WILLIAM B. GRAY, III, d/b/a Greenwood Clinic of Chiropractic, individually v. Hearst Communications, Incorporated; White Directory Holdings Carolina Incorporated

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1302
WILLIAM B. GRAY, III, d/b/a Greenwood Clinic of
Chiropractic, individually and for the benefit and on
behalf of all others similarly situated; B AND K SERVICES
INCORPORATED,
Plaintiffs – Appellees,
and
STEVE WALL AND ASSOCIATES LLC, f/k/a SC Insurance Services
LLC, d/b/a Morgan and Associates Incorporated; UNLIMITED
SERVICES OF GREENWOOD INCORPORATED, individually and for
the benefit and on behalf of all others similarly situated,
Plaintiffs,
v.
HEARST COMMUNICATIONS, INCORPORATED; WHITE DIRECTORY
HOLDINGS CAROLINA INCORPORATED,
Defendants – Appellants,
and
TALKING PHONE BOOK; SAIA HOLDINGS LLC; SAIA PUBLISHING
COMPANY; MICHAEL BROWN; WHITE DIRECTORY HOLDINGS
PENNSYLVANIA INCORPORATED; WHITE DIRECTORY OF CAROLINA,
INCORPORATED,
Defendants.
Appeal from the United States District Court for the District of
South Carolina, at Anderson. G. Ross Anderson, Jr., Senior
District Judge. (8:08-cv-01833-GRA)

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Argued: December 7, 2010 Decided: August 25, 2011
Before WILKINSON and SHEDD, Circuit Judges, and Norman K. MOON,
Senior United States District Judge for the Western District of
Virginia, sitting by designation.
Affirmed by unpublished opinion. Judge Shedd wrote the majority
opinion, in which Senior Judge Moon joined. Judge Wilkinson
wrote a dissenting opinion.
ARGUED: Alan Mansfield, GREENBERG TRAURIG, LLP, New York, New
York, for Appellants. Daniel S. Haltiwanger, RICHARDSON,
PATRICK, WESTBROOK & BRICKMAN, LLC, Barnwell, South Carolina,
for Appellees. ON BRIEF: Stephen L. Saxl, William A. Wargo,
GREENBERG TRAURIG, LLP, New York, New York; R. Bruce Shaw,
Stephen G. Morrison, NELSON MULLINS RILEY AND SCARBOROUGH, LLP,
Columbia, South Carolina, for Appellants. Terry E. Richardson,
Jr., Christopher J. Moore, RICHARDSON, PATRICK, WESTBROOK &
BRICKMAN, LLC, Barnwell, South Carolina; Jon E. Newlon, MCCRAVY,
NEWLON & STURKIE LAW FIRM, P.A., Greenwood, South Carolina, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.

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SHEDD, Circuit Judge:
Hearst Communications, Inc. and White Directory
Holdings Carolina, LLC (collectively “White Directory”) appeal
the district court’s order conditionally certifying class action
claims against them for breach of contract, breach of the
implied covenant of good faith and fair dealing, and unfair and
deceptive trade practices. For the following reasons, we affirm
the certification order.
These claims, brought by William B. Gray, III, d/b/a
Greenwood Clinic of Chiropractic, and B & K Services, Inc., on
behalf of themselves and other similarly situated advertisers
(collectively “Gray”), stem from Gray’s purchase of advertising
in The Talking Phone Book telephone directories which are
published and distributed by White Directory in various markets
throughout South Carolina. Gray alleges White Directory
solicited the class members to enter into advertising contracts
through the use of concerted sales efforts touting White
Directory’s superior distribution coverage, but that White
Directory knowingly misrepresented its actual distribution,
never made a full distribution as promised, and intentionally
sought to conceal this deception.
Gray initially asserted seven causes of action, but
eventually sought class certification on only three theories of
relief: breach of contract, breach of the implied covenant of

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good faith and fair dealing, and unfair and deceptive trade
practices. After a hearing on the motion for class
certification, the district court entered an order conditionally
certifying all three class claims. White Directory timely filed
a petition for review. We review the class certification
decision for abuse of discretion. Brown v. Nucor Corp., 576 F.3d
149, 152 (4th Cir. 2009).
Although White Directory raises several issues on
appeal, the primary issue is whether the district court erred in
finding that Gray’s proposed class action claims satisfy the
commonality and predominance requirements of Federal Rule of
Civil Procedure 23. In granting certification, the district
court determined that each of Gray’s claims ultimately hinges on
whether he can establish a distribution obligation, which is a
question that the district court found is capable of classwide
proof and predominates over any individual issues. We agree.
Federal Rule of Civil Procedure 23 establishes the
standard for class certification, and a proposed class must meet
the requirements of both Rule 23(a) and Rule 23(b). First, a
class action “must comply with the four prerequisites
established in Rule 23(a): (1) numerosity of parties; (2)
commonality of factual and legal issues; (3) typicality of
claims and defenses of class representatives; and (4) adequacy
of representation.” Gunnells v. Healthplan Services, Inc., 348

