Woolley v. Ygrene Energy Fund, Inc.

Opinion

1 2 3 4 5 6 7 10 San Francisco Division 11 GEORGE W. WOOLLEY, TAMMY S. Case No. 17-cv-01258-LB WOOLLEY, ANTHONY LOOK, JR., MARCEY, and FELICIA MARCEY, ORDER DENYING MOTION TO 13 individually and on behalf of all others CERTIFY CLASSES similarly situated 14 Re: ECF Nos. 137, 145, 146, and 157 Plaintiffs, 15 v. 16 YGRENE ENERGY FUND, INC., and LLC, 18 Defendants. 19 21 This is a putative class action. The plaintiffs sued Ygrene Energy for misrepresentations 22 relating to home-improvement loans that finance environmental upgrades (such as solar panels or 23 better windows).1 The loans are called Property Assessed Clean Energy (“PACE”) loans, and the 24 alleged misrepresentations are that Ygrene and its agents falsely told homeowners that the loans 25 would attach to their properties (like property taxes) and transfer upon sale to the new owners and, 26

27 1 Order – ECF No. 52 at 2–3. Citations refer to material in the Electronic Case File (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of documents. 1 correspondingly, failed to reveal that if homeowners sold their homes or refinanced their 2 mortgages, then they would have to prepay the PACE loans and incur fees.2 3 The plaintiffs move to certify California and Florida classes of homeowners who had a PACE 4 loan and who paid the following:” (1) prepayment penalties, giving rise to (a) claims (for the 5 California class) of (i) unfair and fraudulent business practices under California’s Unfair 6 Competition Law (“UCL”), (ii) fraudulent inducement, and (iii) negligent misrepresentation, and 7 (b) a claim (for the Florida class) of deceptive and unfair trade practices under Florida’s Deceptive 8 and Unfair Trade Practices Act (“FDUTPA”); and (2) “surprise fees” (in the form of 9 administrative fees, escrow/custodial fees, and/or payment-statement fees), giving rise to (a) 10 claims (for the California class) of (i) unfair and fraudulent business practices in violation of the 11 UCL and (ii) tortious interference, and (b) claims (for the Florida class) of (i) deceptive and unfair 12 trade practices in violation of the FDUTPA and (ii) unjust enrichment.3 The plaintiffs also propose 13 an “equitable relief” class.4 14 Ygrene opposes the class-certification motion in part on the grounds that the plaintiffs have 15 not shown that (1) they were exposed to the marketing materials that contain the alleged lie, and 16 (2) the alleged misrepresentation was material, and they relied on the misrepresentation.5 It also 17 challenges the plaintiffs’ damages model.6 18 The court denies the plaintiffs’ motion to certify the classes, primarily because they did not 19 show that class members were exposed to the challenged marketing materials.

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25 2 Id. at 1–4. 26 3 Mot. – ECF No. 136-7 at 14–15. 4 Id. at 16. 27 5 Opp’n – ECF No. 143-23 at 21–29. 2 The court’s earlier orders describe the PACE loans that are the subject of this dispute and the 3 plaintiffs’ theories of liability.7 This order assumes familiarity with those facts and theories and 4 synopsizes the facts that illuminate the decision to deny the motion to certify the classes. 5 6 The PACE Loans 7 PACE loans are not traditional loans, where a lender loans money, and a borrower repays the 8 loan directly to the lender.8 Instead, a PACE program — created through state legislative 9 enactments — permits local governments to offer financing (through PACE loans) for clean- 10 energy improvements to residential and commercial properties.9 PACE financing is secured by a 11 special tax-assessment lien on the property, and the property owner repays a PACE loan through 12 property taxes.10 The PACE obligation takes priority over mortgages or other financial 13 encumbrances.11 Thus, if a property owner wants to sell property or refinance a mortgage, the 14 owner must repay the PACE assessment.12 Early PACE programs involved direct financing from 15 local governments, but now, funding happens through third-party financers such as Ygrene.13 16 Relevantly here, Ygrene PACE loans effectively do not transfer.14 17 Ygrene’s business model involved sales teams that trained home-improvement contractors, 18 who in turn introduced homeowners to Ygrene’s PACE financing for clean-energy property 19 20 21 22 7 Orders – ECF Nos. 41, 52. 23 8 Order – ECF No. 52 at 3. 24 9 Cox Decl. – ECF No. 136-10 at 14 (¶ 47). 10 Id. 25 11 Leibsohn Dep., Ex. 6 to LippSmith Decl. – ECF No. 136-8 at 216–217 (pp. 97:16–98:4). 26 12 Cox Decl. – ECF No. 136-10 at 15–16 (¶¶ 51, 53). 27 13 Id. at 14–15 (¶ 48). 14 Cox Decl. – ECF No. 136-10 at 15–16 (¶¶ 51, 53), 19 (¶¶ 65–66). 1 improvements.15 Ygrene’s “consumer-facing marketing efforts,” meaning, sales pitches to 2 homeowners, involved direct mailers and its website.”16 3 The plaintiffs complain that Ygrene did not tell homeowners that they had to repay their PACE 4 assessments if they sold or refinanced their homes and instead implied or said that the assessments 5 were transferable, knowing that they were not (based in part on December 2014 guidance from the 6 Federal Housing Finance Agency (“FHFA”) to Fannie Mae and Freddie Mac):17 7 In issuing this statement FHFA wants to make clear to homeowners, lenders, other financial institutions, state officials, and the public that Fannie Mae and Freddie Mac’s 8 policies prohibit the purchase of a mortgage where the property has a first-lien PACE loan attached to it. This restriction has two potential implications for borrowers. First, a 9 homeowner with a first-lien PACE loan cannot refinance their existing mortgage with a 10 Fannie Mae or Freddie Mac mortgage. Second, anyone wanting to buy a home that already has a first-lien PACE loan cannot use a Fannie Mae or Freddie Mac loan for the purchase. 11 These restrictions may reduce the marketability of the house or require the homeowner to pay off the PACE loan before selling the house.18 12 13 Ygrene included the FHFA directive in the training that it gave its contractors, but it did not 14 mention it in other training materials or scripts that the plaintiffs identify.19 Ygrene taught its 15 contractors at mandatory, in-person trainings that PACE loans were transferable.20 Ygrene’s 16 website said: 17  “What happens if the property is sold? If the property is sold or transferred, the tax payment obligation may be transferred with the property to the new owner.” 18 19

