McCubbrey v. Boise Cascade Home & Land Corp.

71 F.R.D. 62, 22 Fed. R. Serv. 2d 1376, 1976 U.S. Dist. LEXIS 15860
CourtDistrict Court, N.D. California
DecidedMarch 29, 1976
DocketNo. C-72-0470 RFP
StatusPublished
Cited by32 cases

This text of 71 F.R.D. 62 (McCubbrey v. Boise Cascade Home & Land Corp.) 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
McCubbrey v. Boise Cascade Home & Land Corp., 71 F.R.D. 62, 22 Fed. R. Serv. 2d 1376, 1976 U.S. Dist. LEXIS 15860 (N.D. Cal. 1976).

Opinion

MEMORANDUM AND ORDER

PECKHAM, District Judge.

Petitioners Boise Cascade Corporation, Boise Cascade Recreational Communities of Delaware, Boise Cascade Properties, Inc., and Boise Cascade Home & Land Corporation (“Boise Cascade”) seek an order enjoining the prosecution of twenty Superior Court actions presently pending throughout the state of California. This petition raises substantial questions concerning the scope of class action adjudications, the burden on class members to perfect technical compliance with exclusion procedures, the adequacy of notice to absent class members, and the finality of class action settlements.

STATEMENT OF FACTS

Plaintiff J. Bruce McCubbrey filed a purported class action against Boise Cascade, alleging multiple misrepresentations in the sale of recreational subdivision property in California and Nevada. On March 9, 1973, [65]*65this court entered a preliminary order certifying the plaintiff class under rule 23(b)(3) to include “all persons who are present or former owners of property in all Boise Cascade recreational subdivisions (‘the property’) listed in Exhibit A of the Settlement Agreement.”1 The order directed the parties to notify class members of the terms of a proposed settlement submitted to the court for approval. Accordingly, on March 24, 1973, a Notice of Proposed Class Action Settlement (“Notice”) was sent by first-class mail to all persons whom Boise Cascade had recorded as the last known owners of property included in the proposed settlement. In addition to the postal notification, Boise Cascade placed a conspicuous notice of the settlement terms at each of its projects and published a Summary of Notice of Proposed Class Action Settlement in twenty newspapers.2

The Notice advised class members that Boise Cascade had offered to establish a restitution fund from which claims would be satisfied. The Notice outlined three options available to class members under the proposed settlement:

1. A class member could elect to remain in the suit, file no claim for a portion of the restitution fund, and retain any property purchased from Boise Cascade. The consequence of non-action was release of all claims against Boise Cascade.

2. A class member could elect to file a claim for a portion of the restitution fund; the amount awarded was dependent upon the number of claimants against the fund. Under this option, class members were required to offer return of their land and to release all claims against Boise Cascade-.

3. A class member could request exclusion from the class and the contemplated settlement. Under this alternative, a class member received no funds, but retained both his property and his right to proceed against Boise Cascade independently. The Notice detailed the exclusion procedure and specified that the deadline for exclusion requests was June 26,. 1973.

On May 15, 1973, this court held a hearing to afford class -members an opportunity to voice objections to the proposed settlement; on May 21, 1973, this court entered a final order certifying the plaintiff class and approving the settlement.

Petitioners now seek an order from this court enjoining twenty state court actions filed throughout the State of California. Petitioners claim that respondents, plaintiffs in the state court suits, are members of the McCubbrey class who failed to request exclusion within the specified opt-out period; accordingly, claim petitioners, the res judicata effect afforded class adjudications forever bars further litigation on the matters embraced by the McCubbrey suit.3

In determining the rights of the twenty respondents, we classify them according to [66]*66the option selected after receipt of the class action notice: ten respondents, electing the second option, obtained recovery from the restitution fund; ten respondents, electing the first option, filed neither settlement claims nor exclusion requests — they simply failed to act. The ten respondents who remained class members but did not participate in the settlement may be categorized according to the timing of their state court actions: (1) those who had filed suit prior to receipt of the class action notice; (2) those who filed suit after receipt of the settlement notice but prior to expiration of the exclusion period; and (3) those who filed suit after termination of the settlement period.

DISCUSSION

A. Class Members Who Participated in the Settlement

Ten of the respondents sought to be enjoined from further litigation against Boise Cascade elected not only to remain in the class but to file claims for a portion of the restitution fund. These participants in the class action settlement sought and obtained substantial recovery on their claims against Boise Cascade. We see no basis, in law or equity, for permitting these respondents to seek double recovery by pressing state court litigation on matters embraced — and resolved — by the McCub-brey class suit. Our decision is reinforced by their silence: none of these respondents has filed an answer to the Boise Cascade petition, contending that the settlement notice was misleading or that the recovery from the restitution fund was in any way inequitable.

Accordingly, we grant petitioners’ motion to enjoin each of the state court action prosecuted by the following respondents: Frederick and Rosalind Brisson;4 Bullfrog Company;5 Cal-Mark Associates, Inc.;6 R. Marshall and Ann Jelderks; 7 Gustave and Jean Verdult;8 Anita Waytz;9 Mary Johnson; 10 J. Daniel and Vonda M. Tibbitts;11 Robert C. and Lillian P. Tripp;12 and Louis N. and Mary Menconi, Ted E. and Ruth E. Davids, and William P. and Marilyn Grant.13

B. Respondents Who Neither Participated in the Settlement Nor Requested Exclusion From the Class

The remaining ten respondents sought to be enjoined filed neither claims for a por[67]*67tion of the restitution fund nor requests for exclusion from the class; they simply failed to act.

Under rule 23(b)(3)’s “Book-of-the-Month Club” procedure, a final judgment in a class suit binds any member who fails to request exclusion. Where the binding effect of a class adjudication is later challenged, the court must scrutinize the record of the class litigation to determine (1) whether the person sought to be bound was a member of the class and (2) whether due process requirements were satisfied in the prior litigation. Hansberry v. Lee, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22 (1946); Research Corporation v. Edward J. Frank & Sons, 15 F.R.Serv.2d 580, 582 (N.D.Ind. 1971); Frankel, “Some Preliminary Observations Concerning Civil Rule 23,” 43 F.R.D. 39, 46 (1967).

Applying these tests to the present case, we conclude that: (1) respondents prosecuting individual suits against Boise Cascade prior to receipt of the McCubbrey

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71 F.R.D. 62, 22 Fed. R. Serv. 2d 1376, 1976 U.S. Dist. LEXIS 15860, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mccubbrey-v-boise-cascade-home-land-corp-cand-1976.