Ring v. Metropolitan St. Louis Sewer Dist.

• Citation: 41 S.W.3d 487
• Parties: (Mo.App. E.D. 2000) Robert A. Ring, 6024 Washington Avenue, Inc., Champ Spring Co., Kickham Boiler and Engineering, Inc., Viking Lodge and Restaurant, Inc., Apartment Exchange, Inc., and Michael F. Kickham, Sr., Plaintiffs/Respondents, v. The Metropolitan St. Louis Sewer District, Defendant/Respondent, and Barnes-Jewish Hospital, Daimler-Chrysler Corporation, Emerson Electric Co., SSM Healthcare, Unity Health System, Mark D. Roberts, Steven Oberg, and Gretchen Williams, Appellants. ED77467 and ED77469
• Decision Date: 05 December 2000
• Court: Court of Appeal of Missouri (US)

41 S.W.3d 487 (Mo.App. E.D. 2000)

Robert A. Ring, 6024 Washington Avenue, Inc., Champ Spring Co., Kickham Boiler and Engineering, Inc., Viking Lodge and Restaurant, Inc., Apartment Exchange, Inc., and Michael F. Kickham, Sr., Plaintiffs/Respondents, v. The Metropolitan St. Louis Sewer District, Defendant/Respondent, and Barnes-Jewish Hospital, Daimler-Chrysler Corporation, Emerson Electric Co., SSM Healthcare, Unity Health System, Mark D. Roberts, Steven Oberg, and Gretchen Williams, Appellants.

ED77467 and ED77469

Missouri Court of Appeals Eastern District

12/05/2000

Appeal From: Circuit Court of the City of St. Louis, Hon. David A. Dolan

Counsel for Appellant: Robert C. Johnson, Jeffrey J. Kalinowski, Eric D. Martin, and Dennis M. Devereux

Counsel for Respondent: Douglas P. Dowd, James M. Dowd, Diana M. Vuylsteke, Lewis C. Green, Bruce A. Morrison and Maurice B. Graham

Opinion Summary: Barnes-Jewish Hospital, Unity Health System, SSM Healthcare System, Emerson Electric Company, and Daimler-Chrysler Corporation ("Barnes-Jewish class members") and Mark D. Roberts, Steven Oberg, and Gretchen Williams ("Roberts class members") appeal the judgment of the trial court, denying their motions to intervene and approving the class action settlement between Metropolitan Sewer District and Robert A. Ring, Champ Spring Co., Kickham Boiler and Engineering, Inc., Viking Lodge and Restaurant, Inc., Apartment Exchange, Inc., and Michael F. Kickham Sr.

Division holds: The Barnes-Jewish class members and the Roberts class members lack standing to appeal the adequacy of the settlement agreement because their motions to intervene were denied. The trial court's determination that the class representatives and class counsel adequately represented the proposed intervenors' interest in arriving at the settlement is supported by substantial evidence. Therefore the trial court did not err in denying the motions to intervene.

Clifford H. Ahrens, Presiding Judge

Barnes-Jewish Hospital, Unity Health System, SSM Healthcare System, Emerson Electric Company, and Daimler-Chrysler Corporation ("Barnes-Jewish class members") and Mark D. Roberts, Steven Oberg, and Gretchen Williams ("Roberts class members") appeal the judgment of the trial court, denying their motions to intervene and approving the class action settlement between Metropolitan Sewer District ("MSD") and Robert A. Ring, Champ Spring Co., Kickham Boiler and Engineering, Inc., Viking Lodge and Restaurant, Inc., Apartment Exchange, Inc., and Michael F. Kickham Sr. ("Ring plaintiffs"). We sustain the motions to dismiss the appeal of the class action settlement for lack of standing and affirm the denial of the motions to intervene.

In Beatty v. Metropolitan St. Louis Sewer Dist., 867 S.W.2d 217, 221 (Mo. banc 1993) ("Beatty II"), the Supreme Court of Missouri ruled that a rate increase by MSD violated article X, section 22(a) of the Missouri Constitution because MSD did not obtain voter approval for the increase.¹ In violation of article X, section 22(a), MSD collected $39,700,000 in overcharges pursuant to the rate increase between July 1, 1992, and June 30, 1993.² Subsequent to ruling the rate increase unconstitutional, the Supreme Court in Beatty v. Metropolitan St. Louis Sewer Dist., 915 S.W.2d 791, 795 (Mo. banc 1995) ("Beatty III"), held that only those persons who actually sued in Beatty II could recover the increase overcharges. In Ring v. Metropolitan St. Louis Sewer Dist., 969 S.W.2d 716 (Mo. banc 1998), a class action was brought on behalf of those not a part of the initial suit against MSD to recover the overcharges. The trial court dismissed the class action on statutory and sovereign immunity grounds. Id. This court affirmed and transferred the case to the Supreme Court, which reversed the dismissal and remanded the case back to the trial court. Id. at 719.

