Marks v. San Francisco Real Estate Board

69 F.R.D. 353, 20 Fed. R. Serv. 2d 428, 1975 U.S. Dist. LEXIS 13668
CourtDistrict Court, N.D. California
DecidedFebruary 24, 1975
DocketNo. C-71-369 ACW
StatusPublished
Cited by4 cases

This text of 69 F.R.D. 353 (Marks v. San Francisco Real Estate Board) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marks v. San Francisco Real Estate Board, 69 F.R.D. 353, 20 Fed. R. Serv. 2d 428, 1975 U.S. Dist. LEXIS 13668 (N.D. Cal. 1975).

Opinion

ORDER GRANTING DEFENDANTS’ MOTION TO DECERTIFY CLASS

WOLLENBURG, District Judge.

This is an antitrust class action charging Defendants with conspiring to fix the rate of commission charged by real estate brokers for the sale of residential property in the county of Marin. The action was conditionally certified as a class action by order of the Court filed April 10, 1972. On June 22, 1972, the Court issued an order which revised and narrowed the class to encompass all persons who had paid a brokerage commission on the sale or lease of residential property in Marin County from February 23, 1967, to February 21, 1971. The class was subsequently modified again, and persons who only leased property were excluded.

The case is now before the Court on Defendants’ motion to decertify the class. After this motion was briefed and argued and the matter submitted, the Court of Appeals for the Ninth Circuit decided Kline v. Coldwell, Banker & Co., 508 F.2d 226 (9th Cir. 1974). The facts in Kline are nearly identical to those in the case at bar, and the Court [355]*355of Appeals’ opinion addresses some of the issues raised by the pending motion. Because the present case is controlled by Kline, and because Kline requires that this case not proceed as a class action, it will be unnecessary to discuss other issues raised in Defendants’ motion.

Plaintiff herein seeks to assert the claims of approximately 13,000 persons who purchased residential real property in Marin County.1 The claims and relief pursued by Plaintiff makes an action under Rule 23(b)(3) of the Federal Rules of Civil Procedure, commonly called the “hybrid” class action, the most appropriate class action for this case. To maintain such an action, Plaintiff must satisfy the requirements of Rules 23(a) and 23(b)(3). These requirements are set out in the margin,2 and only those portions which are pertinent to the disposition of this motion will be discussed :

In a class action under Rule 23(b)(3), the Court must find “that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” The Rule sets out certain factors pertinent to such a finding, but the Court’s consideration is not restricted to these factors. “Manageability” is among these factors, and the Court of Appeals for this Circuit has recently expressed great concern for the problems being imposed on litigants and on the federal judiciary by “massive” class actions. La Mar v. H & B Novelty & Loan Company, 489 F.2d 461, 468 (9th Cir. 1973); cf. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). In Kline the Court of Appeals introduced the notion of fairness to the defendants as another factor to consider under Rule 23(b) (3): the class action is not “superior to other available methods for the fair and efficient adjudication of the controversy”, Rule 23(b) (3), if, because the action is maintained as a class action rather than on an individual basis, each defendant becomes exposed to such massive liability as “would shock the conscience.” Kline v. Coldwell, Banker & Co., supra, 508 F.2d at 234-235.

Kline might be distinguished from the case at bar on the ground that this issue of fairness was raised in Kline during a discussion of whether a defendants’ class action was properly maintainable, whereas the case at bar seeks to establish only a plaintiffs’ class. The concerns which led the Court of Appeals, in the case of a proposed defendants’ class, to

find that the same reasoning [that class actions are inappropriate] ap[356]*356plies to treble-damage actions under the Sherman and Clayton Acts[,]

apply equally in the case of a plaintiffs’ class.

In Kline there was a plaintiffs’ class as well as a defendants’ class. What increased the potential liability of the defendant class in Kline was not merely the fact of a defendant class. Liability in Kline, as in the case at bar, was based on alleged overcharges in commissions paid by sellers of real property. Individuals—particularly when, as in the present ease, only residential property is involved—engage in relatively few real estate transactions in a lifetime. Unless there was a plaintiffs’ class in Kline, the case could not have encompassed the 400,000 to 800,000 real estate transactions which the Court of Appeals found created the unconscionable prospects of staggering liability on the part of each defendant. Regardless of the number of defendants, their potential liability is a function of the number of plaintiffs and the sum of their individual claims.

This point is well illustrated by Alsup v. Montgomery Ward & Company, 57 F.R.D. 89 (N.D.Cal.1972). There was but a single defendant in these two consolidated cases, but because the plaintiff in one of the actions sought to represent a class of approximately 200,000, and in the other a class estimated at five to eight million, the single defendant’s potential liability could have been $8.2 billion had the actions been permitted to proceed as class actions. 57 F.R.D. at 89, 92.

Since the problem of the enormity of the potential liability for each defendant is more acute in the case of a plaintiffs’ class than a defendants’ and is a function not of the number of parties but of the number of individual liabilities in which each defendant must share, the rule formulated by the Court of Appeals in Kline cannot reasonably be restricted to cases in which a defendants’ class is alleged.

The same problems of proof of Plaintiffs’ damages and of fairness to Defendants who will be exposed to possible liability far in excess of three times the actual damages caused by their own acts, are present in this action as well as in Kline. Accordingly, this Court must adopt the position of the Court of Appeals and grant Defendants’ motion to decertify the class.

It is hereby ordered that Defendants’ motion to decertify the class is granted, and that this action shall no longer proceed as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure.

It is further ordered that Plaintiff’s motion to approve a class notice is denied.

ON MOTIONS TO RECONSIDER, TO CERTIFY CLASS AND TO CERTIFY INTERLOCUTORY APPEAL ORDER DENYING PLAINTIFF’S MOTION TO RECONSIDER ORDER OF FEBRUARY 24, 1975, DENYING MOTION TO CERTIFY CLASS UNDER RULE 23(b)(2) or 23(b)(3), AND GRANTING MOTION TO CERTIFY INTERLOCUTORY APPEAL

On February 24, 1975, this Court granted Defendants’ motion that this case not proceed as a class action.

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Related

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158 F.R.D. 439 (N.D. California, 1994)
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72 F.R.D. 140 (E.D. Pennsylvania, 1976)

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Bluebook (online)
69 F.R.D. 353, 20 Fed. R. Serv. 2d 428, 1975 U.S. Dist. LEXIS 13668, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marks-v-san-francisco-real-estate-board-cand-1975.