Court Opinion

ID: 9519567
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:18:54.56336+00
Date Added: 2024-06-11T12:44:30.405775
License: Public Domain

Mr. JUSTICE WINELAND dissenting: Because I cannot agree that this case should have been permitted to proceed as a class action, nor that the defendant violated the Illinois and Missouri retail credit statutes, nor that there is a basis in law or equity for the sweeping remedies fashioned by the trial court, I must respectfully dissent. As this court said just three years ago, the class action is a device which requires “close and vigilant scrutiny” by the courts, and “should be resorted to only when complete justice to all interested parties will follow from its application.” (Dailey v. Sunset Hills Trust Estate, 30 Ill. App. 3d 121, 126, 332 N.E.2d 158, 163 (5th Dist. 1975).) The majority here ignores, I think, this wise cautionary language. Unquestionably, the class action can be an invaluable tool for redressing small injuries to numerous parties. Nevertheless, however alluring the device appears, permission to proceed with a class action should generally be refused where the right to proceed is doubtful. (Dailey.) The case law makes it clear that the mere fact that there are numerous aggrieved parties all of whom have similar claims against a defendant is not alone sufficient to support a class action in Illinois. See e.g., Reardon v. Ford Motor Company, 7 Ill. App. 3d 338, 287 N.E.2d 519, 522 (3d Dist. 1972), and cases cited therein. The majority’s opinion correctly notes that circuit courts in this state have jurisdiction over all justiciable matters. Having made that observation, it then proceeds to dismiss the defendant’s contention that the trial court’s equitable jurisdiction was not properly invoked. I think that the court is confusing “jurisdiction” in the sense of power and “jurisdiction” in the sense of sound principles of decision. As Professor Chafee explained it: ” [Cjourts sometimes speak of having ‘jurisdiction’ or not, when they are really deciding whether they ought to exercise equitable jurisdiction. When the word is employed in this unfortunate and confusing sense, it is wholly disconnected with the existence of power. Of course, the court possesses the power in such cases, but power alone is not enough to justify relief. ‘O it is excellent to have a giant’s strength; but it is tyrannous to use it like a giant.’ One of the chief troubles with the frequent preoccupation of judges with questions of power is that it makes them slide over much more important questions of wisdom and fairness which ought to receive careful attention. 6 6 0 # # e 0 0 0 [T]oday , with law and equity merged in a single court, ‘equity jurisdiction’ ° * * is simply a bundle of sound principles of decision concerning particular kinds of relief. ° * * # e # In other words, when a suit for some kind of specific relief is brought in a regular trial court ” ” ”, then in my opinion the judge has power to decide, rightly or wrongly, whether to give the relief sought or a different kind of relief or no relief at all. 000 The appellate court may declare equity jurisdiction wanting, but this is merely equivalent to saying that he has disregarded sound principles of decision and made a wrong choice. In the witty words of Mr. Sabel, ‘Equity jurisdiction has as little to do with jurisdiction as quasi-contracts has to do with contracts.’ SO# o * « phrase [equity jurisdiction] has become an obsolete and confusing label for the great cluster of situations where the principles of right decision permit a court to sit without a jury and grant specific relief after finding that the appropriate facts have been proved.” Z. Chafee, Jr., Some Problems of Equity 303-310 (1950). It is the wisdom of the trial court’s exercise of its equitable discretion with which I am primarily concerned here. I agree with the United States Court of Appeals for the Second Circuit that courts should be “reluctant to permit actions to proceed where they are not likely to benefit anyone but the lawyers who bring them.” (Eisen v. Carlisle, 391 F.2d 555, 567 (2d Cir. 1968).) I would not be so reluctant in this case, regardless of the fact that individual class members’ recoveries would be extremely small, were I convinced that we were in fact faced with some insidious illegal pricing scheme which was victimizing great numbers of the public. I do not, however, believe that this is such a case. Since the turn of the century, Famous-Barr has had an Eagle Stamp policy virtually identical to that attacked in this case. During all the years that this retailer operated exclusively in Missouri, no Missouri court, and no Federal court, ever ruled that this policy was deceptive or fraudulent or otherwise illegal. Now, as a result of this action brought only six days after Famous-Barr’s first Illinois store opened to the public, by two Illinois residents in an Illinois court, purportedly representing a class, the vast majority of whom are Missouri residents, none of whom received any notice, and after construction of novel questions of Missouri law, this policy is declared illegal, and the defendant is ordered to set aside *9 million from its general assets to repay the excessive “charges” the stamps supposedly represented, make a costly and time consuming