20 15 Kelly Dep., Ex. B to Levin Decl. – ECF No. 143-25 at 4 (p. 12:3–16), 5 (p. 67:3–5), 6 (p. 72:11–12), 9–10 (pp. 122:10–123:10), 12–13 (pp. 129:19–130:4), 17 (p. 134:17–18); see, e.g., Fuller Decl., Ex. N 21 to Levin Decl. – ECF No. 143-29 at 2 (¶¶ 1–3). 16 Kelly Dep., Ex. 5 to LippSmith Decl. – ECF No. 136-8 at 200 (p. 398:7–23), 201 (p. 401:3–6), 202 22 (p. 410:8–10); Kelly Dep., Ex. B to Levin Decl. – ECF No. 143-25 at 50 (p. 401:3–19). 23 17 Kelly Dep., Ex. 5 to LippSmith Decl. – ECF No. 136-8 at 160 (p. 25:17–20), 165–166 (pp. 129:10– 130:11), 186–187 (pp. 266:23–267:17), 188–189 (pp. 288:24–289:3); Leibsohn Dep., Ex. 6 to 24 LippSmith Decl. – ECF No. 136-8 at 211 (p. 52:12–21), 212 (p. 53:6–7), 213 (p. 54:9–10); Cox Decl. – ECF No. 136-10 at 15 (¶ 51), 16–17 (¶¶ 55–56), 20–21 (¶¶ 75–77), 22 (¶ 87). 25 18 FHFA Statement, Ex. 8 to LippSmith Decl. – ECF No. 136-8 at 242. 26 19 Kelly Dep., Ex. 5 to LippSmith Decl. – ECF No. 136-8 at 182–183 (pp. 257:5–258:3), 197 (p. 376:6–23). 27 20 Id. at 162–163 (pp. 72:23–73:5), 164 (p. 128:19–22), 165–166 (pp. 129:10–130:11), 177 (p. 239:2– 22), 181 (p. 250:16–25), 184–185 (pp. 259:24–260:22).  “Q. Is making payments through my property tax bill a good idea?” and answers that 1 question, in part, with the following statement: “If you sell your property, payments 2 may transfer to the new owner, just like your property taxes.”  “How does Ygrene’s clean energy financing differ from other options? [...]Key 3 advantages to the program include [that] [t]he project debt does not have to be paid off 4 upon property sale or transfer.”21 5 All customer-service representatives were trained on transferability and “were aware of the 6 talking points required for transferability.22 7 The plaintiff’s expert is Prentiss Cox, a professor at the University of Minnesota Law School 8 who specializes in consumer protection.23 He reviewed and summarized Ygrene’s marketing 9 materials and identifies (what he characterizes as) consistent misrepresentations that the PACE 10 loans transfer when a borrower sells or refinances a property coupled with no mention of the 11 likelihood of prepayment.24 He organizes these into four categories: (1) representations that the 12 PACE obligations will transfer; (2) representations that the obligations “may” transfer; (3) “may 13 transfer” representations with a disclosure that “some lenders” require repayment; and (4) “may 14 transfer” representations with a footnote that some lenders require repayment.”25 15 In category 1 (the “will transfer” representations), Professor Cox summarizes different 16 marketing and training materials. For example, four versions of a document titled “Ygrene Works” 17 (on a page titled “Ygrene Works for You”) ask, “Q: What are the benefits of making payments 18 on my property tax bill?,” and answer, in part, that payments “stay with the property when you 19 move. . . .”26 Similarly, a document for contractors titled “Selling Energy Efficiency for 20 Residential Audience to Contractors” has the following statements: (1) under the heading 21 “MESSAGING,” it says, “The following set of benefits will likely apply to all residential property 22 23 21 Cox Decl. – ECF No. 136-10 at 8–9 (¶¶ 27, 30, 31) (citing Bates Nos. YG-004605, P000825, 24 P000835–P000836, P000841–P000842, and P000895). 22 Kelly Dep., Ex. 5 to LippSmith Decl. – ECF No. 136-8 at 193–194 (pp. 322:4–323:6), 195 (p. 25 372:2–5), 196 (p. 374:11–16), 197 (376:6–23). 26 23 Cox Decl. – ECF No. 136-10. 24 Id. 19–20 (¶¶ 70–71), 20–21 (¶¶ 74–78), 22 (¶¶ 83–87), 23 (¶¶ 89–93). 27 25 Id. at 5–14 (¶¶ 13–45). 1 owners,” and under the subheading “Property Owner Benefits from Ygrene program and 2 financing,” it says, “Tax payments stay with the property, so at the time of sale, payments go to 3 the new owner,” and (2) “a sample 30-second pitch that includes many of the important reference 4 point” says, “The best part — It doesn’t cost you anything up front, and you repay through your 5 property tax bill. That means that if or when you sell your home, you enjoy the 10% higher price 6 due to the work you’ve done to improve your home, but the tax bill goes to the new owner who 7 enjoys the benefits of the upgrade” and “just like [a] property tax, the payments can stay with the 8 property when you move.” 27 In the same vein, a training manual for Ygrene Regional Area 9 Managers and a training document for Ygrene Customer Service Representatives say that the 10 assessment transfers with the property.28 11 In category 2 (the “may transfer” representations), Professor Cox summarizes different 12 marketing and training materials. For example, two “Playbooks” for contractors say, “[the] Loan 13 may stay with property upon transfer, especially with Ygrene’s SB 555 program, since the 14 assessment is a Mello-Roos special tax.”29 A document titled “AMERICA’s BEST 15 FINANCING” says, “Lien Transferability – When the Property is Sold, the Lien may be 16 transferred to New Buyers.”30 Another statement in a contractor playbook is that “Financing may 17 be tax deductible and lien may transfer upon sale.”31 A document titled “FREQUENTLY ASKED 18 QUESTIONS PROPERTY OWNERS” has the following Q and A that — by linking the word 19 “may” to a statement about transferability — suggests that the obligation is transferrable: (1) Q2: 20 “How does Ygrene’s energy improvement financing differ from other options?” A (in part): 21

22 27 Id. (¶ 14) (citing Bates Nos. YG-002461, YG-002463). 23 28 Id. at 5–6 (¶¶ 15–16) (citing Bates Nos. YG-002989, YG-003413, YG-003889, YG-002267, YG- 002281); see also id. at 6–7 (¶¶ 17–23) (citations to Bates-numbered documents omitted) 24 (summarizing statements about transferability in Ygrene documents, Ygrene website statements, Ygrene sales-presentation documents for account representatives and sales managers, Ygrene program 25 handbooks, documents for Regional Area Managers, a Contractor Playbook, video presentations directed to home owners, and mailings to utility customers). 26 29 Id. at 7–8 (¶ 24) (citing Bates Nos. YG-002909, YG-004430, YG-005039) (emphasis in original). 27 30 Id. at 8 (¶ 25) (citing Bates No. YG-002322). 31 Id. (¶ 26) (citing Bates No. YG-002629). 1 “The balance transfers to the new owner upon sale;” and (2) Q7 (on the same page): “What 2 happens if the property is sold?” A: “if the property is sold, the remaining payment obligation 3 may be transferred to the new owner.”32 Sales scripts, video presentations aimed at homeowners, 4 website representations, and contractor statements make similar representations to the effect of, if 5 the owner sells the property, the special tax may be transferred.33 6 In category 3 (the “may transfer” representations with a disclosure of the requirements of 7 “some lenders”), Professor Cox summarizes different marketing and training materials that (1) 8 represent that the PACE assessment transfers with sale or refinancing and (2) add that (for 9 example) “some . . . lenders may require full repayment of the special tax upon sale or refinance. 