues because

we believed they might become moot after the trial court clarified the class definition.

That did not happen. In this second appeal, these same ascertainability issues

persist, and we can no longer ignore them.

Specifically, the putative class cannot be ascertained without individualized

fact assessments that would predominate over issues common to all class members.

To identify the class members, the trial court must determine which of 2,118 people

who called a car dealer’s promotional hotline number are among the 927 people who

later visited the dealership to claim a promotional prize. Because there are no records

of who visited the dealership, this fact question cannot be resolved without

individualized determinations for each of those 2,118 people.

Plaintiffs contend that the dealership should not be “rewarded” for failing to

keep records of who visited it. But plaintiffs do not identify any legal reason why the

dealership was obligated to retain those records (assuming they once existed), and

there is no indication in the record that plaintiffs pursued spoliation or destruction-

of-evidence claims in the trial court. Our ruling today does not address these

discovery-related claims and does not preclude plaintiffs from pursuing them on

remand. We hold only that, on the current record, plaintiffs cannot satisfy the legal

criteria for class certification, and we must therefore vacate the trial court’s class

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certification order.

Facts and Procedural History

In 2018, plaintiffs received a promotional flyer in the mail advertising a “Game

On Tent Sale Event” at Nissan of Shelby, an automobile dealership. The promotion

offered a chance to win one of six “grand prizes,” including a 2018 Nissan Sentra SR

or $20,000 in cash. The flyer contained a scratch-off section with instructions stating

that “if the scratch off below matches one of the six lucky number game prize boxes,

you are a guaranteed winner of one of these prizes.” The flyer instructed recipients

whose code matched a winning prize to call the event hotline and then come to the

dealership during the sales event to claim their prize.

Plaintiffs allege that the scratch-off portion of all the flyers matched the

number for the car or $20,000 grand prize, misleading recipients into believing they

won the grand prize. Instead—according to defendants’ interpretation of the contest

rules—a separate “activation code” printed on each flyer governed the prize

associated with that flyer. For all known contestants who attempted to claim a prize,

the activation code awarded a $2 cash prize.

Plaintiffs brought claims for breach of contract and unfair and deceptive trade

practices against the dealership and various other parties connected to the sales

promotion. During discovery, defendants produced records showing that

approximately 50,000 households received the promotional flyer and 2,118 people

called the promotional hotline number to claim their prize as the flyer instructed.

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Defendants also produced records indicating that 927 people visited the dealership

during the promotional period. There is conflicting evidence about whether, during

the promotional period, the dealership had more detailed records of those 927 people.

But it is undisputed that those records, if they once existed, no longer exist. As a

result, there is no documentary evidence of who visited the dealership to claim a

prize.

In 2021, the trial court granted plaintiffs’ motion to certify a class consisting

of the 927 people who visited the dealership. Surgeon v. TKO Shelby, LLC, No. 18

CVS 3983, 2021 WL 9772618, at *5 (N.C. Super. Ct. Dec. 13, 2021). Defendants

appealed that certification order to this Court under N.C.G.S. § 7A-27(a)(4). We

vacated the order because of a “mismatch” between the trial court’s class definition

and the analysis used to certify the class. Surgeon v. TKO Shelby, LLC, 385 N.C. 772,

778, 782 (2024). We remanded for the trial court to address the conflicting analysis

and, if appropriate, enter a new certification order with consistent legal reasoning.

Id. at 782.

On remand, the trial court again certified a class. Defendants again appealed

to this Court under N.C.G.S. § 7A-27(a)(4).

Analysis

I. Class certification criteria

This Court has reaffirmed the appropriate standard for class certification in a

number of recent decisions. See, e.g., Armistead v. Cnty. of Carteret, 926 S.E.2d 886

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(N.C. 2026); Wardson Constr., Inc. v. City of Raleigh, 926 S.E.2d 903 (N.C. 2026). “As

a threshold matter, the party seeking class certification bears the burden to show

that a proper class exists, meaning the named and unnamed members each have an

interest in either the same issue of law or of fact, and that issue predominates over

issues affecting only individual class members.” Jackson v. Home Depot U.S.A., Inc.,

388 N.C. 109, 113 (2025) (cleaned up). “Beyond this threshold requirement, the party

seeking class certification also must satisfy a number of other certification criteria

designed to protect the interests of the absent class members, such as notice and

adequacy of representation.” Armistead, 926 S.E.2d at 889 (cleaned up). These legal

criteria for class certification are questions of law that we review de novo. Wardson,

926 S.E.2d at 908.

“Once these legal prerequisites are met, the trial court may, in its discretion,

certify a class.” Armistead, 926 S.E.2d at 890. “In evaluating whether class

certification is appropriate, the trial court should consider whether a class action is

superior to other available methods to adjudicate the controversy and whether the

class action is likely to serve useful purposes such as preventing a multiplicity of suits

or inconsistent results.” Id. “The court also considers whether the class mechanism is

efficient and economically reasonable given the administrative costs and the likely

recovery for individual claimants.” Id. (cleaned up).

On appeal, “the trial court’s legal analysis of the class certification criteria is

reviewed de novo, the court’s corresponding fact findings are reviewed for competent

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evidence, and the court’s ultimate determination to certify a class as the superior

method of adjudicating the claims is reviewed solely for abuse of discretion.”

Wardson, 926 S.E.2d at 908.

II. Conflicting class analysis

When this case first came to us on appeal, we vacated and remanded because

of a “mismatch between the class the trial court analyzed and the one it ultimately

certified.” Surgeon, 385 N.C. at 778. Specifically, when analyzing the class criteria,

the trial court described the class as people who received the promotional flyer, called

the hotline number on the flyer, and went to the dealership to claim a prize. But when

later defining the class, the court stated that the class members were those who

received the flyer and went to the dealership. This second definition did not require

class members to have also called the hotline number.

