McMonagle v. Allstate Insurance

324 A.2d 414, 227 Pa. Super. 205, 1974 Pa. Super. LEXIS 2048

• Court: Superior Court of Pennsylvania
• Decided: April 3, 1974
• Docket: Appeal, No. 530
• Status: Published

Opinions

Opinion

Per Curiam,

Order affirmed.

Opinion by Jacobs, J., In Support op the Order Per Curiam:

I would affirm the dismissal by the lower court of appellant’s class action on the basis that it did not abuse its discretion in dismissing the class action.

It is clear that Pa. R. O. P. 2230(a), which authorizes the commencement of class actions, was based upon Rule 23(a) of the Federal Rules of Civil Procedure. The note to Pa. R. C. P. 2230(a) discloses that “[tjhis subdivision adopts the practice under . . . F.R.C.P. No. 23(a)____” In 1966, Fed. R. Civ. P. 23 was substantially changed. In my opinion there would be no purpose in following the outdated practice of a rule that has been revised. Therefore, we should give persuasive effect to the federal law under the present Fed. R. Civ. P. 23.

A person who brings a class action under Fed. R. Civ. P. 23 must satisfy several requirements. For a class action to be maintained it must be demonstrated that “(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 will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a). After these prerequisites are met, the proponent of the class action must show one of the following:

“(1) the prosecution of separate actions by or against individual members of the class would create a risk of

“(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the elass, or

“(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

“(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

“(3) the court finds that the question 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. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (0) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.” Fed. R. Civ. P. 28(b). In my opinion, the only subdivision of Fed. R. Civ. P. 23(b) which could possibly apply to the present case would be subdivision (3). Subdivision (1) (A) is not applicable because there is no threat of inconsistent verdicts if several suits are brought. One court has even held that subdivision (1) (A) does not apply to cases concerning monetary damages since the principle of stare decisis would insure uniform results. Rodriquez v. Family Publications Service, 57 F.R.D. 189 (C.D. Calif. 1972). Subdivision (1)(B), as well, is not applicable for there is no evidence that separate suits by some members of the class would impair or impede the ability of other members to protect their interests. See Wright & Miller, Federal Practice and Procedure: Civil § 1774 (1972). The typical case under (1) (B) is where class members have claims against a fund that may later prove to be insufficient to satisfy all of them. Id. In the present case, I can foresee no prejudice by allowing each policyholder in the class to maintain his own lawsuit. Subdivision (2) is clearly not applicable because injunctive or declaratory relief was not requested by appellant in her complaint, nor appropriate under the circumstances of this case.

Unlike subsections (1) and (2), subsection (8), by its own language, gives the trial court wide discretion in determining the fate of the class action. To maintain a class action, under subsection (3), it is necessary that “the court [find] 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 . . . adjudication of the controversy.” Fed R. Civ. P. 23(b) (3). [Emphasis added.] In addition, various factors, such as the desirability of concentrating the action in the particular forum, the interest of the individual class members which may conflict with the bringing of the class action, and the difficulties of managing a class action, are listed in subsection (3) for the court to consider in reaching its decision.

In the present case, the lower court reviewed these factors and it concluded that “[tjhere would be a great expenditure of time, effort and expense to have all the claims disposed of in Allegheny County, not only for the claimants and attorneys but for this court. The claims can be handled more efficiently and with less expense in the respective judicial district.” In essence, the court below was of the view that such claims could be better pursued individually than by a class action. If Fed. E. Civ. P. 23(b) (3) means what it says, these findings of the lower court, which are supported by the record, are determinative of the present case. In my opinion, the facts of this case do not indicate that the lower court abused its discretion and its order should be affirmed.

Watkins, P. J., joins in this opinion.

