Federated Dept. Stores, Inc. v. Pasco

• Decision Date: 20 March 1973
• Docket Number: 72--525,72--495,Nos. 72--491,72--492,72--496,72--494,72--497,72--506,72--503,72--509,72--493,s. 72--491
• Citation: 275 So.2d 46
• Parties: FEDERATED DEPT. STORES, INC., d/b/a Burdine's, Appellant, v. Charles PASCO et al., Appellees. SEARS, ROEBUCK AND CO., Appellant, v. William M. HICKS et al., Appellees. CITY STORES CO., d/b/a Richards, Appellant, v. Ann UNGER et al., Appellees. BYRONS DEPARTMENT STORE, INC., d/b/a Jackson Byrons, Inc., Appellant, v. Ann BROCKINGTON et al., Appellees. JORDAN MARSH COMPANY, a Florida corporation, Appellant, v. Shirley R. WILLIAMS et al., Appellees. The FIRESTONE TIRE AND RUBBER COMPANY, Appellant, v. Alberto PEREZ, Appellee.
• Court: Florida District Court of Appeals

Page 46

275 So.2d 46

FEDERATED DEPT. STORES, INC., d/b/a Burdine's, Appellant, v. Charles PASCO et al., Appellees.

SEARS, ROEBUCK AND CO., Appellant, v. William M. HICKS et al., Appellees.

CITY STORES CO., d/b/a Richards, Appellant, v. Ann UNGER et al., Appellees.

BYRONS DEPARTMENT STORE, INC., d/b/a Jackson Byrons, Inc., Appellant, v. Ann BROCKINGTON et al., Appellees.

JORDAN MARSH COMPANY, a Florida corporation, Appellant, v. Shirley R. WILLIAMS et al., Appellees.

The FIRESTONE TIRE AND RUBBER COMPANY, Appellant, v. Alberto PEREZ, Appellee.

Nos. 72--491, 72--495, 72--492, 72--496, 72--493, 72--497, 72--494, 72--509, 72--503, 72--506, 72--525.

District Court of Appeal of Florida, Third District.

March 20, 1973.

Mershon, Sawyer, Johnston, Dunwody & Cole and Woodrow M. Melvin, Jr. and George W. Wright, Jr., Miami, for Sears, Roebuck & Co., Federated Department Stores, d/b/a Burdine's and City Stores Co., d/b/a Richards.

Adams, George & Wood, Miami, Shackleford, Farrior, Stallings & Evans, Tampa, for Byrons Department Stores.

McCarthy, Steel, Hector & Davis, Miami, for Jordan Marsh Co.

Preddy, Haddad, Kutner & Hardy, Horton, Schwartz & Perse, Miami, for Firestone Tire and Rubber Co.

Colson & Hicks, Podhurst, Orseck & Parks, Miami, for appellees.

Before PEARSON, CHARLES CARROLL and HENDRY, JJ.

PEARSON, Judge.

These consolidated interlocutory appeals and petitions for certiorari are brought by the defendants. They seek review of the orders of the trial court which denied the defendants' motion to dismiss plaintiffs' complaints and the orders denying defendants' motions for summary judgment. The common questions presented are: (1) Did the trial court err in holding that plaintiffs' suits were properly brought as class actions? (2) Is the 'previous balance' method of computing finance charges on 'revolving charge accounts' permitted by Fla.Stat. § 520.35, F.S.A.? ¹ We think that it is necessary to answer both questions in order to expedite future litigation on the subject. We hold, (1) that the motions to dismiss were erroneously denied because the instant suits do not qualify as class actions, and (2) that the motions to dismiss were erroneously denied because the 'previous balance' method of computing finance charges on 'revolving charge accounts' is not prohibited by the statute.

Class actions are permitted in Florida under Rule 1.220, RCP, 30 F.S.A. ² The appellees describe the class which they desire to represent as follows:

'The instant class of plaintiffs is comprised of all those persons who have been extended credit by the defendant stores and have been assessed and paid finance charges on the Previous Balance Method.'

The appellees contend that the courts of this state have consistently held that the rule allowing class actions is applicable to situations where there is a 'single legal question' which will determine liability. Although this assertion is not inaccurate, it is merely the initial stepping stone in considering whether a class action may be initiated. In this connection, the appellees properly cite the case of Port Royal, Inc. v. Conboy, Fla.App.1963, 154 So.2d 734, as more fully determining the principles to be evaluated in ascertaining whether a class action may be maintained. In the Port Royal case, the court stated:

