Mesa Computer Utilities, Inc. v. Western Union Computer Utilities, Inc.

67 F.R.D. 634, 20 Fed. R. Serv. 2d 72
CourtDistrict Court, D. Delaware
DecidedApril 23, 1975
DocketCiv. A. No. 74-80
StatusPublished
Cited by21 cases

This text of 67 F.R.D. 634 (Mesa Computer Utilities, Inc. v. Western Union Computer Utilities, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mesa Computer Utilities, Inc. v. Western Union Computer Utilities, Inc., 67 F.R.D. 634, 20 Fed. R. Serv. 2d 72 (D. Del. 1975).

Opinion

OPINION AND ORDER

MURRAY M. SCHWARTZ, District Judge.

One individual and three corporate plaintiffs 1 join in this action seeking in-junctive as well as monetary relief from Western Union Computer Utilities, Inc. (WUCU) and its alleged corporate parents, Western Union Corporation and the Western Union Telegraph Company.2 The action is predicated upon the execution during 1969 and 1970 of certain franchise agreements between WUCU and each of the corporate plaintiffs; in essence, these agreements gave plaintiffs, as franchisees, the right to operate computer service bureaus designed to provide automated accounting services to medium-sized businesses in the franchise area. The franchisor, WUCU, agreed in turn to develop and maintain computer programs having general business application for use by the computer service bureaus. With the exception of the parties and franchise areas described, the agreements were in all material respects identical.

The amended complaint asserts eight claims which, for present purposes, fall into three substantive areas. Plaintiffs first allege that defendant WUCU as agent, and its parent corporation, as principal, breached the original franchise agreements because, among other things, WUCU failed to deliver usable programs, did not maintain an adequate staff of programmers and technicians, failed to develop a nationwide computer service bureau network, and breached implied warranties of fitness and merchantability in failing to supply adequate computer programs.3 Second, plaintiffs maintain that they were induced to enter into the original franchise agreements based upon fraudulent representations by WUCU relating to its ability and intention to provide the services described in the franchise agreements. Finally, plaintiffs assert various antitrust violations by defendants arising from the latters’ alleged conspiracy to force WUCU franchisees out of business and the concomitant acquisition by the Western Union Corporation of a competing subsidiary, National Shareda-ta, Inc.; it is alleged that these transactions resulted in the unlawful diminution of competition and creation of monopoly in certain computer markets.

Defendants have filed counterclaims against two of the three corporate plaintiffs—Seattle and Cleveland—based upon the latters’ failure to remit certain license fees and royalties called for in the original franchise agreements. De[636]*636fendants assert that these agreements were terminated pursuant to plaintiffs’ alleged breach and notification thereof. Defendants request no damages from plaintiff Mesa.

Defendants seek in the instant motion to sever the joined plaintiffs, contending that the claims asserted by each arise out of entirely separate transactions or involve substantially different questions of law and fact. Accordingly, they assert joinder by plaintiffs in a single action is improper under Fed.R.Civ.P. 20(a). For the reasons articulated below, the Court must at this juncture deny defendants’ motion.

Fed.R.Civ.P. 20(a) establishes the procedure governing permissive joinder of parties in a single civil action.4 The first sentence of that rule provides that several persons may join as plaintiffs “if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action.” The quoted language contemplates two tests for joinder: (1) the occurrence of some question of fact or law common to all parties; and (2) the existence of a right to relief predicated upon or arising out of a single transaction or occurrence or series thereof. Both tests must be satisfied if joinder is to be permitted. Smith v. North American Rockwell Corp., 50 F.R.D. 515, 522 (N.D.Okl.1970); Poindexter v. Louisiana Financial Assistance Corp., 258 F.Supp. 158, 165-66 (E.D.La.1966), aff’d 389 U.S. 571, 88 S.Ct. 693, 19 L.Ed.2d 780 (1968) (per curiam); Philadelphia Dressed Beef Co. v. Wilson & Co., 19 F.R.D. 198, 200 (E.D.Pa.1956).

Defendants contend that plaintiffs’ joinder is improper because their respective contract claims do not arise out of a single transaction or occurrence nor do they involve common questions of law or fact. They stress the fact that each franchise agreement was solicited, negotiated, and executed at different times and places and that WUCU’s contractual performance with respect to each franchisee was dependent upon a diverse set of variables which had little or no interdependence. The alleged defects in WUCU’s performance were different with respect to each franchisee; hence, defendants urge, the adequacy of this performance under the terms of the agreement will entail wholly different legal and factual inquiries in each case.

Defendants argue that the remaining antitrust and fraud aspects of plaintiffs’ action are wholly spurious for purposes of this motion. They urge (1) the allegedly fraudulent misrepresentations made to all plaintiffs do not form a legally cognizable basis for relief because they [637]*637were disclaimed or superseded by the written franchise agreement; (2) the allegedly fraudulent representations were made separately to different plaintiffs and were not part and parcel of a single course of dealing; and (3) the antitrust allegation of conspiratorial activity designed to destroy WUCU franchisees is contraindicated by the fact that one franchisee, Mesa is still operative.

Notwithstanding defendants’ contentions, the Court is not prepared to conclude that the tests for joinder cannot be met. The contract claims may well be predicated on different transactions or occurrences. The Court cannot, however, discount the fact that the fraud and antitrust claims respectively allege acts of misrepresentation and conspiracy which directly affected all plaintiffs. It has been held that such conduct may constitute a single transaction or occurrence for purposes of Rule 20(a).5 Of course, defendants’ argument that the allegedly fraudulent acts were perpetrated separately and were not part and parcel of a larger fraudulent scheme may or may not ultimately prove true; at this point, however, the record is not sufficiently well-developed to permit such a conclusion. Moreover, while it is recognized, as defendants contend, that plaintiffs’ fraud and antitrust claims may eventually prove to have no factual or legal basis, it would be wholly premature to pass upon these arguments at this point in the litigation or in the context of the present motion.

For similar reasons, it cannot be said that there exist no factual or legal issues which are common to all parties plaintiff. It is apparent, even at this stage of the litigation, that the legal and factual issues to be determined will differ in some respects from one plaintiff to the next. However, Rule 20(a) does not require precise congruence of all factual and legal issues; indeed, joinder may be permissible if there is but one question of law or fact common to the parties. Music Merchants, Inc. v. Capitol Records, Inc., 20 F.R.D. 462, 464-65 (S.D.N.Y.1959); see 7 C. Wright & A. Miller, Federal Practice and Procedure § 1653, at 274 (1972).

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Bluebook (online)
67 F.R.D. 634, 20 Fed. R. Serv. 2d 72, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mesa-computer-utilities-inc-v-western-union-computer-utilities-inc-ded-1975.