10 Check with your lender to determine their requirements if you are planning to sell or refinance.”34 11 In category 4 (the “may transfer” representations with a footnote that some lenders require 12 repayment), Professor Cox summarizes different marketing materials. Some state, “Q. Is making 13 payments through my property tax bill a good idea?,” and answer, in part: “If you sell your 14 property, payments may transfer to the new owner, just like your property taxes.”35 A 15 representative footnote says, “Property taxes are legally transferrable on sale[;] however, some 16 mortgage lenders may require full repayment of the special tax upon sale or refinancing.”36 Other 17 materials similarly tout transferability and disclose, in a footnote, that lenders may require 18 prepayment.37 19 The plaintiffs also complain that Ygrene charged a significant prepayment penalty (between 20 three percent and five percent, depending on the jurisdiction) when a borrower repaid a PACE 21 22 23 32 Id. (¶ 27) (citing Bates No. YG-004605). 33 Id. at 8–9 (¶¶ 28–32) (citations to Bates-numbered documents omitted). 24 34 Id. at 10 (¶ 34) (citing Bates Nos. YG-004951–YG-004952,YG-000645); see also id. at 10–11 (¶¶ 25 35–39) (similar representations in training and marketing materials) (citations to Bates-numbered documents omitted). 26 35 Id. at 12–13 (¶¶ 41(A)–(E)) (citations to Bates-numbered documents omitted). 27 36 Id. at 13 (¶ 42). 37 Id. at 13–14 (¶¶ 43–45). 1 loan before the end of the loan term.38 (Ygrene stopped imposing the prepayment penalty after the 2 litigation began.39) Borrowers who prepaid their loans also had to pay “surprise fees:” (1) a payoff 3 statement fee, which was a fee for a payoff quote of the borrower’s cost to prepay a loan; (2) an 4 “administrative fee;” and (3) an escrow/custodial fee.40 5 An issue is the sufficiency of the disclosures about prepayment fees. The plaintiffs contend 6 that the following disclosure does not disclose the prepayment fees, did not define reasonable 7 costs, and did not disclose certain fees for getting a payoff quote:41 8 Prepayment of Special Tax Obligation. The Owner may prepay the Special Tax obligation at any time by paying the then outstanding principal balance as shown on the amortization 9 schedule provided with the Final Closing Statement, plus reasonable administrative costs 10 and the current year's installment of the Special Tax that appears on the property tax bill. The prepayment may also include a prepayment premium based upon a percentage of the 11 remaining principal as defined in Exhibit C hereto. he Special Tax obligation may only be 12 prepaid in full.42 13 Ygrene has records of the prepayment fees.43 Ygrene’s agent Willdan Financial collected the 14 fees, and the plaintiffs subpoenaed the records and can run calculations to determine damages.44 15 Ygrene’s expert is Dominique Hanssens, a professor of marketing at the U.C.L.A. Anderson 16 School of Management.45 He surveyed 161 Ygrene customers and concluded that there are 17 variations in marketing materials, different statements about transferability, and (generally) input 18 from contractors was the most important source of information that customers considered when 19 deciding to obtain PACE financing from Ygrene.46 20

21 38 Makowski Dep., Ex. 7 to LippSmith Decl. – ECF No. 136-8 at 224–226 (pp. 86:6–88:4). 22 39 Id. at 234 (p. 108:13–22). 40 Id. at 220 (pp. 76:5–76:22), 221–223 (pp. 81:19–83:8), 227–230 (pp. 93:5–96:11), 231–232 (pp. 23 105:19–106:4). 24 41 Mot. – ECF No. 136-7 at 13–14. 42 Look Unanimous Approval Agreement, Ex. 9 to LippSmith Decl. – ECF No. 136-8 at 247. 25 43 Bass Decl. – ECF No. 136-9 at 3–4 (¶¶ 4–5). 26 44 Id. at 4–5 (¶¶ 6–7). 27 45 Hanssens Decl. – ECF No. 143-39. 46 Id. at 21–22 (¶¶ 61–65), 29 (¶ 79), 30 (¶ 81). 1 The Representative Plaintiffs 2 As California representatives, the plaintiffs propose Kimberly and Anthony Look, Jr., and as 3 Florida representatives for the three classes, the plaintiffs propose Tammy and George Woolley.47 4 Kimberly and Anthony Look used a Ygrene loan to finance a patio project for their California 5 home in May 2015.48 They reviewed Ygrene’s website and watched a marketing video that told 6 them that loan payments would “stay with the property in the event of a sale or refinancing.”49 7 They called Ygrene to ask about the program, and they spoke with Megan Smith, who told them 8 that the loan would transfer with the property if they sold the house.50 In April 2017, when they 9 refinanced their mortgage, the lender would not refinance unless they prepaid the PACE loan.51 10 They prepaid the loan (a total of $22,055.91), including (1) a prepayment premium of $638.62, (2) 11 an escrow/custodial fee of $55.00, and (3) an “administrative” fee of $75.00.52 They would not 12 have taken the PACE loan if they knew that they would have to prepay it in full to refinance or sell 13 their home.53 14 Tammy and George Woolley used a Ygrene loan to finance a home project in December 15 2015.54 Mr. Woolley heard about Ygrene from a colleague and later received a Ygrene solicitation 16 17 47 Mot. – ECF No. 136-7 at 15. 18 48 Kimberly Look Dep., Ex. 1 to LippSmith Decl. – ECF No. 136-8 at 14 (p. 56:2–11), 15–16 (pp. 19 64:24–65:3). 49 Id. at 18 (p. 68:4–7), 20 (p. 71:9–24), 21–22 (pp. 76:22–77:5), 32 (p. 147:9–14); Anthony Look 20 Dep., Ex. 2 to LippSmith Decl. – ECF No. 136-8 at 47–48 (pp. 67:21–68:1), 49–50 (pp. 69:8–70:1), 55–56 (pp. 143:15–144:1). 21 50 Kimberly Look Dep., Ex. 1 to LippSmith Decl. – ECF No. 136-8 at 28 (p. 143:2–20), 30–31 (pp. 145:23–146:1), 32–33 (pp. 146:24–147:19); Anthony Look Dep., Ex. 2 to LippSmith Decl. – ECF No. 22 136-8 at 51–52 (pp. 93:13–94:2), 53 (p. 101:16–23). 23 51 Kimberly Look Dep., Ex. 1 to LippSmith Decl. – ECF No. 136-8 at 36 (p. 167:2–10), 37 (p. 175:22– 25); Anthony Look Dep., Ex. 2 to LippSmith Decl. – ECF No. 136-8 at 57 (p. 165:1–14), 58 (p. 24 169:3–10). 52 Anthony Look Dep., Ex. 2 to LippSmith Decl. – ECF No. 136-8 at 64–65 (pp. 198:21–199:4); Look 25 Parcel Payoff Statement, Ex. 11 to LippSmith Decl. – ECF No. 136-8 at 310–311. 26 53 Kimberly Look Dep., Ex. 1 to LippSmith Decl. – ECF No. 136-8 at 34–35 (pp. 161:24–162:12); Anthony Look Dep., Ex. 2 to LippSmith Decl. – ECF No. 136-8 at 66–67 (pp. 210:16–211:6). 27 54 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 89 (p. 156:5–8), 90 (p. 158:1– 11). 1 letter.55 The Woolleys reviewed the Ygrene website (listed on the solicitation letter) and watched a 2 marketing video.56 Both said that the loan obligation would stay with the property in the event of a 3 sale or refinancing.57 Ms. Woolley called Ygrene to verify the information that she saw on the 4 website, and the representative told her that the PACE loan was transferable and “it was if the 5 house was borrowing the money — not them.”58 Then, in August 2016, the Woolleys applied for a 6 second mortgage with their credit union and were pre-approved (pending inspection and a title 7 search).59 A loan processor told them that the PACE loan was recorded as a lien and needed to be 8 prepaid before the bank could “proceed with the second mortgage.”60 The Woolleys prepaid the 9 loan (a total of $13,367.60), including (1) a prepayment premium of $668.38, (2) an 10 escrow/custodial fee of $55.00, and (3) an “administrative” fee of $75.00.61 The Woolleys would 11 not have taken the PACE loan if they had known that they would need to prepay it.62 12 13 The Proposed Classes 14 The plaintiffs propose the following classes:63 15

