Brodsky v. Selden Sanitary Corp.

• Decision Date: 14 December 1981
• Citation: 444 N.Y.S.2d 949,85 A.D.2d 612
• Parties: Bruce BRODSKY, et al., Appellants, v. SELDEN SANITARY CORP. et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 949

444 N.Y.S.2d 949

85 A.D.2d 612

Bruce BRODSKY, et al., Appellants, v. SELDEN SANITARY CORP. et al., Respondents.

Supreme Court, Appellate Division, Second Department.

Dec. 14, 1981.

Gloria May Rosenblum, East Islip, for appellants.

Cahn, Wishod & Wishod, Melville, (Eugene L. Wishod, Melville, of counsel), for respondent Selden Sanitary Corp.

Martin J. Kerins, Town Atty., Patchogue, (Philip H. Sanderman, Asst. Town Atty., Patchogue, of counsel), for all respondents except Selden Sanitary Corp. (relying on the brief submitted by Selden).

Before DAMIANI, J. P., and LAZER, MANGANO and WEINSTEIN, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to recover damages, and for declaratory and injunctive relief, plaintiffs appeal from an order of the Supreme Court, Suffolk County, dated January 7, 1981, which denied their motion for leave to maintain this action as a class action, and for other incidental relief.

Order affirmed, without costs or disbursements. Plaintiff Arthur Shulman is granted leave to move at Special Term, if he be so advised, for permission to maintain this action as a class action on his own behalf and on behalf of all former customers of Selden Sanitary Corporation who had paid their 1977-78 bills in full and for a severance of that class action from the individual actions of other named plaintiffs.

The named plaintiffs commenced this action on their own behalf and as representatives of all other former customers of Selden Sanitary Corporation (Selden), the former owner and operator of a sewage disposal system in the Town of Brookhaven. They seek a judgment declaring the illegality of certain sewer rates that Selden charged its customers for the period January 1, 1977, to January 16, 1978 (hereinafter referred to as the 1977-78 rates). They also seek a judgment declaring the illegality of a resolution of the Town Board of Brookhaven, adopted December 18, 1979, which approved these rates. ^* Furthermore, they ask for a permanent injunction restraining Selden (1) from collecting on bills based on these rates, (2) from bringing any lawsuit for the nonpayment of said bills, and (3) from executing on any judgment Selden may have obtained in such a collection suit. Finally, plaintiffs seek refunds of any amounts paid by former Selden customers in remittance of bills based on the 1977-78 rates, to the extent that these payments exceeded amounts payable under the former rates fixed on or about January 17, 1967.

By notice of motion, dated August 29, 1980, plaintiffs moved for an order, pursuant to CPLR 902 and 904, (1) permitting this action to be maintained as a class action, (2) setting forth the method of notice to be used in notifying the members of the class, and (3) directing that Selden bear the cost of said notification. Special Term denied this motion, basing its decision, in part, on a per curiam opinion of this court in a related matter (Selden Sanitary Corp. v. Elstroth, 69 A.D.2d 402, 418 N.Y.S.2d 788). In that case Selden had sued its former customers for unpaid sewer bills and had obtained an order at Special Term certifying the defendants as a class. This court, in reversing the class certification order, found that the only issue of law or fact that was common to all of the proposed defendants was whether Selden was entitled to collect on bills based on the 1977-89 rates. We held (p. 403, 418 N.Y.S.2d 788):

'Except for this one common issue of law, i.e. the legality of the the plaintiff's cause of action amounts to one for the collection of money due and owing from its customers. The claim against each of the approximately 1,000 potential class members involved is small, ranging from $36.79 to $775.45. A finding in plaintiff's favor on the one common question of law would not make out a prima facie case against any one of the defendants. Each of the other admittedly prosaic elements of the cause of action would still have to be proven as to each defendant. Moreover, individual defendants may well have defenses or counterclaims peculiar to themselves. For example, some members of the class may have paid their bills in full or in part.

