Seligson v. Plum Tree, Inc.

61 F.R.D. 343, 18 Fed. R. Serv. 2d 94
District Court, E.D. Pennsylvania·Decided November 20, 1973·No. Civ. A. No. 71-1998·Published·Cited by 35 cases

Opinion

MEMORANDUM AND ORDER

JOSEPH S. LORD, III, Chief Judge.

This action is brought by Jerome and Dorothy Seligson, former owners of a franchise, against The Plum Tree, Inc., their former franchisor, alleging violations of § 1 of the Sherman Act, 15 U.S.C. § 1, as well as pendent claims based on fraudulent misrepresentation and breach of warranties. The defendants have moved to strike plaintiffs' class action allegations and also have moved under Rule 9(b) to dismiss Count V for failure to state with particularity the grounds on which plaintiffs base their claim of fraudulent misrepresentation. In addition, plaintiffs have moved for reconsideration, or, in the alternative, certification under 28 U.S.C. § 1292(b) of our order of July 19, 1973 granting summary judgment for defendants on Count II and dismissing Counts III and IV of plaintiffs’ Second Amended Complaint. Seligson v. The Plum Tree, Inc., 361 F.Supp. 748 (E.D.Pa., 1973). Since only the motion to strike plaintiffs’ class action allegations requires extensive comment, we shall treat it first.

Class Action Determination

On June 30, 1972, we conditionally granted plaintiffs’ motion for a class action determination pursuant to F.R.Civ.P. 23(c)(1). According to plaintiffs’ Second Amended Complaint, the class would consist of all “present and former Plum Tree franchisees who have purchased Plum Tree franchises in the United States.” Our determination was made explicitly conditional,1 rather than permanent because at that time we were not convinced that this action was appropriate [345]*345for class action treatment. However we allowed it to proceed conditionally since we lacked sufficient bases on which to make a final determination.

We specifically forbade notification to the class, as well as communication with other potential class members regarding this action, in order to protect against reliance by such potential class members before we made a final decision on class action status. For the reasons given below, we are now convinced that this action is inappropriate for class action treatment.

At the time the conditional determination was made, we had not yet explored the sufficiency of the allegations in plaintiffs’ complaint. Since that time, plaintiffs’ first Amended Complaint was dismissed with leave to amend for failure to allege that defendants’ conduct affected interstate commerce. Seligson v. The Plum Tree, Inc., 350 F.Supp. 440, 441 (E.D.Pa., 1972). Plaintiffs then filed a Second Amended Complaint which we held cured the interstate commerce deficiency. However, we granted summary judgment to defendants on Count II which alleged that plaintiffs were required “to purchase all of their merchandise and supplies from defendants” since we found no genuine material issue of fact and that as a matter of law plaintiffs could not recover. We also dismissed Count III for failure to allege a price-fixing conspiracy and Count IV which could not stand after Counts II and III had been dismissed. Therefore, the only remaining counts are Count I, an alleged tie-in in the purchase of furnishings, decor, supplies and original inventory, and Counts V and VI, alleging fraudulent misrepresentations and breach of warranties.

In order for a class action to be appropriate, common questions of law and fact must predominate. The more a trial will involve individual proof for each plaintiff’s allegations, the less appropriate it becomes for class action treatment. Although the proof required for Count I, the alleged tie-in, might be similar for all members of the class, certainly proof as to oral misrepresentations and breach of warranties will require individual proof. Additionally, as to the alleged misrepresentations in newspaper advertisements and other informational material, different franchisees may have read and/or relied on different statements. Therefore we now hold that because individual questions of proof are likely to predominate over common questions, this action is inappropriate for class action treatment.

We find further support for our decision to dissolve the class from the relevant cases we have examined since our conditional determination was made. We have found only one recent case, McMacken v. Schwinn Bicycle Co., 1972 Trade Cas. ¶ 74,220 (N.D.Ill., 1972), which has allowed an action brought by a franchisee to be maintained as a class action.

Other decisions involving franchisees have stressed some or all of various reasons to disallow the class action. Some have asserted, as we have, that common questions are unlikely to predominate. E. g., DiConstanzo v. Chrysler Corp., 57 F.R.D. 495, 499 (E.D.Pa., 1972). Some have shown serious concern with the possible conflicting interests of former and present franchisees, and fear that a former franchisee cannot adequately protect the interests of those franchisees still maintaining a business relationship with the franchisor. E. g., Gaines v. Budget Rent-a-Car Corp. of America, 1972 Trade Cas. ¶ 73,860 (E.D.Ill., 1972). Others have

/ [346]*346felt that the class action was unnecessary and therefore inappropriate where the limited number of franchisees could be accommodated by joinder or intervention. E. g., Anderson v. Home Style Stores, Inc., 58 F.R.D. 125, 130 (E.D.Pa., 1972). And when the damages alleged by the named plaintiff are substantial so that his action can easily proceed without the support of an entire class, there is, in light of these other factors mentioned, no need to preserve the class. E. g., Abercrombie v. Lum’s Inc., 345 F.Supp. 387, 394 (S.D.Fla., 1972) (reversing an initial determination by a transferor court allowing the case to proceed as a class action).

