Opinion ID: 1865168
Heading Depth: 1
Heading Rank: 23

Heading: On Behalf of Class

Text: The next question is whether Hoiengs has successfully pled an action on behalf of a class consisting of current and past participants in the system. Class actions are authorized under Neb. Rev.Stat. § 25-319 (Reissue 1989), which provides: When the question is one of a common or general interest of many persons, or when the parties are very numerous, and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of all. While or, when used properly, is disjunctive and and conjunctive, the words are so frequently interchanged that in construing a civil statute, or may be read as and where a strict reading would lead to an absurd or unreasonable result and defeat the intent of the statute. See Rapid Film Service, Inc. v. Bee Line Motor Freight, 181 Neb. 1, 146 N.W.2d 563 (1966); Richter v. City of Lincoln, 136 Neb. 289, 285 N.W. 593 (1939); Carlsen v. State, 127 Neb. 11, 254 N.W. 744 (1934). Surely it would be absurd to say that two persons litigating a question of common interest should, for that reason alone, be afforded class action treatment; it would be equally absurd to say that 50,000 persons litigating questions having no common or general interest should be so treated. Thus, the second or in the phrase common or general interest of many persons, or when the parties are very numerous requires that both of the designated conditions exist. That is, in order to justify class status treatment, there must exist both a question of common or general interest and numerous parties so as to make it impracticable to bring all the parties before the court. See Berkshire & Andersen v. Douglas County Board of Equalization, 200 Neb. 113, 262 N.W.2d 449 (1978). There is no mechanical test for determining whether in a particular case the class is so numerous that the requirement of numerosity has been satisfied. Kelley v. Norfolk & W. Ry. Co., 584 F.2d 34 (4th Cir.1978). Nonetheless, here Hoiengs' allegation that 9,000 employees have been affected by the statute meets the numerosity requirement; the impracticality of joining such a large number of parties is obvious. However, the question as to whether the commonality requirement has been met is a more complicated matter. In Archer v. Musick, 147 Neb. 344, 23 N.W.2d 323 (1946), opinion vacated on reh'g 147 Neb. 1018, 25 N.W.2d 908 (1947), we stated that an action may not be maintained as a class action by a plaintiff on behalf of himself or herself and others unless he or she has the power as a member of the class to satisfy a judgment on behalf of all members of the class. The defendants urge that as Hoiengs could not satisfy a judgment, class action status is inappropriate. In State ex rel. Sampson v. Kenny, 185 Neb. 230, 175 N.W.2d 5 (1970), the relators on behalf of all taxpayers similarly situated asked that the court make provisions for paying claims for the refund of taxes illegally collected and disbursed to all taxpayers having the right to file such claim. We determined that the action could not be brought as a class action because in such a case the  ` judgment must not only be for each according to the amount due him, but must depend upon whether each as an individual paid voluntarily or involuntarily. '  Id. at 232, 175 N.W.2d at 6. In addition, we pointed to the procedural difficulties and confusion inherent in attempting to judicially control in a class action the ministerial actions of a county treasurer where, by statute, such a refund must be individually determined. See, Boersma v. Karnes, 227 Neb. 329, 417 N.W.2d 341 (1988), appeal dismissed 488 U.S. 801, 109 S.Ct. 29, 102 L.Ed.2d 9; Gates v. Howell, 211 Neb. 85, 317 N.W.2d 772 (1982); Riha Farms, Inc. v. County of Sarpy, 212 Neb. 385, 322 N.W.2d 797 (1982); Hansen v. County of Lincoln, 188 Neb. 461, 1 Neb. 798, 197 N.W.2d 651 (1972); State ex rel. Sampson, supra ; Neb. Rev.Stat. § 77-2795 (Reissue 1990). What distinguishes State ex rel. Sampson and similar cases from the case now before us is our reference to the peculiarly individual requirements of the refund statute and the policy of the Legislature in normally not refunding taxes paid under a mistake of law unless such request is made pursuant to statute. State ex rel. Sampson, 185 Neb. at 233, 175 N.W.2d at 7. In contrast, observing that class actions rendered unnecessary the proliferation of litigation of individual suits, we permitted a city policeman on behalf of himself and all city policemen and firemen to recover an amount erroneously deducted for pension purposes from their salaries. Gant v. City of Lincoln, 193 Neb. 108, 225 N.W.2d 549 (1975). We held that where 400 parties would be entitled to share in the funds, where the amount due each was small, and where questions of law and fact were common to all and predominated over individual interests, the plaintiff, in representing