Paley v. Coca-Cola Co., COCA-COLA

• Citation: 209 N.W.2d 232,389 Mich. 583
• Decision Date: 24 July 1973
• Docket Number: COCA-COLA,No. 5,5
• Parties: Lloyd S. PALEY, Individually and as a representative of and member of a certain class being so numerous as to make it impracticable to bring them all before the Court, Plaintiffs-Appellees, v.COMPANY, a Delaware Corporation, and Glendinning Companies, Inc., a Connecticut corporation, jointly and severally, Defendants-Appellants.
• Court: Supreme Court of Michigan

Page 232

209 N.W.2d 232

389 Mich. 583

Lloyd S. PALEY, Individually and as a representative of and member of a certain class being so numerous as to make it impracticable to bring them all before the Court, Plaintiffs-Appellees, v. COCA-COLA COMPANY, a Delaware Corporation, and Glendinning Companies, Inc., a Connecticut corporation jointly and severally, Defendants-Appellants.

No. 5.

Supreme Court of Michigan.

July 24, 1973.

Rehearing Denied Sept. 18, 1973.

Richard D. Mintz, Madison Heights, for plaintiffs-appellees; Melvin M. Belli, San Francisco, Cal., of counsel.

Butzel, Long, Gust, Klein & Van Zile, Detroit, for defendant-appellant Coca-Cola Co.

Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, for defendant-appellant Glendinning Companies, Inc.

Kratchman & Kratchman, P.C. and Ronald J. Prebenda, Detroit, for Metropolitan Detroit AFL-CIO Council, amicus curiae by, D. Michael Kratchman, Detroit.

WILLIAMS, Justice (to affirm).

Despite the millions of dollars involved in this case and the general struggle to guarantee to the people the right to bring the potentially powerful consumer class action suit in the state's court best equipped with discovery, injunction and other powers, the legal issue in this case is narrow and relatively simple. The legal issue boils down to whether or not the Legislature in its wisdom divested the circuit courts of original jurisdiction in class action suits in setting up district court jurisdiction. With the aid of excellent briefs and arguments pro and con, this opinion concludes that the Legislature did not intend to divest the circuit courts of jurisdiction over class action suits whatever the amount in controversy.

I--THE FACTS

Defendants Coca Cola and Glendinning created and conducted a nationwide contest called 'Big Name Bingo.' Cards were distributed with ten questions on each, relating to the achievements of some famous persons. The answers were pictures of such famous persons and were to be found on Coca Cola and Tab bottle tops and can cartons. The game was to paste the proper picture over the answers. Plaintiffs allege the original rules indicated that there was only one right answer to each question. However, at the last minute and after most contestants had filed their answers new rules were announced indicating that some questions required two answers. This prevented most of the 1,500,000 contestants from winning the $100 prize for correctly answering ten questions.

Plaintiff Paley filed a representative class action on behalf of himself and 1,500,000 other persons similarly situated, seeking damages totalling $900,000,000 for unfair trade practices, breach of contract and fraudulent misrepresentation on November 19, 1970.

Similar class actions had been filed in Los Angeles and the federal district courts in northern California and Detroit. The California case is still pending, the California federal case was dismissed and is on appeal, and the Detroit federal case was dismissed and has not been appealed. There is a still pending Federal Trade Commission case against the same defendants on the same facts.

Defendant Coca Cola filed a motion to dismiss for lack of jurisdiction and defendant Glendinning filed a motion for summary and accelerated judgments. These motions were granted February 22, 1971. Plaintiffs appealed. The Court of Appeals vacated the circuit court judgment and remanded for further proceedings on March 23, 1972. 39 Mich.App. 379, 197 N.W.2d 478.

We granted leave to appeal June 22, 1972. 387 Mich. 797 (1972).

II--SOURCE OF JURISDICTION

The basic issue in this case is whether the circuit court or the district court has jurisdiction to try it. The answer to that question must be found in the subscribed constitutional and statutory provisions:

A. 'The circuit court shall have original jurisdiction in all matters not prohibited by law . . .' ¹ Const.1963, art. 6, § 13.

B. 'Sec. 601. Circuit courts have the power and jurisdiction

(1) possessed by courts of record at the common law, as altered by the constitution and laws of this state . . ., ¹ and

(2) possessed by courts and judges in chancery in England on March 1, 1847 as altered by the constitution and laws of this state . . .'

M.C.L.A. § 600.601; M.S.A. § 27A.601.

C. 'Sec. 605. Circuit courts have original jurisdiction to hear and determine all civil claims and remedies, except where exclusive jurisdiction is given in the constitution or by statute to some other court or where the circuit courts are denied jurisdiction by the constitution or statutes of this state.' M.C.L.A. § 600.605; M.S.A. § 27A.605.

