Chapter 9

9.1 Complaint

Automobile Lease Case

CV 93 XXXXXXX JON CONSUMER, on behalf of himself and all others similarly situated, [vs.] CREDIT AUTO LEASE, INC. and FRED'S MOTORS, INC., SUPERIOR COURT JUDICIAL DISTRICT AT NEW HAVEN COMPLAINT Jon Consumer ("Consumer"), suing on behalf of himself and all others similarly situated, complains as follows against Credit Auto Lease, Inc. ("CAL") and Fred's Motors, Inc. ("FM"):

MATTERS COMMON TO ALL COUNTS

PARTIES

1. Consumer is an individual who resides at 100 Main Street, New Haven, Connecticut. 2. CAL is a corporation with its principal place of business in Chicago, Illinois. It is engaged in the business of leasing vehicles and purchasing leases of vehicles. 3. FM is a corporation which operates a car dealership at Auto Row, New Haven Connecticut. FM regularly leases vehicles.

PLAINTIFF'S TRANSACTION

4. On August 31, 1992, Consumer leased a 1993 Jeep Cherokee from FM and CAL. In connection with the transaction, Consumer signed the combination lease/ disclosure statement attached hereto as Exhibit A [not reprinted infra]. The scheduled term of the lease was 60

months and the total contractual obligation was $24,757.20 plus $89 for registration of the vehicle. 5. At the time he leased the vehicle, Consumer intended to keep it for the term of 60 months. 6. Exhibit A provides for early termination, both voluntarily at the instance of the lessee and by the lessor for default. 7. According to the report of an investigation by the Attorney General of New York, approximately 50-80% of automobile leases are terminated early. 8. The description of the provision for "liquidated damages" for default and early termination on the printed form of lease represented by Exhibit A is totally incomprehensible to the average consumer. It requires multiple, totally unnecessary cross-references and knowledge of technical accounting concepts, such as the "rules for journal entries for lessors as to direct financing leases contained in Statement of Financial Accounting Standards No. 13," the "depreciation and lease charge portions" of each payment, and how "lease charges" are "earned by you on a constant yield basis in relation to the Adjusted Lease Balance as it declines during the lease term," and the "rate which provides a constant yield throughout the lease term." 9. The leased vehicle had significant mechanical problems: a. b. c. d. e. Windows leaking badly. Misaligned window wiper. Malfunctioning cruise control. Loose metal parts found under the carpet. Abnormal whining noises from under hood when engine was cold.

10. Consumer brought the vehicle back to FM for repairs several times. The problems were not corrected. 11. Exhibit A purports to provide that the lessee must make all payments to CAL notwithstanding problems with the leased vehicle. In paragraph G of Exhibit A, the lessee 2

purportedly "acknowledges that I am leasing the vehicle from you [CAL] [sq]as is' and that you do not make any warranty or representation, either express or implied, as to the design, compliance with specifications, operation or condition of, or as to the quality of the material, equipment or workmanship in the vehicle or any of its components, and you specifically disclaim any implied warranties including warranties of merchantability or fitness of the vehicle or any of its components for any particular purpose." 12. Because Consumer was dissatisfied with the condition of the leased vehicle, he terminated the lease early and returned the car, in April 1993. 13. CAL thereupon applied or purported to apply the early termination formula in Exhibit A to determine that Consumer owed CAL $8,878.23. 14. CAL sent Consumer Exhibit B, attached [not reprinted infra], reflecting this purported liability. DAMAGES 15. Consumer and each member of the class described below have been injured by the collection and/or attempted collection of early termination and default charges, in one or more of the following ways: a. b. Injury to credit. Expenditure of money, time and effort in resisting attempts by CAL to collect the charges. c. Creation of an unlawful and fictitious indebtedness, for which the consumer is ostensibly liable. d. Payment of the charges. CLASS ALLEGATIONS 16. Counts I and II of this action are brought on behalf of a class. The class consists of all persons who satisfy the following criteria:

a.

They signed an automobile lease with CAL written on a printed form containing the same early termination and warranty provisions as Exhibit A.

b. c. d.

The lease shows a Connecticut address for the lessee. The lease has the "consumer use" box checked or initialled. The lease either (i) was terminated within three years next before the filing of this action or (ii) is still outstanding.

17. Certification of a class under Conn. G.S. 86-90 is appropriate in that the class is so numerous that joinder of all members is impracticable, there are questions of law or fact common to the class, the claims of the representative party are typical of the claims of the class, and the representative will fairly and adequately protect the interests of the class. 18. Alternatively, certification of a class under CUTPA, Conn. G.S., 42-110g-i is appropriate, in that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. 19. The class is so numerous that joinder of all members is impracticable. Consumer's lease was entered into in 1992 on a printed form that contains a legend indicating that it was issued in 1989. During the ensuing period, CAL undoubtedly entered into leases with numerous persons. It is therefore reasonable to infer that the number of class members exceeds the 20-40 required for satisfaction of the numerosity requirement. 20. There are questions of law and fact common to the class, which questions predominate over any questions affecting only individual class members. These questions include: a. Whether it is an unfair and deceptive trade practice to describe substantial pecuniary obligations incurred by 50-80% of consumers entering into a transaction in terms which are incomprehensible to the average consumer and then enforce the terms against consumers. 4

b.

Whether the incomprehensible provisions are a lawful part of the contract between Consumer and defendants.

c.

Whether the warranty provisions of the CAL lease are lawful.

