Ahne v. Allis-Chalmers Corp.

102 F.R.D. 147, 39 Fed. R. Serv. 2d 758
CourtDistrict Court, E.D. Wisconsin
DecidedMay 16, 1984
DocketNo. 83-C-0921
StatusPublished
Cited by12 cases

This text of 102 F.R.D. 147 (Ahne v. Allis-Chalmers Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ahne v. Allis-Chalmers Corp., 102 F.R.D. 147, 39 Fed. R. Serv. 2d 758 (E.D. Wis. 1984).

Opinion

DECISION AND ORDER

WARREN, District Judge.

On July 22, 1983, plaintiffs, all participants or beneficiaries of a salaried employees’ termination pay plan, filed their complaint in this case, alleging principally that the defendant employers acted with malice and in bad faith by making termination payments based not on established base salaries but on plaintiffs’ temporarily-reduced salaries. Plaintiffs claim that this alleged violation of the termination pay plan constitutes a breach of contract and a wrongful deprivation of compensation and severance pay, actionable under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. Plaintiffs seek, among other things, compensatory [148]*148damages in amounts equal to the unpaid benefits allegedly due them under the termination pay plan and punitive damages for defendants’ “intentional, malicious, bad faith conduct.” Plaintiffs’ Complaint at 17.

On October 4,1983, defendants answered the charges against them, denying all material allegations and raising three affirmative defenses—among them, that two of plaintiffs’ state claims for relief are preempted by ERISA and that none of the counts in the complaint states a claim upon which relief can be granted. Defendants seek dismissal of the complaint on its merits and costs and disbursements, including reasonable attorneys’ fees.

Discovery in this case proceeded with regularity until approximately March 1, 1984, at which time the parties advised the Court during a status conference that they were unable to reach an agreement on a sequence for the further prosecution and defense of the underlying claims. In particular, plaintiffs contended that they should be permitted to file their motion for certification of the class prior to any resolution of the substantive issues in this action, while defendants maintained that the parties should file their cross motions for summary judgment before the Court addresses the class certification issue, if necessary.

Pursuant to the Court’s order embodied in its summary letter of March 1, 1984, counsel for both sides have submitted letters further articulating their positions on whether the class certification issue should be resolved prior to the disposition of the summary judgment motions the parties anticipate filing. The Court has carefully reviewed these letters and considered the authority cited therein. Based on the analysis that follows, the Court concludes that it should résolve the parties’ motions for summary judgment prior to its consideration of the class certification issue.

RULE 23(c) AND THE PROPRIETY OF PRE-CERTIFICATION RESOLUTION OF DISPOSITIVE MOTIONS

Pursuant to Rule 23(c) of the Federal Rules of Civil Procedure, the district court must determine the propriety of class certification “[a]s soon as practicable after the commencement of an action brought as a class action____” As both parties have observed in their letter briefs, the courts have typically interpreted this as a requirement that the issue of class certification be addressed prior to any substantive resolution of the merits of the underlying complaint. In fact, this general rule forms the centerpiece of the United States Supreme Court’s 1974 decision in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-178, 94 S.Ct. 2140, 2152-2153, 40 L.Ed.2d 732 (1974):

We find nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action. Indeed, such a procedure contravenes the Rule by allowing a representative plaintiff to secure the benefits of a class action without first satisfying the requirements for it. He is thereby allowed to obtain a determination on the merits of the claims advanced on behalf of the class without any assurance that a class action may be maintained. This procedure is directly contrary to the command of subdivision (c)(1) that the court determine whether a suit denominated a class action may be maintained as such “[a]s soon as practicable after the commencement of [the] action____” In short, we agree with Judge Wisdom’s conclusion in Miller v. Mackey International, 452 F.2d 424 (CA5 1971), where the court rejected a preliminary inquiry into the merits of a proposed class action:
In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met. Id,., at 427.

See also American Pipe & Construction Company v. Utah, 414 U.S. 538, 547, 94 S.Ct. 756, 763, 38 L.Ed.2d 713, rehearing [149]*149denied, 415 U.S. 952, 94 S.Ct. 1477, 39 L.Ed.2d 568 (1974) (1966 amendment to Rule 23 designed “to assure that members of the class would be identified before trial on the merits and would be bound by all subsequent orders and judgments”).

Taking its cue from the Supreme Court’s decision in Eisen, the Court of Appeals for the Seventh Circuit has likewise held that delaying class certification until after the district court has ruled on the merits of the underlying complaint would unjustly expose the defendant to so-called “one-way intervention” by potential class members.1 In Peritz v. Liberty Loan Corporation, 523 F.2d 349, 353-354 (7th Cir.1975), the Seventh Circuit stated bluntly that

Rule 23 requires class certification prior to a determination on the merits.
The language of Rule 23(c) itself is clear in this regard____ Section 23(c)(1) makes it plain in the second sentence thereof that the order determining class status is to be made and finalized “before the decision on the merits.” Section 23(c)(2) similarly indicates that the class members in a 23(b)(3) class action are to be notified early enough to allow voluntary exclusion prior to “judgment” and also early enough to allow for effective appearance by counsel. Section 23(c)(3), by providing that the judgment shall bind all class members, was specifically intended to confront the one-way intervention problem____
Inasmuch as the plaintiffs here did not seek certification, and in fact affirmatively sought resolution on the merits prior to certification in the fact of objections by the defendants, they have themselves effectively precluded any class certification in this case.

See also Fujishima v. Board of Education, 460 F.2d 1355, 1360 (7th Cir.1972) (if prerequisites for class certification under Rule 23 are met, the district court, having ruled on the merits of the case, “may not deny class status because there is no ‘need’ for it”).

Significantly, however, the Seventh Circuit in Peritz

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Bluebook (online)
102 F.R.D. 147, 39 Fed. R. Serv. 2d 758, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ahne-v-allis-chalmers-corp-wied-1984.