Worthen Bank & Trust Co. v. National BankAmericard Inc.

• Court: U.S. District Court — Eastern District of Arkansas
• Citation: Worthen Bank & Trust Co. v. National BankAmericard Inc., 345 F. Supp. 1323 (E.D. Ark. 1972)
• Decision Date: 19 July 1972
• Docket Number: No. LR-71-C-248.,LR-71-C-248.
• Parties: WORTHEN BANK & TRUST COMPANY, Plaintiff, v. NATIONAL BankAMERICARD INCORPORATED, Defendants.

345 F. Supp. 1323

WORTHEN BANK & TRUST COMPANY, Plaintiff, v. NATIONAL BankAMERICARD INCORPORATED, Defendants.

No. LR-71-C-248.

United States District Court, E. D. Arkansas, W. D.

July 19, 1972.

Stephen D. Susman of Fulbright, Crooker & Jaworsky, Houston, Tex., Philip S. Anderson of Wright, Lindsey & Jennings, Little Rock, Ark., for plaintiff.

John T. Williams of Smith, Williams, Friday, Eldredge & Clark, Little Rock, Ark., John B. Bates, of Pillsbury, Madison & Sutro, San Francisco, Cal., for defendant.

OPINION

JOHN E. MILLER, Senior District Judge.

In paragraphs 4 and 5 of the complaint, Worthen alleged that the action was brought for itself individually and as a representative of a class pursuant to Rule 23, Fed.R.Civ.P.

"4. * * * The class is composed of all banks which are members of NBI or Interbank Card Association (hereinafter `Interbank') or both of them, and which either themselves or through other banks with which they contract or are affiliated, or which they sponsor, intend to or do own, issue, assist in the issuance of, service, honor, enter into contractual relationships with persons for the issuance of or with merchants to honor, accept for deposit or purchase any instruments arising from the use of two or more national bank credit cards * * *.

"5. The above-described class is so numerous that joinder of all members is impracticable; there are questions of law or fact common to the class; the claims of Worthen as representative of the class are typical of the claims of the class; and Worthen will fairly and adequately protect the interests of the class."

The answer of the defendant filed January 13, 1972, admitted that Worthen purports to bring a class action, but denied that this action is a proper class action, and also denies the allegations contained in paragraph 5 of the complaint, hereinbefore set forth.

Section (c) (1) provides:

"As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits."

Section (a) provides:

"One or more members of a class may sue or be sued as representative parties on behalf of all if (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."

In 3B Moore's Federal Practice, 2d Ed., § 23.03, p. 23-228, the learned author states:

"For the proper maintenance of a class action, the court must find that all the prerequisites of subdivision (a) are met, and in addition that the suit satisfies the standards of at least one of the three types of class suits enumerated in subdivision (b)."

In § 23.02-2, p. 23-152, it is stated:

"An action, of course, is not maintainable as a class suit merely because it is designated as such in the pleadings; whether it is or is not depends upon the attending facts. Both logic and justice dictate that a party or parties who seek to bring an action on behalf of a class or against a class, or an action by a class against a class, must bring themselves within the requirements of Rule 23."

Subdivision (d) of the Rule provides that the court may make an appropriate order "(4) requiring that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly".

In Hansberry v. Lee, (1940) 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, the court at page 41, 118 of 61 S.Ct. said:

"The class suit was an invention of equity to enable it to proceed to a decree in suits where the number of those interested in the subject of the litigation is so great that their joinder as parties in conformity to the usual rules of procedure is impracticable. Courts are not infrequently called upon to proceed with causes in which the number of those interested in the litigation is so great as to make difficult or impossible the joinder of all because some are not within the jurisdiction or because their whereabouts is unknown or where if all were made parties to the suit its continued abatement by the death of some would prevent or unduly delay a decree. In such cases where the interest of those not joined are of the same class as the interests of those who are, and where it is considered that the latter fairly represent the former in the prosecution of the litigation of the issues in which all have a common interest, the court will proceed to a decree." (Citations omitted.)

In Montgomery Ward & Co. v. Langer, (8 Cir. 1948) 168 F.2d 182, the court at page 187 said:

"The class action was an invention of equity (Hansberry v. Lee, 311 U.S. 32, 41, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741), mothered by the practical necessity of providing a procedural device so that mere numbers would not disable large groups of individuals, united in interest, from enforcing their equitable rights nor grant them immunity from their equitable wrongs. See United Mine Workers of America v. Coronado Coal Co., 259 U. S. 344, 387-389, 42 S.Ct. 570, 66 L.Ed. 975, 27 A.L.R. 762. By Rule 23 the Supreme Court has extended the use of the class action device to the entire field of federal civil litigation by making it applicable to all civil actions."

Worthen served and submitted a memorandum in support of the maintenance of this case as a class action. NBI did not submit any memorandum, either in support of or in opposition to the maintenance as a class action, but did deny that the action should be maintained as a class action.

During the extensive discovery proceedings engaged in by the parties, it was apparent to the court that the facts developed by said discovery proceedings would be helpful to the court in determining whether the requisites of subdivision (b), Rule 23, in addition to the requisites of subdivision (a) were sufficiently established to allow the suit to proceed as a class action. Prior to the beginning of the oral argument, the court advised the attorneys that a decision on the question would be made simultaneously with the determination of the motion of Worthen for a partial summary judgment.

According to the record there were as of the date of, or shortly before, the commencement of the action 3,980 banks in the NBI system and 5,492 banks in the Interbank system. There were 250 banks in the NBI system that were Class A members, of which two are Arkansas banks (Worthen, and Simmons National Bank of Pine Bluff, Ark.). There are two card issuing banks in both systems, Worthen and Winchester Bank located in Kentucky. However, Worthen has not issued any cards in the Interbank system because of a stipulation between the parties thereto to defer the issue until the termination of this action.

There are six card issuing Class A banks in NBI that are merchant banks in Interbank. There are 14 merchant banks (Class B) in the NBI system that are card issuing banks (associate banks) in Interbank.

Three banks that are members of Interbank were unable to obtain membership in NBI because of being a card issuing member in Interbank. At least one bank, the Industrial Bank & Trust Company of Kalamazoo, Michigan, was accepted by NBI on condition that it drop its affiliation with Interbank.

Since the adoption of the original rule and the rule as now constituted, there has been a great number of cases filed which in the opinion of the court could have been handled more efficiently under the provisions of the present Rules of Federal Procedure. The results reached by the courts in many of the decisions are convincing that the rule has been abused by use in many cases not within the problems which the drafters had in mind when it was written.

In an Advisory Committee Note, 39 F.R.D. 100, the Committee stated:

"`The felt necessity for a class action is greatest when the courts are called upon to order or sanction the alteration of the status quo in circumstances such that a large number of persons are in a position to call on a single

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