Court Opinion

ID: 9566375
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:38:35.999509+00
Date Added: 2024-06-11T09:37:24.523931
License: Public Domain

SUTIN, Judge (dissenting). I dissent, not out of sympathy for the defendant, but out of love for those principles of law which govern class actions under old Rule 23(a), amended in the federal rules in 1966. The innovation of class actions in New Mexico will cause serious problems until Rule 23(a) is amended by the Supreme Court. Trial courts and lawyers need guidance in class actions, complicated by large groups of class members, principles of intervention, res judicata, statutes of limitation, evidence, jury trials and the large expanse of time involved. A. Adobe Acres had no standing to sue as a party plaintiff. Defendant contended that Adobe Acres Improvement Association (Adobe Acres) was not a proper party plaintiff; that it was not, as an association aggrieved, nor did it suffer damages from the alleged actions of defendant; that it has no building or any structure known to be serviced by defendant; that it is not a real party in interest; that it has no right to sue and, therefore, it cannot represent absentee members of the suing class. I agree. Plaintiffs did not meet this contention. Abode Acres is a nonprofit corporation entitled to sue. Section 51-14-30, N.M.S.A. 1953 (Repl. Vol. 8, pt. 1). But before Adobe Acres has standing to sue in this case, defendant must invade some private right of Adobe Acres. State ex rel. Overton v. New Mexico State Tax Com’n, 81 N.M. 28, 462 P.2d 613 (1969). What private right of Adobe Acres was invaded ? Its Articles of Incorporation provide for group action to promote activities and projects beneficial to all parties who have an interest in Adobe Acres. There is not a scintilla of evidence that defendant intruded upon or attacked any activity or project of Adobe Acres, nor that Adobe Acres had an activity or project which sought to prevent water damage by defendant to its members’ homes. Article IV of the Articles of Incorporation states: The corporation will not be operated for profit or pecuniary gain to its members. Adobe Acres, as plaintiff, sought recovery of compensatory damages for all of its members. This it had no power to do. It was not allowed by statute. Section 51-14-24. “It is fundamental that one without interest in the subject matter of a law suit has no legal standing to prosecute it.” Quoted in Edisto Fleets, Inc. v. South Carolina Tax Com’n, 256 S.C. 350, 182 S.E.2d 713, 714 (1971); California Apparel Creators v. Wieder of California, 162 F.2d 893 (2d Cir. 1947). Adobe Acres had no standing to prosecute this case as a party plaintiff and could not, therefore, represent interests of the class. Albertson’s Inc. v. Amalgamated Sugar Company, 62 F.R.D. 43 (D.C.Utah 1973). B. Individual plaintiffs had standing■ to bring this sptirious class action. Defendant claims that (1) “the class itself has not been identified”; (2) “the remaining named Plaintiffs have not demonstrated that they adequately represent a class other than themselves * * * ”; (3) notice to the class was deficient. Ridley v. First National Bank in Albuquerque, 87 N.M. 184, 186, 531 P.2d 607, 609 (Ct.App.1974) states: A class action suit does not exist just because it is so designated by the pleadings. Rather, the plaintiffs must prove that all the elements required to make the case a class action are present. Rossin v. Southern Union Gas Company, 472 F.2d 707 (10th Cir. 1973). * * * In order to qualify for a class action, plaintiffs have the burden of showing that the prerequisites of Rule 23(a) are satisfied and, in addition, plaintiffs must show that the class action comes within one of three categories enumerated. City of Philadelphia v. Emhart Corporation, 50 F.R.D. 232 (U.S.D.C.E.D.Pa.1970). Ridley, supra [87 N.M. at 188, 531 P.2d 607], (Sutin, J., dissenting). (1) Plaintiffs’ class action was identified. In the individual plaintiff’s class action, a “spurious” class was represented by those individually named. It was identified by the notice in evidence given to residents of Adobe Acres Subdivision of the right to permissive joinder. A “spurious” class suit is an opprobrious epithet to distinguish it from a truly representative action. It is little more than an invitation to non-parties closely interested to intervene. Nagler v. Admiral Corporation, 248 F.2d 319 (2d Cir. 1957). The “spurious” class suit in the original Rule 23(a) is explained in 3B Moore’s Federal Practice, § 23.10, as follows: The spurious class suit was a permissive joinder device. The presence of numerous persons interested in a common question of law or fact warranted ‘its use by persons desiring to clean up a litigious situation. While a purist