21. The claims and defenses of Consumer are typical of the claims and defenses of the class members. All are based on the same factual and legal theories. 22. Consumer will fairly and adequately protect the interest of the class. He has a substantial pecuniary stake in the controversy, and has retained experienced counsel. 23. CAL has acted in a uniform manner with respect to the entire class, by imposing substantial pecuniary obligations through incomprehensible language and disclaiming warranty responsibility with respect to all class members. 24. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. 25. Because CAL is a major financial institution and effective presentation of the cause of action asserted requires expert testimony, the interest of members of the class in individually controlling the prosecution or defense of separate actions is minimal. 26. Many class members are unaware of their rights. Typically, leasing companies institute collection actions and secure default judgments against lessees for the charges in question. 27. The difficulties likely to be encountered in the management of a class action are much less than in the case of many types of action routinely certified, such as class actions for securities fraud.

COUNT I -- CUTPA 28. Consumer incorporates 1-27 by reference. 29. The early termination charges under an automobile lease are generally very substantial, amounting to thousands of dollars. 5

30. CAL engaged in unfair and deceptive acts and practices by: a. Describing substantial pecuniary obligations in terms incomprehensible to the average consumer. b. c. Then attempting to collect the obligations charges from consumers. Providing in its lease form that the consumer must make lease payments irrespective of the condition of the leased vehicle. 31. CAL thereby violated the Connecticut Unfair Trade Practices Act ("CUTPA"),

Conn. G.S., 42-110b(a). 32. The violations complained of were committed for pecuniary gain, and with 33. A dispute exists between Consumer and the class

knowledge of probable illegality.

described below, on the one hand, and defendants, on the other, concerning the validity of these charges.

WHEREFORE, the Court should enter judgment in favor of Consumer and the class and against defendants granting the following relief: a. Declaring that the inadequate disclosure of default/ early termination charges in the form represented by Exhibit A is an unlawful and unenforceable unfair trade practice, enjoining the collection of default/ early termination charges from the class members, and requiring a refund of all such charges that have been collected from the class members. b. Awarding statutory and punitive damages in an amount sufficient to deter further violations of law. c. Attorney's fees, litigation expenses and costs. d. Such other or further relief as the Court deems appropriate.

COUNT II -- DECLARATORY RELIEF

34. 35.

Plaintiff incorporates 1-33. Because the early termination charges are incomprehensible, they are not a valid

and effective part of the contract between plaintiff and the class members, on the one hand, and defendants, on the other. WHEREFORE, the Court should enter judgment in favor of Consumer and the class and against defendants granting the following relief: a. Declaring that the default/ early termination charges in the form represented by Exhibit A are not a valid part of the contract, enjoining the collection of default/ early termination charges from the class members, and requiring a refund of all such charges that have been collected from the class members. b. Awarding statutory and punitive damages in an amount sufficient to deter further violations of law. c. Attorney's fees, litigation expenses and costs. d. Such other or further relief as the Court deems appropriate.

COUNT III -- INDIVIDUAL BREACH OF WARRANTY CLAIM

36. Plaintiff incorporates 1-27. 37. The warranty provisions of Article 2 of the UCC apply to leases as contracts for transactions in goods. 38. The warranty disclaimer in Exhibit A is ineffective for the following reasons: a. The contradictory and confusing language of the disclaimer makes it unclear whether there is a manufacturer's express warranty.

b.

The disclaimer requires the lessee to make a legal judgment as to whether the manufacturer's express warranties are assignable.

39. Because the leased vehicle could not be repaired, the leased vehicle was not merchantable. By providing an unmerchantable vehicle, CAL and FM breached the implied warranty of merchantability, in violation of Conn. G.S. 2-314.

WHEREFORE, Consumer requests that the Court enter judgment on his behalf and against CAL and FM: a. For appropriate damages. b. For costs. c. Granting such other and further relief as the Court deems appropriate. COUNT IV -- INDIVIDUAL LEMON LAW CLAIM 40. Plaintiff incorporates 1-27. 41. Consumer was damaged as a result of the breach, in an amount equal to the lease payments and early termination charges imposed in the lease. WHEREFORE, Consumer requests that the Court enter judgment pursuant to the Connecticut "New Automobile Warranties" law, Chapter 743b, Conn. G.S. 42-179(b), commonly known as the "lemon law," and 42-184, on his behalf and against defendants: a. For appropriate damages. b. For costs. c. For attorneys fees in accordance with Conn. Gen. Stat. 42-180. d. Granting such other and further relief as the Court deems appropriate.

Attorney For Plaintiff

9.2

Discovery

CV 93 XXXXXXX JON CONSUMER, on behalf [vs.] CREDIT AUTO LEASE, INC. and FRED'S MOTORS, INC., of himself and all others similarly situated,

SUPERIOR COURT JUDICIAL DISTRICT AT NEW HAVEN

December 24, 1993 PLAINTIFF'S FIRST DISCOVERY REQUEST

Plaintiff hereby requests,that defendants respond to the following interrogatories, document request, and requests for admissions. Documents are to be produced at the offices of plaintiff's counsel, Joanne S. Faulkner, 123 Avon Street, New Haven, Connecticut 06511. Throughout this request: A. Unless otherwise specified in a particular paragraph, the time period covered by this request is November 22, 1990 to present. B. "Early termination charges" include excess mileage charges, disposition charges, the formula for rebating unearned lease charges, and any and all other charges payable upon the early termination of a lease that are not payable if the lease is fully performed. C. References to the form of lease attached as Exhibit A to the complaint in this action include any lease with the same text as Exhibit A, irrespective of whether it contains the name and logo of defendant, another firm, or no name and logo. D. Exhibit A means Exhibit A to the complaint in this action.

