Gas Service Company v. Coburn

• Decision Date: 26 March 1968
• Docket Number: No. 9635.,9635.
• Citation: 389 F.2d 831
• Parties: The GAS SERVICE COMPANY, Appellant, v. Otto R. COBURN, on behalf of himself and all others similarly situated, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

389 F.2d 831 (1968)

The GAS SERVICE COMPANY, Appellant, v. Otto R. COBURN, on behalf of himself and all others similarly situated, Appellee.

No. 9635.

United States Court of Appeals Tenth Circuit.

February 23, 1968.

Rehearing Denied March 26, 1968.

Gerrit H. Wormhoudt, Wichita, Kan. (Robert L. Coleman, Kansas City, Mo., Kirke W. Dale, Arkansas City, Kan., and Paul R. Kitch, Wichita, Kan., were with him on the brief) for appellant.

William V. Crank, Wichita, Kan. (D. Arthur Walker and Richard E. Cook, George B. Collins, Robert Martin, K. W. Pringle, Jr., W. F. Schell, Robert M. Collins, W. L. Oliver, Jr., Tom C. Triplett, Wichita, Kan., Thomas M. Burns and Peter J. Wall, Denver, Colo., were with him on the brief) for appellee.

Before WOODBURY^*, LEWIS and HICKEY, Circuit Judges.

DAVID T. LEWIS, Circuit Judge.

This is an interlocutory appeal authorized in compliance with 28 U.S.C. § 1292 (b) to allow appellate consideration of an order of the District Court for the District of Kansas denying appellant's (defendant's) motion to dismiss appellee's (plaintiff's) complaint for lack of jurisdiction. The determinative question is whether under Rule 23, Fed.R. Civ.P., as amended in July 1966, aggregation of several and distinct claims is permitted for the purpose of satisfying the diversity jurisdictional amount requirement of 28 U.S.C. § 1332 where a class action under the amended rule is otherwise appropriate.

This action was brought by plaintiff, on behalf of himself and all others similarly situated, against defendant to recover back all amounts allegedly unlawfully charged by defendant for gas sold to customers for consumption outside the city limits of various Kansas municipalities. Defendant's charges are said to be revenues on city franchise rights imposed in addition to a volume charge for gas and are alleged to have been arbitrarily extended and charged to customers residing outside city limits. Plaintiff is such a customer and is one of a class of more than 18,000 other customers similarly situated. The complaint contains conclusionary allegations that joinder of the numerous class members is impractical, that plaintiff's claim is typical of the claims of the class members, that questions of law and fact are common to the class, that the action will fairly and adequately protect the interests of the class, and that the action is cognizable under Rule 23. It is conceded that neither plaintiff nor any member of the class has an individual claim exceeding $10,000, and that such individual claims are variable in amount¹ but would aggregate to more than $10,000.

The trial court found, and it seems indisputable, that plaintiff's action definitively meets each prerequisite to a class action as presently set out in Rule 23 (a) and one or more of the additional requirements of 23(b).² The class is numerous, a single question of law is presented common to the class, the claim of the class and any defense thereto is typical, and the interests of the class will be adequately protected. So, too, it is apparent that a class action is superior to other available methods for a fair and efficient adjudication of the controversy. The class has a high degree of cohesion and the stake of each individual is so small that separate suits are obviously impractical. In mixed terms, it may be said that pragmatically the case presents an ideal class action.

Because the claims of the individuals constituting the class in the case at bar are neither "joint" nor "common" this action under Rule 23 before amendment³ would not have been classified as a "true" class action and aggregation of claims would not have been permitted. See Aetna Ins. Co. v. Chicago, Rock Island & Pac. R. R., 10 Cir., 229 F.2d 584. The Fifth Circuit in Alvarez v. Pan American Life Ins. Co., 375 F.2d 992, has held that this result is still dictated after adoption of the new rule. Citing Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001, and in reliance upon the compulsion of Rule 82, Fed.R.Civ.P.,⁴ the Fifth Circuit reasoned that to hold otherwise would result in the expansion of federal jurisdiction, as Judge Bell aptly phrases it, in "a sub silentio manner." 375 F.2d at 995. We must respectfully disagree.

It is true, of course, that the rule-making power does not include the right to create or abrogate substantive law and that as a consequence no rule can lift or lower the $10,000 restriction upon federal jurisdiction. But it has long been established that the jurisdictional amount may be met by aggregation when the matter in controversy is of the required value. In Gibbs v. Buck, 307 U.S. 66, 72, 59 S.Ct. 725, 729, 83 L.Ed. 1111, the Supreme Court stated it thus:

"* * * federal jurisdiction will be adequately established, if it appears that for any member, who is a party, the matter in controversy is of the value of the jurisdictional amount, or, if to the aggregate of all members in this representative suit, the matter in controversy is of that value."

Rule 23 before or after amendment does not purport to affect this principle.

The amendment to Rule 23 did contemplate very comprehensive change in the procedural aspects of class suits and to effectuate such change many guidelines set down in earlier judicial rulings must now be questioned in application of the amended rule.⁵ The Advisory Committee's Note, 39 F.R.D. 98, places great emphasis on the fact that the amended rule is intended to eliminate the nice judicial distinctions and concomitant case law confusion that had arisen from a classification of class actions as "true," "hybrid," and "spurious." "In practice," said the Committee, "the terms `joint,' `common,' etc. which were used as the basis of the old Rule 23 classification proved obscure and uncertain." These terms were eliminated in the amendment and a purely pragmatic classification was adopted. The rule now recognizes that the procedural tool of a class action must be workable if it is to be desirable. To now hold that the former classifications of "true," "hybrid" and "spurious" must be perpetuated to allow or defeat aggregation would seem to render the rule sterile in that regard.

We find comfort for our view in Provident Tradesmen Bank & Trust Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936, decided January 29, 1968, wherein Mr. Justice Harlan, writing for a unanimous Court, considers amended Rule 19 and rejects the following...