Opinion ID: 2435979
Heading Depth: 3
Heading Rank: 1

Heading: Prerequisites to Class Actions

Text: The complaint and amended complaint in this action were brought as class actions under Rule 23, Tennessee Rules of Civil Procedure. Both alleged that the class consisted of all persons, which included legal entities, who own land in the state of Tennessee across which Defendant Southern Railway Company (SRC), has maintained a railroad right-of-way, and/or across which the Defendant Sprint has constructed a fiber optics communication system. The class was further divided into three subclasses, two of which were distinguished by the manner of the railroad's acquisition of the right of way and the third of which consisted of land over which the railroad had no right of way. The complaint and amended complaint alleged all the prerequisites to class action filings [1] set forth in Rule 23.01 and requested certification pursuant to subsection one or two of Rule 23.02, or alternatively, pursuant to subsection three. In addition to the prerequisites to a class action set forth in Rule 23.01, Rule 23.02 further limits the situations in which a class action can be maintained to three. The first, set forth in Rule 23.02(1), allows class actions in order to avoid prejudice to the parties which might result from multiple suits about the same subject matter. Since separate prosecutions might establish incompatible standards of conduct for the defendant or dispositive adjudications which impair or impede the plaintiffs' protection of their interests, the unitary adjudication of a class action is preferable. Tenn.R.Civ.P. 23.02(1)(a) & (b). The second reason for allowing class action adjudication, set forth in Rule 23.02(2) applies to cases in which injunctive or declaratory relief is the predominant relief sought. Thus, a class action may be maintained when the party opposing the class has acted or refused to act on grounds generally applicable to the class. Tenn.R.Civ.P. 23.02(2). While this provision may also apply in cases seeking monetary relief, that relief must be secondary or ancillary to the predominant injunctive or declarative relief sought. H. Newberg, Newberg on Class Actions, § 4.12, at 294 (2d ed. 1985) (hereafter Newberg, supra, § ___, at ___). The third situation in which class actions may be maintained are those situations in which questions of law and fact predominate over individual issues making a class action the superior method for a fair resolution of the controversy. Tenn.R.Civ.P. 23.02(3). This provision is the most general, arguably encompasses all class actions, and is based on principles of judicial economy. Newberg, supra, § 4.24, at 315. Because subsection three requires notice to all class members, and because of its opt out provisions, certification under subsections (1) or (2) is generally preferred. Id., § 4.20, at 310. Plaintiff Meighan alleged that each of the three categories for class action certification applied to this lawsuit. Defendant opposed certification on all grounds. In its order granting certification, the trial court held as follows: [I]n an inverse condemnation case, such as this one, venue means jurisdiction and ... this Court therefore has no jurisdiction to certify a class action comprised of landowners whose land lies outside Knox County, Tennessee; and that while this action is appropriate for county-wide certification under Rule 23.02(3), ... the Court will defer deciding... . After considering further pleadings, the court certified the action as a class action and order[ed] that it shall be so maintained pursuant to Rule 23.02(3)... . The court limited the class to affected landowners in Knox County. Implicit in the court's ruling was a finding that plaintiff had established all of the prerequisites for maintaining a class action under Rule 23.01 as well as a finding that a class action was appropriate under Rule 23.02(3). It is equally apparent that the trial court's redefinition of the class was prompted by the court's interpretation of venue and jurisdiction requirements in eminent domain actions. Both of these rulings were challenged on appeal. The Court of Appeals reversed the class action certification because there are no more remaining questions of law or fact common to the class. In that court's opinion, the only remaining issues are whether each fee interest owner is entitled to recover damages and, if so, in what amount. These questions are different for each class member and are therefore not common to the class... . Because resolution of each plaintiff's claim will require a detailed factual inquiry as to the market value of that plaintiff's property ... this case is inappropriate for class action treatment. As the Court of Appeals correctly noted, the determination of whether an action should proceed as a class action is a matter which is left to the sound discretion of the trial judge. Only upon a finding of an abuse of that discretion should the trial judge's decision be modified on appeal. Sterling v. Velsicol Chemical Corp., 855 F.2d 1188 (6th Cir.1988). The Court of Appeals' conclusion, prompted by our decision in Buhl , was that the trial court abused its discretion because there are no remaining questions of law or fact common to the class. We disagree. The decision in Buhl did reconcile one of the legal issues in this case which was common to all plaintiffs. It did not, however, resolve all the common legal and factual issues. The removal of one common legal question is not sufficient grounds for decertifying the class if other common questions of law or fact remain. See generally 7A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, § 