Other instructions and definitions to be used in making your response are attached as Exhibit 1. If any paragraph of this request is believed to be ambiguous or unduly burdensome, please contact the undersigned an effort will be made to remedy the problem. If your response to any of the requests for admission is anything other than an unqualified admission, please explain the basis for the denial. If you are declining to produce any document or respond to any paragraph in whole or in part because of a claim of privilege, please: (a) identify the subject matter, type (e.g. letter, memorandum), date, and author of the privileged communication or information, all persons that prepared or sent it, and all recipients or addressees; (b) identify each person to whom the contents of each such communication or item of information have heretofore been disclosed, orally or in writing; (c) state what privilege is claimed; and (d) state the basis upon which the privilege is claimed. If any document requested was, but no longer is, in your possession or subject to your control, please state: (a) the date of its disposition; (b) the manner of its disposition (e.g., lost, destroyed, transferred to a third party); and (c) an explanation of the circumstances surrounding the disposition of the document.

I. REQUESTS FOR ADMISSION 1. Plaintiff, Jon Consumer ("Mr. Consumer"), is a resident of New Haven, Connecticut. 2. Defendant Fred's Motors, Inc. ("Fred's") is a Connecticut corporation. 3. Defendant Credit Auto Lease, Inc., ("CAL") is a foreign corporation which is registered to do business and does business in Connecticut. 4. The regular business activities of Fred's includes selling and leasing automobiles. 5. The regular business activities of CAL includes leasing and offering to lease and purchasing leases of motor vehicles.

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6. Many of Fred's and CAL's leases are made with natural persons who lease vehicles for personal, family or household purposes. 7. The intended term of all Fred's and CAL's leases exceeds four months. 8. Fred's and CAL enter into vehicle leases where the total contractual obligation under the lease is less than $25,000. 9. On August 31, 1992, Mr. Consumer signed a

"Closed End" Vehicle Lease Agreement with Fred's, covering a 1993 Jeep Cherokee. A true and accurate copy of this document is attached to the complaint as Exhibit A. 10. Mr. Consumer's lease (Exhibit A) was immediately assigned to CAL. 11. Mr. Consumer leased the 1993 Jeep Cherokee for purposes of personal transportation. 12. Fred's and CAL received money from Mr. Consumer pursuant to Exhibit A. 13. Exhibit A is a preprinted form which Fred's and CAL used in all automobile lease transactions from November 22, 1990 to the present. 14. From November 22, 1990 to the present, AHMC issued new vehicle warranties on all new Honda cars, whether leased or sold. 15. From November 22, 1990 to the present, it was Fred's and CAL's practice to lease new vehicles "as is", except to the extent the vehicle is subject to the manufacturer's new vehicle warranty, as to which Fred's assigned lessee all rights and remedies under that warranty, "to the extent they are assignable." (Exhibit A, Paragraph G). 16. Fred's and CAL did not issue a new vehicle warranty on the new 1993 Jeep Cherokee leased to Mr. Consumer on August 31, 1992. 17. CAL has permitted lessees whose leases are written on the form attached as Exhibit A to terminate their leases prior to the expiration of the scheduled term. 18. Mr. Consumer paid Fred's $951.62 upon entering into the lease attached as Exhibit A.

11

19. The standard manufacturer's warranty on a 1993 Jeep Cherokee did not require a consumer purchaser to resort to a manufacturer's dispute resolution mechanism prior to enforcing rights under the warranty. 26. Between November 22, 1990, and the present, CAL entered into and/or purchased more than 50 automobile leases that (i) were (according) to the leases) entered into for personal, family or household purposes, (ii) were entered into with natural persons in Connecticut, (iii) were for a period of time exceeding four months, (iv) were for a total contractual obligation not exceeding $25,000 and (v) were written on forms containing the same terms as Exhibit A (irrespective of what name or logo they contained). 27. Between November 22, 1990 and the present, CAL entered into and/or purchased more than 500 automobile leases that (i) were (according to the leases) entered into for personal, family or household purposes, (ii) were entered into with natural persons in Connecticut, (iii) were for a period of time exceeding four months, (iv) were for a total contractual obligation not exceeding $25,000 and (v) were written on forms containing the same terms as Exhibit A (irrespective of what name or logo they contained). 29. Between November 22, 1990 and the present, Fred's entered into more than 25 automobile leases that (i) were (according to the leases) entered into for personal, family or household purposes, (ii) were entered into with natural persons, (iii) were for a period of time exceeding four months, (iv) were for a total contractual obligation not exceeding $25,000 and (v) were written on forms containing the same terms as Exhibit A (irrespective of what name or logo they contained). 30. Between November 22, 1990 and the present, Fred's entered into more than 50 automobile leases that (i) were (according to the leases) entered into for personal, family or household purposes, (ii) were entered into with natural persons, (iii) were for a period of time exceeding four months, (iv) were for a total contractual obligation not exceeding $25,000 and (v)

12

were written on forms containing the same terms as Exhibit A (irrespective of what name or logo they contained). 31. Between November 22, 1990 and the present, Fred's entered into more than 100 automobiles leases that (i) were (according to the leases) entered into for personal, family or household purposes, (ii) were entered into with natural persons, (iii) were for a period of time exceeding four months, (iv) were for a total contractual obligation not exceeding $25,000 and (v) were written on forms containing the same terms as Exhibit A (irrespective of what name or logo they contained). 33. Fred's and CAL do not provide lessees, at the time they enter into leases containing the same terms as Exhibit A, with any document identifying the "lease charge portion" of each payment or explaining how "lease charges" are "earned by you on a constant yield basis in relation to the Adjusted Lease Balance as it declines during the lease term." (Exhibit A, Item D).

