ChartOne, Inc. v. Roosevelt Raglon
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SUPREME COURT OF ARKANSAS
No.
CHARTONE, INC.,
07-940
Opinion Delivered APRIL 24, 2008
APPELLANT;
VS.
ROOSEVELT RAGLON,
APPELLEE;
APPEAL FROM THE JEFFERSON
COUNTY CIRCUIT COURT;
NO. CV-06-276-1;
HON. ROBERT H. WYATT, JR.,
JUDGE;
AFFIRMED.
DONALD L. CORBIN, Associate Justice
Appellant ChartOne, Inc., appeals the order of the Jefferson County Circuit Court
granting Appellee Roosevelt Raglon’s motion for class certification pursuant to Ark. R. Civ.
P. 23. On appeal, ChartOne argues that the trial court erred in granting class certification
because (1) the class definition presents no feasible means for identifying class members; (2)
there is no statutory prohibition against ChartOne charging a fee for the service of mailing
records; and (3) Raglon failed to sustain his burden of proof with regard to the requirements
of predominance, superiority, and typicality. This court assumed jurisdiction of this case
pursuant to Ark. Sup. Ct. R. 1-2(d). We affirm.
Facts
ChartOne is a health-information management company that provides copying services
of medical records for doctors, hospitals, and other medical-care providers throughout
Arkansas. Raglon, who had requested and paid for a copy of his medical records, filed his first
amended complaint against ChartOne on February 5, 2007. The complaint alleged that
ChartOne charged fees in excess of those allowed by statute for copying medical records and
also charged for shipping and postage that it either did not incur or was reimbursed for by the
medical-care provider. Raglon alleged that ChartOne’s actions constituted a statewide
deceptive practice in violation of Ark. Code Ann. § 16-46-106 (Repl. 1999)1, the Arkansas
Deceptive Trade Practices Act (ADTPA), codified at Ark. Code Ann. §§ 4-88-101 to -115
(Repl. 2001), and common law. Raglon sought to bring the action on his own behalf, as well
as all those similarly situated, requesting that the court certify the matter as a class action, with
Raglon as the named representative. Raglon requested declaratory and injunctive relief under
the ADTPA and sought compensatory and punitive damages, as well.
ChartOne opposed Raglon’s motion for class certification, arguing that the proposed
class definition was ambiguous and contained no objective criteria by which to ascertain the
members of the class. In addition, ChartOne argued that Raglon failed to sustain his burden
of proving that the six required elements for certifying a class action under Rule 23 had been
satisfied.
The circuit court held a hearing on the motion for class certification on April 5, 2007.
At the hearing, Tonya Jones, a corporate representative for ChartOne, testified regarding
ChartOne’s billing practices in Arkansas. Specifically, Jones testified that it was unclear
whether base charges or clerical charges were actually notary fees. Jones went on to state that
ChartOne did not maintain any records to show whether a notary was requested or charged
1
Section 16-46-106 was amended pursuant to Act 662 of 2007. As the amendments to this section
took effect after entry of the court’s order granting the motion for class certification, we are concerned only
with the prior version of the statute.
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and that the company would have to pull every request ever received to determine if a notary
service was requested. With regard to the data sheets maintained by ChartOne, Jones testified
that they contained all the information that is on an invoice, including clerical fees, base fees,
the date of the charges, who the invoice is sent to, the amount paid, the amount billed, and
the number of pages copied. Jones also testified that within the last six years, ChartOne had
billed its customers a percentage of the invoice for shipping and handling. Finally, she stated
that some medical providers did reimburse ChartOne for postage.
At the conclusion of the hearing, the circuit court took the motion for class
certification under advisement. In an order dated June 5, 2007, the circuit court granted
Raglon’s motion for class certification and defined the class as
[a]ny person designated by ChartONE as (a) a “patient”; or (2) “attorney,”
including Plaintiff and all similarly situated persons, from the period of time
beginning on January 1, 1994 to the present (“Class Period”) who requested
a copy of medical records from a healthcare provider located in Arkansas and
who paid ChartONE (1) base fees, clerical fees, retrieval fees and/or page fees
as part of a charge for copying medical records, which resulted in charges being
in excess of $5 for the first five pages and 25¢ for each page thereafter; and/or
(2) shipping charges.