16 55 Id. at 70–71 (pp. 90:22–91:19), 72–73 (pp. 92:14–93:2), 74–75 (pp. 95:25–96:5); Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – ECF No. 136-8 at 119 (p. 49:2–25), 120 (p. 50:7–13), 121–122 (pp. 17 52:5–53:5). 18 56 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 77–78 (pp. 109:16–110:6); Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – ECF No. 136-8 at 123–124 (pp. 59:15–60:13). 19 57 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 77–78 (pp. 109:16–110:6), 79 (p. 111:13–20); Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – ECF No. 136-8 at 123–124 (pp. 20 59:15–60:13), 125 (p. 61:7–10). 21 58 Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – ECF No. 136-8 at 126–127 (pp. 63:1–64:19), 128–129 (pp. 65:13–66:9), 131 (p. 89:9–16). 22 59 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 91 (p. 172:11–24). 60 Id. at 93–94 (p. 181:21–182:1), 95 (p. 185:15–21), 96 (p. 187:8–19); Tammy Woolley Dep., Ex. 4 to 23 LippSmith Decl. – ECF No. 136-8 at 132 (p. 109:1–13), 133 (p. 111:5–13), 135 (p. 113:11–19), 136– 137 (pp. 114:17–115:4), 138 (p. 117:10–25). 24 61 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 97–98 (pp. 188:17–189:10), 25 99–100 (190:3–191:1); Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – ECF No. 136-8 at 144 (p. 132:6–16); Woolley Parcel Payoff Statement, Ex. 12 to LippSmith Decl. – ECF No. 136-8 at 312–313. 26 62 George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 76 (p. 103:20–121), 108–109 (pp. 244:24–245:4). 27 63 Mot. – ECF No. 136-7 at 14–16. Excluded from the proposed classes are “[d]efendants, any entities 1 3.1 Prepayment Penalty Classes: 2  All persons within the State of California who, during the applicable statute of limitations, entered into a PACE financing agreement originated and/or facilitated by 3 Ygrene in connection with their primary residence who paid a Prepayment Penalty. (Proposed class representatives: Kimberly and Anthony Look, Jr.) 4  All persons within the State of Florida who, during the applicable statute of limitations, 5 entered into a PACE financing agreement originated and/or facilitated by Ygrene in connection with their primary residence who paid a Prepayment Penalty. (Proposed 6 class representatives: Tammy and George Woolley). 7 The claims for the California class members are violations of California’s UCL, fraudulent 8 inducement, and negligent misrepresentation.64 The claims for the Florida class members are a 9 violation of Florida’s FDUTPA.65 10 3.2 Surprise Fee Classes: 11  All persons within the State of California who, during the applicable statute of limitations, entered into a PACE financing agreement originated and/or facilitated by 12 Ygrene in connection with their primary residence who paid an Administrative Fee and/or an Escrow/Custodial Fee in connection with prepayment. (Proposed class 13 representatives: Kimberly and Anthony Look, Jr.) 14  All persons within the State of California who, during the applicable statute of limitations, entered into a PACE financing agreement originated and/or facilitated by 15 Ygrene in connection with their primary residence who paid a Payoff Statement Fee. 16 (Proposed class representatives: Kimberly and Anthony Look, Jr.)  All persons within the State of Florida who, during the applicable statute of limitations, 17 entered into a PACE financing agreement originated and/or facilitated by Ygrene in 18 connection with their primary residence who paid an Administrative Fee and/or an Escrow/Custodial Fee in connection with prepayment. (Proposed class representatives: 19 Tammy and George Woolley.) 20  All persons within the State of Florida who, during the applicable statute of limitations, entered into a PACE financing agreement originated and/or facilitated by Ygrene in 21 connection with their primary residence who paid a Payoff Statement Fee. (Proposed class representatives: Tammy and George Woolley.) 22 23 24 25 employees and members of such persons’ immediate families, and the presiding judge(s) in this case, 26 their staff, and his, her, or their immediate family.”). Id. at 15–16 & n.2. 27 64 Id. at 15. 65 Id. 1 The claims for the California class members are violations of California’s UCL and tortious 2 interference.66 The claims for the Florida class members are a violation of Florida’s FDUTPA and 3 unjust enrichment.67 4 3.3 Equitable Relief Class: 5  All persons within the State of California and the state of Florida who, during the applicable statute of limitations, entered into a PACE financing agreement originated 6 and/or facilitated by Ygrene in connection with their primary residence.68 7 9 Class actions are governed by Federal Rule of Civil Procedure 23. A party seeking to certify a 10 class must prove that all the prerequisites of Rule 23(a) are met, as well as those of at least one 11 subsection of Rule 23(b) (and the relevant subsections here are Rule 23(b)(2) and (3)). 12 The following are the prerequisites of Rule 23(a): (1) the class is so numerous that joinder of 13 all members is impracticable; (2) there are questions of law or fact common to the class; (3) the 14 claims or defenses of the representative parties are typical of the claims or defenses of the class; 15 and (4) the representative parties will fairly and adequately protect the interests of the class. 16 A court may certify a class under Rule 23(b)(3) if “the court finds that the questions of law or 17 fact common to class members predominate over any questions affecting only individual 18 members, and that a class action is superior to other available methods for fairly and efficiently 19 adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). A court may certify a class under Rule 20 23(b)(2) for injunctive or declaratory relief (i.e., not for money damages) if “the party opposing 21 the class has acted or refused to act on grounds that apply generally to the class, so that final 22 injunctive relief or corresponding declaratory relief is appropriate respecting the class as a 23 whole[.]” Fed. R. Civ. P. 23(b)(2). 