Court Error – Abuse of Discretion

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7^th Circuit Court of Appeals

Case Name: Red Barn Motors, Inc. et al. v. NextGear Capital, Inc. 

Case No.: 18-1409

Officials: WOOD, Chief Judge, and ROVNER and BRENNAN, Circuit Judges.

Focus: Court Error – Abuse of Discretion

This appeal presents us with only the narrow issue of whether the district court erred in rescinding class certification. The defendant-appellee, NextGear Capital, Inc., formerly known as Dealer Services Corporation, provided lines of credit for financing the operations of used car dealerships. The plaintiffs Red Barn Motors, Inc., Platinum Motors, Inc. and Mattingly Auto Sales, Inc., operated used car dealerships, and were solicited by NextGear to enter into a contract called a Demand Promissory Note and Security Agreement (the “Agreement”), whereby NextGear would issue a line of credit for them to access in purchasing used vehicles at automobile auctions. Those agreements provided the plaintiffs with a revolving line of credit, called a floorplan agreement, to purchase vehicles at the auction which they subsequently would sell at their dealerships.

We review a district court’s decision to grant or deny certification for abuse of discretion. Chicago Teachers Union, Local No. 1, 797 F.3d at 433. We have recognized, however, that such review, while deferential, “can and must also be exacting.” Id. A decision to deny or grant certification can have a considerable impact on the playing field of litigation and requires a rigorous analysis. Id.; Bell v. PNC Bank, National Association, 800 F.3d 360, 373 (7th Cir. 2015).

The decision of the district court is VACATED and the case REMANDED for further proceedings.

Vacated and Remanded

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.