Excluded from the class are the agents, affiliates and employees of the
Defendant and the assigned judge and his/her staff, and members of the
appellate court and their staff.
The circuit court concluded that the above-stated definition was sufficient to objectively
identify members of the class. Additionally, the court concluded that the requirements of
Rule 23 had been satisfied. From that order, comes the present appeal.
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Standard of Review
At the outset, we note that certification of a lawsuit as a class action is governed by
Rule 23. Circuit courts are given broad discretion in matters regarding class certification, and
we will not reverse a circuit court’s decision to grant or deny class certification absent an
abuse of discretion. See Teris, LLC v. Golliher, 371 Ark. 369, ___ S.W.3d ___ (2007); Asbury
Auto. Group, Inc. v. Palasack, 366 Ark. 601, 237 S.W.3d 462 (2006). When reviewing a
circuit court’s class-certification order, this court reviews the evidence contained in the record
to determine whether it supports the circuit court’s decision. Id. This court does not delve
into the merits of the underlying claims at this stage, as the issue of whether to certify a class
is not determined by whether the plaintiff has stated a cause of action for the proposed class
that will prevail. See Am. Abstract & Title Co. v. Rice, 358 Ark. 1, 186 S.W.3d 705 (2004).
Rule 23 provides in relevant part:
(a) Prerequisites to Class Action. One or more members of a class may sue
or be sued as representative parties on behalf of all 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 and their counsel will fairly and adequately protect the
interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class
action if the prerequisites of subdivision (a) are satisfied, and 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 a class action is
superior to other available methods for the fair and efficient adjudication of the
controversy. At an early practicable time after the commencement of an action
brought as a class action, the court shall determine by order whether it is to be
maintained. For purposes of this subdivision, “practicable” means reasonably
capable of being accomplished. An order under this section may be altered or
amended at any time before the court enters final judgment. An order
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certifying a class action must define the class and the class claims, issues, or
defenses.
Under Rule 23, the following six requirements must be met before a lawsuit can be
certified as a class action: (1) numerosity, (2) commonality, (3) typicality, (4) adequacy, (5)
predominance, and (6) superiority. See Teris, 371 Ark. 369, ___ S.W.3d ___. Having set
forth our standard of review, we now turn to the points on appeal.
I. Class Definition
For its first point on appeal, ChartOne argues that the trial court erred in granting the
motion for class certification, because the class definition presents no feasible means for
ascertaining the members of the class. Specifically, ChartOne argues that the class as defined
suffers the fatal defect that the circuit court cannot determine in any reasonable or feasible
manner which of ChartOne’s customers are class members. In advancing this argument,
ChartOne states that such a determination cannot be made because there is no way of
ascertaining the per-page charges without reviewing the actual requests for records that are
stored with the patients’ medical files, mainly because it is unable to determine if a notary fee
was charged or not. ChartOne further avers that it is simply not feasible to conduct a file-byfile review of confidential medical records that could number over 120,000 files. Raglon
counters that class members can be identified by objective criteria, including ChartOne’s own
billing records. With regard to the notary-fee issue, Raglon avers that any issue that may arise
regarding a notary fee is a damages issue and does not render the class definition defective.
We agree with Raglon.
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In addressing the issue of class definition, this court has recently said:
It is axiomatic that in order for a class action to be certified, a class must exist.
The definition of the class to be certified must first meet a standard that is not
explicit in the text of Rule 23, that the class be susceptible to precise definition.
This is to ensure that the class is neither “amorphous,” nor “imprecise.”
Concurrently, the class representatives must be members of that class. Thus,
before a class can be certified under Rule 23, the class description must be
sufficiently definite so that it is administratively feasible for the court to
determine whether a particular individual is a member of the proposed class.
Furthermore, for a class to be sufficiently defined, the identity of the class
members must be ascertainable by reference to objective criteria.
Teris, 371 Ark. at 373, ___ S.W.3d at ___ (quoting Van Buren Sch. Dist. v. Jones, 365 Ark.
