Heritage Healthcare Services, Inc. v. The Beacon Mutual Ins. Co.
| Decision Date | 19 January 2011 |
| Docket Number | C.A. PB 02-7016 |
| Court | Rhode Island Superior Court |
| Parties | HERITAGE HEALTHCARE SERVICES, INC., VITO'S EXPRESS, INC., SWIMMING POOL SPECIALIST, INC., J. BROOMFIELD & SONS, INC., STERLING INVESTIGATIVE SERVICES INC., and LEONELLI AND VICARIO, LTD., individually and on behalf of all those similarly situated v. THE BEACON MUTUAL INSURANCE COMPANY, JOSEPH ARTHUR SOLOMON, MICHAEL DENNIS LYNCH and JOHN DOES 1-100 |
DECISION
Before this Court is Plaintiffs Heritage Healthcare Services, Inc. (Heritage), Vito's Express Inc. (Vito's), Swimming Pool Specialist, Inc. (Pool Specialist), J. Broomfield & Sons Co., Inc. (Broomfield), Sterling Investigative Services Inc. (Sterling), and Leonelli and Vicario, Ltd.'s (collectively, Named Plaintiffs) motion to certify a class pursuant to Super. R. Civ. P. 23 and designate the Named Plaintiffs as the class representatives and the objection thereto of Defendants The Beacon Mutual Insurance Company (Beacon), Joseph Arthur Solomon, Michael Dennis Lynch, and John Does 1-100 (collectively, Defendants).
"A class action is a procedural vehicle that serves the interests of judicial economy by permitting a representative with claims or defenses that are typical of the group to represent a class of similarly situated individuals who are too numerous to practicably join in the litigation." DeCesare v. Lincoln Benefit Life Co., 852 A.2d 474 486 (R.I. 2004) (citing Zarrella v. Minnesota Mut. Life Ins. Co., 824 A.2d 1249, 1262 (R.I. 2003). In Rhode Island, class actions are governed by Rule 23 of the Superior Court Rules of Civil Procedure.2[] To attain class certification, a plaintiff or group of plaintiffs must satisfy the requirements set forth in subsections (a) and (b) of Rule 23. DeCesare, 852 A.2d at 486. A party seeking certification of a proposed class bears the burden of establishing that the class meets the elements set forth in Rule 23(a), and qualifies in one of the three categories described in Rule 23(b). Id. Subsection (b) is only implicated after all four prerequisites of subsection (a) have been satisfied. Id.
"'In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.'"3[] Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178, 94 S.Ct. 2140, 2153 (1974) (quoting Miller v. Mackey Int'l, Inc., 452 F.2d 424, 427 (5th Cir. 1971)). Our Supreme Court has stated that while the "initial burden is not heavy, " plaintiffs seeking class certification bear the burden of proving that Rule 23's requirements have been met by "more than mere conjecture and conclusory allegations." Cabana v. Littler, 612 A.2d 678, 686 (R.I. 1992). Indeed, the United States Supreme Court has admonished trial courts to conduct a "rigorous analysis" of the prerequisites to a class action before a class may be certified under Rule 23. DeCesare, 852 A.2d at 487 (citing General Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372 (1982). Generally, however, a court contemplating class certification should err in favor of granting class certification early in the litigation4[] because (1) it alerts all parties that the matter will be litigated as a class action, and (2) the decision is not final since the court retains "power to subdivide, modify or decertify the class at any time prior to judgment." Cabana, 612 A.2d at 686.
The first step in class certification is to examine whether the proposed class meets the requirements set forth in Rule 23(a). Zarrella, 824 A.2d at 1263-64. Rule 23(a) states that class certification is appropriate when:
"(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law and 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." Super. R. Civ. P. 23(a).
Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable." DeCesare, 852 A.2d at 484. However, Rule 23 does not require that joinder be impossible but merely impracticable. 7A Wright & Miller, Federal Practice & Procedure, Civil 2d § 1762, at 159 (1986). Whether or not a proposed class is so numerous that joinder of all class members would be impracticable should be evaluated on a case-by-case basis where a number of factors may be considered. See Cohen v. Harrington, 722 A.2d 1191, 1196 (R.I. 1999). Indeed, courts should not rely on the size of a class as the lone guideline for determining practicability of joinder. See Dale Elecs., Inc. v. R.C.L. Elecs., Inc., 53 F.R.D. 531, 534 (D.N.H. 1971).
While the Court need not address numerosity as Defendants concede that joinder would not be practicable, the issue of practicability raises two additional questions. The first question is whether each proposed class member has the financial resources to pursue his or her claim on an individual basis. See Committee of Blind Vendors v. District of Columbia, 695 F.Supp. 1234, 1242 (D.D.C. 1988). The second issue is whether the relief sought by an individual class member is substantial enough on its own to merit the efforts of litigation. See Eisen, 417 U.S. at 161, 94 S.Ct. at 2144 ().
Class certification is a tool available to the Court to encourage judicial economy by allowing one representative with similar claims to sue on behalf of a group of similarly situated people that is too large to practicably join in the litigation. See Super. R. Civ. P. 23; 1 H. Newberg & A. Conte, Newberg on Class Actions, § 1.01 (4th ed. 2002). More importantly, class actions provide motivation for individuals to pursue claims that they may not otherwise pursue because individual recovery would be too small to warrant litigation. See Phillips Petroleum v. Shutts, 472 U.S. 797, 809, 105 S.Ct. 2965, 2973 (1985).
In this case, if each individual policyholder brought his or her own suit against the Defendants, the potential monetary recovery would represent the dividend (or discounted premium) each policyholder would have received if Beacon had equitably distributed the $101 million alleged to have been inappropriately distributed to Select Policyholders through consent-to-rate discounts in 2002-2005. The monetary value of this recovery, however, would be minimal.5[] Consequently, because it is unlikely that each individual Class member would recover enough in a similar individual action to warrant the costs of litigation, it follows that each proposed Class member does not have the financial resources to pursue such nominal claims. Nevertheless, were the proposed Class members' claims to be aggregated6[] as a class action, it is likely that the costs of litigation would be allayed and the recovery, if awarded, would be substantial enough to justify the effort and expense of litigation. As a result, the Court finds that the proposed Class satisfies the requirements of Rule 23(a)(1).
Class certification is appropriate where "there are questions of law and fact common" to all proposed class members. See Super. R. Civ. P. 23(a)(2); DeCesare 852 A.2d at 487. The "threshold of commonality is not high." Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 472 (5th Cir. 1986). Under Rule 23(a)(2) commonality requires that "questions of law or fact common to the class exist" and the representative plaintiff's claims share at least one question of fact or law with the claims of the prospective class. See Caranci v. Blue Cross & Blue Shield, 1999 WL 766974, at *12 (D.R.I. Aug. 19, 1999) ). This is not an exacting standard as complete identity or predominance of claims is not required for class certification. Id.; see also 1 H. Newberg & A. Conte, Newberg on Class Actions, § 3:10, at 272-74 (4th ed. 2002) (...
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