accounting, and pay unspecified “reasonable” fees for the attorneys of the class “representatives.” This to me is not a sound exercise of equitable jurisdiction. The court purports to recognize that the Illinois statute relating to class actions enacted subsequent to this litigation does not apply to this case, but then proceeds, in my opinion, to give it undue persuasive weight. Nevertheless, I would submit that the court ignores that portion of the statute (reflective of the old case law) that a class action may be maintained only if the court finds it appropriate “for the fair and efficient adjudication of the controversy.” (Ill. Rev. Stat. 1977, ch. 110, par. 57.2(a)(4).) Efficient it may be, at least so far as plaintiffs’ attorneys are concerned. Fair it is not. Returning for the moment again to the question of jurisdiction, the majority opinion brushes aside the question of jurisdiction on the ground that since this is a justiciable matter and the Constitution of 1970 vests “original and exclusive jurisdiction of all justiciable matters” in our State’s circuit courts, therefore there can be no valid objection to any lack of jurisdiction. Despite this constitutional mandate it is still necessary to remember that in presenting any case calling for the exercise of equitable jurisdiction the complaint must be based on equity and good conscience. The chancellor is vested with discretion in determining whether equitable jurisdiction should be exercised in the particular case. Jurisdiction in this sense does not mean a want of power, it means a want of equity. Broadly speaking the sound discretion of the court is the controlling guide of judicial action in every phase of a suit in equity. The majority correctly recognizes this as being a suit in equity despite its designation as a suit at law. See City of Chicago v. Fieldcrest Dairies, Inc., 316 U.S. 168, 86 L. Ed. 1355, 62 S. Ct. 986; Rozema v. Quinn, 51 Ill. App. 2d 479, 201 N.E.2d 649. The case presented in the trial court by plaintiffs was not one that should call upon the exercise of the chancellor’s favorable discretion. It is generally agreed that each class action case as in all equitable actions must be determined upon its own set of facts. Perlman v. First National Bank, 15 Ill. App. 3d 784, from which we quote: “As is pointed out by the courts and the law writers and commentators, the decisions on this subject are numerous and conflicting and each case must be decided on its own merits.” Kruse v. Streamwood Utilities Corp., 34 Ill. App. 2d 100, 108.” The exercise of equitable jurisdiction is not automatic in class action cases. Dvorkin v. Illinois Bell Telephone Co., 34 Ill. App. 3d 448, 340 N.E.2d 98; Oppenheimer v. Cassidy, 345 Ill. App. 212, 102 N.E. 678. It is no secret that the rise of an undefined, and in some cases unorganized, movement, known generally as consumerism, has resulted in a vast extension of the representative suit in equity to the present rash of cases known as class action cases. We glean from a reading of these cases cited by the plaintiffs that precedent is helpful in determining the equitable principles which should be applied by the trial court in determining whether relief by way of class action should be granted. Yet it is primarily a matter of sound discretion resting in the chancellor which determines whether class action relief should in fact be granted or withheld. This appellate court recognized the vast importance of the exercise of discretion in class action cases such as this when it said in Dailey, “No precise rule can be stated as to when a court of equity will exercise its jurisdiction in an accounting since the court has a large discretion on the subject and may refuse to exercise its jurisdiction in cases 0 ° * according to the circumstances of the particular case. [Citations.]” 30 Ill. App. 121, 125. Turning now to the merits of this case, we find scant reason in equity and good conscience to grant class action relief to the plaintiffs in this case. First, we question any judicial procedure, where after the court has determined liability to exist provides that notice after the fact may be given by means of the “opt out” process to the unknown class members who supposedly have some type of heretofore unrecognized claim against the defendant. This is a far reaching extension of judicial powers and does not appear to be valid under either the present Missouri or Illinois acts. The Illinois act as it now exists merely provides for such notice in a class action as the court may deem necessary without any further specification of the means. The Missouri act as it has now developed does not even provide for notice whereby members may “opt out” (see section 407.025.4) and specifically provides that pretrial notice be given and stipulates what it shall contain. The result is that if this suit were to be filed in the courts of Missouri where some 337,500 of the class members reside it would have failed for lack of notice under the type of notice given here. The majority opinion recognizes the inherent difficulty in finding such notice as was afforded here, to constitute due process, and holds that since under the Federal class action provisions, prior notice has not been required then it should not be required in this instance. As pointed out by appellant