II. INTERROGATORIES 1. Identify each person involved in preparing or composing advertisements for Fred's. 2. Identify each person involved in preparing or composing advertisements for CAL concerning vehicle leases. 3. State the name and address of each newspaper, magazine, radio, television and other media outlet in which Fred's advertised, along with the dates or periods that advertisements were run in each. 4. State whether any efforts were made, prior to or after the issuance of the form of contract of which Exhibit A is an example, to estimate or quantify the financial impact of defaults on the early termination of a consumer automobile lease, and if there were, describe the efforts and identify each individual involved in the efforts. 5. State whether a computer is used by CAL to perform any functions relating to the administration of automobile leases or to communications with lessees under such leases, and if 13

it is, describe each such function and how a computer is used to perform it and state when a computer was first used to perform each such function and how that function was performed previously. 6. Identify each form of motor vehicle lease contract used by CAL, its purpose, and its period of use. 7. Identify each person who was involved in the decision to adopt the form of contract of which Exhibit A is an example. 8. State whether any decision was made to cease using or modify the form of contract of which Exhibit A is an example, and if it was, state when such decision we made, whether it was implemented, and identify each person who was involved in the decision. 9. (a) State, broken down by Connecticut zip code, the number of automobile leases CAL entered into and/or purchased. (b) State how many of the leases were on the form used in Exhibit A. (c) State how many of the leases in group (b) were entered into (according to the lease files ) for personal, family or household purposes, with natural persons, for a period of time exceeding four months, and for a total contractual obligation not exceeding $25,000. (d) State how many leases in groups (a), (b) and (c) had default or early termination charges assessed. (e) State how many leases in groups (a), (b) and (c) were for new cars and how many of these lessees received new vehicle warranties. 10. Describe in detail how Mr. Consumer's early termination liability was calculated. If a formula was used, state the entire formula, define each term in the formula and give the value used for each term when calculating Mr. Consumer's liability. 11. Identify each person (1) who was involved in the decision to use the formula used to calculate Mr. Consumer's early termination liability, (2) who was involved in the calculation of Mr. Consumer's early termination liability, and (3) who was involved in the calculation of early termination liability for any other customer.

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12. State for each year from 1990 through 1993, the total amount that was assessed and collected on account of default or early termination charges. explain in detail the reasons for any difference between the two figures, including a statement of any amounts assessed on account of early termination charges that were compromised. 13. State whether CAL has ever treated any of the following as part of the "any other amounts owed arising from your failure to keep promises under this Lease" referred to in Item F of Exhibit A: excess mileage charge; "excessive wear and tear". If so, explain the justification for charging the lessee with such items when the realized value of the vehicle is used to determine the lessees liability. 14. Identify each person who was involved in any decision to charge, alter, or stop charging the "dealer conveyance" fee on motor vehicles sold or leased by Fred's, or to change the amount or designation of such fees. 15. State whether a "dealer conveyance" fee was assessed and, if so, how the amount of the "dealer conveyance fee" was determined. 16. State for each year from 1990 through 1993, the number of people that paid the "dealer conveyance" fee to Fred's and the amount each person was charged. 17. Identify each expert whom you will or may call upon to give evidence in connection with this case, including the subject matter of his expertise, his educational background including academic degrees, employment history, and any other matters which you contend qualify him as an expert, the substance of all facts and opinions to which he could testify if called as a witness, a summary of the grounds for each such opinion. III. REQUESTS FOR PRODUCTION OF DOCUMENTS Please produce: 1. All advertisements, commercials, point of sale and other promotional materials for leasing cars that Fred's ran, or participated in running. In the case of radio and television commercials, produce the script and storyboards. 15

2. All documents compiling or summarizing information relating to early termination or default charges, on automobile leases. 3. All documents compiling or summarizing information relating to dealer conveyance fees. 4. All documents which refer to dealer conveyance fees. 5. All documents compiling and summarizing information relating to the financial impact on CAL of the early termination of automobile leases (either by default or voluntarily). 6. All documents describing practices or policies or procedures relating to the compromise of amounts demanded by CAL procedures relating to the compromise of amounts demanded by CAL on account of default or early termination charges, on automobile leases. 7. All form documents relating to vehicle leases which CAL supplies to dealers. 8. All manuals, memoranda, and other documents setting forth policies, practices and procedures which CAL supplies to dealers. 9. All manuals which Fred's uses in its business which refer to leases and/or dealer conveyance fees. 10. All documents relating to the use of computers to perform any functions relating to automobile leases. 11. All documents relating to any complaint, claim, criticism or inquiry, by any person, concerning Fred's and/or CAL's computation or method of computation of automobile lease default or early termination charges, and taxes, including the pleadings in any other litigation involving these subjects. 12. All documents relating to any complaint, claim, criticism or inquiry, by any person, concerning dealer conveyance fees, including the pleadings in any other litigation involving that subject.

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13. All documents relating to any complaint, claim, criticism or inquiry, by any person, concerning defendants' disclosures of the terms of automobile leases, including the pleadings in any other litigation involving these subjects. 14. Fred's and CAL's annual financial statements, annual reports and semiannual and quarterly annual financial statements. 15. All documents relating to any judicial or administrative proceeding in which Fred's and CAL were accused of any illegal or improper conduct relating to automobile leases. 16. All documents summarizing information on automobile leases that Fred's and CAL entered into and/or purchased. Include only documents containing information relating to two or more leases. 17. All documents summarizing information concerning the amounts CAL (i) assessed and (ii) collected on account of early termination charges and default charges. 18. All documents describing or discussing CAL's policies, practices or standards for compromising amounts assessed on account of default or early termination charges. 19. All documents which describe or discuss the impact which excess mileage has on the value of a car. 20. All documents relating to the payment to salesmen or other employees of Fred's of any part of the "dealer conveyance" fees, or of compensation based on "dealer conveyance" fees generated. 21. All documents showing the posting of amounts collected on account of "dealer conveyance" fees on Fred's books and records. 22. All insurance policies that may afford coverage with respect to the matters complained of. (Alternatively, you may state the name and address of the insurer, the policy limits per claim, occurrence and aggregate, and the policy language relevant to how a claim or occurrence is defined in the event of a class action or other multiple person claim).