After the case was remanded, MSD and the Ring plaintiffs agreed to settle the case. The settlement called for a $30,140,000 refund of which $4,521,000 would be paid for attorney's fees. The balance of $25,619,000 would be distributed among the Ring class members who could be located. Notice of the settlement was sent to the class. On November 1, 1999, the trial court held a hearing on the proposed settlement. Prior to the hearing, the Roberts class members and the Barnes-Jewish class members filed objections to the proposed settlement. The Roberts class members filed a motion to intervene as a matter of right under Rule 52.12(a) with their objections to the proposed settlement. On November 22, 1997, after the fairness hearing, the Barnes-Jewish class members also filed a motion to intervene under Rule 52.12(a). On December 27, 1999, the trial court entered a judgment approving the settlement, overruling all objections, and denying the motions to intervene. The Barnes-Jewish class members and the Roberts class members appeal the denial of the motions to intervene and the approval of the proposed settlement.

In their first point on appeal, the Barnes-Jewish class members and the Roberts class members argue that the trial court erred in approving the proposed class action settlement because it was not fair, reasonable, and adequate. Both the Ring class members, plaintiff-respondent, and MSD, defendant-respondent, have moved to dismiss the appeal contending that the Barnes-Jewish class members and the Roberts class members do not have standing to appeal the approval of the settlement because their motions to intervene were denied; therefore, they were not parties to the action.

No Missouri case has directly considered whether an unnamed class member who was denied intervention has standing to appeal the approval of a class action settlement. Missouri Rule 52.08 is identical to Rule 23 of the Federal Rules of Civil Procedure; therefore, we look to federal precedent for guidance. Ralph v. American Family Mut. Ins. Co., 809 S.W.2d 173, 174 (Mo. App. 1991). The federal circuit courts have taken various approaches when confronted with unnamed individual class members who have not intervened but seek to appeal the settlement. In the Fifth, Sixth, Seventh, Tenth, and Eleventh Circuits, unnamed class members do not have standing to appeal absent intervention. See Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1997); Shults v. Champion Int'l Corp., 35 F.3d 1056 (6th Cir. 1994); Gottlieb v. Wiles, 11 F.3d 1004 (10th Cir. 1993); Walker v. City of Mesquite, 858 F.2d 1071 (5th Cir. 1988); Guthrie v. Evans, 815 F.2d 626 (11th Cir. 1987). In the Third and Ninth Circuits, unnamed class members have standing to appeal final orders. See Carlough v. Amchem Products, Inc., 5 F.3d 707 (3d Cir. 1993); Marshall v. Holiday Magic, Inc., 550 F.2d 1173 (9th Cir. 1977).

The Eighth Circuit is persuasive here. No Eighth Circuit case has directly addressed whether an unnamed class member has standing to appeal the fairness of a settlement after a motion to intervene in the underlying case was denied. However, in Croyden Assoc. v. Alleco Inc., 969 F.2d 675 (8th Cir. 1992), cert. denied, 507 U.S. 908, 113 S.Ct. 1251, 122 L.Ed.2d 650 (1993), an unnamed class member submitted written objections to the proposed class action settlement, appeared at the fairness hearing, and made oral objections at the fairness hearing, but failed to make a motion to intervene. Croyden, 969 F.2d at 677. Relying on Guthrie v. Evans, 815 F.2d 626 (11th Cir. 1987) and Marino v. Ortiz, 484 U.S. 301, 108 S.Ct. 586, 98 L.Ed.2d 629 (1988), the Eighth Circuit held that "unnamed class members who object to a settlement must move to intervene, and they will be denied standing to appeal when they have not done so." Id. at 679.

In Guthrie, the court held that unnamed class members do not have standing to appeal a final judgment binding on the class members, indicating three reasons. Guthrie, 815 F.2d at 628. First, unnamed class members have not followed the procedures provided for in Rule 23 of the Federal Rules of Civil Procedure and therefore cannot represent the class. Id. Second, unnamed class members who disagree with the course of the class action have adequate procedures available to protect their interest. Id. "Third, class actions could become unmanageable and non-productive if each member could individually decide to appeal." Id.

In Marino, the Supreme Court held that because the petitioners were not parties to the underlying case and because the petitioners failed to intervene in the underlying lawsuit they could not appeal the settlement. Marino, 484 U.S. at 304, 108 S.Ct. at 587. The Court noted the well-settled rule that only parties to a lawsuit or those who properly become parties may appeal an adverse judgment. Id. The Court also noted that "the better practice is for such a nonparty to seek intervention for purposes of appeal; denials of such motions are, of course, appealable." Id.

While the cited cases do not specifically address standing to appeal when an unnamed class member's motion to intervene is denied, we find the reasoning in Marino and Guthrie, adopted by the Eighth Circuit in Croyden, to be persuasive here. Requiring intervention as a condition for appeal insures that class actions will continue to serve their purpose in making the litigation manageable. In addition, when a motion to intervene is denied the party still may appeal the denial of the motion. Marino, 484 U.S. at 304, 108 S.Ct. at 588; State ex rel. Reser v. Martin, 576 S.W.2d 289, 291 (Mo. banc 1978). We find that neither the Barnes-Jewish class members nor the Roberts class members have standing to appeal the adequacy of the settlement agreement because their motions to intervene were denied. The motions to dismiss are sustained.³

The Barnes-Jewish class members and the Roberts class members, however, do have standing to appeal the denial of their motion to intervene. The applicable standard of review is set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The...