Opinion By Cercone, J., In Support of the Order Per Curiam:

In 1941, when Pennsylvania adopted its present rule permitting the use of the class action device in courts of law, the Supreme Court manifested a clear intention to adopt the practice, as it was developing, under F.R.C.P. 23(a).¹ While Pennsylvania did not use the definitive language found in the subsections of 23(a), distinguishing the three types of class actions— so called, “true, hybrid and spurious”² — recognition that there were both procedural and substantive differences between the various kinds of class actions that might be maintained was inevitable. The most articulate, though often criticized, description of those differences, first suggested by Professor Moore, developed in federal practice under rule 23(a). Thus, the courts and commentators in Pennsylvania adopted these classifications and terminology, a course not unusual in light of the fact that there has been “almost complete acceptance by the courts of Moore’s labels and of the binding effect which he attributes to each classification.”³

At least three of the most authoritative works on Pennsylvania civil procedure indicate that the types of class actions established under old F.R.C.P. 23(a) are equally a part of Pennsylvania law.⁴ In addition, while the appellate courts in Pennsylvania have not had the occasion to treat the distinctions between the various types of class actions, the lower courts have frequently recognized Moore’s labels and the concomitant procedural and substantive differences they entail.⁵

It has been said that while “the term ‘class suit’ is used to describe at least three distinct types of representative suits . . . much apparent inconsistency results from the failure to recognize the differences between them.”⁶ I feel that the discussions of whether this is a proper case for the maintenance of a class action, which appear not only in the concurring and dissenting opinions of my brethren, but also in the briefs of both parties and the opinion of the court below, is required only if one fails to recognize the distinctions between the so-called “true, hybrid and spurious” class actions, and their bearing upon this appeal in light of its current posture.

The instant case clearly falls under the 23(a)(3)-type class action. “[T]he character of the right sought to be enforced [namely, payment under the Medical Payments provision of the policy after an arbitration award under the Uninsured Motorists provision] for . . . the class is . . . several. . . ,”⁷ and the object of the action is not any specific property of Allstate, such as assets in receivership or a particular parcel of real estate.⁸ The right will derive from the existence of separate insurance contracts containing Medical Payment and Uninsured Motorists provisions, and the recoveries of the “class members” will neither be mutually dependent (as is typically the case in a 23(a)(1) or “true” class action), or mutually exclusive (as is sometimes the case under a 23(a) (2) or “hybrid” class action).⁹ As the concurring opinion of Judge Jacobs indicates, this “spurious” type of class action requires asldng whether there exists some “common question of law or fact” which supplies a sufficient community of interest that the advantages of joinder, for the parties and the court, outweigh its disadvantages.¹⁰

But, having identified the class action as a spurious-type class suit, the question remains regarding who is bound by the adjudication of the “common question of law or fact.” While this question is apparently one of first impression before this Court, the overwhelming weight of authority is that in a spurious class action only those who intervene or are joined prior to judgment are bound by the determination of the “common question”.¹¹ While the language of Pa. R.C.P. 2230 relates only to class defendants who are not parties,¹² Pennsylvania authorities are consistent with the other authorities under former rule 23(a)(3) in holding that a potential “spurious” class member must “opt-in’’ prior to judgment, or the decision of the court will not be binding in any suit brought or defended by Mm. “In the case of a spurious class suit, the judgment of the court should be binding only upon the parties and those who have become parties by intervention. Since the claims asserted are separate or independent the action of the court affects only the claims of the parties before it and does not affect the claim of any person not a party.”¹³

Thus construed, it becomes apparent that the spurious class action is little more than a permissive joinder device¹⁴ or, as some courts have called it, “an invitation ... to join the battle.”¹⁵ “The authorization of the spurious class action in Pennsylvania is, in a sense, a procedural duplication [of the permissive joinder rule] «¹⁶

Returning to the particular facts of the instant case, to grant the appellant’s motion to reinstate his suit as a class action would not operate as an invitation to join the battle, but rather as an invitation to join the victory feast. While it is often suggested that interventions should be liberally granted in spurious class actions,¹⁷ Pa. R.C.P. 2327 requires intervention “during the pendency of the litigation.” Some doubt as to whether an action was pending after judgment but prior to appeal arose when one of the leading Pennsylvania commentators suggested that the terminative date of “pendency” was the date when an appeal was filed. However, in School Dist. of Robinson Twp. v. Houghton, 387 Pa. 236, 241-42, 128 A. 2d 58 (1956), the Supreme Court explicitly rejected that view in holding that the pendency of an action ends with the entry of judgment. Furthermore, this decision was followed in both Howell v. Franke, 393 Pa. 440, 143 A. 2d 10 (1958), and Admiral Homes, Inc. v. Floto Management Corp., 397 Pa. 509, 156 A. 2d 326 (1959). And, there is the rub.

