Meighan v. U.S. Sprint Communications Co.

• Citation: 924 S.W.2d 632
• Parties: Joe C. MEIGHAN, Jr., for himself, and others similarly situated, Plaintiff/Appellant, v. U.S. SPRINT COMMUNICATIONS COMPANY, Defendant/Appellee.
• Decision Date: 29 April 1996
• Court: Supreme Court of Tennessee

Page 632

924 S.W.2d 632

Joe C. MEIGHAN, Jr., for himself, and others similarly situated, Plaintiff/Appellant, v. U.S. SPRINT COMMUNICATIONS COMPANY, Defendant/Appellee.

Supreme Court of Tennessee at Knoxville.

April 29, 1996.

Rehearing Denied July 1, 1996.

Donald K. Vowell, A. James Andrews, Thomas A. Snapp, Knoxville, for Appellant.

J. Anthony Farmer, Knoxville, for Amicus Curiae.

John B. Rayson, John C. Burgin, Jr., Adrienne L. Anderson, Knoxville, for Appellee.

OPINION

WHITE, Justice.

In this case we are called upon to examine the application of Rule 23, Tennessee Rules of Civil Procedure to actions involving injuries to real property and to determine the available causes of action and appropriate measure of damages in such actions.

I.

Plaintiff Meighan is a property owner in Knox County, Tennessee. Southern Railway Company has a railroad right of way across plaintiff's land. Defendant U.S. Sprint is a communications company who entered into a license agreement with Southern Railway allowing the installation of fiber optic cable on 230 miles of railroad right of way in Tennessee. Plaintiff's land was among those tracts upon which Sprint's cable was installed. Sprint did not avail itself to the statutory condemnation procedures, did not get plaintiff's consent, and did not offer plaintiff compensation.

As a result of Sprint's actions, plaintiff filed suit in the Knox County Circuit Court alleging that the installation of the cable constituted a "taking" of plaintiff's land and a trespass over plaintiff's land. Plaintiff sought statewide class action certification. In his prayer for relief, plaintiff sought both compensatory and punitive damages.

The trial court granted class certification only as to affected property owners in Knox County. Sprint moved to dismiss the trespass cause of action and the punitive damages claim. The court dismissed the trespass claim, but allowed the claim for punitive damages to stand.

Both parties sought and were granted interlocutory and extraordinary appeals. Under Rule 9, Tennessee Rules of Appellate Procedure, plaintiff challenged the single-county class action limitation. By virtue of a Rule 10 appeal, plaintiff challenged the dismissal of the trespass cause of action. Defendant challenged, also by virtue of Rule 10, the certification of the class action. Under Rule 9, defendant challenged the ruling allowing plaintiff's punitive damages claim to stand. The Court of Appeals affirmed the dismissal of the trespass cause of action, reversed the trial court and dismissed the punitive damages claim and the class action certification, thereby removing the need to address the propriety of the single-county limitation. We granted Rule 11 review to consider the class action certification, the nature of the cause of action, and the relief available.

The resolution of this case is affected by our recent decision in Buhl v. U.S. Sprint Communications Co., 840 S.W.2d 904 (Tenn.1992). There we held that the installation of telephone cable constituted a taking of the landowner's property within the meaning of the law of eminent domain. Accordingly, the property owner was entitled to compensation. Buhl v. U.S. Sprint Communications Co., 840 S.W.2d at 913. Since Buhl clearly establishes that plaintiff is entitled to relief, we turn our attention in this appeal to the appropriateness of class action certification, the nature of the cause of action, and the available relief.

II. Class Actions under Rule 23

A. Prerequisites to Class Actions

The complaint and amended complaint in this action were brought as class actions under Rule 23, Tennessee Rules of Civil Procedure. Both alleged that the class consisted of all persons, which included legal entities, who own land in the state of Tennessee "across which Defendant Southern Railway Company (SRC), has maintained a railroad right-of-way, and/or across which the Defendant Sprint has constructed a fiber optics communication system." The class was further divided into three subclasses, two of which were distinguished by the manner of the railroad's acquisition of the right of way and the third of which consisted of land over which the railroad had no right of way. The complaint and amended complaint alleged all the prerequisites to class action filings ¹ set forth in Rule 23.01 and requested certification pursuant to subsection one or two of Rule 23.02, or alternatively, pursuant to subsection three.

