Russo and Dubin v. Allied Maintenance Corp.

• Decision Date: 01 January 1970
• Citation: 95 Misc.2d 344,407 N.Y.S.2d 617
• Court: New York Supreme Court
• Parties: , 1978-2 Trade Cases P 62,146 RUSSO & DUBIN, suing on behalf of itself and all other persons, corporations, partnerships, joint ventures and other business or legal entities similarly situated who are or were tenants in buildings located in the County of New York from

Page 617

407 N.Y.S.2d 617

95 Misc.2d 344, 1978-2 Trade Cases P 62,146

RUSSO & DUBIN, suing on behalf of itself and all other persons, corporations, partnerships, joint ventures and other business or legal entities similarly situated who are or were tenants in buildings located in the County of New York from January 1, 1970 to October 31, 1974 which purchased Building Maintenance Service from any of the Defendants and who were injured by the acts and practices of the Defendants, Plaintiff, v. ALLIED MAINTENANCE CORPORATION, Alpine Industries, Inc. Anchor Cleaning Service, Inc., Arcade Cleaning Contractors Inc., Coastal Enterprises, Inc., Eastern Maintenance Service, Inc., MacClean Service Company, Inc., National Kinney Corporation, Prudential Building Maintenance Corporation, Tenco Service Industries, Inc., and Triangle Maintenance Service, Inc., Defendants.

Supreme Court, Special Term, New York County, Part I.

June 27, 1978.

Solin & Breindel, New York City, for the plaintiff.

Graubard, Moskovitz, McGoldrick, Dannett & Horowitz, New York City, for defendant Allied Maintenance Corp.

Skadden, Arps, Slate, Meagher & Flom, New York City, for defendant Alpine Industries, Inc.

Spiro, Felstiner, Prager & Treeger, New York City, for defendant Anchor Cleaning Service, Inc.

Weil, Gotshal & Manges, New York City, for defendant Arcade Cleaning Contractors, Inc.

S. Edward Orenstein, P. C., New York City, for defendant Coastal Enterprises, Inc.

Martin, Obermaier & Morvillo, New York City, for defendants Eastern Maintenance Service, Inc. and Triangle Maintenance Service, Inc.

Shea, Gould, Climenko & Casey, New York City, for defendant MacClean Service Co., Inc.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for defendant National Kinney Corp.

Kaye, Scholer, Fierman, Hays & Handler, New York City, for defendant Prudential Building Maintenance Corp.

Stroock & Stroock & Lavan, New York City, for defendant Tenco Service Industries, Inc.

HILDA G. SCHWARTZ, Justice:

Plaintiffs and moving parties on this motion, Russo & Dubin, suing on behalf of itself and all others similarly situated, are or were tenants in commercial, industrial or institutional buildings located in New York County, from January 1, 1970 to October 31, 1974, who purchased building maintenance service from any of the building maintenance companies named as defendants and who allegedly were damaged by the acts of such defendants.

Plaintiffs move, pursuant to CPLR Sec. 901 et seq. for a determination that this action may be maintained as a class action. The eleven defendants are all building maintenance companies. Building maintenance, it is not disputed, includes service such as janitorial, repair, security, elevator, landscaping, heating, lighting and the like.

Plaintiffs seeking a determination as to whether they may proceed as a class action under CPLR 902.

Plaintiff contends that members of the class in whose behalf they sue, number in excess of 10,000 and joinder, therefore, of all members is impracticable. Plaintiffs further contend that their application that this action be adjudicated a class action meets the five prerequisites of CPLR 901(a).

The gist of the complaint in this action is the claim by plaintiffs that the defendants conspired and agreed with each other to maintain a monopoly and restrain trade in the building maintenance service business in New York State in violation of Sec. 340 Et seq. of the General Business Law (the "Donnelly Act").

The plaintiffs seek determination as a class action on behalf, Not of persons who purchase building maintenance services Directly but on behalf of tenants, indirect users of the services, who were allegedly injured by the conduct of the defendants through the passing on to them by their landlords (the direct purchasers) of increased charges pursuant to the terms of their leases. Plaintiffs seek injunctive relief and damages in an amount to be determined at a trial. (emphasis added)

The determination that an action proceed as a class action requires the satisfaction of the five (5) prerequisites of CPLR 901(a). They are:

1. The class is so numerous that joinder of all members, whether otherwise required of permitted, is impracticable;

2. There are questions of law or fact common to the class which predominate over any questions affecting only individual members;

3. The claims or defenses of the representative parties are typical of the claims or defenses of the class;

4. The representative parties will fairly and adequately protect the interests of the class; and

5. A class action is superior to other available methods for the fair and efficient adjudication of the controversy.

General Business Law, Sec. 340 states, in pertinent fact:

"1. Every contract, agreement, arrangement or combination whereby

A monopoly in the conduct of any business, trade or commerce or in the furnishing of any service in this state, is or may be established or maintained, or whereby

Competition or the free exercise of any activity in the conduct of any business, trade or commerce or in the furnishing of any service in this state is or may be restrained or whereby

For the purpose of establishing or maintaining any such monopoly or unlawfully interfering with the free exercise of any activity in the conduct of any business, trade or commerce or the furnishing of any service in this state any business, trade or commerce or the furnishing of any service is or may be restrained, is hereby declared to be against public policy, illegal and void."

Plaintiffs allege that defendant companies accounted for approximately 70% Of all building maintenance services sold in New York City. In January 1976 an indictment was filed charging the defendants, under the Sherman Act, with conspiracy in restraint of trade and commerce in the sale of building maintenance services. This indictment was subsequently dismissed and in July 1976 the government filed an information incorporating the allegations to which all of the defendants pleaded Nolo contendere and were fined.

In the U.S. District Court, Southern District, the court (Frankel, J.) in 1977 certified as a class persons who purchased building maintenance services Directly from the defendants from January 1, 1970 to October 1974. (emphasis supplied) (Shelter Realty Corp. v. Allied Maintenance Corp., 76 Civ. 341, 442 F.Supp. 1087 (S.D.N.Y.1977)).

The defendants, joining in opposition to this motion, contend that plaintiffs cannot satisfy the requirements for class determination and in fact, plaintiffs Russo & Dubin do not even have a viable claim to assert in their own behalf. They argue that the putative class are tenants whose cost for these services, if any, were included only as a fraction of the rent they paid to their landlord who were the direct purchasers. Defendants point out that since the tenants' claims of injury would be dependent upon the insurmountable task of establishing to a degree of certainty that alleged overcharges were passed on to them by the direct purchaser, the plaintiff is without a viable claim. The United States Supreme Court in a recent decision (Illinois Brick Company v. State of Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977)) held that claims of indirect purchasers could not be asserted under the Sherman Act; that only the direct purchaser had been injured and has a viable claim regardless of whether he passed on the alleged overcharges to the next person in the stream of commerce. Any other conclusion would result in an endless chain of possible claims. For instance, if a claim based on the passing on of overcharges were permitted then presumably sub-tenants as well as the customers of tenants or sub-tenants, and eventually the customer of customers should be entitled to me, Ad infinitum.

Defe...