Opinion ID: 2339712
Heading Depth: 1
Heading Rank: 6

Heading: Inconsistent Adjudications

Text: K.S.A. 2010 Supp. 60-223(b)(1)(A) establishes one of three alternative requirements for maintaining a class action lawsuit. This requirement is that either the prosecution of separate actions would create a risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for the party opposing the class, or that adjudications with respect to individual members of the class would as a practical matter dispose of or impair the interests of the other members who were not parties to the adjudications. The district court determined that the requirements of K.S.A. 2010 Supp. 60-223(b)(1)(A) were satisfied because separate actions by individual class members might result in incompatible standards of conduct for Taranto. The court also held that two courts could reach inconsistent results on defenses such as express consent, established business relationships, or opt-out notice validity. Taranto contends on appeal that the statutory inconsistent standards element refers primarily or exclusively to future conduct. Taranto cites National Union v. Midland Bancor, Inc., 158 F.R.D. 681, 687 (D.Kan. 1994), holding that federal Rule 23(b)(1)(A), the federal equivalent of 60-223, requires more than the mere possibility that inconsistent judgments and resolutions of identical questions of law would result if numerous actions are conducted instead of one class action. The National Union court quoted Employers Ins. of Wausau v. Federal Deposit Ins., 112 F.R.D. 52, 54 (E.D.Tenn.1986), holding that the risk of incompatible standards of conduct against which Rule 23(b)(1)(A) was designed to protect involves situations where the non-class party does not know, because of inconsistent adjudications, whether or not it is legally permissible for it to pursue a certain course of conduct and where it could be sued for different and incompatible relief. While this conclusion has some basis in the plain statutory language, which refers to incompatible standards of conduct, K.S.A. 2010 Supp. 60-223(b)(1)(A), the language may also be taken to mean that the class action establishes a standard of conduct that the non-class party is bound to follow, or it may refer to applying incompatible standards to past conduct. The large number of potential plaintiffs in the present case could give rise to thousands of cases in a variety of courts, and the potential for inconsistent results is therefore great. This is the problem that the Missouri Court of Appeals addressed when it recently decided that class certification was the superior means of litigating a TCPA fax advertising suit: Class actions are designed to provide an `economical means for disposing of similar lawsuits' while simultaneously `protecting defendants from inconsistent obligations and the due process rights of absentee class members.' State ex rel. Coca-Cola Co. v. Nixon, 249 S.W.3d 855, 860 (Mo.banc 2008) (citing United States Parole Comm'n v. Geraghty, 445 U.S. 388, 402-03, 100 S.Ct. 1202, 63 L.Ed.2d 479 [1980]). The underlying question in any class action certification is whether the class action device provides the most efficient and just method to resolve the controversy at hand. Karen S. Little, L.L.C., v. Drury Inns, Inc., 306 S.W.3d 577, 583 (Mo.App.2010) (affirming TCPA class certification). The potential for inconsistent results lies most obviously in the question of damages. Under the TCPA, treble damages are available for willfully or knowingly violating the Act. The Louisiana First Circuit Court of Appeal found this provision sufficient to conclude that inconsistent results might follow in the absence of class certification: With the damages being so limited and defined in the statute, the possibility of inconsistent adjudications is not so likely in TCPA cases as in other types of claims that have been pursued as class actions. However, there is the possibility that one court might conclude that the actions of transmitters of faxes in violation of the TCPA were willful and knowing, justifying the imposition of punitive damages under the statute, while another court might find that precisely the same actions by the same defendant did not justify punitive damages. An early decision either imposing or denying such damages could, as a practical matter, be dispositive of the interests of other potential claimants who were not parties to that adjudication. Therefore, it is reasonable to pursue such claims in a class action. . . . Display South, 992 So.2d at 520. We are persuaded that class certification in this case promotes the establishment of consistent standards for evaluating the defendant's conduct. Taranto raises an additional argument related to its contention that the statutory scheme