might not like to have the third type of class action termed spurious, this label served to direct attention to the practical realities of litigation. The character of the right sought to be enforced for or against the class was “(3) several, and there is a common question of law or fact affecting the several rights and a common relief is sought.” There is no jural relationship between the members of the class; unlike for example, the members of an unincorporated association, they had taken no steps to create a legal relationship among themselves. They were not fellow travelers by agreement. The right or liability of each was distinct. The class was formed solely by the presence of a common question of law or fact. When a suit was brought by or against such a class, it was merely an invitation to joinder — an invitation to become a fellow traveler in the litigation, which might or might not be accepted. It was an invitation and not a command performance. Defendant claims that the class action was not identified because of the judgment rendered on the jury verdict. The jury returned a verdict in the “sum of $1,000.00 per member of the class representing the common damages to each individual of the class or a total suhi for all 475 members of the class: $475,000.00”. Each individual plaintiff was denied any recovery for special damages. The judgment stated that Adobe Acres was a “true” class and the remaining resident-subscribers not members of Adobe Acres was a “spurious” class. Although, in my opinion, the judgment is erroneous, it does properly identify the “spurious” class. (2) Proof of adequate representation was unnecessary. On motion for directed verdict, denied by the trial court, defendant contended that “there is no adequate proof that the plaintiffs individually fairly and properly represent the entire class of citizens in Adobe Acres.” Do five persons out of 500 families adequately represent the “spurious” class ? Under old Rule 23(a), they do. In Ridley, supra, I said: In this type of class action, adequacy of representation is not required. The reason is that this type of class action is, in actuality, equivalent to a permissive joinder device; and judgment will only be res judicata as to plaintiffs who were actually joined. Members who were not actually joined will not be legally affected, even though they have an interest in the outcome of the suit. [87 N.M. at 193, 531 P.2d at 616, Sutin, J., dissenting] The “spurious” class action could proceed without evidence of adequate representation. Rule 23(a) should provide for findings by the trial court, after notice to the class members, that a sufficient number of the class desires to participate in the suit to justify its maintenance as a class action. See, Vasques v. Superior Court of San Joaquin County, 4 Cal.3d 800, 94 Cal.Rptr. 796, 484 P.2d 964 (1971). (3) Notice given and distributed sufficiently complied with Rule 23(a). Defendant contends (a) that notice to absentees in a class action is required under the due process clause of the Fourteenth Amendment; (b) that notice is specifically required under Rule 23(a); (c) that the trial court must supervise notice in class action suits; (d) that plaintiffs’ “notice” does not comply with due process or Rule 23(a). Plaintiffs’ notice complied with the federal amended rule. It apprised the class members of the pendency of the suit. It stated in part: In the event the case goes to trial as a class action, the effect of a class action is as follows: 1) The Final Judgment of the Court, whether favorable or not to the residents, will be binding upon all residents, unless he or she wishes to be excluded from the lawsuit. 2) Each resident has the right, if he or she so chooses, to be excluded from the lawsuit by so notifying the Court or Plaintiffs’ attorneys in writing before June 18, 1974. [Emphasis added] Notice to absentees in a class action is required to fulfill the requirements of due process when the rule specifically provides for it. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). Under Rule 23(a), as federally amended, the sufficiency of the notice to members, when requested by plaintiff, is under the control and discretion of the trial court. Gold Strike Stamp Company v. Christensen, 436 F.2d 791 (10th Cir. 1970). However, under old Rule 23(a), no case appears on the scene that the trial court must supervise the sufficiency, nor the distribution, of the notice. Eisen, supra, simply concludes, under the federal rule, that it “requires that individual notice be sent to all class members who can be identified with reasonable effort.” [94 S.Ct. at 2152], This requirement can be accomplished by mail or delivery to the class member personally or at his residence. The record shows that a copy