Opinion ID: 1722395
Heading Depth: 1
Heading Rank: 2

Heading: The representatives must vigorously prosecute the rights of the class through qualified counsel.

Text: The intertwined requirements of vigorous prosecution and employment of qualified counsel act to assure the court of a true adversary proceeding between the plaintiff class and the defendant. Cf. Entin v Barg, 60 FRD 108, 114, fn 9 (ED Pa, 1973); Hansberry v Lee, 311 US 32, 45-46; 61 S Ct 115; 85 L Ed 22 (1940). The representatives' interests must be typical and compatible with those of the class they seek to represent and, of course, opposed to the interests of the defendant. Hansberry v Lee, supra . In asserting their own individual cases, the representatives must at the same time be able to forthrightly and vigorously assert the interests of the class. Mersay v First Republic Corp of America, 43 FRD 465 (SD NY, 1968). The qualifications of plaintiffs' counsel have not been challenged; [6] but the diligence of the action's prosecution has been called into question. First, it is claimed that the representatives are no longer able to vigorously represent the class because they have accepted individual judgments. Second, the small number of intervening class members is said to indicate a lack of interest in the class action and require its dismissal. 1. A predominant concern expressed throughout the prior proceedings in this action has been the fact that the named plaintiffs accepted satisfaction of their individual claims against the defendant while purporting to remain as class representatives. Reference to this situation is made in the portion of the Court of Appeals' opinion quoted supra, and it is addressed in detail in appellee's brief. Both the Court of Appeals and appellee city assumed that because the named plaintiffs have received their recovery, they and their counsel are no longer able to adequately represent the class. While this position seems a priori reasonable, the guidance of the Federal case law reveals the over-breadth of such a conclusion. Under the Federal case law, a court may not conclude from the single fact that the named plaintiffs have accepted judgment that they and their counsel are no longer adequate representatives. The court's inquiry should go in back of the individual judgments in order to determine if the representatives have, in fact, abandoned their representative role. If, for example, the representatives accept individual judgments in a manner that is contrary to the interests of the class or otherwise indicative of an abandonment of their representative duties, the court should clearly find them to be inadequate representatives. If, however, the representatives and their counsel seek the court's approval prior to the individual judgments, and if thereafter they continue to vigorously prosecute the rights of the class, there is no basis for a conclusion of inadequate representation. See Wymelenberg v Syman, 54 FRD 198, 200 (ED Wis, 1972); Frost v Weinberger, 375 F Supp 1312, 1318-1319 (ED NY, 1974); Stokes v Bonin, 366 F Supp 485, 488 (ED La, 1973); Thomas v Clarke, 54 FRD 245 (D Minn, 1971); Huff v N D Cass Co of Alabama, 485 F2d 710, 714 (CA 5, 1973). The facts in today's case are illustrative of a situation in which the acceptance of individual judgments has not affected the adequacy of representation. The representatives initially sought a judgment on behalf of all class members. After the court dismissed the class action and denied that portion of plaintiffs' motion for judgment, the representatives filed a timely claim of appeal. The named plaintiffs did then accept the court's award of individual judgments, but they did not, as far as the record reveals, thereafter reduce their efforts on behalf of the absent class members. After accepting individual judgments, the plaintiffs proceeded to prosecute two appeals in the Court of Appeals, various proceedings in the circuit court and the present appeal to our bench. In all of these proceedings plaintiffs' counsel, acting in the name of the representatives, has been the moving force and has adequately protected the interests of the class. The crucial role played by counsel in a class action should not be overlooked or underemphasized. The professional obligation to represent the class plus the prospective monetary award for successfully doing so make counsel an important force with a continuing interest in the litigation. In an analogous situation in the case of Dolgow v Anderson, supra , Judge Weinstein offered some candid comments on the role of counsel in a class action. In refuting an allegation that the interests of the named plaintiffs were of insufficient size to insure adequate representation, Judge Weinstein wrote: In contending that the size of the claims of the parties before the court should be given great weight in determining the question of adequacy of representation, the defendants assume that the plaintiffs' force in prosecuting the action is proportionate to the amount they hope to recover. This equation is based on the assumption that the plaintiffs bring this action solely to recover their individual damages. The realities of the situation here and in the vast majority of class actions suggest that the amount of possible recovery by the class rather than by the individual plaintiffs furnishes the motivating force behind prosecution. [Citations omitted.] 43 FRD 472, 494-495. In summation, we find no support in the record for a conclusion that the named plaintiffs' acceptance of individual judgments rendered them inadequate class representatives. 2. We also believe that the Court of Appeals and the circuit court erred in this case when they relied on the small number of intervening class members to find that there was insufficient interest to continue this suit as a class action. The basic factual premise for such a finding is that the class members knew of the action and with that knowledge did not intervene because they were not interested in the suit. A sparsity of intervenors standing alone is meaningless. The failure to intervene prior to judgment in a spurious class action is equally consistent with satisfaction with the representatives, dissatisfaction with the representatives, lack of interest in the action or a lack of knowledge of its existence. If the Court finds it necessary to rely on the number of intervenors, it must first determine that it has an adequate factual basis for its conclusion. Cf. Knuth v Erie-Crawford Dairy Coop Ass'n, 395 F2d 420, 428 (CA 3, 1968), cert den 410 US 913; 93 S Ct 966; 35 L Ed 2d 278 (1973). In the present case, because the notice provided to the absent class members was clearly inadequate, the courts lacked a sufficient factual basis upon which to proceed when reviewing the interest of the absent class members in the suit. In its 1968 opinion the Court of Appeals found that the original notice was inadequate and would not support an assessment of class interest. [7] Accordingly, the Court of Appeals remanded the matter for correction and further review. On remand, however, the circuit