In the instant ease the appellant moved his cause of action to judgment through his motion for judgment on the pleadings, and by doing so, has rendered any order we might grant reversing the lower court’s order which dismissed the class action a sterile vanity. In any event, the appellant’s motion for summary judgment prior to the final determination of the class action issue made moot the court’s refusal to allow the action to proceed as a class action. Even if the lower court’s determination incidental to the motion for summary judgment had allowed the action to be maintained as a class action, the entry of judgment for the plaintiff would have closed the “class” before other potential “class members” could enter. Apparently appellant wanted the immediate summary judgment after a favorable determination of the class action issue, but he misconceived the mechanics of “spurious” class actions under the old, “opt-in”, federal rule, which is the current Pennsylvania rule.

In the “spurious” class action there is no fund established from which class members may draw, and each plaintiff who has joined or intervened must litigate that part of his right of recovery which is not part of the common question. Each plaintiff then takes judgment separately. When all of the “class members” who have joined have taken judgment, the class is closed because the action is no longer pending —there are no more joined plaintiffs before the court. Any intervention thereafter is impossible under Pa. E.C.P. 2327, and the cases cited above which have construed it, simply because there is no action in which to join or intervene.

A plaintiff purporting to represent a class wears two hats. The plaintiff-appellant in the instant case, however, did not wear both hats equally well. When the plaintiff as an individual sought to take judgment on the pleadings, she jeopardized the interests of potential class members who might have wished to intervene. It was that error, and not, under these circumstances, the essentially pro forma and coincidental determination of the trial court that a class action was improper, which contravened the interests of potential class members. The appellant should have asked first and separately for a determination of the class action issue, and if that turned out unfavorably, at least requested a certification for appeal pursuant to 17 P.S. §211.501.¹⁸ Failing that, a reversal of the order of the court below which reinstates the class action is a meaningless gesture which affects the substantial rights of no one, since Pennsylvania practice bars the entry of class members at this stage of the proceedings.

For the above reasons, the appeal should be dismissed.

1 Rule 2230. Class Actions.

(a) If persons constituting a class are so numerous as to make it impracticable to join all as parties, any one or more of them wbo will adequately represent the interest of all may sue or be sued on behalf of all, but the judgment entered in such action shall not impose personal liability upon anyone not a party thereto.

Note of the Procedural Rules Committee — This subdivision adopts the practice under Pennsylvania Equity Rule 16 and Fed. R.O.P. No. 23(a), 28 TJ.S.C.A. in providing for a class suit where the members of a class are so numerous as to make it impractical to join all as parties.

2 Original F.R.O.P. 23 read, in pertinent part, as follows:

“(a) Representation. If persons constituting a class are so

numerous as to make it impracticable to bring them all before the court, such of them, one or more, as will fairly insure the adequate representation of all may, on behalf of aU, sue or be sued, when the character of the right sought to be enforced for or against the class is

“(1) joint, or common, or secondary in the sense that the owner of a primary right refuses to enforce that right and a member of the class thereby becomes entitled to enforce it;

“(2) several, and the object of the action is the adjudication of claims which do or may affect specific property invovled in the action; or

“(3) several, and there is a common question of law or fact affecting the several rights and a common relief is sought. The labels, true, hybrid and spurious, which were used to identify class actions under subsections (1), (2) and (3) respectively, were first used by Professor Moore, the principal drafter of the rule.”

3 Comment, 71 Harv. L. Rev. 874, 930 (1958).

4 See Goodrieh-Amram §2230(a)-1 et seq.; 4 Anderson, Pennsylvania Practice, Rule 2230 (1962) ; 2 Standard Pennsylvania Practice, Parties §96 (1956).

