Parker v. Pulitzer Pub. Co.

• Decision Date: 28 June 1994
• Docket Number: No. 64130,64130
• Citation: 882 S.W.2d 245
• Parties: Steven J. PARKER, Karlene Toy Kaegel, Kevin Kaegel, and Blue Markee, Inc., Plaintiffs-Appellants, v. PULITZER PUBLISHING COMPANY, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 245

882 S.W.2d 245

Steven J. PARKER, Karlene Toy Kaegel, Kevin Kaegel, and Blue

Markee, Inc., Plaintiffs-Appellants, v. PULITZER PUBLISHING COMPANY, Defendant-Respondent.

No. 64130.

Missouri Court of Appeals,

Eastern District,

Division Three.

June 28, 1994.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Aug. 4, 1994.

Application to Transfer Denied Sept. 20, 1994.

Jay A. Summerville, Thomas B. Weaver, Armstrong, Teasdale, Schlafly & Davis, St. Louis, for plaintiffs-appellants.

Thomas C. Walsh, J. Thomas Archer, Bryan Cave, St. Louis, for defendant-respondent.

PUDLOWSKI, Judge.

This case comes to us on a grant of Pulitzer Publishing Company's (Pulitzer) motion to dismiss Steven J. Parker, Karlene Toy Kaegel, Kevin Kaegel and Blue Markee, Inc.'s (appellants) petition for failure to state a cause of action. It concerns the interpretation of identical contracts which existed between Pulitzer and appellants, the distributors of Pulitzer's St. Louis Post-Dispatch and Total Market Coverage Product (titled "You" at the time the parties entered into the contracts; currently titled "MetroPost.") The trial court dismissed the case finding, whether or not Pulitzer breached the contracts, distributors had expressly waived their right to bring a cause of action against Pulitzer for breach of contract. We reverse and remand.

In the contracts Pulitzer promised to give the carriers "exclusive" distributorship routes and to pay them a set fee for each newspaper they delivered. The fee varied based on the day, the number of pages, the number of advertiser's inserts, and whether the recipient was a subscriber or was only receiving a free copy of Pulitzer's Total Market Coverage Product. Distributors purchased the right to service the routes for fees varying from $20,000 to $200,000 dependant upon the route. ¹

In the event that Pulitzer terminates a distributor or forces him/her to assign a route, the contracts give the distributor the right to elect for arbitration to determine whether Pulitzer wrongfully terminated him/her. In the event the arbitrator finds Pulitzer terminated the distributor due to fraudulent conduct, the distributor is not entitled to any compensation. If Pulitzer terminated distributor due to unsatisfactory work, he/she is entitled to the fair market value of the route as determined by the parties or, in the event the parties do not agree, by the arbitrator. If the arbitrator finds Pulitzer wrongfully terminated a distributor, the arbitrator has the power to award distributor the fair market value of the lost route and twenty percent of the route's value in damages. Damages are to be increased to fifty percent of the fair market value of the route if the distributor is able to show he/she was terminated primarily as punishment for his/her activities within an association representing Pulitzer's carriers. Under the express terms of the contract, the arbitrator does not have the power to reinstate a distributor even if Pulitzer terminated the distributor in bad faith. Absent forced assignment or termination, the contract is expressly interminable.

After entering into these exclusive distributorship agreements, varying only in the preambles of which there were two versions, the assigned routes and the payment per paper delivered, Pulitzer attempted to take actions which appellants believed constituted a breach of the agreement. First, Pulitzer formed the Gateway Consumer Services Company to deliver the MetroPost within appellants' exclusive delivery areas for less money than Pulitzer was required to pay appellants under the exclusive distributorship agreements and, second, Pulitzer attempted to initiate PostLink, a computer database system by which customers could retrieve sections of the Post Dispatch via a modem. Four of Pulitzer's distributors, appellants, filed a suit against Pulitzer claiming Pulitzer's actions constituted breaches of Pulitzer's agreement to "recognize the exclusive home delivery rights of the Carrier as set forth in [the map delineating the distributor's route] ... and not [to] terminate such territorial rights or aid, abet or assist in the creation of other home delivery systems or carriers within all or any part of the territory set forth in [the map delineating the distributor's route] except in accordance with the provisions of Paragraph 9" which deals with terminations [emphasis added]. In their petition, appellants asked the court to certify the case as a proper class action on behalf of themselves and the approximately 220 other distributors under Rule 52.08(b)1(A) and Rule 52.08(b)(2). Appellants also asked the court to find Pulitzer's offering of PostLink and reallocation of delivery service for MetroPost, without honoring the notice and the compensation requirements of the arbitration provision of the contracts, constitutes a breach of contract and to permanently enjoin Pulitzer from providing PostLink and reallocating delivery services for MetroPost within the exclusive delivery areas of the putative class members unless Pulitzer agrees to abide by the arbitration and buyout provisions. Appellants prayed for money damages for Pulitzer's alleged breach of contract to date and asked the court to enter judgment for such other relief as it deems proper.