his own interest, necessarily would represent interests of all members of the class. Unlike cases where, by the very nature of the facts, each of the claimants stood or fell on facts applicable only to that claimant, here, there is at this point nothing unique about Hoiengs' legal claim from other members of the class. All are concerned with the manner in which the retirement act has been applied to the employees' retirement accounts. The case will turn on the interpretation of the statutes governing county contributions. So far as now appears, the effect on Hoiengs and the others will, in that regard, be basically the same, an increase in the amount of contributions to their employer accounts or no change to their accounts. Further, although in the instant case the amount of recovery would be different for each employee, judgment would not require varying proof as to the right of each employee to participate in the fund. Daar v. Yellow Cab Co., 67 Cal.2d 695, 433 P.2d 732, 63 Cal.Rptr. 724 (1967) (percent of rate of overcharge to each member of class was identical and uniform and known to defendant and would not require each individual plaintiff to appear); Fanucchi v. Coberly-West Co., 151 Cal.App.2d 72, 311 P.2d 33 (1957) (action by 18 cotton growers on behalf of themselves and others similarly situated against ginning company to recover for portion of seed derived from cotton delivered to defendants could be properly maintained as class action where facts necessary to establish liability on part of defendant was exactly the same despite different pro rata recovery by each grower; while recovery of grower would have to correspond with weight of cotton delivered, that is matter of record and amount of each grower's recovery could easily be ascertained by mere mathematical computation). We thus conclude that Hoiengs has stated a cause of action on behalf of a class. Whether the evidence will develop conflicts between Hoiengs and the others he seeks to represent cannot, of course, be known at this time. The test of common interest to maintain a class action is whether all the members of the purported class desire the same outcome of the action that their representative desires. Browne v. Milwaukee Bd. of School Directors, 69 Wis.2d 169, 230 N.W.2d 704 (1975). Persons having an interest adverse to those of parties purported to be represented cannot maintain a representative or class suit on behalf of the latter. Sarratt v. Lincoln Benefit Life Co., 212 Neb. 436, 323 N.W.2d 81 (1982); Evans v. Metropolitan Utilities Dist., 185 Neb. 464, 176 N.W.2d 679 (1970). In determining the ability of a plaintiff to represent a class, it must appear that the relief sought is beneficial to the class members and that the plaintiff's interests are consonant with those of the other members of the class. Luitweiler et al. v. Northchester Corp., 456 Pa. 530, 319 A.2d 899 (1974). Citing Blankenship v. Omaha P.P. Dist., 195 Neb. 170, 237 N.W.2d 86 (1976), the defendants argue that in this case, employees working in one county but living in another would not want the county in which they lived to contribute the additional amounts to others' retirement funds because of the probable resulting increase in taxes that would be required to pay the additional contributions. In Blankenship, a customer of a utility sought a refund of certain allegedly unlawful late charges on his own behalf and on behalf of those other customers or ratepayers of the utility who had or would in the future be required to pay said charges. We reasoned that if the plaintiff were successful, the utility would have to raise approximately $2,400,000 to make the refunds, and those customers who paid the penalty charge only once or rarely would likely be damaged economically in the long run by the increased rates which would have to be charged to pay the judgment. Thus, we held that the would-be representative could not maintain a class action. In an earlier case, Evans, supra, a ratepayer of a utility brought an action on his own behalf and that of all other ratepayers to compel the return to the district of certain statutory payments to the city. Concluding that not all ratepayers would be benefited because many of them were also taxpayers of the city which would have to raise taxes to pay any judgment, we held that a class action was inappropriate. See, also, In re 1983-84 County Tax Levy, 220 Neb. 897, 374 N.W.2d 235 (1985) (residents and taxpayers challenging constitutionality of statute prescribing procedure under which tax levied by one district for providing schools to another district could not maintain class action in view of record showing potentiality of conflict of interest among members of class owning property located in both districts); Kosowski v. City Betterment Corp., 197 Neb. 402, 249 N.W.2d 481 (1977) (where class included members who would stand to suffer if suit