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Thomas Carroll, et al. v. William Stettler

October 19, 2011

THOMAS CARROLL, ET AL.
v.
WILLIAM STETTLER, III, ET AL.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

Class representatives Thomas Carroll and Kimberly Baker brought this lawsuit, claiming that they lost their entire $57,000 investment in a Ponzi scheme wherein Lizette Morice and her company, Gaddel Enterprises, Inc. (collectively, "Gaddel") falsely represented to investors that they purchased foreclosed properties and sold them at a profit.*fn1 Pending before the Court is the plaintiff's motion for class certification. For the reasons that follow, the Court grants the motion.

I. Background

The plaintiffs initiated this class action on behalf of themselves and all other investors that suffered a net loss in their investments with Gaddel since April 1, 2006. Complaint ¶ 36. The complaint named as defendants the persons who orchestrated the Ponzi scheme (the "Gaddel Insiders") as well as other investors who were net winners because they received more money from Gaddel than they invested (the "Net Winner Defendants"). Id. ¶ 10.

The plaintiffs brought a claim under the Pennsylvania Uniform Fraudulent Transfer Act ("PUFTA"), 12 Pa. Cons. Stat. § 5101 et seq., for avoidance and recovery of fraudulent transfers, as well as a common law unjust enrichment claim, seeking pro rata distribution of the profits of the scheme among the plaintiffs and class members.

On May 2, 2011, the plaintiffs moved for preliminary approval of a partial settlement, preliminary certification of a settlement class, and authorization to disseminate class notice. The Court preliminarily approved the class on May 17, 2011.

The plaintiffs now move for entry of an order certifying an opt-out class pursuant to Federal Rule of Civil Procedure 23(b)(3). The class is defined as follows:

All persons or entities who invested with Gaddel Enterprises, Inc. ("Gaddel") since April 2006, and incurred a net loss (the "Class"). Excluded from the Class are Defendants, Gaddel and any of their officers, employees, or affiliates.

II. Analysis

To certify a class under Rule 23, a court must find that all four prerequisite requirements of Rule 23(a) and at least one part of Rule 23(b) have been met. See Baby Neal v. Casey, 43 F.3d 48, 55 (3d Cir. 1994). The Court finds that the plaintiffs have made both of the required showings.

1. Analysis under Rule 23(a)

Rule 23(a) states that class representatives may sue on behalf of all members only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. Pro. 23(a). The plaintiffs satisfy each of the four requirements.

First, the potential number of plaintiffs here easily satisfies the numerosity requirement. "No minimum number of plaintiffs is required to maintain a suit as a class action, but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met." Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). Here, the potential number of plaintiffs exceeds 2,500. See Decl. of Charles J. Kocher, Ex. 6 at 7, ECF No. 310.

Second, the plaintiffs satisfy the commonality requirement because the named plaintiffs share at least one question of fact or law with the grievances of the prospective class. See Stewart, 275 F.3d at 227. The named plaintiffs and the class members are similarly situated because they must demonstrate the defendants' liability for the ...


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