24 “[P]laintiffs wishing to proceed through a class action must actually prove — not simply plead 25 — that their proposed class satisfies each requirement of Rule 23, including (if applicable) the 26 66 Id. 27 67 Id. 1 predominance requirement of Rule 23(b)(3).” Halliburton Co. v. Erica P. John Fund, Inc., 573 2 U.S. 258, 275 (2014) (emphasis in original) (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 3 350–51 (2011); Comcast Corp. v. Behrend, 569 U.S. 27, 32–33 (2013)). “[C]ertification is proper 4 only if ‘the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23[] have 5 been satisfied.’” Comcast, 569 U.S. at 33 (quoting Wal-Mart, 564 U.S. at 350–51). “Such an 6 analysis will frequently entail ‘overlap with the merits of the plaintiff’s underlying claim.’” Id. at 7 33–34 (quoting Wal-Mart, 564 U.S. at 351). “That is so because the ‘class determination generally 8 involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s 9 cause of action.’” Id. at 34 (quoting Wal-Mart, 564 U.S. at 351). Still, “Rule 23 grants courts no 10 license to engage in free-ranging merits inquiries at the certification stage.” Amgen Inc. v. Conn. 11 Ret. Plans and Tr. Funds, 568 U.S. 455, 466 (2013). “Merits questions may be considered to the 12 extent — but only to the extent — that they are relevant to determining whether the Rule 23 13 prerequisites for class certification are satisfied.” Id. (citing Wal-Mart, 564 U.S. at 351 n.6). 14 The plaintiffs’ claims are predicated on their payment of prepayment of penalties and 15 “surprise” fees in violation of California and Florida laws prohibiting unfair practices and false 16 representations. They move to certify the classes on the ground that Ygrene (and its agents) 17 misrepresented that the loans would attach to their properties (like property taxes) and did not say 18 that that consumers would have to prepay the loans (with penalties) when the homeowners sold or 19 refinanced their homes.69 The court denies the motion. 20 21 Rule 23(a) Prerequisites 22 1.1 Numerosity — Rule 23(a)(1) 23 Rule 23(a)(1) requires a “class so numerous that joinder of all members is impracticable.” 24 There is no absolute minimum class size for establishing numerosity, but courts have held that 25 classes as small as 40 satisfy the numerosity requirement. See, e.g., Twegbe v. Pharmaca 26 Integrative Pharmacy, Inc., No. CV 12-5080 CRB, 2013 WL 3802807, at *3 (N.D. Cal. July 17, 27 1 2013); In re Lidoderm Antitrust Litig., No. 14-md-02521-WHO, 2017 WL 679367, at *13 (N.D. 2 Cal. Feb. 21, 2017) (citing Daniel R. Coquillette et al., 5 Moore’s Federal Practice – Civil § 23.22 3 (2016)). The plaintiffs reasonably estimate a class size that is numerous.70 Ygrene does not dispute 4 numerosity. The plaintiffs have satisfied Rule 23(a)(1)’s numerosity requirement. 5 1.2 Commonality — Rule 23(a)(2) 6 Rule 23(a)(2) requires “questions of law or fact common to the class.” “What matters to class 7 certification is not the raising of common ‘questions’ — even in droves — but, rather the capacity 8 of a class-wide proceeding to generate common answers apt to drive the resolution of the 9 litigation.” Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1133 (9th Cir. 2016) (internal ellipsis 10 and some internal quotation marks omitted) (quoting Wal-Mart, 564 U.S. at 350). “To satisfy Rule 11 23(a)(2) commonality, ‘even a single common question will do.’” Id. (some internal quotation 12 marks omitted) (quoting Wal-Mart, 564 U.S. at 359). 13 Here, the plaintiffs contend that (1) Ygrene’s marketing deceived the Prepayment Penalty class 14 about the transferability of its PACE loans by omitting crucial information about the likelihood 15 and costs of prepayment of PACE loans, and (2) Surprise Fee class members received materially 16 identical disclosures that uniformly failed to inform consumers that they would be assessed 17 prepayment fees, administrative fees, and escrow/custodial fees when they prepaid their loans.71 18 The main issue is whether the plaintiffs have established class-wide exposure and actual 19 reliance.72 The plaintiffs claim that Ygrene violated the UCL by misrepresenting or omitting the 20 near-likelihood that lenders would require them to repay their PACE loans before they could sell 21 or refinance their home.73 An essential element for a fraudulent-omission claim is actual reliance. 22 In re Tobacco II Cases, 46 Cal. 4th 298 (2009). “To prove reliance on an omission, a plaintiff . . . 23

24 70 Id. at 19. 71 Id. at 7–8, 20–21; Cox Decl. – ECF No. 136-10 at 4–14 (¶¶ 11–45), 15–19 (¶¶ 50–69), and 22 (¶ 25 84); Look Unanimous Approval Agreement, Ex. 9 to LippSmith Decl. – ECF No. 136-8 at 245; Woolley Agreement to Pay Assessments, Ex. 10 to LippSmith Decl. – ECF No. 136-8 at 286. 26 72 Opp’n – ECF No. 143-23 at 21–24. 27 73 Cold Stone Creamery, Inc. v. Lenora Foods I, LLC, 332 F. App’x 565 (11th Cir. 2019) (“FDUTPA does not require a plaintiff to prove actual reliance on the alleged conduct.”). 1 [may] simply prov[e] ‘that, had the omitted information been disclosed, one would have been 2 aware of it and behaved differently.’” Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 3 2015) (quoting Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 (1993)). As Ygrene contends, the 4 plaintiffs have not shown class-wide exposure and actual reliance because they put in no evidence 5 that any homeowner saw the marketing materials that their expert summarizes.74 6 Todd v. Tempur-Sealy Int’l, Inc., a misrepresentation case, supports the conclusion that even 7 an extensive advertising campaign does not support the inference of classwide exposure. See No. 8 13-cv-04984-JST, 2016 WL 5746364 (N.D. Cal. Sept. 30, 2016).75 Todd was a class action that 9 challenged Tempur-Sealy’s marketing of its mattresses, pillows, and bedding products as (for 10 example) “formaldehyde free” and “hypoallergenic.” Id. at *1. In analyzing commonality and 11 predominance, the court held that the plaintiffs failed to demonstrate that the marketing was 12 sufficiently extensive to allow an inference of class-wide disclosure, in part because the plaintiffs 13 did not identify (1) what representations led to “consumer impressions,” (2) what statements were 14 the direct mailings to consumers, (3) what portion of customer-service calls were related to 15 complaints about chemicals or emissions, and (4) whether there was a uniform response to 16 customer complaints about gasses or chemicals. Id. at *11. Even more fundamentally, it could not 17 be assumed that consumers bought products based on marketing representations (as opposed to 18 simply relying on impressions while shopping), and there was no evidence that the third-party 19 retailers who sold the products implemented the defendants’ alleged uniform marketing campaign. 20 Id. at *12. In sum, the Todd plaintiffs did not establish their exposure to the marketing campaign 21 or that the campaign had uniform misrepresentations. Id. 22 Like the plaintiffs in Todd, the plaintiffs here have not established class-wide exposure or 23 actual reliance. There is no evidence of a marketing campaign that even approximates the Todd 24 campaign. The record suggests that any direct-mailing campaign was modest. The contractors sold 25 26

