Morrow v. Monfric, Inc., DA 14–0464.

• Decision Date: 07 July 2015
• Docket Number: No. DA 14–0464.,DA 14–0464.
• Citation: 380 Mont. 58,354 P.3d 558,2015 MT 194
• Parties: James MORROW, Tyrel Wermelskirchen, Dustin Higgs, and others similarly situated, Plaintiffs and Appellants, v. MONFRIC, INC., a California Corporation, Defendant and Appellee.
• Court: Montana Supreme Court

380 Mont. 58

354 P.3d 558

2015 MT 194

James MORROW, Tyrel Wermelskirchen, Dustin Higgs, and others similarly situated, Plaintiffs and Appellants

v.MONFRIC, INC., a California Corporation, Defendant and Appellee.

No. DA 14–0464.

Supreme Court of Montana.

Submitted on Briefs April 1, 2015.

Decided July 7, 2015.

For Appellants: Lawrence A. Anderson, Attorney at Law, P.C., Great Falls, Montana.

For Appellee: Angela K. Jacobs, Marcel A. Quinn, Hammer, Jacobs & Quinn, PLLC, Kalispell, Montana.

Opinion

Justice LAURIE McKINNON delivered the Opinion of the Court.

¶ 1 Plaintiffs James Morrow, Tyrel Wermelskirchen, and Dustin Higgs, on behalf of others similarly situated, appeal the denial of their motion for class certification in the Eleventh Judicial District Court, Flathead County. We affirm.

¶ 2 The issue presented for review is whether the District Court abused its discretion when it denied class certification on the grounds that the proposed class was not sufficiently numerous.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Plaintiffs are laborers who worked on the construction and rehabilitation of two multi-family housing projects in Kalispell, known as Glacier Manor and Treasure State Plaza Apartments. The owner of the projects is Glacier States Associates, which hired Monfric, Inc., as the general contractor. Monfric hired subcontractors to perform all of the labor on the projects. Plaintiffs are employees of those subcontractors. The projects were financed with industrial development bonds issued by the City of Kalispell. A contractor on such a project is required by Montana law to pay prevailing wages. While the contract between Glacier States and Monfric included a provision requiring Monfric to pay prevailing wages, Plaintiffs claim that contracts between Monfric and its subcontractors did not include that requirement. Plaintiffs claim they were not paid prevailing wages.

¶ 4 Plaintiffs filed this wage and hour action and moved for certification of a proposed class including all laborers, skilled tradesmen, and craftsmen who worked for Monfric or its subcontractors and who were not paid prevailing wages during the construction and rehabilitation of Glacier Manor and Treasure State Plaza. Plaintiffs identified 28 persons they claim were underpaid on the projects, seven of whom were named plaintiffs and class representatives. Monfric objected to the inclusion of four class members, contending that they were not laborers. The class members not joined in the action thus numbered between 17 and 21.

¶ 5 A hearing was held on the motion for class certification on May 29, 2014. The District Court asked counsel for Plaintiffs why the remaining 17 to 21 individuals could not simply be joined as parties. Counsel responded, “I can try to do that. I didn't have their names ... and I don't have all their addresses.” The District Court observed that the proposed class was “a relatively small group of ... local employees, although I suppose if this work happened ... prior to 2008 anyway that they're probably all over in North Dakota now.” Following the hearing, the District Court issued an order denying the motion for class certification, concluding that the class was not so numerous that joining its members as named parties would be impracticable. The District Court also observed that certification of a class would not result in a more efficient use of judicial resources. The District Court concluded that because Plaintiffs had failed to demonstrate numerosity of the proposed class, it did not need to consider other factors.

STANDARD OF REVIEW

¶ 6 We afford district courts the broadest discretion when reviewing a decision on class certification. Jacobsen v. Allstate Ins. Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452. The district court “ ‘is in the best position to consider the most fair and efficient procedure for conducting any given litigation.’ ” Jacobsen, ¶ 25 (quoting Chipman v. Nw. Healthcare Corp., 2012 MT 242, ¶ 17, 366 Mont. 450, 288 P.3d 193 ). To the extent that a ruling on class certification is based on a finding of fact, we review that finding for clear error. Mattson v. Mont. Power Co., 2012 MT 318, ¶ 17, 368 Mont. 1, 291 P.3d 1209. When the ruling involves a question of law, our review is de novo. Mattson, ¶ 17.

DISCUSSION

¶ 7 Whether the District Court abused its discretion when it denied class certification on the grounds that the proposed class was not sufficiently numerous.