In response to the distributors' petition, Pulitzer filed a motion to dismiss for failure to state a claim upon which relief may be granted. In its motion Pulitzer claimed that it did not consider either its actions with regard to MetroPost or PostLink to constitute a breach of its agreement with distributors since the agreement only covered the delivery of the actual St. Louis Post-Dispatch newspapers to paying subscribers. Pulitzer claimed, even if the court believed that Pulitzer breached the agreements, distributors had waived any right to enforce the contract absent termination or forced assignment, situations which were not alleged by distributors.

On March 5, 1993, the trial court stayed class action discovery until the date of its decision on Pulitzer's motion to dismiss unless mooted by such order. On May 10, 1993, the court granted the motion to dismiss as to the distributors' claims for a declaration of breach of contract, injunctive relief and money damages on the ground the distributors had waived any right to enforce the exclusivity provision under the contract, but overruled Pulitzer's motion to dismiss with regard to distributor's claim seeking specific performance of the contractual arbitration provisions. Since the court based its decision on the waiver clause, it did not address the other issues which were before it, namely, whether Pulitzer's actions with regard to the MetroPost or PostLink constituted breaches of the exclusive distributorship contract in that they were alternative delivery systems. The court also made no mention of the petition's request that the putative class be certified. After the trial court overruled Pulitzer's motion to dismiss appellants' claim for compelled arbitration, appellants requested the trial court dismiss any claim asking for arbitration the court may have read into their petition. The trial court granted this motion.

The named distributors then appealed the trial court's dismissal of the portion of their petition requesting an injunction and damages. Appellants claim the waiver provision does not prevent them from bringing this action because it only prohibits a distributor from attempting to be reinstated following a termination or forced assignment and does not constitute a waiver of all rights to enforce the contract provisions. They note in this case all the parties agree the contract still exists and they are merely trying to obtain a remedy for Pulitzer's partial breach of contract. Appellants argue the arbitration clauses in the contracts are only invoked when Pulitzer terminates a distributor or forces him/her to assign his/her route, neither of which occurred in the case at hand. Accordingly, appellants contend the case should be treated as a regular breach of contract case and remanded to the trial court rather than to the arbitration table.

Fearing he would be bound by the actions taken by the named distributors in the trial court and on appeal, Daniel Knierim, an unnamed distributor, then motioned for permission to file an amicus curiae brief protesting appellants' failure to certify the class or to send notice to the putative members of the class. He alleged, due to the size, geographic and socioeconomic differences between the routes, the interests of the distributors in interpreting the contracts vary and, therefore, the other distributors should not be bound by any actions taken by appellants. In response, Pulitzer claimed the arguments presented by the named and unnamed distributors were identical and, therefore, the unnamed distributor was adequately represented by the appellants. The trial court refused to allow the unnamed distributor to submit an amicus curiae brief but permitted him to enter the case as an intervenor.

Appellants plead the case as a class action. Supreme Court Rule 52.08(c)(1) states: "As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained." Rule 52.08(a) notes some of the prerequisites to a class action are that "the claims or defenses of the representative parties are typical of the claims or defenses of the class" and "the representative parties will fairly and adequately protect the interests of the class." Since the class was never certified, the court's order cannot bind distributors who were not named parties. See, State ex rel. Niess v. Junkins, 572 S.W.2d 468, 470 (Mo. banc 1978); Moore v. City of Pacific, 534 S.W.2d 486, 493 (Mo.App.St.L.D.1976). "To hold otherwise would bind numerous persons to a judgment without determining if they in fact constitute a proper class or whether the name...