'It is fundamental that an action is not a class suit merely because the plaintiff designates it as such in the complaint and uses the language of the rule. Whether it is or is not a class suit depends upon the circumstances surrounding the case. However, the complaint should allege facts showing the necessity for bringing the action as a class suit and the plaintiff's right to represent the class. The plaintiff should allege that he brings the suit on behalf of himself and others similarly situated. The complaint should allege the existence of a class, described with some degree of certainty, and that the members of the class are so numerous as to make it impracticable to bring them all before the court. It should be made clear that the plaintiff adequately represents the class, and whether a party adequately represents the persons on whose behalf he sues depends on the facts of the particular case. Generally, The interest of the plaintiff must be co-extensive with the interest of the other members of the class. A class suit is maintainable where the subject of the action presents a question of common or general interest, and where all members of the class have a similar interest in obtaining the relief sought. The common or general interest must be in the object of the action, in the result sought to be accomplished in the proceedings, or in the question involved in the action. There must be a common right of recovery based on the same essential facts.' (Emphasis supplied.)

At this juncture, it should be noted that the members of appellees' proposed class all possess separate and individual contracts with the appellants. It appears to us that the leading case in Florida concerning the principles for maintaining a class action in a suit based upon separate contracts is Osceola Groves, Inc. v. Wiley, Fla.1955, 78 So.2d 700. In the Osceola case, a purported class action was commenced to recover monies due under sale and lease-back agreements. It was alleged that many such sale and lease-back agreements, all virtually identical, had been executed between the defendant and a large class of persons upon whose behalf the plaintiffs brought the action. The court held that the suit could not be entertained as a class action and stated:

'In the instant case we note particularly that each of the alleged numerous purchasers of units of land acquired his interest under separate contracts with the defendant and it does not appear that in these contracts was any provision showing a Cooperative enterprise or any showing that any purchaser had a Pecuniary interest in any development of lands Other than those covered by his own contract. Further, the complaint shows that other alleged purchasers, if they have any cause of action against defendants, have a choice of remedies available to their individual selection and their rights of actions may be subject to separate and distinct defenses.

'We fail to find any Community of interest between the two plaintiffs in this suit and no common ground upon which they can join in building a single action on behalf of themselves and upon all other purchasers of units from defendant corporation.' (Emphasis supplied.)

See Wilson v. First National Bank of Miami Springs, Fla.App.1971, 254 So.2d 362.

The appellants point out, and we agree, that despite the allegations of the appellees' complaint, it is clear that the appellants offer separate and individual contracts to their customers according to the terms of which purchases charged against the customers' accounts are financed in consideration of the payment of interest on the balance. According to appellants' reasoning, such a 'previous balance' charge customer is permitted to manage his account as he chooses. He can use the account as an interest-free charge account by promptly paying each month's outstanding balance, or if the customer elects not to pay his outstanding balance in full, he may instead make the minimum monthly payment prescribed by his agreement and take advantage of the installment feature of the revolving account. According to the appellants, each customer's interest in this suit depends upon his payment habits under his individual contract. In fact, some may have no interest at all, because they have promptly paid their accounts and have thus avoided any finance charges, while others may desire to continue their present contracts simply because they find them a useful source of credit not otherwise available.

Where a plaintiff asserts the right to litigate on behalf of a class of persons not joined with him in the action, the trial court is obliged to make a determination at an early stage of the trial as to whether the suit can properly proceed as a class action. Osceola Groves, Inc. v. Wiley, supra. In determining whether a class action may proceed, the trial court must not only confirm that the parties named actually represent the class, but must clearly demonstrate that the class encompasses the necessary community of interest. Watnick v. Florida Commercial Banks, Inc., Fla.App.1973, 3rd D.C.A., 275 So.2d 278, filed March 20, 1973. See Osceola Groves, Inc. v. Wiley, supra; Ross v. Gerung, Fla.1954, 69 So.2d 650. Once the trial court establishes that the necessary community of interest exists, the interest fuses all members of the class together, and assuming further that the question to be litigated is a valid subject under Rule 1.220, the class members are made parties to the litigation involuntarily, and will be bound by whatever results may follow regardless of their separate or individual wishes. Indeed, the resulting judgment is res judicata upon the rights of the entire class despite their lack of participation in, or perhaps even knowledge of, the proceedings. Osceola Groves, Inc. v. Wiley, supra; City of Lakeland v. Chase Nat. Co., 159 Fla. 783, 32 So.2d 833 (1947); Tenney v. City of Miami Beach, 152 Fla. 126, 11 So.2d 188 (1942).

If the instant case proceeds as a class action the court will be faced with the realities of an impossibly complex case. The court will have to separately analyze hundreds of thousands of separate, individual revolving charge accounts to determine whether the interest received by defendants was greater than that permitted. This sort of virtually insurmountable accounting problem produces the type of complexity which renders a class action the least rather than the most expeditious method of handling the claims of different customers. Cf. Hackett v. General...