610, 614, 232 S.W.3d 444, 448 (2006)). We further pointed out in Teris that clearly defining
the class ensures that those people who are actually harmed by the defendant’s wrongful
conduct will participate in the relief ultimately awarded. See also Ferguson v. Kroger Co., 343
Ark. 627, 37 S.W.3d 590 (2001).
Thus, the issue before us is whether or not the class definition provides a feasible
manner to determine class membership. In its brief to this court, ChartOne avers that the
present case is distinguishable from that of Lenders Title Co. v. Chandler, 358 Ark. 66, 186
S.W.3d 695 (2004). There, Lenders challenged the sufficiency of the class definition set out
by the trial court as being too broad and impermissibly requiring the trial court to inquire into
the facts of each individual case in order to determine whether a person was a class member.
Lenders also argued that there was no administratively feasible way of identifying the class
members because it would require a manual review of more than 50,000 of its closing files.
We rejected Lenders’s argument and ultimately held in part:
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We are not persuaded by the argument that it is not administratively
feasible for Lenders to have to manually review each of the more than 50,000
closing files to identify the class members. Instead, we agree with Chandler
that Lenders should not be allowed to defeat class certification by relying on its
inadequate filing and record system. The fact that Lenders cannot discover
such information by the push of a button on a computer does not render the
class identification any less administratively feasible. Administratively feasible
does not mean convenient. Were Lenders to succeed on this point, it would
undoubtedly encourage other businesses to keep bad records for the purpose
of avoiding class actions. We thus affirm on this point.
Id. at 75-76, 186 S.W.3d at 700-01.
ChartOne avers that, unlike the situation in Lenders, it was wholly appropriate for it
to keep the medical-records requests with the patients’ files and that such a practice was a
sound business judgment. Missing from this argument is an explanation of how the failure
to maintain any record keeping beyond the data sheets is a sound business practice. We are
thus unpersuaded by ChartOne’s argument in this regard for two reasons. First, the data
sheets produced by ChartOne are, at the least, a beginning method for identifying potential
class members. Those sheets include a customer identification number, information regarding
whether that customer was charged a base fee, clerical fee, or per-page fee, as well as the
amounts charged for such fees. Additionally, the data sheets reflect whether a customer was
charged a postage or shipping fee. According to Ms. Jones, the ChartOne corporate
representative, those data sheets allow the company to tell which invoices were paid and how
much was paid.
We are cognizant that ChartOne attempts to circumvent this fact by arguing that it has
no way of determining from the data sheets if a notary fee was charged and, thus, it cannot
ascertain damages from the data sheets. Specifically, Ms. Jones testified as follows:
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Q.
Okay. And if the Court determines that ChartOne can charge only the
page fee of one dollar for the first five pages and twenty-five cents for each
page thereafter, you can determine that total amount of overcharge that was
charged to all class members, all patients and all attorneys, from the data sheets
that are Exhibit 2, can you not?
A.
No, I can’t determine if there was a notary fee in those data sheets.
Q.
Okay.
A.
So I can’t determine that.
Q.
All right. If he says you can’t charge for a notary fee because it’s not in
there, and it’s nowhere documented and nobody knows anything about it but
you, can you charge – can you calculate the total damages based on the data
sheets?
A.
Yes.
Q.
Okay. And you can also determine the overcharge for each individual
invoice based on the data sheets.
A.
If – if there is – if a notary fee is not allowed, and there’s only a per page
fee, yes.
However, any deficiency in those data sheets involve information that would be needed in
the damages stage of the present proceedings. As we have consistently recognized, damages
is a separate issue. Farmers Ins. Co., Inc. v. Snowden, 366 Ark. 138, 233 S.W.3d 664 (2006).
Second, ChartOne’s argument that they have no way of identifying class members
without going back and searching hundreds of thousands of private medical records is
insufficient to defeat the class definition. Despite ChartOne’s attempt to distinguish this case
from Lenders, we believe that the rationale underlying our decision in that case is wholly
applicable in the present case. Much of Ms. Jones’s testimony at the class-certification
hearing, as well as her deposition testimony, focused on the fact that ChartOne has
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inconsistent billing and record-keeping practices.
