Fletcher v. Cape Cod Gas Co.

• Decision Date: 18 April 1985
• Citation: Fletcher v. Cape Cod Gas Co., 394 Mass. 595, 477 N.E.2d 116 (Mass. 1985)
• Parties: Beth E. FLETCHER et al. 1 v. CAPE COD GAS COMPANY et al. 2
• Court: Supreme Judicial Court of Massachusetts

Page 116

477 N.E.2d 116

394 Mass. 595

Beth E. FLETCHER et al.¹ v.CAPE COD GAS COMPANY et al.²

Supreme Judicial Court of Massachusetts Barnstable.

Argued Jan. 7, 1985.

Decided April 18, 1985.

Paul J. Driscoll, Marshfield (Neal Quenzer, Marshfield, with him), for Beth E. Fletcher et al.

Scott P. Lewis, Boston (Molly H. Sherden, Boston, with him), for Cape Cod Gas Co.

Andre A. Sansoucy, Boston (Richard L. Neumeier and Richard E. Powers, Boston, with him), for MEAK, Inc.

Before HENNESSEY, C.J., and WILKINS, LIACOS, NOLAN and O'CONNOR, JJ.

NOLAN, Justice.

The questions before us arise out of litigation related to the installation of urea-formaldehyde foamed-in-place insulation (UFFI) into a number of homes in the Cape Cod area during the years 1977 through 1979.The plaintiffs sought class certification of their action, pursuant to Mass.R.Civ.P. 23, 365 Mass. 767(1974), andG.L. c. 93A, § 9(2).A judge of the Superior Court refused to certify the suit as a class action.We granted direct appellate review to consider the two questions that he subsequently reported to the Appeals Court:

"1.Whether the trial court erred in denying plaintiffs' Motion for Class Certification under Rule 23 of the Massachusetts Rules of Civil Procedure?

"2.Whether the trial court erred in denying plaintiffs' Motion for Class Certification under Massachusetts General Laws, Chapter 93A, Section 9(2)?"For the reasons set forth below, we answer "No" to both questions.

The plaintiffs, fourteen individuals, filed suit against the defendants, Cape Cod Gas Company(Cape Cod Gas), and MEAK, Inc., claiming that they have suffered personal injuries and property damage as a result of the defendants' sale and installation of UFFI in homes owned or occupied by the plaintiffs.The complaint, as amended, contains counts against each defendant alleging negligence, breach of express and implied warranties, and violation of the consumer protection law, G.L. c. 93A.The plaintiffs also assert claims against Cape Cod Gas for deceit and breach of contract.

The plaintiffs asked the judge to certify the case as a class action and to establish two classes of plaintiffs: (1)"All persons who have purchased UFFI from Cape Cod Gas Company and had it installed in their homes by MEAK, Inc."(2)"All persons who have not purchased UFFI from Cape Cod Gas Company, but who are members of the family units of the purchasers defined in ClassNo. 1, and who claim to have suffered some loss or injury due to exposure to UFFI."The Superior Court judge conducted a hearing on the plaintiffs' motion for class certification.After considering relevant factual materials submitted by the parties, he issued a memorandum of decision and an order denying the motion.

With respect to what he termed the plaintiffs' "common law claims,"³ the judge considered whether the plaintiffs had demonstrated that the requirements of Mass.R.Civ.P. 23 were satisfied.⁴He ruled that the plaintiffs had sustained their burden with regard to the prerequisites of rule 23(a): namely numerosity, commonality, typicality, and fairness and adequacy of representation.He decided, however, that the plaintiffs were not entitled to maintain a class action under rule 23 because the requirements of rule 23(b) were not met.The judge was not satisfied that "the questions of law or fact common to the members of the class predominate over any questions affecting only [individual] members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."Mass.R.Civ.P. 23(b).The plaintiffs, for reasons discussed more fully below, contend that the judge erred in ruling that the requirements of rule 23(b) were not satisfied, and that, therefore, he was in error in refusing to permit certification under rule 23.

In ruling on the plaintiffs' motion to have their action under G.L. c. 93A proceed as a class action, the judge viewed the requirements of rule 23(a) to be "explicitly and implicitly included in § 9(2)" and "apparently merged with the similarity requirements of that section."He reiterated his ruling that the rule 23(a) requirements were satisfied in considering certification under § 9(2).He ruled, however, that the plaintiffs were not entitled to maintain a class action under § 9(2).⁵The judge posited that one or all of the following reasons justified his conclusion: (1)G.L. c. 93A, § 9(2), should not be construed as applicable to conventional products liability litigation; (2)the facts of the case and the limitations of § 9(2) together preclude certification; and (3) class certification of the plaintiffs' claims under G.L. c. 93A would be fundamentally unfair to the absent members.The plaintiffs argue that the judge erred in refusing to grant certification under § 9(2) because the only requirements for the maintenance of a class action under that statute are those contained in Mass.R.Civ.P. 23(a), which he explicitly found to have been satisfied.

