52 F.R.D. 510 (W.D.Pa. 1971), C. A. 69-1326, Katz v. Carte Blanche Corp.

Docket Nº:Civ. A. 69-1326.
Citation:52 F.R.D. 510
Opinion Judge:TEITELBAUM, District Judge.
Party Name:Reuben J. KATZ, on behalf of himself and all others similarly situated, Plaintiff, v. CARTE BLANCHE CORPORATION, Defendant.
Attorney:Howard A. Specter, Litman, Litman, Harris & Specter, Pittsburgh, Pa., for plaintiff. John H. Morgan, Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa., for defendant.
Case Date:June 01, 1971
Court:United States District Courts, 3th Circuit

Page 510

52 F.R.D. 510 (W.D.Pa. 1971)

Reuben J. KATZ, on behalf of himself and all others similarly situated, Plaintiff,



Civ. A. No. 69-1326.

United States District Court, W. D. Pennsylvania.

June 1, 1971

Page 511

Action was brought by plaintiff credit card holder on his own behalf and on behalf of other persons similarly situated. On motion by plaintiff for determination of class action, Teitelbaum, J., held that while prerequisites of rule on class actions were satisfied, size of potential class of approximately 600,000 members and provisions of Truth in Lending Act allowing successful plaintiff to recover costs and reasonable attorney's fees raised question of whether or not a test case might be superior to class action by plaintiff charging violations of Truth in Lending Act based on alleged failure to make proper disclosure of certain finance charges and Court would reserve judgment on matter and solicit memoranda on the questions of manageability and superiority of proposed class action.

Ordered accordingly.

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Howard A. Specter, Litman, Litman, Harris & Specter, Pittsburgh, Pa., for plaintiff.

John H. Morgan, Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa., for defendant.


TEITELBAUM, District Judge.

This action is brought by the plaintiff on his own behalf and on behalf of each person similarly situated, who, at any time since July 1, 1969, has been an authorized holder of one of the defendant's credit cards. The gravamen of the complaint is that the defendant failed to properly make certain pre-transaction and transaction disclosures to its credit card holders regarding the application and computation of certain ‘ finance charges' in violation of the Truth in Lending Act, 82 Stat. 146 et. seq. (15 U.S.C.A. § 1601 et. seq.), and Regulation Z (12 C.F.R. 226) promulgated thereunder. The ‘ finance charges' which, allegedly, were improperly disclosed are three in number: (1) the annual charge which is imposed as a precondition to the extension of a credit card, (2) the late charge which is assessed unpaid balances which are overdue, and (3) the finance charge which is imposed upon unpaid balances which are outstanding pursuant to an extended payment plan. The disclosures with respect to those ‘ finance charges' were, and are, allegedly contained in various written communications and statements issued to the members of the class. This motion is to have the Court determine that this action may be maintained as a class action under Federal Rule of Civil Procedure 23.

To be maintainable as a class action under F.R.C.P. 23, the instant class must satisfy the prerequisites of Subsection (a)1 and the provisions of Subsection (b)(3)2 thereof. The plaintiff

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has the burden of satisfying these prerequisites and provisions. City of Philadelphia v. Emhart Corporation, 50 F.R.D. 232 (D.C.E.D.Pa., 1970); Philadelphia Electric Company v. Anaconda American Brass Co., 43 F.R.D. 452 (D.C.E.D.Pa., 1968); Advisory Committee's Note, 39 F.R.D. 98, 104 (1966). Initially, we decide, however, that none of these prerequisites and provisions encumber the plaintiff with the burden of preliminarily demonstrating merit to his underlying cause of action. This accords with the pronouncement of Kahan v. Rosenstiel, 424 F.2d 161, 169 (C.A. 3, 1970), that,

‘ [T]he determination whether there is a proper class does not depend on the existence of a cause of action.’

Other Courts have similarly resolved this issue. In Mersay v. First Republic Corporation of America, 43 F.R.D. 465 (D.C.S.D.N.Y., 1968), the Court decided that proof of the elements of the plaintiff's claim which was ultimate to the litigation was not properly a predeterminant, under F.R.C.P. 23, to the maintenance of a class action. And in Fogel v. Wolfgang, 47 F.R.D. 213 (D.C.S.D.N.Y., 1969), the Court held the defendant's argument that discovery had established his freedom from wrongdoing to be ‘ substantially irrelevant’ in determining the maintainability of a class action. Dolgow v. Anderson, 43 F.R.D. 472 (D.C.E.D.N.Y., 1968), in which a hearing was ordered for the purpose of requiring the plaintiff to convince the Court that there was a substantial possibility of his prevailing on the merits prior to the Court's determination of whether or not a class action was maintainable, is to be distinguished. While that Court plainly held that unless so convinced, the action was not to be allowed to proceed as a class action, in reaching that holding, the Court confronted the questions of who was responsible for what notice to whom 3 and suggested that the defendant might properly bear the burden of effecting and financing notice. In that context, the Court was unprepared to assign such a burden without first examining the merits of the plaintiff's case. Since, however, the questions of who is responsible for what notice to whom need not be confronted in determining the bare maintainability of a class action,4 we do not reach them in rendering this opinion.

Professor Moore suggests that the requisite preliminary showing be a minimal demonstration that the complaint is ‘ sincere’ or ‘ more than frivolous'. 3B Moore's Federal Practice ¶ 7 23.45[3]. We think this is a reasonable prerequisite and, on the basis of the instant complaint, conclude that the plaintiff's

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allegations are sincere or more than frivolous.


The plaintiff represents that the instant class numbers approximately 600,000 members. A class of that size makes joinder of all members not only impracticable, but impossible. The...

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