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23. All budgets, forecasts, projections and other planning documents which describe, discuss, mention, or otherwise relate to early termination charges or default charges or dealer conveyance charges. 24. Sufficient documents to identify the location and program for any computer system which CAL uses to address mailing labels or otherwise communicate with its lessees. 25. All warranties applicable to the motor vehicle leased by Mr. Consumer on August 31, 1992. 26. All documents that discuss, describe, refer to and/or relate to new vehicle warranties on new cars leased by Fred's and CAL. 27. All documents that discuss, describe, refer to and/or relate to formula(s) and/or method(s) for determining the amount or method of determining the amount of any penalty or other charge for delinquency, default, or late payments on leases. 28. All documents which disclose or explain to one or more lessees how "lease charges will be earned . . . on a constant yield basis in relation to the Adjusted Lease Balance" as it declines during the Lease Term". (Exhibit A, Item D). 29. All documents which describe, discuss or explain the manner of computing or determining the number to be inserted in the blanks alongside the following items of Exhibit A: (a) "Sales Tax" (Item 3D), (b) "Estimated Personal Property/Excise/Other Tax" (Item 2E, 4C), (c) "Estimated Sales Taxes During Lease term" (Item 4a) and (d) "Estimated Personal Property, Excise, or Other Taxes During Lease Term" (Item 4c). 30. All documents which describe, discuss or explain to one or more lessees the difference between the "Sales Tax" (Exhibit A, Item 3D) and the "Estimated Personal Property, Excise, or Other Taxes During Lease term (if applicable)" under the "Estimated Official Fees and Taxes" (Exhibit A, Item 4c), as well as their respective effect on the price or cost of the leased vehicle, or on any other charge or fee to the lessee.

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31. All documents which disclose or explain to one or more lessees "the rules for journal entries for lessors as to "Direct Financing Leases" set forth in "Financial Accounting Standards Board Rule 13". (Exhibit A, Item D). 32. All documents describing Fred's and CAL's policies, practices or procedures for disposing of leased vehicles returned by or taken from lessees. 33. One example of each form of automobile lease that Fred's and CAL made, used or purchased, other than that of which Exhibit A is an example. 34. All documents which describe or discuss the ability of consumers to understand the disclosures made in automobile lease forms. 35. All manuals and other documents that CAL provided to other companies (including but not limited to dealers) to inform, instruct or advise them how to fill out automobile lease forms or how to determine the amounts to be inserted in such forms. 36. All documents relating to Mr. Consumer, or which are indexed, filed or retrievable under his name or any number, symbol, designation or code (such as a lease number of Social Security number) assigned to him or his transaction. 37. All documents or communications concerning default or early termination charges, dealer conveyance fees, taxes, and warranties between Fred's or CAL and any regulatory or law enforcement or consumer protection agency (including any state Attorney General's office), the Federal Trade Commission, the Better Business Bureau, or other public or private agency which receives consumer complaints. 38. All documents concerning complaints form lessees or other persons concerning default or early termination charges, dealer conveyance fees, or taxes,including claims in judicial proceedings, correspondence, and any other documents expressing dissatisfaction with such charges. 39. All documents discussing the default or early termination charges, dealer conveyance fees, and taxes charged by companies other than Fred's and CAL. 19

40. All arrangements between Fred's and CAL. 41. All documents provided to or obtained by any expert who will or may be called to testify in this case. 42. All documents relied upon by any expert, who will or may be called to testify in this case, as a basis for each of his or her opinions.

THE PLAINTIFF BY Attorney for the Plaintiff

9.3

Class Certification Motion

CV 93 XXXXXXX JON CONSUMER, on behalf [vs.] CREDIT AUTO LEASE, INC. and FRED'S MOTORS, INC., of himself and all others similarly situated,

SUPERIOR COURT JUDICIAL DISTRICT AT NEW HAVEN

January 28, 1994

PLAINTIFF'S MOTION FOR CLASS CERTIFICATION

Plaintiff respectfully requests, pursuant to Connecticut Practice Book 86-90 that the Court certify a class, with respect to Counts I and II, consisting of all persons:

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(i)

who signed leases with CAL written on a printed form containing the same early termination and warranty provisions as Exhibit A,

(ii) (iii)

where the lease shows a Connecticut address for the lessee, where the lease has the "consumer use" box checked or initialled, and

(iv)

where the lease either was terminated after three years next before the filing of this action or is still outstanding.