In addition to the prerequisites to a class action set forth in Rule 23.01, Rule 23.02 further limits the situations in which a class action can be maintained to three. The first, set forth in Rule 23.02(1), allows class actions in order to avoid prejudice to the parties which might result from multiple suits about the same subject matter. Since separate prosecutions might establish "incompatible standards of conduct" for the defendant or dispositive adjudications which "impair or impede" the plaintiffs' protection of their interests, the unitary adjudication of a class action is preferable. Tenn.R.Civ.P. 23.02(1)(a) & (b).

The second reason for allowing class action adjudication, set forth in Rule 23.02(2) applies to cases in which injunctive or declaratory relief is the predominant relief sought. Thus, a class action may be maintained when the party opposing the class "has acted or refused to act on grounds generally applicable to the class." Tenn.R.Civ.P. 23.02(2). While this provision may also apply in cases seeking monetary relief, that relief must be "secondary or ancillary to the predominant injunctive or declarative relief sought." H. Newberg, Newberg on Class Actions, § 4.12, at 294 (2d ed. 1985) (hereafter Newberg, supra, § ----, at ----).

The third situation in which class actions may be maintained are those situations in which questions of law and fact predominate over individual issues making a class action the superior method for a fair resolution of the controversy. Tenn.R.Civ.P. 23.02(3). This provision is the most general, arguably encompasses all class actions, and is based on principles of judicial economy. Newberg, supra, § 4.24, at 315. Because subsection three requires notice to all class members, and because of its opt out provisions, certification under subsections (1) or (2) is generally preferred. Id., § 4.20, at 310.

Plaintiff Meighan alleged that each of the three categories for class action certification applied to this lawsuit. Defendant opposed certification on all grounds. In its order granting certification, the trial court held as follows:

[I]n an inverse condemnation case, such as this one, venue means jurisdiction and ... this Court therefore has no jurisdiction to certify a class action comprised of landowners whose land lies outside Knox County, Tennessee; and that while this action is appropriate for county-wide certification under Rule 23.02(3), ... the Court will defer deciding....

After considering further pleadings, the court certified the action "as a class action and order[ed] that it shall be so maintained pursuant to Rule 23.02(3)...." The court limited the class to affected landowners in Knox County.

Implicit in the court's ruling was a finding that plaintiff had established all of the prerequisites for maintaining a class action under Rule 23.01 as well as a finding that a class action was appropriate under Rule 23.02(3). It is equally apparent that the trial court's redefinition of the class was prompted by the court's interpretation of venue and jurisdiction requirements in eminent domain actions. Both of these rulings were challenged on appeal.

The Court of Appeals reversed the class action certification "because there are no more remaining questions of law or fact common to the class." In that court's opinion, the only remaining issues

are whether each fee interest owner is entitled to recover damages and, if so, in what amount. These questions are different for each class member and are therefore not common to the class....

Because resolution of each plaintiff's claim will require a detailed factual inquiry as to the market value of that plaintiff's property ... this case is inappropriate for class action treatment.

As the Court of Appeals correctly noted, the determination of whether an action should proceed as a class action is a matter which is left to the sound discretion of the trial judge. Only upon a finding of an abuse of that discretion should the trial judge's decision be modified on appeal. Sterling v. Velsicol Chemical Corp., 855 F.2d 1188 (6th Cir.1988). The Court of Appeals' conclusion, prompted by our decision in Buhl, was that the trial court abused its discretion "because there are no remaining questions of law or fact common to the class." We disagree.

The decision in Buhl did reconcile one of the legal issues in this case which was common to all plaintiffs. It did not, however, resolve all the common legal and factual issues. The removal of one common legal question is not sufficient grounds for decertifying the class if other common questions of law or fact remain. See generally 7A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, § 1778, at 522-46 (2d. ed 1986) (hereafter Federal Practice and Procedure, supra, § ---- at ----).

It is well established that the existence of separate issues of law and fact, particularly regarding damages, do not negate class action certification. See Rules Advisory Committee Notes to 1966 Amendments to Fed.R.Civ.P. 23, 39 F.R.D. 69 (1966). ² While the separate factual issue of individual damages remains, common legal and factual issues, including the nature of the claim and of the relief, predominate. We hold that the trial court properly exercised its discretion in certifying a class action in this lawsuit and that the appellate court improperly interfered with that discretion by decertifying the class based on the Buhl decision.

In addition to being an inappropriate case for...