of a sufficient notice was “distributed to each house in the Adobe Acres Subdivision”. The notice given and distributed complied with the requirements of Rule 23 (a). C. The judgment is erroneous and should be amended. (1) Only named plaintiffs are entitled to judgment. On June 27, 1974, the jury returned a verdict “for each member of the class including named plaintiffs, but excluding Plaintiff O’Hare, the following sum of $1,000.00 per member of the class representing the common damages to each individual of the class or a total sum for all 475 members of the class: $475,000.00”. On July 9, 1974, a judgment mas entered that: 1. Each of the 272 members of the class who are also members of the Plaintiff Adobe Acres Improvement Association recover of the Defendant $1,000.00 per class member for a total of $272,-000.00. Neither Adobe Acres nor its members were proper parties to this action. Plaintiffs erroneously proceeded on the basis of a “true” class action by Adobe Acres, a judgment which would have bound all of its members. The only parties entitled to judgment were the named plaintiffs, excluding O’Hare. The judgment should be amended to allow the four named plaintiffs to recover $1,000.00 each. (2) The second provision of the judgment afforded the remaining class members an opportunity to intervene. A review of the record discloses that no such right was preserved. On July 11, 1974, after judgment had been entered, the court issued a notice to members of the class that if they wished to participate in the judgment against defendant, they must complete an enclosed form and return it to plaintiffs’ attorney within 60 days after entry of the judgment. A judgment on their behalf would be deferred until the expiration date. The form enclosed was a petition by the class member to permit intervention. It provided for the name and address of the applicant and his or her interest in Abode Acres Subdivision and the length of residence. On July 25, 1974, about 96 applications for permission to intervene were filed. On August 8, 1974, defendant filed its notice of appeal of the judgment. On August 15, 1974, about 304 applications for permission to intervene were filed. No order was entered which allowed intervention. No further judgment was entered upon behalf of the class members who petitioned for intervention. Was the judgment appealed from final? Rule 54(b) (2) of the Rules of Civil Procedure applies to judgments involving multiple parties [§ 21-1-1(54) (b) (2), N. M.S.A.1953 (Repl. Vol. 4, 1975 Supp.)]. It reads: When multiple parties are involved, judgment may be entered adjudicating all issues as to one [1] or more, but fewer than all parties. Such judgment shall be a final one unless the court in its discretion, expressly provides otherwise and a provision to that effect is contained in the judgment. If such provision is made, then the judgment shall not terminate the action as to such party or parties and shall be subject to revision at any time before the entry of judgment adjudicating all claims and the rights and liabilities of all the parties. [Emphasis added] The judgment expressly provided for intervention, but it did not reach the class members because they were not yet parties to the action. “* * * [R]elief attained in class suits under Rule 23(a)(3) extends only to the named plaintiffs actually becoming parties before judgment.” McGrath v. Tadayasu Abo, 186 F.2d 766, 770 (9th Cir. 1951); All American Airways v. Elderd, 209 F.2d 247 (2d Cir. 1954). The judgment is final as to the four .named plaintiffs who are the only parties to the judgment and appeal. Intervenors who are not parties to the judgment cannot seek relief on appeal. (3) The judgment can recite the issues finally determined. Restatements, Judgments, § 26, applies to representative or class actions. It reads: Where a class action is properly brought by * * * members of a class, the court has jurisdiction by its judgment to make a determination of issues involved in the action which will be binding as res judicata upon other members of the class, although such members are not personally subject to the jurisdiction of the court. Comment (a) states that in the judgment, the trial court can “make a final determination as to the issues decided in the class action which will be conclusive as to those issues, not only as to the parties who are personally subject to the jurisdiction of the court but also as to those who are not so subject.” If this appeal were reversed and remanded, the trial court could accomplish this objective. D. Procedural policy dictates that intervention of class members should take place before judgment is entered. There is a strong diversity of opinion whether, in a “spurious” class action, class members might