Court Opinion

ID: 9461323
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:11:34.452552+00
Date Added: 2024-06-11T17:37:00.196182
License: Public Domain

DUNIWAY, Circuit Judge
(concurring):
I concur in the judgment, but for somewhat different reasons.
First, I think that this case is controlled by the rationale of our decision in In re Hotel Telephone Charges, 9 Cir., 1974, 500 F.2d 86. That case, like this one, was an antitrust case, involving large classes of potential plaintiffs and defendants. We there held that the case was not a proper one for class action treatment for two reasons: (1) that common questions did not predominate over individual questions (see Rule 23(b)(3), F.R.Civ.P.), 500 F.2d at 88-90; and (2) that the proposed class action was not a superior method of adjudication (see Rule 23(b)(3)), 500 F.2d at 90-92. The facts here are not identical to those in Hotel Telephone Charges, but the differences are minor and, in my opinion, not significant enough to make the rationale of that case inapplicable to this one.
Second, I cannot believe that Rule 23, as amended, was intended or should be construed to authorize the kind of judicial juggernaut that plaintiffs and their counsel seek to create here. The plaintiffs Kline have been designated as the representatives of an estimated 400,000 sellers of real property in Los Angeles County, sellers of residential dwellings containing up to twelve units. The Klines sold one residence, in 1970, for $42,500. They paid a commission to one *237broker, Lelah Pierson, of 6%, or $2,550. She is a named defendant. Their theory of damages is that, but for the charged conspiracy, the commission would have been less, but they do not tell us how much less. If we assume that the broker would have done her work for nothing, an obviously improper assumption, their maximum damages would be $2,550, which, trebled, would be $7,650. Realistically, this is a grossly exaggerated figure. Yet the plaintiffs seek to parlay their claim into a lawsuit on behalf of 400.000 sellers, not one of whom, so far as we are advised, except the Sherman plaintiffs, has indicated the slightest interest in suing anyone. The Shermans, too, made but one sale. They paid a 6% commission of $2,700, which was divided between two brokers, neither of whom is named as a defendant. The plaintiffs, by this device, seek to recover from Ms. Pierson, among 2,000 others, $750,000,000 in damages, plus attorneys’ fees and costs.
The named defendants are 32 real estate brokers and five associations of real estate brokers. They have been designated as representatives of a class of 2.000 brokers. Only one of the “representative” defendants, Ms. Pierson, ever dealt with the “representative” plaintiffs Kline.
At oral argument, plaintiffs explained how easy it will be for them to identify the members of the respective classes. First, they propose, under the aegis of the court, to compel the defendant associations to furnish them with lists showing the name and address of every broker who was a member of any of them at any time during the four year period preceding the filing of this action. These brokers, estimated at 2,000, will be the class of represented defendants. Next, plaintiffs propose, under the aegis of the court, to compel each of these 2.000 brokers to search his files and supply the name and address of every person who, during the same period, paid the broker a commission on a sale of residential property containing twelve units or less. These persons, estimated at 400,000, will be the class of represented plaintiffs. Plaintiffs do not tell us at whose expense all this is to be done.
Next, notice will be sent to each of the 400,000 represented plaintiffs. I would expect that the Rule 23 notice to each “represented” plaintiff, as prepared by plaintiffs’ counsel, would give him a brief description of the nature of the case, and then would tell him (Rule 23(c)(2)(A)) that he can “opt out,” but would also tell him that, if he does not opt out, he will incur no financial obligation, while, if the suit is won, he will share in the loot. I wonder if this is proper. Why shouldn’t a “represented” plaintiff be told that if he elects to participate in the alleged bonanza, he may, by so electing, subject himself to liability for his share of the costs of suit if the bonanza is not forthcoming? Why should the court offer him a free ride in a case in which the defendants’ costs, if they win, may be very large, and will probably not be collectible from the named plaintiffs? Why shouldn’t what I have said also apply to plaintiffs’ attorneys’ fees, unless there is an ironclad agreement by the attorneys that they will collect no fees from anyone if the suit is lost? Rule 23(c)(2)(B) states that the notice shall advise each member of the class that “the judgment, whether favorable or not, will include all members who do not request exclusion.” In most cases, one of the incidents of an adverse judgment is liability for costs. No doubt it will be said that the potential liability for costs might cause many represented plaintiffs to opt out. If so, what is so wrong about that? It may also be said that the potential liability is meaningless. How would defendants collect? However, there may be a possible alternative. The real bonanza in a case like this, if it is won, will go to counsel. Perhaps the class action order could be conditioned upon an agreement by counsel that they will pay all costs of all defendants if the suit is lost!