27 74 Cox Decl. – ECF No. 136-10 at 3–14 (¶¶ 10–45), 6–7 (¶¶ 21, 24, 26). 1 the product, and there is no evidence that they implemented a sales pitch that establishes the 2 requisite exposure needed for class certification. 3 Mazza v. Am. Honda Motor Co., Inc. also supports the conclusion that the plaintiffs have not 4 established reliance. 666 F.3d 581 (9th Cir. 2012). Mazza involved the plaintiffs’ exposure to a 5 limited advertising campaign about a braking package for certain Honda Acuras. Id. at 585–86, 6 594–96. The court held that the small scale of the advertising campaign did not support a 7 presumption of reliance. 8 Ygrene also contends that its marketing representations were not uniform, predicating this 9 contention on its contractors’ declarations that they tailored their pitches to the needs of a 10 particular property owner.76 This does not necessarily defeat commonality (or typicality or 11 predominance). If there were representations — made as a major selling point that the PACE loans 12 transfer with the property and are not like a loan at all — then slight variations in wording would 13 not defeat the uniform misrepresentation.77 See In re First Alliance Mortg., 471 F.3d at 991 14 (“[T]he gravamen of the alleged fraud is not limited to the specific misrepresentations made to 15 bond purchasers. . . . The exact wording of the oral misrepresentations, therefore, is not the 16 predominant issue. It is the underlying scheme which demands attention.”) (citation omitted). Put 17 another way, slight variations in wording do not matter if the gist of the representation is the same: 18 the PACE loans are transferrable. But again, there is no evidence of uniform representations or 19 class-wide exposure or reliance. 20 Ygrene next contends that its contracts disclosed the issue sufficiently to the consumers, and 21 that in any event, the disclosures are not uniform.78 This is an important point. Some documents 22 mention potential limits on transferability,79 and others assert (without reservation) that Ygrene’s 23 76 Id. at 25–26 (citing Contractor Decls., Exs. N–R to Levin Decl. – ECF Nos. 143-29–143-33). 24 77 Cox Decl. – ECF No. 136-10 at 5–6 (¶¶ 15, 16.B), 8–9 (¶¶ 25, 29), 11 (¶ 36). 25 78 Id. at 26–27. Ygrene’s fact submissions do not permit the court to determine whether its contract- based arguments are correct.. 26 79 See, e.g., Distinct Transferability Statements, Ex. 2 to Hanssens Decl. – ECF No. 143-39 at 112–13 27 (“Ygrene payments are made through property taxes which are legally transferable upon sale; however, mortgage lenders may require full repayment of the special tax upon sale or refinance;” 1 PACE loans are transferable and do not have to be paid off in the event of a sale.80 In the former 2 category, this may defeat Ygrene’s liability if the disclosures adequately disclose the risk of 3 prepayment and fees. In its review of one financing agreement, the court agreed that the agreement 4 adequately disclosed the possibility of prepayment and a prepayment-waiver fee.81 Either way, 5 common disclosures are common questions that result in common answers. The same is true about 6 the contracts’ disclosures about prepayment and the attendant fees and costs (such as the 7 disclosure excerpted in the Statement). 8 That said, there are hundreds of contracts. There must be some uniformity in the contracts that 9 would allow a class action to proceed based on uniform representations in the contracts, but the 10 proposed class definitions are too broad and untethered to the representations. Revised class 11 definitions might solve this problem. 12 Ygrene also contends that even if there were a misrepresentation, the court cannot assume that 13 it was material.82 Its survey shows that only three percent of customers considered transferability 14 important in deciding to take a PACE loan, and “no Ygrene customers considered the 15 reasonableness of the fees and penalties associated with prepayment important.”83 The plaintiffs 16 object to the sufficiency of that survey and contend the transferability was a key marketing point.84 17 Given the court’s conclusions about class-wide exposure and reliance, the court does not reach the 18 issue. 19 20

21 owners’ property taxes which are legally transferable upon sale; however, some mortgage lenders may require full repayment of the special tax;” “Some banks and/or purchasers require the outstanding 22 assessment balance to be paid off when a homeowner refinances or sells a home, which can be done without pre-payment penalties if seller purchased a pre-payment waiver at the time of financing. upon 23 sale or refinancing;” and “Property taxes are legally transferable at the time of sale; however individual transactions vary and may limit transferability.”). 24 80 See id. (“Transferable: Yes”; “Transferability: As part of property taxes; “The project debt does not have to be paid off upon property sale or transfer.”). 25 81 Order – ECF No. 52 at 9–10, 12–14. 26 82 Opp’n – ECF No. 143–23 at 28. 27 83 Id. at 28 (citing Hanssens Decl. – ECF No. 143-39 at 9–10 (¶ 25), 41–44 (¶¶ 112–116)). 84 Mot. to Strike Hanssens Decl. – ECF No. 155-5.; Reply – ECF No. 158-4 at 14;. 1 Ygrene also contends that the contract’s disclosure — that consumers would be required to 2 pay a “reasonable” administrative fee — defeats certification because “reasonableness” inquiries 3 involve individualized issues that predominate.85 To support its argument, it cites cases involving 4 health-care costs.86 See, e.g., Ross-Randolph v. Allstate Ins. Co., No. DKC 99-3344, 2001 WL 5 36042162, at *6 (D. Md. May 11, 2001) (collecting cases); Colomar v. Mercy Hosp., Inc., 242 6 F.R.D. 671, 680–81 (S.D. Fla. 2007); Maldonado v. Ochsner Clinic Found., 493 F.3d 521, 524–25 7 (5th Cir. 2007).87 As the plaintiffs point out, health care is highly individualized, and evaluating 8 reasonableness on a class basis is difficult because the inquiry involves “determin[ing] whether a 9 particular medical provider’s procedure was necessary for a claimant.” Ross-Randolph, 2001 WL 10 36042162, at *6.88 By contrast, this case involves whether Ygrene is permitted to assess an 11 undisclosed fee. The plaintiffs point out that courts certify cases involving undisclosed fees. Ehret 12 v. Uber Techs., Inc., 148 F. Supp. 3d 884, 899 (N.D. Cal. 2015) (certifying surprise-fee case).89 13 The court defers its analysis of the issue to any renewed motion for class certification. 14 Ygrene also contends that the plaintiffs’ damages model fails because it does not account for 15 consumers who prepaid for reasons other than sale or refinancing.90 But relief under the UCL 16 focuses on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s 17 larger purpose of protecting the general public against unscrupulous business practices. In re 18 Tobacco II Cases, 46 Cal. 4th at 312. That is why under the UCL, restitution is available without a 19 more particularized proof of injury and causation. See Stearns v. Ticketmaster Corp., 655 F.3d 20 1013, 1021 (9th Cir. 2011).91 And the named plaintiffs arguably here have shown the appropriate 21