to adopt the “opt out” procedure is to create judicial chaos. To give notice after liability has been determined is to give notice after the reason for same ceases to exist. If the trial court had ruled that this was a proper class action but ruled in favor of the defendant on the merits, then the unnamed plaintiffs would have found themselves on the losing end of a decision in which they had no opportunity to participate, and in which they did not participate. The only notice they would have received — would have been the notice that they had lost the case. Upon finding that they had lost, could such class members “opt out,” regroup and sue defendant again, hoping for a better result? We agree with defendant, prior class certification is prerequisite in a class action. Notice prior to adjudication has always been a due process right. We find nothing in the law of class actions in Illinois or Missouri to change this basic constitutional right. In our opinion “opt out” notice is of grave constitutional dimensions and would of itself provide sufficient discretionary grounds upon which this court could vacate the order granting the summary judgment. We agree with the majority in this case that both the Illinois and Missouri Act are credit disclosure laws. “As such their purposes are obviously similar to that expressed in ° ° ° the Federal ‘Truth in Lending Act’ (15 U.S.C.S. 1601), that is ” to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.’ ” To briefly narrate the facts of this is to provide ample reason for denying the summary relief sought by plaintiffs. We note that the suit is now reduced to where two Illinois citizens purport to represent some 337,500 (three quarters) residents of Missouri and approximately 112,500 (one quarter) residents of Illinois in a class action based on the Illinois Retail Installment Sales Act (Ill. Rev. Stat. 1973, ch. 1211/2, pars. 501-533) (referred to herein as the Illinois act) and the Missouri Credit Sales Act (Mo. Rev. Stat. §§408.250-403.370 (1975 Supp.)) (referred to herein as the Missouri act). Defendant’s acts were also alleged to violate the Federal Truth In Lending Act (15 U.S.C. §§1601-1666J (1974)). One of the basic questions then becomes, was the Eagle Stamp policy of the defendant such a violation of the Missouri or Illinois laws as to give rise to the drastic penalty inflicted upon the defendant by the chancellor sitting in a court of equity? The chancellor found, and the majority approved of his finding, in determining that the failure to supply credit customers of the defendant Eagle Stamps when the customer’s account is not paid within 30 days of the billing date, to constitute a “finance charge” under the Illinois act and a “time charge” under the Missouri act. We tend to agree with defendant in this respect. We see no forfeiture or discrimination against credit customers. Nor was there any attempt to deceive them, as the trial court seemed to think, as to the failure to advise the credit customer as to terms available to him. For over a period of 60 years it seems to have been the policy of defendant company to promote its sales by giving its credit customers a choice — by paying within the 30-day period they could provide themselves a saving of an estimated 1.8% of their bill. In the event of nonpayment within the time limit the customer failed to receive the bonus. This established practice was without cost to the customer because the cost of the bonus was never added to the cost of the merchandise. This fact was not controverted. There was no change in this policy when the Missouri and Illinois acts governing credit were enacted in 1961 and in 1967, respectively. The defendant merely adopted a policy as to installment credit accounts which comported with the acts governing retail credit account, but in addition thereto, it retained its policy of providing a form of bonus to those paying within the “30 day period from date of billing.” The plaintiff refers to the continuation of this policy with reference to Eagle Stamps as “reprehensible” and “a policy that has been carefully disguised so as to mislead, confuse and cheat the public.” We fail to see it as such but rather view defendants time-honored program not only as a sales promotion but as a program designed to reward the individual for his thrift. While it is true that thrift seemingly is no longer the virtue that it once was and that profligacy, once considered a vice, has largely replaced it, it is well to remember that it was the virtue of thrift that to a great extent accounted for our substantial economic growth as a developing nation throughout the years. I cannot agree that the defendant is the scofflaw that plaintiffs would have us believe. It seems more consonant with equity and good conscience to hold that defendant’s Eagle Stamp policy was not invalid as found by the trial court in its ruling here appealed from, but was in fact a legitimate exercise of retailing merchandise. We observe as a persuasive factor of great significance that no court, legislature or congress has ever found that trading stamps are, or should be, considered “finance charges” or “time charges.” This goes to the very basis of the opinion in this case, for if there is no such finance charges made by the defendant then there could be no common question of