Ms. Jones tried to explain the
inconsistencies by stating that ChartOne had upgraded its billing system several times,
resulting in differing practices, and that regulations regarding billing vary from state to state.
Whatever the reason, the fact that ChartOne failed to maintain and store sufficient records
is not the fault of Raglon or the class. We simply do not see how it was an “appropriate
business practice” to maintain the only detailed invoice with the patients’ medical records.
Moreover, ChartOne’s assertion that being forced to review medical records is not
administratively feasible is unavailing. As we recognized in Lenders, administratively feasible
does not equate to convenient. Just as we stated in Lenders, if we were to allow ChartOne
to defeat the class definition because of its own failure to maintain accurate records, including
whether a notary fee was charged or not, we would encourage other businesses to maintain
poor records in an attempt to avoid class actions. Thus, we reject ChartOne’s argument
regarding the class definition.
II. Interpretation of Section 16-46-106
Next, ChartOne argues that the circuit court erred in certifying this as a class action
because its order certifying the class was based, in part, on the court’s erroneous interpretation
of section 16-46-106. Specifically, ChartOne alleges that the trial court read into the statute
a prohibition that is simply not there; namely, that ChartOne is prohibited from charging a
fee for postage. According to ChartOne, the statute governs only the charges allowed for
copying medical records and does not regulate postage, notary services, or other ancillary
services. Moreover, ChartOne argues that because this issue is one of statutory interpretation
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that directly impacts the court’s decision to certify the class, we should review this issue de
novo. Raglon counters that the trial court properly found that section 16-46-106 does not
authorize a charge for shipping and postage but, in any event, the issue of whether the statute
allows such a charge or not is not a basis for the class definition. Moreover, Raglon points
out that in his first amended complaint, he alleges that the charging of fictitious and excessive
postage is a deceptive act in violation of the ADTPA and common law, thus, ChartOne’s
argument is irrelevant. We agree.
ChartOne’s argument on this point is unavailing, as it has mischaracterized the nature
of the circuit court’s order. In its order, the court, under the heading “Findings of Fact,”
stated as follows:
Without making a determination of credibility and without considering
the merits of the claims, the following is the type of common proof that might be
presented, which supports the procedural decision to certify this case as a class
action[.]
(Emphasis added). The order then sets forth examples of such common proof, including:
“Arkansas law does not authorize a charge for shipping or postage as part of the allowed
charges for copying medical records.” Although ChartOne argues that in order to sustain the
class as defined, this court must approve of the circuit court’s interpretation of section 16-46106, we do not agree. The portion of the class definition concerning the charging of postage
or shipping is not limited to section 16-46-106. As Raglon points out, he alleges that
ChartOne violated the ADTPA and common law by charging fictitious postage or shipping
charges. Simply put, the class is not as narrowly defined as ChartOne’s argument suggests.
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Moreover, the issue of whether ChartOne charged excessive or fictitious postage or
shipping charges goes to the underlying merits of this case. As recognized by ChartOne, it
is improper for this court to consider the merits of the underlying lawsuit in reviewing the
appropriateness of a class-certification order. See Mittry v. Bancorpsouth Bank, 360 Ark. 249,
200 S.W.3d 869 (2005). We are not persuaded by ChartOne’s reliance on Eisen v. Carlisle
& Jacquelin, 417 U.S. 156 (1974), for the proposition that we may delve into the merits in
order to analyze the factors under Rule 23. In sum, the issue of whether section 16-46-106
allows ChartOne to charge for postage or shipping is immaterial to our review of the
requirements of Rule 23. Accordingly, this argument provides no basis for reversing the
order granting class certification.