'Under these circumstances, it cannot be said that the common issues in this case predominate as required by CPLR 901 (subd. a, par. 2).'

Selden was thus left to commence separate collection actions in District Court, which, apparently, it has done in approximately 160 cases.

On the application for class certification in this matter, therefore, Special Term observed 'that extensive litigation has been commenced against the members of the proposed class.' Consequently, it decided that 'fact together with the decision of the Appellate Division relegating Selden to the District Court for collective purposes leads only to the conclusion that a determination in favor of a class action is neither superior to other available methods nor provides a fair and efficient adjudication of the instant controversy (CPLR 901(5) and 902(2) and (3)).' Finally, Special Term decided that 'where, as here, governmental operations are involved, class actions are unnecessary and inappropriate'.

We affirm.

Initially, it must be observed that plaintiffs have joined Selden, the Town of Brookhaven, and four members of the town board in their official capacity, as defendants in this action. The only relief sought against the town and the members of the town board is a judgment declaring the board's approval of the 1977-78 sewer rates illegal, null and void. It would appear, therefore, that, as to those causes of action against the town and the members of the board, the general rule would apply that class actions in cases where governmental operations are involved are not necessary since comparable relief would adequately flow to others similarly situated under principles of stare decisis. (Matter of Martin v. Lavine, 39 N.Y.2d 72, 382 N.Y.S.2d 956, 346 N.E.2d 794; Matter of Jones v. Berman, 37 N.Y.2d 42, 371 N.Y.S.2d 422, 332 N.E.2d 303; Matter of Rivera v. Trimarco, 36 N.Y.2d 747, 368 N.Y.S.2d 826, 329 N.E.2d 661; Suffolk Housing Servs. v. Town of Brookhaven, 69 A.D.2d 242, 418 N.Y.S.2d 452, app. dsmd. 49 N.Y.2d 799, 426 N.Y.S.2d 735, 403 N.E.2d 458, 48 N.Y.2d 652, 421 N.Y.S.2d 202, 396 N.E.2d 485.) An exception to this rule, however, has been developed, viz, where the class action involving governmental operations seeks money damages and there is a large, readily definable class, with questions of law and fact virtually identical as to each member, the maintenance of a class action will be the superior method of adjudication. (Ammon v. Suffolk County, 67 A.D.2d 959, 960, 413 N.Y.S.2d 469.)

It is true that in this case the action against the town and town board members is not for money damages. Nevertheless, due to the unique relationship of the town board and Selden under the Transportation Corporations Law, the money damages sought against Selden are based on rate increases approved by the town board. Therefore, these damages (i.e., refunds) result from a single series of transactions in which both Selden and the town board participated. Thus, practically speaking, even as to the town and the board members, the same can be said here as in Ammon (supra, p. 960, 413 N.Y.S.2d 469), i.e.,

'for the individual plaintiffs in the absence of class relief will only result in a plethora of actions being brought for identical relief, with the consequent delay and added expense associated with multiple actions (see Beekman v. City of New York, 65 A.D.2d 317 Moreover, in view of the small sums which individual plaintiffs would be entitled to recover (according to the complaint, a maximum of $65 per year for a maximum of seven or eight years), it is plausible, if not probable, that many potential plaintiffs entitled to less than the maximum recovery will have to forego bringing suit, or will find the prospects of individual litigation economically unappealing. As to these plaintiffs, it can scarcely be argued that their rights 'will be adequately protected under the principles of state decisis' (Matter of Jones v. Berman, 37 N.Y.2d 42, 57, 371 N.Y.S.2d 422, 332 N.E.2d 303, supra).'

Consequently, the general rule that a class action is inappropriate where governmental operations are involved does not appear to be applicable to this case.

Notwithstanding the fact that the involvement of governmental operations would not prevent the maintenance of this suit as a class action, we are still not convinced that the named plaintiffs have met the prerequisites for class action...