In support of this motion, plaintiff states: 1. The class is so numerous that joinder of all members is impractical. New Haven personal property tax records indicate there are over 70 cars in that city alone on which CAL is liable for personal property taxes. Declaration of Joanne Faulkner, Exhibit B. 2. There are questions of law and fact common to the class, which common issues predominate over any issues involving only individual class members. The principal issues are: 3. Whether it is an unfair and deceptive trade practice, in violation of CUTPA, Conn. G.S., 42-110a et. seq. to describe substantial pecuniary obligations incurred by 50-80% of consumers entering into a transaction in terms which are incomprehensible to the average consumer and then enforce the terms against consumers. 4. Whether the incomprehensible provisions are a lawful part of the contract between Consumer and defendants. 5. Whether the warranty provisions of the CAL lease violate CUTPA, 42-110b(a). 6. Mr. Consumer's claims are typical of those of the class members. All are based on the same facts and legal theories. 7. Mr. Consumer will fairly and adequately protect the interests of the class. He has retained counsel experienced in handling class actions and actions involving unlawful business practices. Declarations setting forth counsels' qualifications are in Exhibit B. Neither Mr. 21

Consumer nor his counsel have any interests which might cause them not to vigorously pursue this action. 8. Certification of the class under Connecticut Practice Book 88 is appropriate in that: 9. The questions of law or fact common to the members of the class predominate over any questions affecting only individual member. 10. A class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Respectfully submitted, Attorney For Plaintiff

9.4

Memorandum In Support of Class Certification

CV 93 XXXXXXX JON CONSUMER, on behalf [vs.] CREDIT AUTO LEASE, INC. and FRED'S MOTORS, INC., of himself and all others similarly situated,

SUPERIOR COURT JUDICIAL DISTRICT AT NEW HAVEN January 28, 1994 CV 93 0529101 MEMORANDUM IN SUPPORT OF PLAINTIFF'S MOTION FOR CLASS CERTIFICATION Plaintiff has requested that the Court certify a class, pursuant to Connecticut Practice Book 88. This memorandum is submitted in support of that motion. 22

I. NATURE OF THE CASE

Plaintiff complains that defendants use a standard printed form automobile lease that imposes substantial early termination charges in language which is totally incomprehensible to a lay consumer. This is the same type of claim involved in Lundquist v. Security Pacific Automotive Financial Services Corp., Civ. No. 5:91-754 (TGFD) (D.Conn.), aff'd, 993 F.2d 11 (2d Cir. 1993), reh'g en banc denied, cert. denied U.S. (1993). Indeed, defendant's lease disclosures are very similar to those held unlawful in Lundquist. Count I alleges that the lease fails to comply with the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn.Gen.Stat. 42-110a et seq., while Count II alleges that because the early termination charges are incomprehensible, they are not a valid and effective part of the contract between plaintiff and the class members, on the one hand, and defendants on the other.

II. STANDARD FOR CLASS CERTIFICATION In determining whether a class will be certified, the merits of the case are not examined and the substantive allegations of the complaint should be taken as true. Blackie v. Barrack, 524 F.2d 891, 901 n. 16 (9th Cir. 1975); Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669, 671 n. 2 (N.D.Ill. 1989); Riordan v. Smith Barney, 113 F.R.D. 60, 62 (N.D.Ill. 1986); In re Energy Systems Equipment Leasing Securities Litigation, 642 F.Supp. 718, 724 (E.D.N.Y. 1986). Moreover, the Court should resolve any doubt regarding the propriety of certification in favor of allowing the class action, so that it will remain an effective vehicle for deterring corporate wrongdoing. In re Folding Cartons Antitrust Litigation, 75 F.R.D. 727, 733 (N.D.Ill. 1977). Class actions are essential to enforce laws protecting consumers. As the Illinois Appellate Court stated in Eshaghi v. Hanley Dawson Cadillac Co., 214 Ill.App.3d 995, 574 N.E.2d 760 (1st Dist. 1991): 23

In a large and impersonal society, class actions are often the last barricade of consumer protection. . . . To consumerists, the consumer class action is an inviting procedural device to cope with frauds causing small damages to large groups. The slight loss to the individual, when aggregated in the coffers of the wrongdoer, results in gains which are both handsome and tempting. The alternatives to the class action -- private suits or governmental actions -- have been so often found wanting in controlling consumer frauds that not even the ardent critics of class actions seriously contend that they are truly effective. The consumer class action, when brought by those who have no other avenue of legal redress, provides restitution to the injured, and deterrence of the wrongdoer. (574 N.E.2d at 764, 766)

III. THE PROPOSED CLASS MEETS THE REQUIREMENTS FOR CERTIFICATION

Under Connecticut Practice Book 87 "[o]ne or more members of a class may sue or be sued as representative parties on behalf of all only if": (1) (2) (3) (4) the class is so numerous that joinder of all members is impracticable, there are questions of law or fact common to the class, the claims or defenses of the representative parties are typical of the claims or defenses of the class, and the representative parties will fairly and adequately protect the interests of the class.

Under Connecticut Practice Book 88 an action that satisfies these requirements may be maintained as a class action if:

the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that 24

a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:

(1)

the interest of members of the class in individually controlling the prosecution or defense of separate actions;

(2)

the extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

(3)

the desirability or undesirability of concentrating the litigation of the claims in the particular forum;

(4)

the difficulties likely to be encountered in the management of a class action.

We will discuss each requirement in turn.

A. 87(1) -- Numerosity Connecticut Practice Book 87 requires that the class be "so numerous that joinder of all members is impracticable." "When the class is large, numbers alone are dispositive . . . ." Riordan v. Smith Barney, 113 F.R.D. 60, 62 (N.D.Ill. 1986). Where the class numbers at least 40, joinder is generally considered impracticable. Swanson v. American Consumer Industries, 415 F.2d 1326, 1333 (7th Cir. 1969) (40 sufficient); Cypress v. Newport News General & Nonsectarian Hospital Ass'n, 375 F.2d 648, 653 (4th Cir. 1967) (18 sufficient); Riordan v. Smith Barney, 113 F.R.D. 60 (N.D.Ill. 1986) (10-29 sufficient); Sala v. National Railroad Passenger Corp., 120 F.R.D. 494, 497 (E.D.Pa. 1988) (40-50 sufficient). It is not necessary that the precise number of class members be known. McCleery Tire Service, Inc. v. Texaco, Inc., 1975-2 Trade Cas. (CCH) 60,581 (E.D.Pa. 1975). "A class action may proceed upon estimates as to the size

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of the proposed class." In re Alcoholic Beverages Litigation, 95 F.R.D. 321 (E.D.N.Y. 1982); Lewis v. Gross, 663 F.Supp. 1164, 1169 (E.D.N.Y. 1986). Attorney Joanne Faulkner examined the New Haven personal property tax records and found over 70 cars in that city alone on which CAL was liable for personal property taxes. Exhibit B.

