Gaffney v. Shell Oil Co., 58027

• Court: United States Appellate Court of Illinois
• Writing for the Court: DEMPSEY; Mc,NAMARA, P.J., and McGLOON
• Citation: 312 N.E.2d 753,19 Ill.App.3d 987
• Parties: Alice M. GAFFNEY, for herself and on behalf of others similarly situated, Plaintiff-Appellant, v. SHELL OIL COMPANY et al., Defendants, Norman Razowsky d/b/a Ontario-Dearborn Shell Service as representative of all other members of his class, Defendant-Appellee.
• Docket Number: No. 58027,58027
• Decision Date: 16 May 1974

Page 753

312 N.E.2d 753 19 Ill.App.3d 987 Alice M. GAFFNEY, for herself and on behalf of others
similarly situated, Plaintiff-Appellant,
v.
SHELL OIL COMPANY et al., Defendants,
Norman Razowsky d/b/a Ontario-Dearborn Shell Service as
representative of all other members of his class,
Defendant-Appellee. No. 58027. Appellate Court of Illinois, First District, Third Division. May 16, 1974.

[19 Ill.App.3d 988]

Page 754

Van Emden, Busch & Van Emden, George J. Van Emden, Chicago, for plaintiff-appellant.

Page 755

Brian B. Duff, Chicago, for defendant-appellee.

DEMPSEY, Justice:

Alice Gaffney filed a complaint against the Shell Oil Company and Norman Razowsky. The action was brought on behalf of all purchasers of motor fuel who held Shell credit cards. Razowsky, the owner of the Ontario-Dearborn Shell Service, Chicago, who had sold $9.40 worth of gasoline to the plaintiff, was sued as the representative of all Shell service station operators in Illinois.

The complaint alleged that Shell, Razowsky and other Shell dealers, unlawfully computed the Illinois use tax and State and Municipal retailers' occupation taxes (sales taxes) upon the products they sold, by adding to the selling price the Federal petroleum products and State motor fuel taxes which were collected at the time of a sale, and then charging the plaintiff, and the class represented by her, sales taxes on the total. It was further alleged that the defendants remitted to the Illinois Department of Revenue only that portion of the sales tax collected on the products sold, and that they kept for themselves that portion of the sales tax which was collected on the motor fuel taxes. The complaint sought injunctive relief, an accounting and a refund to the plaintiff, and to all persons similarly situated, of the tax money the defendants collected illegally.

Both defendants filed motions to dismiss. Shell's motion was denied. Razowsky's motion was denied insofar as the complaint stated a cause of action against him as an individual, but it was sustained insofar as he was sued as the representative of all Shell service station operators in Illinois. The plaintiff appeals from the order which dismissed Razowsky in his representative capacity.

This suit can be termed a 'double class' action--there is a plaintiff class and a defendant class. It is unique in that the individual designated as the representative of the defendant class has no direct association with the other members of his class. Although Shell service station operators have no common bond other than the fact that they are in the [19 Ill.App.3d 989] same business and deal with the same company, the plaintiff contends there is no legal prohibition against suing them as a class and none against naming one of them as the representative of the whole class. Counsel for both the plaintiff and the defendant have informed us that no case bearing upon these contentions has reached the appellate level in Illinois, and that they have been unable to find a case elsewhere (absent statutory authorization) in which the designation of one person to defend many unassociated persons has been approved or disapproved.

Generally, all persons interested in the subject matter of a suit should be made parties (Green v. Grant (1892), 143 Ill. 61, 32 N.E. 369) but equity has long recognized exceptions to the rule such as stockholder derivative suits; cases involving persons not in being, unknown parties, beneficiaries, heirs and bondholders; cases against unincorporated associations, and cases involving so many persons that their joinder as parties is impracticable. The last exception, commonly called a class action, is permitted if the number of those interested in the subject of the litigation is very large, if the expense and delay in bringing them into court would be oppressively burdensome and if it appears that they are properly represented so that their interests will receive actual and efficient protection. Weberpals v. Jenny (1921), 300 Ill. 145, 133 N.E. 62; Farmers' Loan & Trust Co. v. Lake Street El. R. Co. (1898), 173 Ill. 439, 51 N.E. 55. It is necessary that the purported representative and the absent parties have a common right of interest, the operation and protection of which will be for the common benefit of all and to the injury of none. Hale v. Hale (1893), 146 Ill. 227, 33 N.E. 858.

Members of plaintiff and defendant classes who are not parties to the action

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must be afforded due process (Hansberry v. Lee (1940), 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22) and the criteria used to determine this is the same for both classes. However, these criteria are more easily applied to plaintiff than to defendant class actions, and to the first issue in this case than to the second.

There is no statutory law in Illinois governing class actions; case law controls and the Illinois cases differ as to whether a representative action can be maintained on behalf of a plaintiff class if each member of that class must make individual proof of his claim. See, Tornquist, Roadmap of Illinois Class Actions, 5 Loyola L.J., 45, 53 (1974). One line of authority holds that there can be no such action: Newberry Library v. Board of Education (1944), 387 Ill. 85, 55 N.E.2d 147; Peoples Store of Roseland, v. McKibbin (1942), 379 Ill. 148, 39 N.E.2d 995; Heller v. Fergus Ford, Inc. (1973), 15 Ill.App.3d 868, 305 N.E.2d 352; Reardon v. Ford Motor Co. (1972), 7 Ill.App.3d 338, 287 N.E.2d 519. A second line of authority holds that multiple claims for damages in varying amounts which have to be separately adjudicated does not bar [19 Ill.App.3d 990] a class suit if the other requirements of such a suit are present. Fiorito v. Jones (1968), 39 Ill.2d 531, 236 N.E.2d 698; Harrison Sheet Steel Co. v. Lyons (1959), 15 Ill.2d 532, 155 N.E.2d 595; Lee v. City of Casey (1915), 269 Ill. 604, 109 N.E. 1062; Rodriguez v. Credit Systems Specialists, Inc. (1974), 17 Ill.App.3d 606, 308 N.E.2d 342; Perlman v. First National Bank of Chicago (1973), 15 Ill.App.3d 784, 305 N.E.2d 236; Hagerty v. General Motors Corporation (1973), 14 Ill.App.3d 33, 302 N.E.2d 678. Although members of the plaintiff class in the present case have a community of interest in recovering overpayments made to Shell retailers, each member would have to substantiate his own claim. Likewise, each member of the defendant class would have to resist...