court narrowly read the Court of Appeals opinion with the consequence that only a limited notice by publication was served on the class. This latter notice was not reasonably calculated in this case to reach the absent class members and was inferior to other methods of the notice that could have easily been ordered by the court. With the information that was available in the city's records, the court could have, for example, markedly increased the chances of reaching the class by ordering a simple notice by mail. [8] Cf. Mullane v Central Hanover Bank & Trust Co, 339 US 306; 70 S Ct 652; 94 L Ed 865 (1950). The problems concerning notice that have arisen in this case reflect the fact that the notice provisions in our class action rule are vague. This vagueness is aggravated by the lack of due process constraints in a spurious class action. See fn 4, supra. We conclude that if a court seeks to measure the interest of the class and perhaps dismiss a class action, thereby putting an end to the class claim, it must first order adequate notice and convey to the class members their need to intervene to preserve the action. If the court does otherwise, it lacks the factual basis necessary for such a decision. [9] We find that there was not sufficient evidence to support the circuit court and Court of Appeals finding of inadequacy of representation based upon the conduct of the named plaintiffs or the small number of intervenors. To affirm such findings would merely penalize the absent class members for the confusion of all other participants in the suit. We accordingly suggest that the following procedures be employed to equitably terminate this protracted litigation. A. Remand On remand the circuit court should determine the substantive merits of the class claims. Since it is a matter of record that the class claims are legally and factually like those of the named plaintiffs heretofore found meritorious by the circuit court, we proceed on the assumption that judgment will be entered in favor of the class. B. Notice After the circuit court resolves the issue of liability, it must insure that a satisfactory attempt is made to notify the absent class members of their right to intervene in the class action. The court's duty at this stage in the litigation is to enforce its finding of liability. [10] Bond v Ann Arbor School Dist, 383 Mich 693, 702-706; 178 NW2d 484; 41 ALR3d 742 (1970). In a case such as the case before us today, the physical problems of notice are greatly reduced by the fact that the city has the names and addresses of all persons who purchased building permits during the period of the illegal fee schedule. The circuit court should enter an order providing for direct mail notice to the class members and supplement the mail notice with whatever other form of notice the court deems proper. Appropriate provision shall be made for forwarding to such other addresses as in the exercise of reasonable diligence can be obtained notices returned because the addressee has moved or is unknown at the address in the city's records. The notice should, at this point in the litigation, either contain a returnable claim form or an explanation of how the class member can comply with the claim procedure established by the court. C. Intervention After adequate notice has been given to the absent class members, the circuit court should devise a procedure for determining if those persons responding to the notice belong to the class and, if so, the amount of recovery to which they are entitled. State Wholesale Grocers v Great Atlantic & Pacific Tea Co, 24 FRD 510, 513 (ND Ill, 1959). A model for such a procedure may be found in Foster v Detroit, 254 F Supp 655, 668-669 (ED Mich, 1966). In Foster the district court appointed a special master to handle the details involved in collecting the individual class claims against the City of Detroit. The court allowed the absent class members a period of six months, in which to appear and file claims before a special master who will determine their membership in the class and the extent, if any, of their damages   . In order to facilitate the calculation of damages, the City of Detroit was required to make available its records relating to the loss suffered by each class member. The city was also provided the opportunity to challenge any intervenor's membership in the class and allowed to be a party to the calculation of individual damages. We recognize that the procedure employed in Foster cannot literally be followed in the state courts. See Const 1963, art 6, § 5; cf. Frank v Schultz, 295 Mich 714; 295 NW 374 (1940). The circuit court, however, may fashion an analogous procedure for the fair and expeditious resolution of this class action. [11] D. Payment of Damages The relief requested by plaintiffs is the creation of a fund comprised of all excess building fees paid by the class members plus interest. From this fund plaintiffs would have the court deduct the costs of the action, reasonable attorney fees and the proper amount of damages for each class member who files a valid claim according to the procedures established by the court. The expenses incurred in connection with the administration of the fund would also be deducted and any remaining funds returned to the city. (Plaintiffs' motion for summary judgment, September 4, 1969). A similar approach was adopted by the Court of Appeals in the case of Metro Homes, Inc v City of Warren, 19 Mich App 664, 674-675; 173 NW2d 230 (1969). See, also, Bond v Ann Arbor School Dist, supra . An important distinction, however, between Metro Homes and today's case is the speed with which each case was prosecuted. While Metro Homes appears to have progressed with reasonable dispatch, today's case has become a product of excessive delays, in part attributable to the plaintiffs. As a result of these delays, the requested relief may be an unnecessarily harsh burden on defendant city. While the amount of interest that has accrued over the course of the action may be substantial, the number of class members actually filing claims will undoubtedly evidence the natural attrition of a 15-20 year delay between the date of purchase of a building permit and the date of recovery set by the courts. The city thus would be required to pay a larger fund into court than may be needed to meet the class claims. The circuit court should employ its discretion to see that justice is done. We suggest that costs be taxed against the city and the city create a fund that is equal to the damages found to be due to those class members filing valid claims within the time limits established by the circuit court plus interest from July 21, 1965, the effective date of 1965 PA 240; MCLA 600.6013; MSA 27A.6013. Reasonable attorney's fees, based on the size of this sub-class, can then be deducted from the fund and individual awards made. See Hornstein, Legal Therapeutics: The Salvage Factor in Counsel Fee Awards, 69 Harv L Rev 658 (1956); Simeone, Procedural Problems in Class Suits, 60 Mich L Rev 905, 950-953 (1962). Reversed and remanded to the Macomb Circuit Court.