Notice will also go to each of the 2,000 represented defendants. Here I note a peculiarity of Rule 23 that none of the *238parties has mentioned. Rule 28(c)(2)(A) requires that the notice to each member of the class must advise him that “the court will exclude him from the class if he so requests by a specified date.” I have read and re-read the rule and I can find nothing in it to indicate that this provision is not just as applicable to members of a “class” of defendants as it is to members of a “class” of plaintiffs. The notice, therefore, must tell the represented defendant that he can opt out. What member of a class of defendants who is in his right mind, and who is told that, if he does not elect to be excluded, he may be liable for $750,000,000 plus very large attorneys’ fees and costs, will fail to opt out? It seems more than probable that the court, having gone to the trouble and expense of learning the name and address of each potential broker defendant and of devising a proper notice and having it sent out, will wind up with no “class” of defendants, but only those who are named as defendants and are served with process in the ordinary way. Yet this will not simplify the action if the 400,000 “plaintiffs” are brought in as a class. It will still be necessary for each such “plaintiff,” if he is to share in the loot, to prove (a) that the broker with whom he dealt, whether the broker has opted out or not, participated in the conspiracy, and (b) that he was damaged by the conspiracy, and what his damages are. Opting out is not the same as defaulting — it confesses nothing. And it must be remembered that plaintiffs have demanded a jury trial.
I venture to suggest that none of the class action features of this case was dreamed up by the named plaintiffs, but that all of them are the brain children of their attorneys. In California, barratry is a crime (Cal.Pen.C. § 158). The Rules of Professional Conduct of the State Bar, authorized by Cal. Bus. and Prof. Code § 6076, provide (Rule 2 § a): “a member of the State Bar shall not solicit professional employment by advertisement or otherwise.” Does solicitation cease to be solicitation when done under the aegis of a judge? If so, what has become of the centuries old policy of the law against stirring up litigation? Did the Supreme Court, when it adopted Rule 23, as amended, intend to abrogate that policy for a case like this? I am loath to believe that it did. I also have grave doubt whether such a change in the law, if intended, can properly be called a matter of procedure. In other words, I doubt that the Supreme Court has power, by a procedural rule, to abrogate the policy to which I have referred, assuming that that is what the Court intended.
Perhaps more important is the practical effect of such a suit as this. The burden that it can impose on the court— discovery, pre-trial, notice to the classes, etc., and on a jury, if one is ever empan-elled, is staggering. It is inconceivable to me that such a case can ever be tried, unless the court is willing to deprive each defendant of his undoubted right to have his claimed liability proved, not by presumptions or assumptions, but by facts, with the burden of proof upon the plaintiff or plaintiffs, and to offer evidence in his defense. The same applies, if he is found liable, to proof of the damage of each “plaintiff.” I doubt that plaintiffs’ counsel expect the immense and unmanageable case that they seek to create to be tried. What they seek to create will become (whether they intend this result or not) an overwhelmingly costly and potent engine for the compulsion of settlements, whether just or unjust. Most, though by no means all, real estate brokers are small business men. They cannot afford even to participate in such an action as this, much less to defend it effectively. I suspect, for example, that this is true of Ms. Pierson. It is almost inevitable, if the judge’s order is permitted to stand, and even if all potential defendants opt out, that many of the named defendants will settle for whatever amount they can bargain for, and without regard as to whether they are really liable or not, with a good chunk of the money going to plaintiffs’ lawyers.
I do not say that the Rule 23(b)(3) class action is always unethical and im*239properly coercive. Doubtless there are circumstances in which it is the only viable means of obtaining relief for classes of truly and actively aggrieved plaintiffs. But courts should not be in the business of encouraging the creation of lawsuits like this one.
I join in the judgment of reversal.