1.Factual background.We summarize the facts which relate to the questions before us.⁶In 1976, Cape Cod Gas established an "insulation program."One aspect of that program involved promoting the use of insulation in residential and commercial buildings in an effort to encourage energy conservation.In connection with the program, Cape Cod Gas began to promote the sale of urea-formaldehyde foamed-in-place insulation (UFFI), beginning around late 1976 or early 1977.UFFI consists of urea, formaldehyde, and a surfactant or foaming agent.At an installation site, the urea-formaldehyde resin and the foaming agent are combined with air before the UFFI is installed.Cape Cod Gas commenced selling UFFI in January, 1977, and last sold UFFI in the fall of 1979, prior to the time that all sales of UFFI were banned in the Commonwealth.⁷

MEAK was incorporated on January 1, 1977, to carry on the business of home and building insulation.MEAK, which no longer conducts daily business activities, performed the bulk of its insulation work for Cape Cod Gas insulation customers.MEAK installed UFFI in the homes and commercial establishments of approximately 390 Cape Cod Gas insulation customers.

Cape Cod Gas utilized several salesmen in the course of its insulation program.Some of the UFFI salesmen were full-time employees of Cape Cod Gas, who also performed other sales duties for their employer.The other UFFI salesmen were employed on a part-time basis by MEAK, and paid on a commission only basis.In the usual course of a UFFI sales transaction involving Cape Cod Gas and MEAK, the customer purchased UFFI from Cape Cod Gas pursuant to a retail instalment sale agreement, which was prepared by the salesman and signed by the customer.After any necessary credit approval, Cape Cod Gas transmitted a purchase order to MEAK, authorizing MEAK to install the UFFI, and providing information on a "sketch sheet" pertaining to square footage and placement of the insulation.A MEAK employee then prepared a work order, and MEAK installers performed the actual installation.UFFI purchasers made payment directly to Cape Cod Gas, and Cape Cod Gas paid MEAK for the installation services.

2.The plaintiffs' allegations.The plaintiffs assert that the UFFI sold to them by Cape Cod Gas, and installed in their homes by MEAK, is defective, dangerous to human health, and carcinogenic.They claim to have suffered various forms of physical and emotional injury, and also seek to recover damages related to their exposure to an increased risk of future injury.In addition, the plaintiffs allege economic damages, including loss of the contract price they paid to purchase UFFI and have it installed, the cost of having the UFFI removed and replaced with safe insulation, and the diminution of the value of their homes attributable to the presence of UFFI.

The plaintiffs suggest a number of grounds for the imposition of liability upon Cape Cod Gas for their damages, including negligence, breach of warranty, breach of contract, fraud and deceit theories.They also invoke the Massachusetts consumer protection statute, G.L. c. 93A.Their contentions in support of these theories include charges that Cape Cod Gas knew or should have known that UFFI was defective, dangerous, and carcinogenic before the company sold it, and that Cape Cod Gas failed to test the product before marketing it, and to warn customers of the dangers associated with UFFI.The plaintiffs further allege that Cape Cod Gas failed to make proper inquiry into the health status of potential UFFI purchasers; violated warranties with respect to its ability to install UFFI properly; acted negligently in investigating, selling and installing UFFI; violated its contractual obligations with its customers, including its obligation to act in good faith; and misrepresented the true nature and quality of the UFFI.

The plaintiffs present similar allegations in support of their claims against MEAK.Furthermore, they contend that MEAK adopted the representations made by Cape Cod Gas with respect to the nature of UFFI, and made its own misrepresentations regarding the nature of UFFI and its own experience, training and ability to install UFFI properly.

3.Certification under Mass.R.Civ.P. 23.As noted above, the judge expressly found that the requirements set forth in rule 23(a) had been met.The parties do not dispute the propriety of this ruling.The plaintiffs challenge the judge's refusal to certify a class action under rule 23 on the ground that he erred in ruling that the plaintiffs did not demonstrate that the predominance and superiority requirements of rule 23(b) had been met.There was no error.

In seeking class certification of their claims under rule 23, the plaintiffs bore the burden of establishing that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class...