III. Rule 23 Requirements
Next, ChartOne argues that the circuit court erred in certifying this as a class action
because Raglon failed to sustain his burden of proof that all the elements of Rule 23 have
been satisfied. Specifically, ChartOne claims that Raglon failed to establish the elements of
predominance, superiority, and typicality. To the contrary, Raglon asserts that the circuit
court properly found that all of the elements of Rule 23 had been satisfied.
a. Predominance
In arguing that the predominance requirement has not been satisfied, ChartOne avers
that this court is charged with the task of determining whether the circuit court’s order
identified issues for the elements of Raglon’s claim that predominate over the inconsequential
questions. Citing to this court’s opinion in Williamson v. Sanofi Winthrop Pharmaceuticals, Inc.,
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347 Ark. 89, 60 S.W.3d 428 (2001), ChartOne avers that if determinative questions cannot
be answered en masse, the predominance requirement has not been met. ChartOne then
argues that the circuit court deemed only one issue to predominate over the others:
“Whether the prices charged by ChartONE exceed the amounts allowed by Ark. Code Ann.
§ 16-46-106[.]” This conclusion was in error, according to ChartOne, because in order to
determine that predominating question, the fact-finder would have to engage in
individualized inquiries that are specific to each class member. Raglon counters that his claim,
as well as the claims of any class members, all arise from ChartOne’s uniform practice of
charging Arkansas consumers inflated prices for copying medical records and for fictitious and
excessive postage expenses; thus, according to Raglon, this common practice gives rise to
predominating issues, both of fact and law. Moreover, Raglon asserts that simply because
individual issues may exist, the element of predominance is not defeated.
Rule 23(b) requires that “the questions of law or fact common to the members of the
class predominate over any questions affecting only individual members[.]” In Georgia-Pacific
Corp. v. Carter, 371 Ark. 295, ___ S.W.3d___ (2007), this court noted that the starting point
in examining the predominance issue is whether a common wrong has been alleged against
the defendant. If a case involves preliminary, common issues of liability and wrongdoing that
affect all class members, the predominance requirement of Rule 23 is satisfied even if the
circuit court must subsequently determine individual damage issues in bifurcated proceedings.
See Johnson’s Sales Co., Inc. v. Harris, 370 Ark. 387, ___ S.W.3d ___ (2007). We have
recognized that a bifurcated process of certifying a class to resolve preliminary, common issues
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and then decertifying the class to resolve individual issues, such as damages, is consistent with
Rule 23. See id. In addition, we have said that
[t]he predominance element can be satisfied if the preliminary, common issues
may be resolved before any individual issues. In making this determination, we
do not merely compare the number of individual versus common claims.
Instead, we must decide if the issues common to all plaintiffs “predominate
over” the individual issues, which can be resolved during the decertified stage
of bifurcated proceedings.
Carter, 371 Ark. 295, 301, ___ S.W.3d ___, ___ (quoting Asbury, 366 Ark. at 610, 237
S.W.3d at 610).
If, however, the preliminary issues are individualized, then the
predominance requirement is not satisfied. Johnson Sales, 370 Ark. 387, ___ S.W.3d ___.
We must thus determine whether there is a predominating question that can be
answered before determining any individual issues regarding damages. In addressing the issue
of predominance, the circuit court found that the issue of whether the prices charged by
ChartOne exceeded those allowed under section 16-46-106 was the single most common
issue that predominated over all others. This finding was not an abuse of discretion.
ChartOne’s billing practices, whether they be for the copying of records or for shipping or
postage, are the central issue of this litigation. Raglon alleges that ChartOne engaged in a
deceptive scheme to overcharge its customers in violation of statutory and common law; thus,
the issue of whether ChartOne overcharged its customers is a predominating question. We
similarly held that the issue of whether a defendant engaged in a fraudulent scheme
predominated over any individual issues in Seeco, Inc. v. Hales, 330 Ark. 402, 954 S.W.2d 234
(1997). Accordingly, ChartOne’s argument that the element of predominance is not satisfied
is without merit.
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b. Superiority
ChartOne argues that the circuit court erred in determining that the element of
superiority had been satisfied because individual issues create insurmountable manageability
problems. According to ChartOne, it will be necessary for the fact-finder to make customerspecific determinations about what services were requested and subsequently provided.
ChartOne also argues that there are more expeditious avenues for pursuing this action.
Raglon argues that the trial court correctly determined that a class action was the superior
method of proceeding, particularly because of the large number of persons affected and the
relatively small amount of potential claims.