These “mismatched” definitions created tension within the court’s analysis.

Even among the two named plaintiffs, we noted that the record suggested one called

the hotline number, but the other did not. Id. at 781. We therefore vacated the trial

court’s certification order and remanded the case because the decision to certify the

class “cannot be squared with the reasoning used to reach that decision.” Id. at 778.

On remand, the trial court resolved the mismatched definitions by concluding

that class members must satisfy three requirements: (1) received the promotional

flyer; (2) called the hotline number shown on the flyer; and (3) then visited the

dealership to claim their prize.

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But in the trial court’s fact findings, the court also found that one of the named

plaintiffs did not call the hotline number. Instead, the plaintiff’s grandmother called

the number. Nevertheless, the court permitted her to remain a named plaintiff

representing the class.

Once again, this creates an irreconcilable tension in the court’s analysis that

prevents meaningful appellate review of the court’s order. See id. Did the court

determine that someone must call the hotline number, but it need not be the class

members themselves? Did the court believe the named plaintiff’s grandmother was

acting as her agent in claiming the prize? Or did the court, as in the first order, use

two different class definitions and analyses in two different parts of the order?

We do not know. Accordingly, we must again vacate the trial court’s class

certification order because the conflicting analyses preclude meaningful appellate

review. See id.

III. Ascertainability analysis

In the first appeal in this case, we acknowledged that defendants focused

primarily on more fundamental problems with the class certification order—most

notably a series of ascertainability concerns—but we held that “we need not address

all of defendants’ arguments in this appeal, many of which may be mooted by entry

of a new order on remand.” Id. at 779. We examined only the issues “intertwined with

the mismatched class definitions.” Id.

In this second appeal, defendants insist that it is time to examine these deeper

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issues with the legal criteria for class certification. We agree that it will not serve the

interests of justice to ignore these issues a second time. Shortly before oral argument

in this case, plaintiffs voluntarily dismissed the claims of the named plaintiff who did

not call the hotline number. Defendants have raised legitimate concerns about the

propriety of that voluntary dismissal because several issues involving that plaintiff

are the subject of this appeal. Regardless of whether that dismissal is effective, it

cannot cure the conflict in the trial court’s reasoning. But if we remand solely to

correct the conflicting class analyses involving that named plaintiff, as we did in the

last appeal, there will likely be yet another interlocutory appeal on class certification,

raising the remaining unaddressed arguments, which would further delay the

resolution of this case. To avoid that outcome, we will examine defendants’ other

challenges to class certification.

Defendants’ central argument is that the class is not ascertainable because

there is no way to know “who exactly is a member of the class” without individualized

fact determinations that will predominate over the common issues.

Ascertainability is one of the “legal criteria” for class certification. Armistead,

926 S.E.2d at 890. “To ensure that class members receive the required notice, the

trial court must confirm that there is a feasible, objective way to identify who those

class members are.” Id. “Importantly, ascertaining the members of the class cannot

be done in a manner that defeats other legal criteria for class certification,” such as

the predominance requirement. Id. Thus, “if class members cannot be identified

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without separate evidence for each class member and then separate resolution by a

factfinder, the ascertainability requirement would not be satisfied because the

identification process would devolve into a series of mini-trials that would dwarf the

adjudication of the common issues.” Id. (cleaned up).

Here, whatever the ultimate class definition in this case, the parties

acknowledge that it must be limited to people who went to the dealership to claim a

prize listed on the promotional flyer. Undisputed records from defendants indicate

that 927 people came to the dealership during the promotional period. But these

records do not identify who those 927 people are. Other records contain the telephone

numbers of 2,118 people who called the hotline number listed on the promotional

flyer. But we do not know how many of those 2,118 people are among the 927 people

who later went to the dealership.

As a result, there is no “feasible, objective way” to identify the 927 people who

went to the dealership to claim a prize. See id. The only option would be to contact

the 2,118 people who called the hotline and ask them to “self-identify” as class

members by asserting that they are among the 927 people who later visited the

dealership. Id. at 890–91. As we explained in Armistead, “this self-identification

process would cause the case to devolve into individualized mini trials, including the

need for discovery, to determine if the claimant in fact did or did not” go to the

dealership. Id. at 891 (cleaned up). This, in turn, would create a predominance

problem that precludes class certification. Accordingly, on the current record, the

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proposed class is not ascertainable, and we must vacate the trial court’s certification

order.

We close by noting that, in their briefing to this Court, plaintiffs state that

defendants “should not be rewarded for their failure to maintain these business

records.” This issue is beyond the scope of our review of this class certification order.

Notably, plaintiffs do not argue that defendants wrongfully discarded these records,

nor do they point to any legal basis for defendants to retain them. Moreover, during

the two years of intensive discovery in this case, plaintiffs did not assert spoliation or

destruction-of-evidence claims. Likewise, plaintiffs did not raise these issues during

the trial court’s multiple class certification hearings, instead arguing that there was

no need to ascertain the identities of class members until after final judgment, when

money would need to be disbursed.

We do not have the full trial record before us and do not know if there was a

discovery order or deadlines for motions practice that have since passed. We leave

this issue, should plaintiffs seek to pursue it, in the hands of the trial court. We note

only that our holding today does not preclude the trial court from examining this

question, if appropriate, and imposing a sanction should plaintiffs show that

defendants wrongfully destroyed records necessary to ascertain the members of this

putative class.

Conclusion

We vacate the trial court’s class certification order and remand for further

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proceedings.

VACATED AND REMANDED.

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