22 85 Opp’n – ECF No. 143-23 at 29. 23 86 Id. at 29–30. 87 Id. (citing these cases). 24 88 Reply – ECF No. 158-4 at 18 (quoting Ross-Randolph, 2001 WL 36042162, at *6). 25 89 Id. (citing Ehret, 148 F. Supp. 3d at 899, and Bowe v. Pub. Storage, 318 F.R.D. 160, 180 (S.D. Fla. 2015)). 26 90 Reply – ECF No. 159-4 at 31. 27 91 The parties did not address in depth whether the FDUTPA analysis is similar to the UCL analysis, but on their (modest) briefing (a half page each), the analysis is similar. 1 individual-specific factors, such as injury-in-fact and causation. Id. at 1020. Also, the PACE loans 2 here are tethered to specific transactions. The Bass declaration sufficiently establishes a damages 3 model for calculating individualized damages.92 Leyva v. Medline Indus., Inc., 716 F.3d 510, 514 4 (9th Cir. 2013). Moreover, different damages do not destroy class cohesion. Jimenez v. Allstate 5 Ins. Co., 765 F.3d 1161, 1167–68 (9th Cir. 2014). 6 1.3 Typicality — Rule 23(a)(3) 7 Rule 23(a)(3) requires that “the claims or defenses of the representative parties [be] typical of 8 the claims or defenses of the class.” “The test of typicality serves to ensure that ‘the interest of the 9 named representative aligns with the interests of the class.’” Torres, 835 F.3d at 1141 (quoting 10 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)). “‘Under the Rule’s permissive 11 standards, representative claims are ‘typical’ if they are reasonably coextensive with those of 12 absent class members; they need not be substantially identical.’” Id. (quoting Parsons v. Ryan, 754 13 F.3d 657, 685 (9th Cir. 2014)). “In this context, ‘typicality refers to the nature of the claim or 14 defense and not to the specific facts from which it arose or the relief sought.’” Id. (internal ellipsis 15 omitted) (quoting Parsons, 754 F.3d at 685). “Measures of typicality include ‘whether other 16 members have the same or similar injury, whether the action is based on conduct which is not 17 unique to the named plaintiffs, and whether other class members have been injured by the same 18 course of conduct.’” Id. (quoting Hanon, 976 F.2d at 508). “Typicality is satisfied ‘when each 19 20 92 Ygrene moved to strike the Bass declaration. Mot. to Strike Bass Decl. – ECF No. 143-141. The 21 court denies the motion. Under Comcast, the court must vet the proposed damages model with some rigor. Comcast, 569 U.S. at 35–36. The court has tried to do that. The expert’s calculations will assist 22 the trier of fact given, among other things, the class size and the varying (yet ascertainable) fees. The model is consistent with the plaintiffs’ theory of liability. 23 Ygrene moved to strike the Cox declaration on the grounds that (1) he is unqualified to opine on 24 consumer perceptions, (2) he opines (impermissibly) about legal conclusions, (3) his methodology is unreliable, and (4) his opinions are irrelevant. Mot. to Strike Cox Decl. – ECF No. 143-40. The court 25 denies the motion. Professor Cox opines as a real-estate and mortgage expert, his opinions are based on his personal knowledge and experience, and — at class certification — the primary utility of his 26 declaration (as the discussion in this order shows) is his organization of the evidence. The plaintiffs moved to strike Professor Hanssens’s declaration. Mot. to Strike Hanssens Decl. – ECF 27 No. 155-5. The court denies the motion. The objections go to credibility, weight, and context, see Oracle Am., Inc. v. Google Inc., No. C 10-03561 WHA, 2016 WL 1743116, at *6 (N.D. Cal. May 2, 1 class member’s claim arises from the same course of events, and each class member makes similar 2 legal arguments to prove the defendants’ liability.” Arroyo v. Int’l Paper Co., No. 17-cv-06211- 3 BLF, 2019 WL 1508457, at *6 (quoting Rodriguez v. Hayes, 591 F.3d 1105, 1124 (9th Cir. 4 2010)). 5 The court’s analysis of commonality means that the named plaintiffs’ claims are not typical of 6 the classes’ claims. 7 1.4 Adequacy – Rule 23(a)(4) 8 Rule 23(a)(4) requires that “the representative parties [] fairly and adequately protect the 9 interests of the class.” “This adequacy requirement . . . ‘serves to uncover conflicts of interest 10 between named parties and the class they seek to represent’ as well as the ‘competency and 11 conflicts of class counsel.’” Espinosa v. Ahearn (In re Hyundai and Kia Fuel Econ. Litig.), 926 12 F.3d 539, 566 (9th Cir. 2019) (en banc) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 13 625, 626 n.20 (1997)). “To determine legal adequacy, [courts] resolve two questions: ‘(1) do the 14 named plaintiffs and their counsel have any conflicts of interest with other class members and (2) 15 will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the 16 class?’” Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). 17 There are no conflicts. The plaintiffs maintain that they will prosecute the case vigorously 18 through qualified counsel on behalf of the class.93 They have actively participated in the case, 19 cooperated in discovery, and completed their depositions.94 20 Class counsel is adequate in all relevant respects. Under Rule 23(g)(1)(A), the court considers 21 the following criteria: (1) counsel’s work in identifying and investigating potential claims in the 22 action; (2) counsel’s experience in handling class actions; (3) counsel’s knowledge of the 23 24 93 Mot. – ECF No. 136-7 at 23; Kimberly Look Dep., Ex. 1 to LippSmith Decl. – ECF No. 136-8 at 25 23–24 (pp. 101:6–102:1), 24–25 (pp. 102:24–103:3); Anthony Look Dep., Ex. 2 to LippSmith Decl. – ECF No. 136-8 at 59–60 (pp. 179:21–180:8), 60–61 (pp. 180:22–181:17), 62 (p. 185:3–19), 63 (p. 26 187:3–15); George Woolley Dep., Ex. 3 to LippSmith Decl. – ECF No. 136-8 at 110–111 (pp. 248:16– 249:15), 112 (p. 250:3–21), 115 (p. 259:13–18); Tammy Woolley Dep., Ex. 4 to LippSmith Decl. – 27 ECF No. 136-8 at 154 (p. 172:12–23), 155 (p. 177:3–13). 94 Id. 1 particular law; and (4) the resources that counsel will commit to representing the class. Fed. R. 2 Civ. P. 23(g)(1)(A). The court also “considers any other matter pertinent to counsel’s ability to 3 fairly and adequately represent the class.” Fed. R. Civ. P. 23(g)(1)(B). Counsel have extensive 4 experience in litigating class actions, they are proficient in the applicable law, and they have the 5 necessary resources to prosecute this action to the end.95 6 7 Rule 23(b) Prerequisites 8 2.1 Predominance — Rule 23(b)(3) 9 Among other things, Rule 23(b)(3) requires that “the questions of law or fact common to class 10 members predominate over any questions affecting only individual members.” “Considering 11 whether ‘questions of law or fact common to class members predominate’ begins with . . . the 12 elements of the underlying cause of action.” Halliburton, 563 U.S. at 809. 