Rule 23(b)requires “that a class action is superior to other available methods for the
fair and efficient adjudication of the controversy.” This court has repeatedly held that the
superiority requirement is satisfied if class certification is the more “efficient” way of handling
the case, and it is fair to both sides. See Beverly Enters.–Ark., Inc. v. Thomas, 370 Ark. 310, ___
S.W.3d ___ (2007); Van Buren, 365 Ark. 610, 232 S.W.3d 444. Where a cohesive and
manageable class exists, we have held that real efficiency can be had if common,
predominating questions of law or fact are first decided, with cases then splintering for the trial
of individual issues, if necessary. Van Buren, 365 Ark. 610, 232 S.W.3d 444. This court has
further stated that when a circuit court is determining whether class-action status is the
superior method for adjudication of a matter, it may be necessary for the circuit court to
evaluate the manageability of the class. Id. Furthermore, the avoidance of multiple suits lies
at the heart of any class action. Beverly, 370 Ark. 310, ___ S.W.3d ___.
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In addressing the requirement of superiority, the circuit court concluded that
resolution of the central issues in this case was superior to the adjudication of those common
issues in individualized proceedings that could number in the thousands. Moreover, the court
took into consideration the fact that because of the size of the potential claims, they might
otherwise go unaddressed. The trial court thus reasoned that the efficiency of resolving the
predominating central issues established the superiority of resolving this matter as a class
action. We agree.
As we explained, the common, predominating issue is whether ChartOne engaged in
a scheme to overcharge customers for copying charges, as well as postage and shipping. This
common question can be answered and, if necessary, subsequent trials can be held on any
individual issues.
ChartOne’s assertion that the court would have to conduct an
individualized inquiry into what services were requested and provided does not defeat the
finding of superiority, as any such inquiry would go to damages and could be handled in a
bifurcated proceeding. Moreover, simply because the number of potential class members may
number in the thousands does not render this matter unmanageable as a class action. To the
contrary, the large number of potential class members, and the relatively small size of their
claims, favors a finding of superiority. Finally, proceeding as a class action is fair to both sides.
Each side can present evidence regarding the predominating question of whether ChartOne
engaged in a deceptive scheme. Accordingly, the trial court did not err in concluding that
a class action was the superior method for handling this case.
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c. Typicality
Finally, ChartOne argues that Raglon failed to demonstrate that the element of
typicality had been satisfied. Specifically, ChartOne argues that Raglon’s claims are not
typical of the proposed class, as any claim against ChartOne stemming from its charges will
vary from person to person. Raglon asserts that his claims are typical of those of the class, as
he and all class members were charged inflated prices for copying medical records and for
fictitious postage expenses.
Rule 23(a)(3) requires that “the claims or defenses of the representative parties are
typical of the claims or defenses of the class[.]” This court has described the typicality
requirement as follows: “[T]he typicality requirement is satisfied where the event or practice
or course of conduct that gives rise to the claim of other class members is the same event or
practice or course of conduct that gives rise to the plaintiffs injury, and where the claim is
based upon the same legal theory.” Asbury, 366 Ark. at 609, 237 S.W.3d at 468 (quoting Van
Buren, 365 Ark. at 619, 232 S.W.3d at 451). We also stated that “[t]he class representative’s
claim must only be typical and not identical.” Id. (quoting Van Buren, 365 Ark. at 619, 232
S.W.2d at 452).
In determining that typicality had been met, the circuit court concluded that Raglon’s
claims were typical of all patients or their attorneys who requested copies of medical records
from a medical-care provider. The court pointed out that Raglon and the class allege the
same unlawful conduct by ChartOne and a resolution of the central issues of whether
ChartOne overcharged its customers will resolve all class members’ claims; thus, making the
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claims typical. A similar result was reached by the circuit court and affirmed by this court in
Asbury, 366 Ark. 601, 237 S.W.3d 462. There, this court held that the element of typicality
was satisfied where the claims of the class members all arose out of the same conduct; namely,
the charge of a documentary fee by the car dealers. Likewise, here the claims of the class
members all arose out of ChartOne’s practices of charging for the copying of medical records.
Accordingly, the trial court did not abuse its discretion in concluding that the element of
typicality was satisfied.
Affirmed.
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