were successful in enjoining disbursement of funds). The general rule extracted from these cases is that if any party included in the claimed class stands to suffer an economic loss as the result of his or her inclusion, the party initiating the class action will have an interest adverse to those of the parties he or she purports to represent, and, therefore, it can be said the action is not brought for the benefit of all members of the class. See Blankenship, supra . Thus, where the record demonstrates potentially conflicting interests within the class, it is appropriate to grant a motion for summary judgment as to the class aspect of the case. Sarratt, supra ; Kosowski, supra . We said in Blankenship: All the court need determine in granting a motion for summary judgment denying the plaintiff the right to proceed in a class action is that the undisputed facts demonstrate the potentiality of conflict of interests between the represented, or some of them, and the interests which the plaintiff asserts. 195 Neb. at 177, 237 N.W.2d at 90. However, at this point, the asserted conflict of interest between Hoiengs and the members of the claimed class is highly speculative. We have only the argument of the defendants that the class includes members whose taxes would be raised without receiving an offsetting benefit. While we have said that a petition for class status may be challenged by demurrer, Twin Loups Reclamation & Irr. District v. Blessing, 202 Neb. 513, 276 N.W.2d 185 (1979), it would be unjust under the allegations in the present petition to presume the presence of a conflict in the absence of evidentiary support. See Ross v. City of Geneva, 43 Ill.App.3d 976, 2 Ill.Dec. 609, 357 N.E.2d 829 (1976), aff'd 71 Ill.2d 27, 15 Ill.Dec. 658, 373 N.E.2d 1342 (1978). The determination of whether the suit is maintainable as a class action usually should be predicated on more information than the petition itself. See, Beckstead v. Superior Court, 21 Cal.App.3d 780, 98 Cal.Rptr. 779 (1971); Lucas v. Pioneer, Inc., 256 N.W.2d 167 (Iowa 1977); Riley v. New Rapids Carpet Center, 61 N.J. 218, 294 A.2d 7 (1972); Hicks v. Milwaukee County, 71 Wis.2d 401, 238 N.W.2d 509 (1976) (whether class action may be maintained will seldom be answered on the face of the complaint, and demurrer or its equivalent will seldom be an appropriate way to object to a class action). There remains a further question none of the parties have raised. What members of the class are to be bound by the judgment entered herein? Although our statute is silent on this issue, we acknowledge that the procedure in a class action must conform to the requirements of due process and fairly ensure the protection of absent parties who are to be bound. Hansberry v. Lee, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22 (1940); Horst v. Guy, 211 N.W.2d 723 (N.D.1973). Thus, in particular cases there may be a due process requirement of notice to absent class members even though there is no express statutory requirement. See, Eastham v. Public Employees' Retirement Ass'n Bd., 89 N.M. 399, 553 P.2d 679 (1976); Graham v. Bd. of Supervisors, 25 A.D.2d 250, 269 N.Y.S.2d 477 (1966), appeal dismissed 17 N.Y.2d 866, 218 N.E.2d 332, 271 N.Y.S.2d 295. We are not unmindful that in Gant v. City of Lincoln, 193 Neb. 108, 225 N.W.2d 549 (1975), we dispensed with notice, stating that notice was not required in all representative actions. However, therein, it appeared that as the plaintiff had won, there was no way in which the absent class members could be prejudiced by the judgment. Here, we cannot know the ultimate outcome. One of the primary purposes of notice is so that one may ask to be excluded in order to avoid being bound by a class action judgment and to permit those excluded to litigate their own claims. Sarasota Oil Co. v. Greyhound Leasing & Financial Corp., 483 F.2d 450 (10th Cir.1973). Providing notice of an opportunity to opt out of the class fulfills due process by safeguarding individual interests and by allowing individuals to avoid being bound by a classwide judgment that otherwise would preclude them from litigating their claims separately. Waldo v. Lakeshore Estates, Inc., 433 F.Supp. 782 (E.D.La.1977), appeal dismissed 579 F.2d 642 (5th Cir. 1978); In re Four Seasons Securities Laws Litigation, 502 F.2d 834 (10th Cir.1974), cert. denied 419 U.S. 1034, 95 S.Ct. 516, 42 L.Ed.2d 309; In re Nissan Motor Corp. Antitrust Litigation, 552 F.2d 1088 (5th Cir. 1977); Redhail v. Zablocki, 418 F.Supp. 1061 (E.D.Wis.1976), aff'd 434 U.S. 374, 98 S.Ct. 673, 54 L.Ed.2d 618 (1978). We are persuaded that the due process rights afforded by Neb. Const. art. I, § 3, preclude binding any member of the claimed class who does not receive notice of this suit to any judgment rendered herein. In like vein, one receiving notice is entitled to exercise his or her due process right to opt out of the class.