Mega Life and Health Ins. Co. v. Jacola

Ray Thornton, Justice, dissenting. In order to obtain certification by the trial court for a class action, the Jacola family as plaintiffs have the burden of showing that the requirements for class certification have been met. The Jacolas have not met that burden in this case. I do not find that either the trial court’s order or the record reflects the type of rigorous analysis that I believe is required under Rule 23 to determine the reasons why the common questions predominate over the individual questions and why a class action is superior to other methods of trying the issues. Arthur v. Zearley, 320 Ark. 273 , 895 S.W.2d 928 (1995); see also Valentino v. Carter-Wallace, Inc., 97 F.2d 1227 (9th Cir. 1996).

Rule 23 of the Arkansas Rules of Civil Procedure provides for class certification when:

(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Ark. R. Civ. P. 23(a). Additionally, the rule provides that a class action may be maintained if the court

finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Ark. R. Civ. P. 23(b).

In the case before us, the trial court did not make the determination required by the rule as to predominance, or as to the superiority of a class action for a fair and efficient adjudication of the controversy. It seems to me that it is necessary that this matter be remanded to the trial court for consideration of these two criteria.

Predominance

We have held that it is not necessary that the questions of law and fact be identical, but that it is enough to show that a common question of law or fact predominates over other questions affecting individual members. Arkansas Louisiana Gas Co. v. Morris, 294 Ark. 496 , 744 S.W.2d 709 (1988); see also Security Benefit Life Ins. Co. v. Graham, 306 Ark. 39 , 810 S.W.2d 943 (1991) and International Union of Elec., Radio & Mach. Workers v. Hudson, 295 Ark. 107 , 747 S.W.2d 709 (1988) (emphasizing the requirement that the questions of law or fact be predominant in order to meet the criteria of this rule). With regard to Rule 23 motions, we have specifically stated that we will follow the federal rules in class actions. Farm Bureau Mut. Ins. v. Farm Bureau Policy Holders, 323 Ark. 706 , 918 S.W.2d 129 (1996). The Supreme Court, in interpreting Rule 23, has said that a class action “may only be certified if the trial court is satisfied after a rigorous analysis, that the prerequisites of Rule 23 have been satisfied.” General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982) (emphasis supplied); see also Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996). In the recent case of Anchem Products, Inc. v. Windsor, 117 S. Ct. 2231 (1997), the Supreme Court affirmed a reversal by the Third Circuit Court of Appeals of a district court’s class certification, based in part upon a failure to show predominance as required by Rule 23. The Supreme Court stated:

We address first the requirement of Rule 23(b)(3) that “[common] questions of law or fact . . . predominate over any questions affecting only individual members.” The District Court concluded that predominance was satisfied based on two factors: class members’ shared experience of asbestos exposure and their common “interest in receiving prompt and fair compensation for their claims, while minimizing the risks and transaction costs inherent in the asbestos litigation process as it occurs presently in the tort system.”

The predominance requirement stated in Rule 23(b)(3), we hold, is not met by the factors on which the District Court relied. The benefits asbestos-exposed persons might gain from the establishment of a grand-scale compensation scheme is a matter fit for legislative consideration, see supra, at 2237-2238, but it is not pertinent to the predominance inquiry. That inquiry trains on the legal or factual questions that qualify each class member’s case as a genuine controversy, questions that preexist any settlement.

The Rule 23(b)3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation. See 7A Wright, Miller, & Kane 518-159.

Id. at 2249 (footnotes omitted) (emphasis supplied).

At issue in this case is the plaintiffs’ reliance upon representations by Mega. The fact that each individual’s reliance on Mega’s representations, as well as the uniformity of the representations, will be questioned, further underscores the importance of rigorously analyzing whether the common issues predominate. As pointed out by the Fifth Circuit in Simon v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 482 F.2d 880 (5th. Cir. 1973):

If there is any material variation in the representations made or in the degrees of reliance thereupon, a fraud case may be unsuited for treatment in a class action. Thus, courts usually hold that an action based substantially, as here, on oral rather than written misrepresentations cannot be maintained as a class action. Similarly, if the writings contain material variations, emanate from several sources, or do not actually reach [certain class members], they are no more valid a basis for a class action than dissimilar oral representations.

Id. (citations omitted) (emphasis supplied). In Arthur v. Zearley, 320 Ark. 273 , 895 S.W.2d 928 (1995), when reversing a class certification of a medical malpractice case that involved a question of informed consent, we found that the issues regarding what was said to each patient, the emotional condition of the patient, and each patient’s understanding would make the individual questions predominant. Quoting Brown v. Regents of University of California, 151 Cal. App. 3d. 982, 198 Cal. Rptr. 916 (3d Dist. 1984), we noted that where close scrutiny is required as to what representations are made to each plaintiff, it cannot be said that the common issues predominate.

Conversely, in Lemarco, Inc. v. Wood, 305 Ark. 1 , 804 S.W.2d 724 (1991), a suit by members of a buyers’ club against the club, the record shows that there was testimony that salesmen were trained by video tape, that they were instructed what to say and how to make the sales presentations, and that the presentations were virtually the same for each customer. Further, the mail solicitation and retail sales were the same for each member of the class. We relied upon these facts in upholding the trial court’s order of class certification. As this is an action involving questions of misrepresentation and rebanee, I do not believe we should affirm without such a showing in this case.

Superiority

Rule 23(b) also requires the court to find “that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” In determining the answer to this inquiry, the court must first consider what other procedures, if any, exist for disposing of the dispute before it. 17A Charles Alan Wright et al, Federal Practice and Procedure § 1779, at 551 (2d ed. 1986). It must then compare possible alternatives to determine “whether Rule 23 is sufficiently effective to justify the expenditure of the judicial time and energy that is necessary to adjudicate a class action and to assume the risk of prejudice to the rights of those who are not directly before the court.” Id. No such determination was made by the trial court here. I would remand with directions to make the required determinations under Rule 23. I respectfully dissent.