Wolfson v. Riley

94 F.R.D. 243, 31 Fed. R. Serv. 2d 1114, 1981 U.S. Dist. LEXIS 17556
CourtDistrict Court, N.D. Ohio
DecidedJanuary 29, 1981
DocketCiv. A. Nos. C79-642, C80-1054A
StatusPublished
Cited by4 cases

This text of 94 F.R.D. 243 (Wolfson v. Riley) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wolfson v. Riley, 94 F.R.D. 243, 31 Fed. R. Serv. 2d 1114, 1981 U.S. Dist. LEXIS 17556 (N.D. Ohio 1981).

Opinion

[244]*244MEMORANDUM OPINION AND ORDER

ANN ALDRICH, District Judge.

Pending before the Court in the above actions are plaintiffs’ Motions for Class Certification, pursuant to Rule 23, Federal Rules of Civil Procedure. Wolfson v. Riley (Wolfson) was originally filed in the United States District Court for the Eastern District of Pennsylvania. Pogostin v. Riley (Pogostin) commenced in the United States District Court for the Southern District of New York. Pursuant to 28 U.S.C. § 1404(a), both actions were subsequently transferred to the Northern District of Ohio. Oral argument was heard on October 10, 1980 regarding the motions for class certification. For reasons set forth below the plaintiffs’ motions for class certification in Wolfson and Pogostin are granted.

FACTS

In Wolfson, plaintiff alleges that the defendants are in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as adopted by the Securities and Exchange Commission. Specifically, plaintiff alleges that the defendants failed to disclose that Firestone possessed substantial excess capacity to manufacture bias-ply tires and that, in light of reduced demand therefore, various tires and other production facilities related to such bias tire production would require closing at a cost to Firestone of approximately $110 million; that the defendants failed to disclose that Firestone materially understated the extent of its unfunded employee pension plan obligations and that those obligations that were disclosed were inadequately disclosed and not properly reflected in Firestone’s financial statements; that the defendants failed to disclose the extent to which Firestone was incurring problems of overwhelming proportions related to the manufacture and sale of Firestone Radial 500 tires and that such problems had materially impacted upon Firestone’s continuing and future operations, earnings and net worth; and that the defendants overstated Firestone’s earnings, assets and net worth by failing to make adequate provision in Firestone’s financial statements for the probable economic impact of the continuing and future costs of the Radial 500 tires. Wolfson Complaint at Paragraph 24.

In Pogostin, plaintiff also brought his action pursuant to § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities Exchange Commission. Plaintiff alleges that the defendants failed to disclose the extent to which Firestone’s problems with the Radial 500s had materially impacted upon Firestone’s continuing and future operations, earnings, and net worth; that the defendants overstated Firestone’s earnings, assets and net worth for the fiscal years 1975-1977 by failing to make adequate provision in Firestone’s financial statements for the necessary economic impact of the continuing and future costs of the Radial 500 problems; and that the defendants overstated Firestone’s earnings, assets and net worth by reporting income in 1972 and 1973 which had been earned in previous years. Plaintiff asserts that each of these omissions of material fact had the effect of inflating the value of Firestone’s common stock. Pogostin Complaint at Paragraphs 27, 28.

LAW

The prerequisites to a class action suit are numerosity, commonality, typicality, and adequacy of representation. Rule 23(a), Federal Rules of Civil Procedure. The primary issue in Wolfson is whether or not there is adequate representation. Tessie Wolfson is seventy-seven years old. In purchasing her Firestone stock, she relied heavily on the advice of her son-in-law, Alfred Gollomp. The defendants question her ability to finance this litigation if she is certified as the class representative. Defendants further challenge Mrs. Wolfson’s competency to serve as a representative of this class because of her apparent lack of knowledge of the allegations contained in her complaint.

Whether an individual is an adequate representative of a class is dependent on two factors: first, the plaintiff’s attor[245]*245ney must be qualified, experienced and generally able to conduct the litigation; and second, the plaintiff may not have interests which are antagonistic to the class. Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239 (3d Cir. 1975); Eisen v. Carlisle and Jacquelin, 391 F.2d 555 (2d Cir. 1968). This two-part test has been consistently applied in this circuit as well. Senter v. General Motors Corp., 532 F.2d 511 (6th Cir. 1976); Sweet v. General Tire and Rubber Co., 74 F.R.D. 333 (N.D.Ohio 1976).

It appears to this Court that the first part of this test is met in Wolfson. Counsel for the plaintiff has engaged in previous class action suits. He has satisfied this Court that he is competent, qualified, and experienced and that he will prosecute this lawsuit zealously on behalf of Mrs. Wolfson.

A question is raised as to whether Mrs. Wolfson possesses interests antagonistic to the class, and in conjunction with that issue, whether she is an adequate representative. Initially, the defendants argue that Mrs. Wolfson does not meet the typicality requirement of Rule 23(a)(3) because she relied on her son-in-law in the purchase of her Firestone stock as opposed to directly relying on Firestone. Reliance on another in the purchase of stock does not automatically preclude the certification of a class. See Broad v. Rockwell International Corp., 22 FR Serv 2d 1151, 1153 (N.D.Tex.1976); Gerstle v. Continental Airlines, Inc., 50 F.R.D. 213, 219 (D.Col.1970), class decertified for other reasons, 466 F.2d 1374 (10th Cir. 1972).

A plaintiff who is to represent a class need not be the best of all possible plaintiffs. Apanewicz v. General Motors Corp., 80 F.R.D. 672, 677 (E.D.Pa.1978), citing 7 Wright and Miller, Federal Practice and Procedure § 1765. Mrs. Wolfson indeed may not be the best of all possible plaintiffs but her reliance on her son-in-law in purchasing the Firestone stock in and of itself does not preclude her from being a class representative. In fact, her situation is strikingly similar to that of Mrs. Surowitz.

In Surowitz v. Hilton Hotels Corp., 383 U.S. 363, 86 S.Ct. 845, 15 L.Ed.2d 807, rehearing denied, 384 U.S. 915, 86 S.Ct. 1333, 16 L.Ed.2d 367 (1966), Mrs. Surowitz instituted a shareholder’s derivative action against Hilton Hotels corporation for violations of the federal securities laws. Mrs. Surowitz was a Polish immigrant with no formal education, and relied on her son-in-law in purchasing her stock in Hilton Hotels. The Court held that her good faith reliance on her son-in-law should not preclude her from bringing a shareholder’s derivative suit. As noted by the Court:

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Bluebook (online)
94 F.R.D. 243, 31 Fed. R. Serv. 2d 1114, 1981 U.S. Dist. LEXIS 17556, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wolfson-v-riley-ohnd-1981.