13 The predominance inquiry involves weighing and evaluating the common and individual 14 issues in the case. Wal-Mart, 564 U.S. at 360–61. The “inquiry tests whether the proposed classes 15 are sufficiently cohesive to warrant adjudication by representation.” Tyson Foods, Inc. v. 16 Bouaphakeo, 136 S. Ct. 1036, 1045 (2016) (quotation omitted). A common question “is one where 17 the same evidence will suffice for each member to make a prima facie showing [or] the issue is 18 susceptible to generalized, class-wide proof.” Id. (internal quotation marks omitted). An individual 19 question is “one where members of a proposed class will need to present evidence that varies from 20 member to member. . . .” Id. (internal quotation marks omitted). The predominance inquiry 21 involves the same principles that guide the Rule 23(a)(2) commonality analysis, but it “is even 22 more demanding than Rule 23(a).” Comcast, 569 U.S. at 34. 23 Because there is no commonality, there is no predominance. 24 2.2 Superiority — Rule 23(b)(3) 25 Rule 23(b)(3) requires a class proponent to show that the class action is the superior method 26 for adjudicating the dispute. Factors to be considered in weighing this question include the 27 1 following: (1) class members’ interest in individually controlling the litigation; (2) the extent and 2 nature of the litigation; (3) the desirability of concentrating the claims in one suit; and (4) the 3 likely difficulties in managing the class action. Fed. R. Civ. P. 23(b)(3)(A)–(D); Leyva, 716 F.3d 4 at 514. If the plaintiffs had established commonality and predominance, then a class action would 5 be superior to individual suits. The stakes for individual members are low, and litigation costs 6 would exceed the value of individual litigation.96 7 2.3 Acting on Grounds That Apply Generally to the Class — Rule 23(b)(2) 8 A court may certify a class under Rule 23(b)(2) if “the party opposing the class has acted or 9 refused to act on grounds that apply generally to the class, so that final injunctive relief or 10 corresponding declaratory relief is appropriate respecting the class as a whole[.]” 11 “‘The key to the (b)(2) class is the ‘indivisible nature of the injunctive or declaratory remedy 12 warranted — the notion that the conduct is such that it can be enjoined or declared unlawful only 13 as to all of the class members or as to none of them.’” B.K. ex rel. Tinsley v. Snyder, 922 F.3d 957, 14 971 (9th Cir. 2019) (quoting Wal-Mart, 564 U.S. at 360). “‘In other words, Rule 23(b)(2) applies 15 only when a single injunction or declaratory judgment would provide relief to each member of the 16 class. It does not authorize class certification when each individual class member would be 17 entitled to a different injunction.’” Id. (quoting Wal-Mart, 564 U.S. at 360). 18 Rule 23(b)(2) “does not require [courts] to examine the viability or bases of class members’ 19 claims for declaratory and injunctive relief, but only to look at whether class members seek 20 uniform relief from a practice applicable to all of them.” Rodriguez v. Hayes, 591 F.3d 1105, 1125 21 (9th Cir. 2010). “‘[I]t is sufficient’ to meet the requirements of Rule 23(b)(2) that ‘class members 22 complain of a pattern or practice that is generally applicable to the class as a whole.’” Id. (quoting 23 Walters v. Reno, 145 F.3d 1032, 1047 (9th Cir. 1998)). “The fact that some class members may 24 have suffered no injury or different injuries from the challenged practice does not prevent the class 25 from meeting the requirements of Rule 23(b)(2).” Id. (citing Walters, 145 F.3d at 1047). 26 “Furthermore, unlike actions brought under one of the other 23(b) prongs, ‘questions of 27 1 manageability and judicial economy are irrelevant to 23(b)(2) class actions.’” Id. (internal ellipsis 2 omitted) (quoting Forbush v. J.C. Penney Co., Inc., 994 F.2d 1101, 1105 (5th Cir. 1993)). 3 The Ninth Circuit has recently instructed that courts should not impose a “cohesiveness” 4 requirement in assessing whether certification under Rule 23(b)(2) is appropriate. Senne v. Kan. 5 City Royals Baseball Corp., 934 F.3d 918, 937–38 (9th Cir. 2019) (internal brackets omitted) 6 (quoting Fed. R. Civ. P. 23(b)(2)). “Although common issues must predominate for class 7 certification under Rule 23(b)(3), no such requirement exists under 23(b)(2).” Id. at 938 (quoting 8 Walters, 145 F.3d at 1047). Instead, “Rule 23(b)(2) . . . requires only that ‘the party opposing the 9 class have acted or refused to act on grounds that apply generally to the class, so that final 10 injunctive relief or corresponding declaratory relief is appropriate respecting the class as a 11 whole.’” Id. at 928 (internal brackets omitted) (quoting Fed. R. Civ. P. 23(b)(2)). Due to Rule 12 23(b)(2)’s and Rule 23(b)(3)’s differing requirements, courts have granted motions to certify 13 putative classes under Rule 23(b)(2) while denying motions to certify the classes under Rule 14 23(b)(3). See, e.g., Ang v. Bimbo Bakeries USA, Inc., No. 13-cv-01196-HSG, 2018 WL 4181896, 15 at *12, *17 (N.D. Cal. Aug. 31, 2018) (denying certification under Rule 23(b)(3) “[b]ecause 16 Plaintiffs have not shown that the economic harm they allegedly sustained . . . is capable of 17 measurement on a classwide basis” but granting certification under Rule 23(b)(2) because “a 18 single injunction would provide relief to each member of the class”) (internal ellipsis omitted); 19 Campbell v. Facebook Inc., 315 F.R.D. 250, 269–70 (N.D. Cal. 2016) (same). 20 The plaintiffs here seek a single injunction or declaratory judgment — namely, an injunction 21 preventing Ygrene from charging prepayment penalties or unauthorized administrative fees and 22 requiring it to provide adequate disclosures — that would provide relief to each member of the 23 class.97 If the plaintiffs had established commonality and predominance on the theories that they 24 advanced, then they would have satisfied the requirement for certifying a class under Rule 25 23(b)(2). Cf. In re Qualcomm, 328 F.R.D. at 318–19 (certifying Rule 23(b)(2) class in antitrust 26 27 97 Second Amend. Compl. – ECF No. 44 at 52. The plaintiffs do not need to specify at the class- 1 case); In re TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D. 583, 595-97 (N.D. Cal. 2010) 2 (same). 4 The court denies the motion to certify the proposed classes. The court denies the motions to 5 strike the expert submissions. 6 The parties must confer on a new case schedule. 7 This disposes of ECF Nos. 137, 145, 146, and 157. 8 IT IS SO ORDERED. Ld EC 9 Dated: May 28, 2020 LAUREL BEELER 10 United States Magistrate Judge 11

Q 16 & = 17

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