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F.3d 417, 423 (4th Cir. 2003) (quoting Fed. R. Civ. P. 23(a)).
Second, the class action must also fall within one of the three
categories established in Rule 23(b). Id. Here, Gray seeks
certification of his claims under Rule 23(b)(3), which requires
proof that “the questions of law or fact common to class members
predominate over any questions affecting only individual
members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the
controversy.” Fed. R. Civ. P. 23(b)(3). A plaintiff seeking
class certification bears the burden of proving the proposed
class complies with the requirements of Rule 23. Windham v. Am.
Brands, Inc., 565 F.2d 59, 65 n.6 (4th Cir. 1977) (en banc).
Commonality is generally established when a
plaintiff’s claims have “questions of law or fact common to the
class.” Fed. R. Civ. P. 23(a)(2). As the Supreme Court recently
clarified, in order to satisfy the commonality requirement, the
plaintiff must “demonstrate that the class members ‘have
suffered the same injury,’” Wal-Mart Stores, Inc., v. Dukes, 131
S. Ct. 2541, 2551 (2011) (quoting Gen. Tel. Co. of Southwest v.
Falcon, 457 U.S. 147, 156 (1982)), and that the claim “depend[s]
upon a common contention” that “is capable of classwide
resolution – which means that determination of its truth or
falsity will resolve an issue that is central to the validity of
each one of the claims in one stroke,” id.

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“In a class action brought under Rule 23(b)(3), the
commonality requirement of Rule 23(a)(2) is subsumed under, or
superseded by, the more stringent Rule 23(b)(3) requirement that
questions common to the class predominate over other questions.”
Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 146 n.4 (4th Cir.
2001) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 609
(1997)) (internal quotation marks omitted). The Rule 23(b)(3)
predominance requirement is “far more demanding” than Rule
23(a)(2)’s commonality requirement, and the "predominance
inquiry tests whether proposed classes are sufficiently cohesive
to warrant adjudication by representation.” Amchem Prods., 521
U.S. at 623. In other words, to satisfy Rule 23(b)(3), “[c]ommon
questions must predominate over any questions affecting only
individual members; . . . [such that] a class action would
achieve economies of time, effort, and expense, and
promote . . . uniformity of decision as to persons similarly
situated.” Id. at 615 (internal quotation marks omitted).
White Directory initially argued the contracts at
issue did not include an express distribution term and therefore
contained no contractual obligation regarding distribution.
However, during oral argument, White Directory conceded the
contracts do contain a distribution obligation, and further
conceded the distribution plan or scheme is the same for all

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advertisers in any given coverage area. Thus, there is no
dispute that a uniform distribution obligation exists.
Having conceded the existence of a uniform
distribution obligation, White Directory’s remaining objections
to class certification carry little weight. White Directory’s
insistence that there can be no proof of a distribution
obligation absent a distribution number, which the contracts do
not contain, is simply a variation of its now-rejected argument
that the contracts contain no distribution obligation at all.
Likewise, because White Directory concedes it has a distribution
obligation under the contract, the contracts’ integration clause
and North Carolina’s parol evidence rule1
1 The parties agree that North Carolina law applies to
Gray’s breach of contract claim pursuant to the choice of law
provision in the contracts.
do not bar the use of
extrinsic evidence to determine what that obligation is. See,
e.g., Edwards v. Hill, 703 S.E.2d 452, 456 (N.C. Ct. App. 2010)
(noting extrinsic evidence may be used to explain the terms and
the parties’ expressed intentions in an integrated agreement).
In fact, during oral argument White Directory described its
distribution requirement under the contracts as its “normal
course of distributing books.” Evidence of such course of
dealings and course of performance is permissible to explain or
supplement contractual terms. See Phelps v. Spivey, 486 S.E.2d