D. 'Sec. 8301. The district court shall have exclusive jurisdiction in civil actions when the amount in controversy does not exceed $3,000.00.' ² M.C.L.A. § 600.8301; M.S.A. § 27A.8301.

E. 'Sec. 8315. The district court shall not have jurisdiction in actions for injunction, divorce or actions which are historically equitable in nature, except as otherwise provided by law.' M.C.L.A. § 600.8315; M.S.A. § 27A.8315.

The most critical provisions are C, D and E. C (§ 605) provides 'The circuit courts have origianl jurisdiction . . . except where exclusive jurisdiction is given . . . to some other court.' D (§ 8301) appears to provide that 'The district court shall have exclusive jurisdiction in civil actions when the amount in controversy does not exceed $3,000.00.' However, E (§ 8315) provides 'The district court shall not have jurisdiction in . . . actions which are historically equitable in nature . . .'

If a class action is 'historically equitable in nature' then we must see whether the combination of D (§ 8301) and E (§ 8315) divest the circuit court of jurisdiction.

III--IS A CLASS ACTION HISTORICALLY EQUITABLE IN NATURE

In American State Savings Bank, Trustee v. American State Savings Bank, 288 Mich. 78, 84, 284 N.W. 652, 654 (1939) before there was any court rule on class actions, we said:

'In City of Detroit v. Railway, 226 Mich. 354, 197 N.W. 697, the Class suit doctrine was adopted by this court. In that case, where it appeared that an exigency existed requiring a change in the terms of a trust in which approximately 1,200 bondholders were involved, the court quoted with approval the following from the decree of the trial court:

"It seems to be a Well known equitable doctrine that virtual representation (etc.)" (Emphasis added.)

This quotation shows that Michigan in adopting the class action clearly recognized it as a 'well known equitable doctrine.'

In Detroit we quoted from the quotation in Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921) used in Colorado & S.R. Co. v. Blair, 214 N.Y. 497, 108 N.W. 840 (1915) as follows:

"Class suits were known before the adoption of our judicial system, and were in use in English chancery." (226 Mich. p. 371, 197 N.W. p. 704.)

In Pressley v. Wayne Sheriff, 30 Mich.App. 300, 318, 186 N.W.2d 412, 421 (1971), my Brother Levin, then Judge Levin, quoted from Montgomery Ward & Co., Inc. v. Langer, 168 F.2d 182, 187 (CA 8, 1948):

"The class action was an invention of equity (citation omitted) . . ."

See also Bond v. Ann Arbor School District, 18 Mich.App. 506, 514, 171 N.W.2d 557 (1969). ³

In the Author's Comments to GCR 1963, Honigman and Hawkins, Michigan Court Rules Annotated states:

'Class actions were established in Michigan equity practice prior to 1945 when former Rule 16 adopted, in substance, Federal Rule 23 . . .' (Volume 1, p. 601)

The equitable lineage of the class action has been authoritatively recognized in this state without question.

Is a class action then 'historically equitable in nature' within the meaning of § 8315. We so hold.

We recognize that defendants acknowledge the equitable genesis of class actions but argue that the spurious class action is the product of the marriage of an equitable procedure and an action at law. In another context it could well be profitable to try to determine whether this equitable-legal progeny partook more of the characteristics of one rather than the other parent. However, that is not our ultimate objective here. Our ultimate objective in this case is to determine whether the Legislature intended to divest the circuit court of its traditional jurisdiction over class actions.

In making such a determination it is our invariable rule, as we shall immediately develop, to resolve every doubt in favor of retention rather than divestitute of jurisdiction. On that ground alone we would be forced even with defendants' able and penetrating analysis to decide against divestiture.

But the Legislature itself in § 8315 has specially signalled its intention against divestiture of circuit court jurisdiction and in favor of limitation of district court jurisdiction in this area. Section 8315 reads:

'The district court shall not have jurisdiction in actions for injunctions, divorce or actions which are historically equitable In nature, except as otherwise provided by law.' (Emphasis added.)

That the Legislature had a comprehensive restriction in mind is clear. It did not stop with 'actions which are historically equitable' but went on to broaden its proscription to include 'actions which are historically equitable In nature.' Not to recognize the impact of 'in nature' would be to attribute to the Legislature an unnecessary and meaningless use of language.

In short, we are compelled to conclude that the Legislature did not intend to expel the spurious class action from the family of class actions and eject it from its traditional circuit court home.

IV--IS THE CIRCUIT COURT DIVESTED OF CLASS ACTIONS

A. Rules of interpretation

This Court has spoken to the question of divestiture of jurisdiction on several occasions. In Leo v. Atlas Industries Inc., 370 Mich. 400, 402, 121 N.W.2d 926 (1963) we stated:

'The divestiture of jurisdiction, however, is a serious matter and cannot be done except under clear mandate of law.'

And in the case of Crane v. Reeder, ...