1778, at 522-46 (2d. ed 1986) (hereafter Federal Practice and Procedure, supra, § ___ at ___). It is well established that the existence of separate issues of law and fact, particularly regarding damages, do not negate class action certification. See Rules Advisory Committee Notes to 1966 Amendments to Fed.R.Civ.P. 23, 39 F.R.D. 69 (1966). [2] While the separate factual issue of individual damages remains, common legal and factual issues, including the nature of the claim and of the relief, predominate. We hold that the trial court properly exercised its discretion in certifying a class action in this lawsuit and that the appellate court improperly interfered with that discretion by decertifying the class based on the Buhl decision. In addition to being an inappropriate case for finding an abuse of discretion on the part of the trial judge, good reasons support the initial, as well as the continued, certification of this case as a class action. First, it is properly the trial court's prerogative to make the initial determination of and any subsequent modifications to class certification. The trial court retains significant authority to redefine, modify, or clarify the class. Furthermore, and perhaps more importantly, we are mindful of the genesis of class actions. Historically, class actions were created as a matter of convenience to afford partial justice to parties before the court when they were unable to join all interested parties pursuant to the then-compulsory joinder rule governing equity court procedures. See Hansberry v. Lee, 311 U.S. 32, 41, 61 S.Ct. 115, 117-18, 85 L.Ed. 22 (1940). The United States Supreme Court has recognized that class actions advance efficiency and economy of litigation which is a principal purpose of the procedure. General Telephone Company of Southwest v. Falcon, 457 U.S. 147, 159, 102 S.Ct. 2364, 2371, 72 L.Ed.2d 740 (1982). Thus, in 1980, the United States Supreme Court concluded: The justifications that led to the development of the class action include the protection of the defendant from inconsistent obligations, the protection of the interests of absentees, the provision of a convenient and economical means of disposing of similar lawsuits, and the facilitation of the spreading of litigation costs among numerous litigants with similar claims. United States Parole Commission v. Geraghty, 445 U.S. 388, 402-03, 100 S.Ct. 1202, 1212, 63 L.Ed.2d 479 (1980). Thus, while the device has its notable advantages to the parties to a lawsuit, it also advances the interests of judicial economy and of providing access to the courts. These are the most notable of the justifications for class certification in the case before us. The takings by this defendant potentially could result in hundreds of lawsuits in dozens of courts occupying dozens of judges. Inconsistent decisions regarding the trespass and punitive damages claims would be likely. Separate appellate decisions with differing results are no less likely. Determination of the remaining common issues in a single forum is a far superior method of resolution. Additionally, the certification serves to provide access to the courts to individual claimants whose small claims would not otherwise justify their seeking relief. Where it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class-action device. Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 339, 100 S.Ct. 1166, 1174, 63 L.Ed.2d 427 (1980). While defendant argues that this merely allows plaintiff's counsel to have a more lucrative case, historically, fee splitting was a primary impetus behind the class action device. It is not only not condemnable, it is commendable. [3] Thus, we conclude that when a trial court properly exercises its discretion and certifies a lawsuit as a class action under Rule 23.02(3), the fact that one of the significant common legal issues is resolved prior to trial does not justify a decertification of the action if the common questions of law or fact that remain predominate. More importantly, if the trial court has properly exercised its discretion in certifying the class initially, modifications to that order remain the trial court's prerogative. Defendant contends that the sole remaining issue in this case is the amount of individual damages suffered by each property owner. Consequently, defendant suggests that a class action is inappropriate. While we recognize that the issue of compensatory damages may require some individual consideration, we disagree with defendant's position that each owner will be entitled to present detailed damages evidence. In a class action, courts are not required to conduct separate damage inquiries for each class member. Instead, the court may determine an aggregate damage amount for the class as a whole. Newberg, supra, § 4.26, at 321. The trial court may simply choose to divide the award among members or may allow each plaintiff to recover by proving his or her claim against the entire judgment. See Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). This case is particularly amendable to the aggregate damage approach. It is likewise irrelevant that the case involves property damage. Though often characterized as unique, this quality does not foreclose cases involving property damages from Rule 23 procedures. Literally dozens of class actions involving property damages have proceeded in our state and federal courts. See e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982); Eyak Native Village v. Exxon Corp., 25 F.3d 773 (9th Cir.1994) (after federal court consolidation and removal); Hart v. City of Detroit, 97 Mich. App. 697, 296 N.W.2d 151 (1980).