B. 87(2) -- Commonality

Connecticut Practice Book 87 requires that there be a common question of law or fact. The commonality requirement is satisfied if there are common questions linking the class members which are substantially related to the outcome of the litigation. Jordan v. County of Los Angeles, 669 F.2d 1311, 1320 (9th Cir. 1982); Blackie v. Barrack, 524 F.2d at 910; Crowley v. Banking Center, 1992 Conn. Super. LEXIS 704 (Conn.Super. 1992) Not all factual or legal questions raised in the litigation need be common so long as at least one issue is common to all class members. Spencer v. Central States Pension Fund, 778 F.Supp. 985, 989 n.2 (N.D.Ill. 1991). Where a question of law involves "standardized conduct of the defendants toward members of the proposed class, a common nucleus of operative facts is typically presented, and the commonality requirement . . . is usually met." Franklin v. City of Chicago, 102 F.R.D. 944, 949 (N.D.Ill. 1984); Patrykus v. Gomilla, 121 F.R.D. 357, 361 (N.D.Ill. 1988). Plaintiff has identified a number of common questions. a. Whether it is an

unfair and deceptive trade practice to describe substantial pecuniary obligations incurred by 5080% of consumers entering into a transaction in terms which are incomprehensible to the average consumer and then enforce the terms against consumers. b. Whether the incomprehensible provisions are a lawful part of the contract between Consumer and defendants. c. Whether the warranty provisions of the CAL lease violate Conn. G.S. 42-110a et. seq. 26

C. 87(3) -- Typicality The rule requires that the claims of the named plaintiffs be typical of the claims of the class: A plaintiff's claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members and his or her claims are based on the same legal theory. The typicality requirement may be satisfied even if there are factual distinctions between the claims of the named plaintiffs and those of other class members. Thus, similarity of legal theory may control even in the face of differences of fact. De La Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir. 1983) (citation omitted). See also, Crowley v. Banking Center, 1992 Conn. Super. LEXIS 704 (Conn.Super. 1992); Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992). In the instant case, typicality is inherent in the class definition. All class members' claims arise from the same practices of defendants which gave rise to the named plaintiff's claims.

D. 87(4) -- Adequacy of Representation The rule also requires that the named plaintiff provide fair and adequate protection for the interests of the class. That protection involves two factors: "(a) the plaintiff's attorney must be qualified, experienced, and generally able to conduct the proposed litigation; and (b) the plaintiff must not have interests antagonistic to those of the class." Rosario v. Livaditis, supra, 963 F.2d 1013, 1018 (7th Cir. 1992). Plaintiff is capable of serving as class representative, as established by his affidavit (Exhibit C). He has retained experienced counsel (Exhibit B). The second relevant consideration under 87(4) is whether the interest of the named plaintiff is coincident with the general interests of the class. Given the identity of claims between the plaintiff and the class members, there is no potential for conflicting interests in this action. There is no antagonism between the interests of the named plaintiff and those of the class.

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E. 88 -- Common Questions of Law or Fact Predominate

Connecticut Practice Book 88 requires that the questions of law or fact common to all members of the class predominate over questions pertaining to individual members. This criterion is normally satisfied when there is an essential common factual link between all class members and the defendants for which the law provides a remedy. Halverson v. Convenient Food Mart, Inc., 69 F.R.D. 331 (N.D.Ill. 1974). Other courts have stated that common questions predominate if classwide adjudication of the common issues will significantly advance the adjudication of the merits of all class members' claims. McClendon v. Continental Group, Inc., 113 F.R.D. 39, 43-44 (D.N.J. 1986); Genden v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 114 F.R.D. 48, 52 (S.D.N.Y. 1987); Spicer v. Chicago Board Options Exchange, CCH Fed.Sec.L.Rptr. [1989-90 Transfer Binder] 94,943, at p. 95,254 (N.D.Ill. 1990); Alexander Grant & Co. v. McAllister, 116 F.R.D. 583, 590 (S.D.Ohio 1987). With respect to the challenge of defendants' printed form leases, cases dealing with the legality of standardized documents are generally appropriate for resolution by class action because the document is the focal point of the analysis. Each class member has a printed form contract. Since the contract is a standard form, it is given a uniform construction with respect to all signatories. Restatement (Second) of Contracts 211(2) (1982); Kleiner v. First National Bank of Atlanta, 97 F.R.D. 683, 694 (N.D.Ga. 1983) (certifying class in "prime rate" case); Haroco, Inc. v. American National bank & Trust Co., 121 F.R.D. 664 (N.D.Ill. 1988) (certifying breach of contract class action identical to that in Kleiner); Indianer v. Franklin Life Ins. Co., 113 F.R.D. 595 (S.D.Fla. 1986) (certifying breach of contract class action involving meaning of form insurance documents); La Sala v. American S. & L. Ass'n, 5 Cal.3d 864, 877, 97 Cal.Rptr. 849, 489 P.2d 1113 (1971) ("Controversies involving widely used contracts of adhesion present ideal cases for class adjudication; the contracts are uniform, the same principles of interpretation apply to each contract, and all members of the class will share a common interest in the 28