be able to intervene after a decision on the merits favorable to their interests, although they would presumably be unaffected by an unfavorable decision. As to the propriety of this so-called “one way” intervention, see the conflicting views in Union Carbide and Carbon Corporation v. Nisley, 300 F.2d 561 (10th Cir. 1961), pet. cert, dismissed, 371 U.S. 801, 83 S.Ct. 13, 9 L.Ed.2d 46 (1963); 3B Moore’s Federal Practice, § 23.01 [11-3]. The majority opinion permits intervention by class members after rendition of the verdict, but before final judgments are entered after intervention. [300 F.2d at 589]. The dissenting opinion does not. [300 F.2d at 601], It is important to notes three things: First, none of the cases cited and none found to date, have involved proceedings after verdict of the jury and judgment rendered. Second, Rule 23(a) does not provide for whom the benefits are intended. It is silent on the subject. This appears to be the first case in which a verdict and' judgment is entered and intervention by absentees is in question. Third, the majority and the dissent moved in different directions because of disagreement over the position taken by Professor Moore in his treatise. For a morbid discussion of the problem, see, Kalven and Rosenfield, the Contemporary Function of the Class Suit, 8 Chicago L.Rev. 684 (1941); Comments, The Spurious Class Suit: Procedural and Practical Problems Confronting Court and Counsel, 53 N.W.U.L.Rev. 627 (1958); Keeffe, Levy and Donovan, Lee Defeats Ben Hur, 33 Cornell Law Quarterly 327 (1948); Federal Class Actions: A Suggested Revision of Rule 23, 46 Cal.L.Rev. (1946); Multiparty Litigation in the Federal Courts, 71 Harv.L.Rev. 874 (1958); Moore and Cohn, Federal Class Actions, 32 Ill.L.Rev. 307 (1938); id., 32 Ill.L.Rev. 555 (1938); Lesar, Class Suits and the Federal Rules, 22 Minn.L.Rev. 34 (1938). In Union Carbide, supra, the rule adopted by the majority was stated as follows: Other courts, in cases where there has been an identifiable class, have allowed unnamed plaintiffs to intervene and share in the judgment obtained by their representatives, insofar as each is able to prove both membership in the class and damages. [Emphasis added] [300 F.2d at 588] Ultimately each class member will be required in some manner to establish his individual damages. Vasques v. Superior Court of San Joaquin County, supra. “The rule clearly contemplates * * * relief in the form of separate similar judgments, emanating from the same source in law and grounded upon common questions of fact.” [Emphasis added], Kainz v. Anheuser-Busch, Inc., 194 F.2d 737, 743 (7th Cir. 1952). (1) New Hearing by Jury To hold open the judgment to permit persons to intervene' after the verdict would involve a new hearing of the evidence by the jury. Bascom Launder Corp. v. Telecoin Corp., 204 F.2d 331 (2d Cir. 1953), cert. denied, 345 U.S. 994, 73 S.Ct. 1133, 97 L.Ed. 1401 (1953). In the instant case, the jury was discharged. It was not asked to return after 60 days to hear the evidence of over 400 class members who may have been permitted to intervene by the court. The plaintiffs demanded a class action. The trial court permitted it to proceed. Neither the plaintiffs nor the trial court can complain of the extensive time necessary to listen to 400 additional parties testify before the verdict is rendered. (2) Permissive intervention is permitted under Rule 24(b) and is practical. Rule 24(a) permits intervention of right “unless the applicant’s interest is adequately represented by existing parties”. It naturally follows that where the applicant’s interest is adequately represented, the applicant may petition the court to intervene under Rule 24(b). To participate in the benefits of the judgment, the intervenor must become a party. There seems to be little reason to distinguish intervention in “spurious” class actions from permissive intervention under Rule 24(b). When 400 or 4,000 members of a “spurious class” want to burden a defendant, a principle which avoids a multiplicity of suits, they have a duty to intervene and become parties before a verdict is rendered. In this way, jury problems and “final” judgment questions are resolved. An impractically large group of persons who want benefits for nothing should comply with the orderly Rules of Procedure through judgment and appeal. If the judgment is amended, and the issues decided, the class members who did not become parties in this case may proceed with an independent suit for damages. See Conover v. Packanack Lake Country Club, 94 N.J.Super. 275, 228 A.2d 78 (1967). E. Conclusion The majority have affirmed the judgment. It is not necessary to comment on other points raised because a decision on these points will not be a guideline for class actions.