Roemisch v. Mutual of Omaha Insurance

314 N.E.2d 386, 39 Ohio St. 2d 119, 68 Ohio Op. 2d 80, 1974 Ohio LEXIS 407

• Court: Ohio Supreme Court
• Decided: July 17, 1974
• Docket: No. 73-953
• Status: Published

Opinions

William B. Brown, J.

The certified question presented in this case is whether an order of a trial court, pursuant to Civ. R. 23 (C) (1), determining that an action may not be maintained as a class action is a final, appealable order. In holding the order of dismissal is not appealable, the Conrt of Appeals concluded that it did not affect the rights of plaintiff “or any other known complaining party” or prevent a judgment in his favor and therefore was not a final order under R. C. 2505.02.

The court in Miles v. N. J. Motors, supra (32 Ohio App. 2d 350), the decision in conflict with the decision of the Court of Appeals in the instant ease, found a similar order dismissing a class action to be a final, appealable order, relying upon the “death knell” theory¹ enunciated in Eisen I.² (Eisen v. Carlisle & Jacquelin [1966], 370 P. 2d 119.)

In this state, appealable orders are defined in R. 0. 2505.02, which provides, in part, as follows:

“An order affecting a substantial right in an action which in effect determines the action and prevents a judgment, an order affecting a substantial right made in a special proceeding or upon a summary application in an action after judgment * * * is a final order which may be reviewed, affirmed, modified, or reversed, with or without retrial.”

"We believe that the characteristics of an order striking the allegation of a class action are wholly consistent with the requirements of R. C. 2505.02.

Such order clearly affects “a substantial right” of the class which “in effect determines the action and prevents a judgment” adverse or favorable to the class. Rights and judgments do not attach in the abstract, but rather to persons. Civ R. 23 contemplates an action between a class and “the party opposing the class.” In this action, a member of the class, acting as the nominal, representative plaintiff, brought suit on behalf of his class. The class action was dismissed, thus foreclosing a judgment for or against the class, determining the class action to be at an end, and denying the class the right, pursuant to Civ. R. 23, to maintain the action.

In Daar v. Yellow Cab Co.³ (1967), 67 Cal. 2d 695, 433 P. 2d 732, the California Supreme Court concluded that a class action termination order was in legal effect a final judgment from which an appeal lies. The court reasoned, at page 699, as follows:

“* * * We must assay the total substance of the order. It determines the legal insufficiency of the complaint as a class suit and preserves for the plaintiff alone his cause of action for damages. In ‘its legal effect’ * * * the order is tantamount to a dismissal of the action as to all members of the class other than plaintiff. * * * It has virtually demolished the action as a class action. If the propriety of such disposition could not now be reviewed, it can never be reviewed.”⁴ (Citations omitted.)

In our opinion, the underlying purpose of R. C. 2505.02 is to limit the absolute number of appeals taken.⁵ If a trial court determines that a class of plaintiffs is not permitted to function as such in a lawsuit, the number of actions filed will approach the magnitude of the number of class members, and possible appeals from those actions would far exceed any number of “piecemeal” appeals arising from a unified class action. Judicial economy would be sacrificed at both the trial and appellate level.

The termination of a class action is of critical import in that the rights of a class, sui juris, are either denied or affirmed at that stage. The finality requirement would be insurmountable if the class was not permitted an immediate appeal from an order which carries with it such compelling significance. To hold otherwise would effectively place the existence of class actions in the unreviewable discretion of trial courts.

Accordingly, the judgment of the Court of Appeals is reversed and the cause is remanded to that court for an appeal upon the merits.

Judgment reversed.

O’Neill, C. J., Herbert and Stern, JJ., concur. Corrigan, Celebrezze and P. Brown, JJ., dissent.

1 The rationale for implementing the “death knell” exception to the technical, finality requirements of the federal appealable order statute (Section 1291, Title 28, U. S. Code) is expressed in Eisen I, infra (370 F. 2d) at 120, as follows:

“* * * We can safely assume that no lawyer of competence is going to undertake this complex and costly case to recover $70 for Mr. Eisen. * * * If the appeal is dismissed, not only will Mr. Eisen’s claims never be adjudicated, but no appellate court will be given the chance to decide if this class action was proper under the newly amended Rule 23.”

Accordingly, the court established a criterion for appellate review of orders denying class action status, to be applied on an ad hoc basis, that “where the effect of a district court’s order, if not reviewed, is the death knell of the action, review should be allowed.” Id., at page 121.

The Arizona Supreme Court, in Reader v. Magma-Superior Copper Co. (1972), 108 Ariz. 186, 494 P. 2d 708, adopted the “death knell” theory, but other courts have recognized that the “death knell” theory is merely an exception to the finality requirement of Section 1291, supra, and that review will be denied where plaintiff fails to show that an adverse class determination order will effectively terminate the action. Caceres v. International Air Transport Assn. (C. A. 2, 1970), 422 F. 2d 141. See, also, Lamarche v. Sunbeam Television Corp. (C. A. 5, 1971), 446 F. 2d 880; Gosa v. Securities Investment Co. (C. A. 5, 1971), 449 F. 2d 1330; and Falk v. Dempsey-Tegeler & Co. (C. A. 9, 1972), 472 F. 2d 142.

In view of valid criticism of the “death knell’ theory expressed by some federal courts, e. g., Hackett v. General Host Corp. (C. A. 3, 1972), 455 F. 2d 618, certiorari denied, 407 U. S. 925, and our recognition that factual issues would have to be resolved by courts of appeal preliminary to granting review, we see no reason to adopt or reject the “death knell” theory, but will confine our inquiry to whether an order terminating a class action is a final, appealable order pursuant to R. C. 2505.02.

2 The Eisen v. Carlisle & Jacquelin case has been before the United States Court of Appeals for the Second Circuit on three occasions, which are respectively denoted: Eisen I (C. A. 2, 1966), 370 F. 2d 119, certiorari denied, 386 U. S. 1035; Eisen II (C. A. 2, 1968), 391 F. 2d 555; and Eisen III (C. A. 2, 1973), 479 F. 2d 1005. In a recent United States Supreme Court decision, U. S. , 42 L. W. 4804, Eisen III was vacated and remanded. However, the merits of the appeal were resolved absent a definitive ruling as to the validity or viability of the “death knell” theory.

3 State court decisions on the finality of class action orders are collected in an annotation, 54 A. L. R. 3d 595, Appealability of Order Denying Right to Proceed in Form of Class Action — State eases.

4 That an order of this type would evade review is clearly expressed by the United States Supreme Court in Cohen v. Beneficial Industrial Loan Corp. (1949), 337 U. S. 541, 546, as follows:

“* * * this order of the District Court did not make any step toward final disposition of the merits of the case and will not be merged in final judgment. When that time comes, it will be too late effectively to review the present order, and the rights conferred by the statute, if it is applicable, will have been lost, probably irreparably. * * *

“This decision appears to fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. * * *

“We hold this order appealable because it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it. * * *”

5 See Interlocutory Appeal From Orders Striking Class Action Allegations, 70 Col. L. Rev. 1292, 1301.