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226, 228-29 (N.C. Ct. App. 1997) (citing N.C. Gen. Stat. § 25-2-
202).
Finally, White Directory misses the mark by focusing
on the individualized nature of the different representations
that may (or may not) have been made in the negotiations between
each advertiser and White Directory. As we already discussed:
White Directory concedes (and common sense dictates) that the
normal course of distribution is the same for all directory
advertisers in a given market. Accordingly, the level of
distribution does not vary based on what advertisers pay.
It is this uniform distribution practice which
distinguishes Wal-Mart. In Wal-Mart, the putative class sought
to prove Wal-Mart had a general policy of discrimination that
guided millions of allegedly discriminatory employment
decisions. However, in Wal-Mart there was a question of whether
a general policy concerning such decisions existed and whether
that general policy applied to all hiring decisions. Here,
unlike Wal-Mart, there is no dispute that a uniform policy (or
obligation) exists or that such a uniform policy applies to all
plaintiffs; White Directory concedes both. Moreover, to the
extent White Directory argues its sales representatives made
representations regarding distribution that differed from the
distribution obligation in the contract, evidence of those
representations – unlike evidence of White Directory’s course of

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dealings concerning distribution - would be barred by the
contract’s integration clause.
Thus, although White Directory’s sales representatives
may have had broad discretion to make different sales pitches to
different advertisers, they could not make binding promises
regarding distribution obligations which differed from that
reflected in the contract. And, even if the parties may have had
different expectations regarding other variables (e.g. size,
color, location, price, etc.), the common predominating question
focuses on whether White Directory fulfilled that distribution
obligation.
To summarize, we think the district court was correct:
the common question regarding White Directory’s distribution
obligation predominates over any individual issues because the
putative class members all assert injury from the same action
(i.e. failure by White Directory to follow its standard
distribution practice), and determination of whether White
Directory breached its standard distribution obligation will
resolve in one stroke an issue that is central to the validity
of the class members’ breach of contract claims. In addition,
the district court correctly found that Gray may rely on
extrinsic evidence to establish what that normal course of
distribution is. Because the same distribution obligation
applies to every advertiser within the same geographic market

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area, evidence of White Directory’s distribution obligation
would apply to all such advertisers. Whether White Directory
reasonably met that obligation becomes a common question of fact
for the jury to decide.2
Accordingly, we affirm the district court’s
certification of the class.3
AFFIRMED
2 We have reviewed Gray’s breach of a good faith and fair
dealing and unfair trade practices claim and believe he
satisfied his burden of establishing commonality as to those two
claims. Like the breach of contract claim, both of the remaining
claims center on the distribution obligation.
3 White Directory also argues that the district court abused
its discretion by (a) certifying Gray’s class on a conditional
basis, (b) failing to conduct a rigorous analysis of the record,
and (c) finding the class satisfied the superiority, typicality,
and adequacy requirements of Rule 23(b)(3). We have reviewed the
record and find no abuse of discretion by the district court on
these matters.

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WILKINSON, Circuit Judge, dissenting:
This case concerns whether advertisers pursuing a
breach of contract class action met the commonality requirement
of Rule 23(b)(3) for class certification, that “questions of law
or fact common to class members predominate over any questions
affecting only individual members.” Fed. R. Civ. P. 23(b)(3)
(emphasis added). Plaintiffs contend that this standard was
satisfied, but an irresolvable paradox lies at the heart of
their position. On the one hand, plaintiffs insist that there
is commonality due to a uniform distribution obligation in the
contracts. See ante, at 8. Yet on the other, they nonetheless
concede that extrinsic evidence, which inevitably will be
individualized, is permissible and necessary to establish what
the normal course of distribution even was. See ante, at 9.
Because the integrated contracts in fact lack any uniform
distribution term to supply the necessary commonality of law or
fact, I respectfully dissent.
I.
There is no uniform distribution policy in the
contracts for the defendants to have allegedly breached. The
contracts would be the logical place to look for such an
obligation and if it were there, the certification could readily
be affirmed. I have looked high and low for such a distribution

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term, but cannot find one for the simple reason that the
contracts in this breach of contract action do not have one. It
is the contracts that would have supplied a ready commonality
for something that now is anybody’s guess.
The majority’s conclusion depends on its assertion
that “during oral argument, White Directory conceded the
contracts do contain a distribution obligation.” Ante, at 6.
But concessions at oral argument, if made, are always to be
taken cautiously and there remains no provision in the contract
in which any distribution obligation is embodied.
So when and how was what to be distributed to whom?
Plaintiffs fail to cite any language from the contracts to
demonstrate that any such distribution obligation exists within
them. They don’t do so because they can’t -- such language is
nowhere to be found in the contracts themselves.
II.
To establish a distribution requirement and
demonstrate its breach therefore requires resort to
individualized extrinsic evidence of exactly the kind deemed
insufficient to support class certification by the Supreme Court
in Wal-Mart under the even lower threshold of Rule 23(a)(2).
See Fed. R. Civ. P. 23(a)(2) (requiring commonality of questions
of law or fact, but not requiring predominance of those