law or fact upon which to base class action. Nebel v. City of Chicago, 53 Ill. App. 3d 890. It has been previously pointed out that the plaintiffs rely somewhat heavily upon the fact that some of the language of the Illinois act is taken from the Federal Truth in Lending Act. In this respect it is also noteworthy that the Federal Truth in Lending Act now provides that in determining the amount of any award the court shall take into consideration “the extent to which the creditor’s failure of compliance was intentional”. This would seem to also indicate the trend in such cases for it can hardly be said that there was evidence to indicate a violation of the law, let alone an intentional one. (15 U.S.C. §1640a (1976)). Furthermore, section 1666 F2(b) of the same Federal act now provides that “any discount not in excess of 5 per centum offered by the seller for the purpose of inducing payment by cash, check or other means not involving the use of a credit card, shall not constitute a finance charge as determined under 1605 of this title, if such discount is offered to all prospective buyers and its availability” is adequately disclosed. Here the evidence indicated at the most a bonus of 1.8$ involved. We also note that section 1666j(c) of the Act (as amended February 27, 1976) provides that any such discount for paying cash “shall not be considered a finance charge or other charge for credit under the usury laws of any state or under the laws of any state relating to disclosure of information in connection with credit transactions, or relating to the types, amounts or rates of charges, or to any element or elements of charges permissible under such laws in connection with the extension or use of credit.” We detect one other fatal flow in the trial court’s opinion which was adopted by the majority. Under the State-Federal system of our jurisprudence jurisdiction of certain cases is pre-empted by the Federal courts. State courts are likewise limited to jurisdiction over problems generally speaking involving transactions occurring in their respective States or transitory actions brought where the defendant resides. This particular question is of importance in this case because here we have what is fundamentally a Missouri case — involving a Missouri-based retailer — concerning largely Missouri residents and Missouri transactions. Missouri law of a rather technical nature largely governs the transactions involved, yet we have an order entered by an Illinois court which boldly assumes the burden of interpreting Missouri statutes and construing contracts which are to be performed and completed by payment in Missouri. This in itself should make any chancellor hesitant about exercising equitable jurisdiction of the nature involved here, and ordering such broad remedies especially when the representatives of the class are two Illinois citizens and there are no citizens of Missouri who are plaintiffs. Brooks v. Midas-International Corp., 47 Ill. App. 3d 266, 361 N.E.2d 815, recognizes the problem and permitted only Illinois transactions to be included in the class action. The majority opinion relys upon Kimbrough v. Parker, 344 Ill. App. 483, 101 N.E.2d 617. This case did involve residents of more than the one State of Illinois — but the question of multistate jurisdiction was not raised there, nor was it ever discussed. We submit that the fact that there may have been a more or less cohesive class of persons involved here does not provide an answer to the problem of what in fact amounts to an attempted usurpation of another State’s right to determine its own laws through its own courts and to enforce its laws at the behest of its own attorney general. We have previously noted our agreement with the majority opinion to the effect that both the Missouri and Illinois acts are credit disclosure laws. Their principal purpose is to assure a meaningful disclosure of credit terms so that the consumer may compare more readily the various credit terms available to him and thus avoid the uninformed use of credit. If this then be the agreed purpose of the both acts, we fail to see how the trial court and the majority of this court could find this purpose was not complied with by the manner in which the Eagle-stamp bonus was brought to the attention of the defendant’s customers. It seems to us to be stated in the most simple and understandable terms the alternative available to the customer of paying within the 30-day time period. We know of no requirement in law that this time-honored inducement for prompt payment be included in plainer or more bold type than what is shown by the reverse side of Exhibit “C”. Because it would unduly lengthen this opinion and because the-court’s opinion and the briefs and arguments of the parties present an adequate analysis thereof, we have purposely refrained from discussing the factual details of the various Illinois class action cases. Also, to do so would run contra to the principle of law which we enunciated earlier — each class action case must stand upon its own facts and rest largely within the discretion of the trial judge. I think that the discretion in this case was unjustly applied. I would vacate the summary judgment in this case and grant defendant’s motion to dismiss this action as a class action for the reasons above stated.