Van Allen v. Circle K Corporation, 58 F.R.D. 562 (C.D.Cal., 1972) was an action brought by franchisee-grocery businesses against their franchisor. Three plaintiffs each purported to represent a potential subclass, one involving all terminated franchisees, the second a class to whom the franchisor had given notice of termination, and the third, present franchisees. The court found that class action treatment was inappropriate for several reasons. The court believed that since there were only 149 potential plaintiffs, “such number would not create an unmanageable piece of litigation.” 58 F.R.D. at 564. Further, each plaintiff would have to present individual proof of damages, if any; “ — in other words each plaintiff would have a different law suit after all.” Id. at 564. And the court was especially concerned, as we are, with possible conflicting interests between present and former franchisees, regardless of the possibility of subclasses. “Those members of the suggested class who are at present independent operators would seem to be interested in carrying on their operation with a strong defendant able to perform his obligations and able to create a favorable public attitude toward the name Circle K. Those members of the suggested class of former independent operators would be indifferent to anything other than financial recovery to the fullest extent from defendant if they were interested in litigating against defendant.” Id. at 564.

We find the reasoning in Van Allen to be applicable to this ease. There were at most 149 potential plaintiffs in Van Allen; there are apparently at most about 60 in this action.

Free access — add to your briefcase to read the full text and ask questions with AI

Seligson v. Plum Tree, Inc., 61 F.R.D. 343, 18 Fed. R. Serv. 2d 94 (E.D. Pa. 1973).

61 F.R.D. 343 (Seligson v. Plum Tree, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Standard Petroleum Co. v. Faugno Acquisition, LLC
191 A.3d 147 (Supreme Court of Connecticut, 2018)
Daisy Mountain Fire District v. Microsoft Corp.
547 F. Supp. 2d 475 (D. Maryland, 2008)
Morris v. Wachovia Securities, Inc.
223 F.R.D. 284 (E.D. Virginia, 2004)
Broussard v. Meineke Discount Muffler Shops, Inc.
155 F.3d 331 (Fourth Circuit, 1998)
Kelly Broussard Jim Stephens Mark Zuckerman Arnold Fischthal John Hagar Vincent Matera Denis Wickham Mary Ann Wickham Kenex Corporation Ralph Yarusso v. Meineke Discount Muffler Shops, Incorporated New Horizons Advertising, Incorporated Gkn Parts Industries Gkn, Plc Ronald Smythe Gene Zhiss Ted Pearce, and Michigan Franchisees, Which Consists Of: Peter D. Beyer, Ronald S. Slack, Susan I. Slack, Sherman J. Radford, Jayne Radford, William J. Varney, Sr., William J. Varney, Jr., Sher-Jay and Sons, Incorporated, and M.A.T.M., Incorporated, Atl International, Incorporated Blimpie International, Incorporated Burger King Corporation Doctor's Associates, Incorporated Foodmaker, Incorporated Golden Corral Corporation Hardee's Food Systems, Inc. International Dairy Queen, Incorporated McDonald Corporation Mobil Oil Corporation the Southland Corporation Secretary of Commerce of the State of North Carolina American Council of Life Insurance Securities Industry Association British American Business Council of North Carolina, Incorporated American Association of Franchisees and Dealers American Franchisee Association Sal Lobello Goodwin Management Group, Inc. Steven D. Loye Family Limited Partnership Ps & F Enterprises Inc. Stephen Parascondola Robert Ott, Amici Curiae. Kelly Broussard Jim Stephens Mark Zuckerman Arnold Fischthal John Hagar Vincent Matera Denis Wickham Mary Ann Wickham Kenex Corporation Ralph Yarusso v. Meineke Discount Muffler Shops, Incorporated New Horizons Advertising, Incorporated Gkn Parts Industries Gkn, Plc Ronald Smythe Gene Zhiss Ted Pearce, and Michigan Franchisees, Which Consists Of: Peter D. Beyer, Ronald S. Slack, Susan I. Slack, Sherman J. Radford, Jayne Radford, William J. Varney, Sr., William J. Varney, Jr., Sher-Jay and Sons, Incorporated, and M.A.T.M., Incorporated, Atl International, Incorporated Blimpie International, Incorporated Burger King Corporation Doctor's Associates, Incorporated Foodmaker, Incorporated Golden Corral Corporation Hardee's Food Systems, Inc. International Dairy Queen, Incorporated McDonald Corporation Mobil Oil Corporation the Southland Corporation Secretary of Commerce of the State of North Carolina American Council of Life Insurance Securities Industry Association British American Business Council of North Carolina, Incorporated American Association of Franchisees and Dealers American Franchisee Association Sal Lobello Robert Ott Stephen Parascondola Ps & F Enterprises Inc. Steven D. Loye Family Limited Partnership Goodwin Management Group, Inc., Amici Curiae
155 F.3d 331 (Fourth Circuit, 1998)
Birrane v. Master Collectors, Inc.
738 F. Supp. 167 (D. Maryland, 1990)
Oakes Bros. v. Shebel (In Re Shebel)
54 B.R. 196 (D. Vermont, 1985)
CBS, Inc. v. Ahern
108 F.R.D. 14 (S.D. New York, 1985)
Gupta v. Penn Jersey Corp.
582 F. Supp. 1058 (E.D. Pennsylvania, 1984)
Silvers v. County of Dade
5 Fla. Supp. 2d 38 (Florida Circuit Courts, 1983)
Skalbania v. Simmons
443 N.E.2d 352 (Indiana Court of Appeals, 1982)
Payne v. Travenol Laboratories, Inc.
673 F.2d 798 (Fifth Circuit, 1982)
Martino v. McDonald's System, Inc.
81 F.R.D. 81 (N.D. Illinois, 1979)
Galloway v. American Brands, Inc.
81 F.R.D. 580 (E.D. North Carolina, 1978)
Robbins Flooring, Inc. v. Federal Floors, Inc.
445 F. Supp. 4 (E.D. Pennsylvania, 1977)