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questions as in Rule 23(b)(3)); Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011). In Wal-Mart, the Court was troubled by
the lack of proof of a uniform discrimination policy. Likewise,
in Hearst, there is no distribution term in the integrated
contracts speaking to what appellees contend is the common issue
demonstrating breach of contract. Without a contract term
directly addressing the mechanics of distribution or the exact
number of phone books to be distributed, plaintiffs must turn to
individualized extrinsic evidence to establish an implied
distribution term.
A.
To compensate for the contract’s silence on
distribution and construct what might pass for a distribution
policy, plaintiffs invite the district court to resort to
extrinsic evidence regarding White Directory’s distribution
practices. See ante, at 9. But by focusing on distribution
practices, and not on the representations made to clients with
respect to their individual contracts, plaintiffs are the ones
that “miss[] the mark.” Ante, at 8. Any practice of
distribution still begs the critical question of what that
distribution number was or whether the clients had any uniform
expectation of what it would be. Absent an explicit
distribution term in the contracts, uniformity in actual

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distribution tells us nothing about the reliance interests of
individual clients that could form the basis of a contractual
breach. This is especially true if the expectations and intent
of each client varied as a product of the individualized sales
representations that client received.
With respect, the majority is mistaken in its attempt
to distinguish Wal-Mart on the basis of White Directory’s
“uniform distribution practice.” Ante, at 8. The relevant
policy is not White Directory’s distribution practices, but
rather its sales policy, which sheds light on the reliance
interests of the parties and whether they were uniform. And in
this respect, Wal-Mart is squarely on point. Wal-Mart’s policy
that granted broad discretion to local supervisors over pay and
promotion (in conjunction with its written policy of
nondiscrimination) was fatal to the plaintiffs’ assertion of
commonality. As in Wal-Mart, White Directory’s sales policy was
one of broad discretion. Specifically, salesmen had broad
discretion to craft their sales pitch to the needs of the
specific client.
As a result, there was substantial variation in
written and oral sales pitches. Not all members of the class
saw the same sales aids or the same salespersons nor were they
subject to the same representations with respect to
distribution. Evidence of the parties’ intent and expectations

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with respect to distribution will therefore necessarily be
individualized and anecdotal, just like the evidence deemed
insufficient in Wal-Mart. Thus, even if the actual distribution
of phone books was uniform, the lack of uniformity in the
representations to class members indicates that there is no
“common answer” to the critical question of the intent of the
parties to each contract. See Wal-Mart, 131 S. Ct. at 2552.
B.
The extrinsic evidence and the individualized nature
of the claims deriving from it forecast all sorts of difficult
problems down the road. Plaintiffs would need to introduce
individualized evidence, of the kind rejected in Wal-Mart, to
prove a specific numerical distribution term -- specifically
evidence of what sales aids were used or what sales pitches were
given at individual meetings.*
* It is worth emphasizing that even appellees have never
identified a uniform distribution policy within the contracts as
the basis for the breach. Rather, their theory of the case has
always rested on extrinsic evidence of the representations about
distribution made to clients in sales aids and sales
conversations.
Individualized evidentiary
hearings will be necessary to prove both injury and any damages
that may flow from a breach of contract. In contrast, the class
action device as applied to this variety of circumstances may

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force appellants into a one-size-fits-all defense, compromising
what is and should have been their legitimate right to make a
defense tailored to individual circumstances. In this case,
therefore, the class action method hardly seems “superior to
other available methods for fairly and efficiently adjudicating
the controversy.” Fed. R. Civ. P. 23(b)(3).
III.
In the end, we are still left with the question,
unanswered by the contract, of what the uniform distribution
policy was. Plaintiffs want to have their cake and eat it too.
They allege commonality for class certification on the basis of
an alleged uniform distribution obligation, and yet expect use
of extrinsic evidence to demonstrate that such an obligation
existed and was breached. But just as the absence of a uniform
discrimination policy was fatal to certification in Wal-Mart, so
too is the absence of uniform representations with respect to
distribution fatal to the certification effort here. Again, it
is the representations that matter, because it is the violation
of those representations that alone could lead to a viable
breach of contract claim. Accordingly, there is no way to
“resolve an issue that is central to the validity of each one of
the claims in one stroke.” Wal-Mart, 131 S. Ct. at 2545. I

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would therefore reverse the class certification order in this
case.

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