¶ 8 A class action allows representative parties to bring claims on behalf of others similarly situated, with the aim of conserving the resources of both the court and the parties by permitting common issues to be litigated at once. Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 155, 102 S.Ct. 2364, 2369, 72 L.Ed.2d 740 (1982) (citing Califano v. Yamasaki, 442 U.S. 682, 700–01, 99 S.Ct. 2545, 2557, 61 L.Ed.2d 176 (1979) ). As such, a class action is “ ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.’ ”

Mattson, ¶ 18 (quoting Califano, 442 U.S. at 700–01, 99 S.Ct. at 2557 ). M.R. Civ. P. 23 governs the propriety of class actions in Montana and prescribes four prerequisites, each of which must be demonstrated before the class may be certified:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or 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.

These factors are often referred to as numerosity, commonality, typicality, and adequacy of representation. Mattson, ¶ 18 (citing Diaz v. Blue Cross & Blue Shield of Mont., 2011 MT 322, ¶ 27, 363 Mont. 151, 267 P.3d 756 ). The party seeking class certification bears the burden of demonstrating each of these factors. Diaz, ¶ 27. The failure to satisfy any one of these prerequisites is fatal to class certification. Diaz, ¶ 27. Because M.R. Civ. P. 23 corresponds to Fed.R.Civ.P. 23, we may look to federal case law for guidance in interpretation. Chipman, ¶ 43.

¶ 9 There is no bright-line number of class members that will establish numerosity. Instead, the numerosity of the class and impracticability of joinder must be determined on a case by case basis, with consideration given to all of the surrounding circumstances. Gen. Tel. Co. of the Nw. v. E.E.O.C., 446 U.S. 318, 330, 100 S.Ct. 1698, 1706, 64 L.Ed.2d 319 (1980) ; Odom v. Hazen Transp., Inc., 275 F.R.D. 400, 407 (W.D.N.Y.2011). The United States Supreme Court has observed, however, that “as few as 15 employees” would likely “be too small to meet the numerosity requirement.” Gen. Tel. Co. of the Nw., 446 U.S. at 330, 100 S.Ct. at 1706 ; 1 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 3:5, 247 (4th ed.2002). Generally, fewer than 21 potential class members is regarded as inadequate, while more than 40 is likely to be sufficient. Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir.1986) ; 2 James Wm. Moore, Allan D. Vestal & Philip B. Kurland, Moore's Manual: Federal Practice and Procedure § 14A.22 (2014).

¶ 10 Where a class is small in number, other considerations become more significant in determining whether joinder is impracticable. Conte & Newberg, supra, §§ 3:3, at 225, 3:6, at 249–53. Considerations recognized by other courts have included “judicial economy arising from the avoidance of a multiplicity of actions, geographic dispersion of class members, financial resources of class members, the ability of claimants to institute individual suits, and requests for prospective injunctive relief which would involve future class members.” Robidoux v. Celani, 987 F.2d 931, 936 (2d. Cir.1993) ; Conte & Newberg, supra, § 3:6, at 250–52. While each of these factors may be relevant to the question of class certification as a whole, this Court has not yet recognized their applicability to the narrower issue of numerosity. The party seeking certification bears the burden of making a factual showing demonstrating both the approximate number of class members and the impracticability of joinder. Diaz, ¶ 27. Mere speculation or conclusory allegations are not sufficient. Diaz, ¶ 31 (quoting Polich v. Burlington N., Inc., 116 F.R.D. 258, 261 (D.Mont.1987) ); Moore et al., supra, § 14A.22. Plaintiffs must actually prove that they have satisfied the prerequisites for class certification. Sangwin v. State, 2013 MT 373, ¶ 15, 373 Mont. 131, 315 P.3d 279. A court may not simply take their allegations as true nor presume their compliance with the requirements of M.R. Civ. P. 23(a). Sangwin, ¶ 15; Mattson, ¶ 15.

¶ 11 The proposed class in this case includes 24 to 28 persons, seven of whom are named plaintiffs and class representatives. This is near the number below which class certification is likely to be considered inappropriate. Gen. Tel. Co. of the Nw., 446 U.S. at 330, 100 S.Ct. at 1706 ; Cox, 784 F.2d at 1553 ; Conte & Newberg, supra, § 3:5, 247; Moore et al., supra, § 14A.22. The relatively small number of the proposed class is not dispositive, and indeed, courts may reasonably reach differing conclusions as to the propriety of certifying a class this size. In such circumstances, we defer to the District Court's broad discretion in determining whether a class action is “ ‘the most fair and efficient procedure for conducting’ ” the litigation. Jacobsen, ¶ 25 (quoting Chipman, ¶ 17). We cannot conclude that the District Court abused that discretion here.

¶ 12 When a class is relatively small, however, a court must also examine other factors and circumstances that may make joinder impracticable. Gen. Tel. Co. of the Nw., 446 U.S. at 330, 100 S.Ct. at 1706 ; Odom, 275 F.R.D. at 407. The additional factors to be considered are flexible, and the impracticability of joinder must be determined on a case by case basis, with consideration given to all of the...