5 See, e.g., Philadelphia Council of Property Owners v. Philadelphia, 49 D. & C. 2d 245 (1969); Sipe v. Pohland Bros., 51 Westmoreland L.J. 125 (1966); Beauty Hall, Inc. v. State Board of Cosmetology, 77 Dauph. 319 (1961); Charles v. Crestview Properties, Inc., 15 D. & C. 2d 568 (1957). See also the cases cited in 4 Anderson, Pennsylvania Civil Practice, §2230.6 (1962).

6 Goodrich-Amram, §2230 (a) -1.

7 F.R.C.P. 23(a)(2) and (3), supra note 2.

8 F.R.C.P. 23(a)(2).

9 A true class action most often involves a taxpayer’s suit or a shareholder's derivative suit, while hybrid class actions are usually raised by a creditor’s bill, or a suit brought by trust beneficiaries.

10 See 59 Am.Jur. 2d, Parties §62 (1971).

11 “TRe ‘spurious’ action envisaged by original Rule 23 was in any event an anomaly because, although denominated a ‘class’ action and pleaded as such, it was supposed not to adjudicate the rights or liabilities of any person not a party. It was believed to be an advantage of the ‘spurious’ category that it would invite decisions that a member of the ‘class’ could . . . intervene on an ancillary basis.” See 3B Moore’s Federal Practice, §23.01 [8] (1974).

Of course, the original rule was amended in 1986 and got rid of the substantial identity between permissive joinder and spurious class actions by making two major changes. First, in order to maintain what was previously described as a spurious class action, the common question of law or fact must predominate. F.R.O.P. 23(b) (3). Second, all members of the class are bound by the adjudication unless they notify the court of their desire not to be bound. F.R.C.P. 23(c)(2)(B). As was noted by the court in Eisen v, Carlisle & Jacqueiin, 391 F. 2d 555, 562 (2d Cir. 1968) (usually referred to as Bisen II), “the standards for representation under the old spurious class action were not as rigorously enforced, due to the minimal res judicata effects given to the judgments in these suits.” See also Oppenheimer v. F. J. Young & Co., 144 F. 2d 387 (2d Cir. 1944). As some federal courts have already questioned the propriety of binding the absent members of a 23(b) (3) class [see, e.g., School Dist. of Philadelphia v. Harper & Row Publishers, Inc., 267 F. Supp. 1001 (E.D. Pa. 1967)], even graver doubts should exist if it be suggested that absent members should be bound by the determination of a relatively minor, though not insubstantial, issue in a ease in which the absent members did not participate.

12 This caveat is a remnant of the old Pennsylvania Equity Rule 16. See Goodrich-Amram, §2230(a)-6 at p. 85, n. 12.

13 Goodrich-Amram, §2230(a)-6 at p. 85; 2 Standard Pennsylvania Practice, Parties §96 at p. 418, n. 16 (1962) ; 4 Anderson §2230.7 (1962). See also Federation of Salaried Unions v. Westinghouse, 7 D. & C. 2d 281, 286 (1956).

14 In addition to the authorities cited in note 13, supra, see Frankel, Some Preliminary Observations Concerning Civil Rule 23, 43 F.R.D. 39, 43 (1967) ; 3 Moore’s Federal Practice ¶23.10 at p. 3442 (2d ed. 1967) ; C. Wright, Law of Federal Courts 310 (2d ed. 1970). See also Eisen v. Carlisle & Jaequelin, supra, note 11.

15 Lipsett v. United States, 359 F. 2d 956, 958 (2d Cir. 1966); Nagler v. Admiral Corp., 248 F. 2d 319, 327 (2d Cir. 1957).

16 4 Anderson, Rule 2230.7 at p. 588 (1962). See also Federation of Salaried Unions v. Westinghouse, supra, note 13.

17 See, e.g., York v. Guaranty Trust Co., 143 F. 2d 503 (2d Cir. 1944), rev’d on other grounds, 326 U.S. 99 (1945).

18 I express no opinion herein as to whether, upon particular facts, a class representative whose class action is terminated may file an appeal as from a final order. See Green v. Wolf, 406 F. 2d 291 (2d Cir. 1968); Eisen v. Carlisle & Jacquelin, 370 F. 2d 119 (2d Cir. 1966), cert. denied, 386 U.S. 1035 (1967). See also 3B Moore’s Federal Practice §23.97 (1974).