in play in this case is limited to prospective conduct: that K.S.A. 2010 Supp. 60-223(b)(1)(A) does not provide for monetary damages in the circumstances of the present case, because monetary compensation cannot be awarded for exclusively future conduct. Taranto cites In re Dennis Greenman Securities Litigation, 829 F.2d 1539, 1545 (11th Cir.1987), which reluctantly took that position. The statutory language does not set out this policy, however, and courts have declined to apply the policy in an absolute fashion. In Turner v. Bernstein, 768 A.2d 24, 33-34 (Del.Ch.2000), the court rejected universal application of the Greenman reasoning. The court noted that in certain kinds of litigation, the course of conduct would be the same with respect to all the defendants and that those defendants should reasonably expect consistent judgments: In In re Dennis Greenman Securities, the court held that it was improper to certify a class under Rule 23(b)(1)(A) because `courts reason that inconsistent standards for future conduct are not created because a defendant might be found liable to some plaintiffs and not to others' and `that if compensatory damage actions can be certified under Rule 23(b)(1)(A), then all actions could be certified under the section, thereby making the other subsections of Rule 23 meaningless, particularly Rule 23(b)(3).'  Greenman 's logic has some force as to the type of damage cases that frequently come to federal courts in class action clothing, particularly those diversity class actions that arise under state tort law. In such class actions, the individual circumstances of each class member are typically of material importance, and it is not infrequently the case that the substantive state laws governing class members' individual claims are widely disparate. But that logic does not apply to cases like this one. In challenges to corporate mergers brought on behalf of the stockholders not affiliated with the defendants, it is virtually never the case that there is any legitimate basis that `a defendant might be found liable to some plaintiffs and not to others.' [ Greenman, 829 F.2d at 1545.] Rather, the actions involve a challenge to a single course of conduct by the defendants that affects the stockholder class equally in proportion to their ownership interest in the enterprise. That such actions can be certified under Rule 23(b)(1)(A) hardly makes all claims for damages certifiable under that subsection. Rather, there remains an abundance of damage claims involving common and uncommon issues of law or fact that can be asserted on a class basis only by meeting the criteria applicable under the more flexible Rule 23(b)(3). In this respect, it is in reality the Greenman court's reading that is more likely to render a subsection of Rule 23(b) meaningless. By holding that a Rule 23(b)(1)(A) class can be certified only for claims for injunctive and declaratory relief, the Greenman court renders Rule 23(b)(1) largely redundant of Rule 23(b)(2), which expressly addresses injunctive and declaratory relief. 768 A.2d at 33-34. We agree with the Turner reasoning, and conclude that monetary damages are appropriate under K.S.A. 2010 Supp. 60-223(b)(1)(A). In Merck & Co., Inc. Securities, Derivative & ERISA Litigation, Nos. 05-1151, 05-2369, 2009 WL 331426, at  (D.N.J.2009), the court noted that the principal authority underlying the proposition that certification under federal Rule 23(b)(1)(A) applies only to prospective standards was McDonnell Douglas Corp. v. U.S. Dist. Ct. C.D. of Cal., 523 F.2d 1083, 1086 (9th Cir.1975), where that court held: We cannot read subdivision (b)(1)(A) so broadly that subdivision (b)(3) applies only to class actions already maintainable under subdivision (b)(1)(A). The court then further held: This is a far cry from the per se bar against 23(b)(1)(A) money damages cases that Defendants propose. . . . Furthermore, this position inserts a requirement into 23(b)(1)(A) that is not present.. . . Defendants fail to persuade that a class action case principally seeking money damages, but also seeking to establish a standard of conduct for Defendants, cannot qualify under 23(b)(1)(A). Merck & Co., 2009 WL 331426, at . We conclude that the plain language of K.S.A. 2010 Supp. 60-223(b)(1)(A) includes standards of conduct for past behavior. This means that a district court, when evaluating class certification, may consider whether different courts might hold the parties to standards that are ultimately incompatible. An example of such a standard would be the extent to which a defendant's conduct was willful or knowing under 47 U.S.C. § 227(b)(3). The district court in the present case properly considered such factors in concluding that a class action would avoid inconsistent adjudications.