interpretation of an agreement to which each is a party"); Sharon Steel Corp. v. Chase Manhattan Bank, 691 F.2d 1039 (2nd Cir. 1982) (standard form trust indenture provisions "must be given a consistent, uniform interpretation"); Broad v. Rockwell International Co., 642 F.2d 929, 947 and n.20 (5th Cir. 1981) (en banc) (standard form trust indenture provisions must be given uniform construction). "Since plaintiffs' claims arise from allegations of common practice and rights derived from form contracts, the case appears to present the classic case for treatment as a class action." Haroco, Inc. v. American Nat'l Bank & Trust Co., 121 F.R.D. 664, 669 (N.D.Ill. 1988). The suitability of Truth in Leasing cases for class certification is illustrated by several recent cases in federal and state court in Illinois. In Lynch Leasing Co. v. Moore/ Moore v. Lynch Leasing Co., the Circuit Court of Cook County certified a class and entered summary judgment on the disclosure claim, after which the case was settled on a classwide basis. (Copy of order attached as Exhibit D). Classes were also certified in Simon v. World Omni Leasing, Inc., 146 F.R.D. 197 (S.D.Ala. 1992); Johnson v. Suburu, 1993 U.S.Dist. LEXIS 8018 (Exhibit E); Blank v. Nissan Motor Acceptance Corporation, 91 L 8516 (Exhibit F); Wesley v. General Motors Acceptance Corporation, 91 C 3368 (N.D.Ill.) (Exhibit G); Kedziora v. Citicorp National Services, Inc., 91 C 3428 (Exhibit H); Lundquist v. Security Pacific Automotive Financial Services Corp., 993 F.2d 11 (2d Cir. 1993), reh'g denied, July 22, 1993 (Exhibit I). The only "individual" issues appear to concern identification of the class members. This requires nothing more than ministerial examination of defendants' files. This type of "individual issue" is not a barrier to class certification. Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669 (N.D.Ill. 1989).

F. 87 -- Class Action Is Superior to Other Available Methods to Resolve This Controversy Efficiency is the primary focus in determining whether the class action is the superior method for resolving the controversy presented. Eovaldi v. First Nat'l Bank, 57 F.R.D. 545 29

(N.D.Ill. 1972). The Court is required to determine the best available method for resolving the controversy in keeping with judicial integrity, convenience, and economy. Scholes, 143 F.R.D. at 189; Hurwitz v. R.B. Jones Corp., 76 F.R.D. 149 (W.D.Mo. 1977). It is proper for a court, in deciding the "best" available method, to consider the ". . . inability of the poor or uninformed to enforce their rights, and the improbability that large numbers of class members would possess the initiative to litigate individually." Haynes v. Logan Furniture Mart, Inc., supra, 503 F.2d 1161 (7th Cir. 1974). In this case there is no better method available for the adjudication of the claims which might be brought by each individual lessee. First, "the interest of members of the class in individually controlling the prosecution or defense of separate actions" is nonexistent because the average claim is a few thousand dollars, while the investment of lawyer's and expert's time necessary to prosecute the claim is substantially larger. This is precisely the sort of case contemplated by 86 et seq. -- a situation where a defendant unlawfully obtains moderate sums from a large number of persons, resulting in millions of dollars in unlawful gains but insufficient damage to anyone to warrant an individual action. Individual victims suffer substantial damages, but cannot economically bring suit. "[O]ne of the primary functions of the class suit is to provide a device for vindicating claims which, taken individually, are too small to justify legal action but which are of significant size if taken as a group." Brady v. LAC, Inc., 72 F.R.D. 22, 28 (S.D.N.Y. 1976). See also Crowley v. Banking Center, 1992 Conn. Super. LEXIS 704 (Conn.Super. 1992). Even if individual actions were feasible, they would be incredibly wasteful of judicial resources. The legal fees from thousands of individual cases would far exceed those required to resolve this action. Second, "the difficulties likely to be encountered in the management of a class action" are minimal. Distribution of benefits to class members is not expected to pose any difficulty. Defendants have addresses, social security numbers, and driver's license numbers for all class 30

members, so that they should be findable. The management of this action is likely to present fewer difficulties than many other types of cases which are routinely certified, such as those for securities fraud. For example, in any securities fraud case, individual reliance is a possible issue. Such actions are nevertheless routinely certified as class actions. Here, the only individual issues appear to relate to the amount by which some class members were overcharged, and that can be determined by computer. Even if some individual issues are found to exist, the common questions of the legality of the formula and the disclosures predominate. The special efficacy of the consumer class action has been noted by the courts and is applicable to this case: A class action permits a large group of claimants to have their claims adjudicated in a single lawsuit. This is particularly important where, as here, a large number of small and medium sized claimants may be involved. In light of the awesome costs of discovery and trial, many of them would not be able to secure relief if class certification were denied . . . .

In Re Folding Carton Antitrust Litigation, 75 F.R.D. 727, 732 (N.D.Ill. 1977) (citations omitted).

IV. CONCLUSION With respect to the of the proposed class, plaintiff has shown that each of the prerequisites for class certification set forth in 87 is satisfied: (1) the class is so numerous that joinder of all members is impractical; (2) there are many questions of law and fact common to the class; (3) plaintiff's claims are typical of those of the class members; and (4) plaintiff is an adequate representatives of the class. Plaintiff has also shown that the criteria for certification of a class under 88 are satisfied.

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This action is even more suitable for class treatment than many other actions which are commonly certified as class actions. Accordingly, the Court should enter an order determining that this action may proceed as a class action. Respectfully submitted, Attorney For Plaintiff

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