Schlosser v. Allis-Chalmers Corp., ALLIS-CHALMERS
| Decision Date | 14 October 1974 |
| Docket Number | ALLIS-CHALMERS,No. 392,392 |
| Citation | 65 Wis.2d 153,222 N.W.2d 156 |
| Parties | John H. SCHLOSSER et al., Individually and as representatives of all retired employees of Allis-Chalmers Corp., Respondents, v.CORP., Appellant. |
| Court | Wisconsin Supreme Court |
Laurence C. Hammond, Jr., John S. Holbrook, Jr., Larry J. Martin, Quarles, Herriott, Clemons, Teschner & Noelke, Milwaukee, for appellant; Vedder, Price, Kaufmann & Kammholz, Chicago, Ill., of counsel.
Whyte, Hirschboeck, Minahan, Harding & Harland, Milwaukee, for respondents; Robert P. Harland, Richard C. Ninneman, James D. Wing, Milwaukee, of counsel.
Two principal issues are presented on this appeal:
I. Must the class members and their causes of action be joinable under sec. 263.04 or sec. 260.10, Stats., before a class action may be maintained under sec. 260.12?
II. Does this class action involving claims for separate damage recoveries satisfy the requirements of sec. 260.12, Stats.?
The complaint names two plaintiffs, Schlosser and Brown, both retired salaried employees of defendant. Both worked in defendant's corporate legal department. The named plaintiffs claim to bring this suit on behalf of themselves and 'all other retired, non-union salaried employees of defendant who were retired as of February 1, 1973,' a class of about 5,000 persons. The complaint asserts that the members of this class are too numerous to join as named plaintiffs, that the suit involves a question of common or general interest to all members of the class, and that the two named plaintiffs are able to represent the class 'fairly and effectively.'
Plaintiffs allege that in about 1930, defendant established a group life insurance program under which it agreed and promised to provide, at its sole expense, various amounts of group life insurance coverage to each non-union salaried employee during his time of employment and after his retirement. Defendant was to continue assuming the total cost of the insurance during the employee's entire retirement, but with the face value of the coverage gradually being reduced to specific minimum benefits.
Plaintiffs assert that information about the benefits and coverage of the insurance program was communicated by defendant to these employees from time to time orally and in writing and that the program was offered as part of their contract of employment. Plaintiffs claim that they, and all other members of the class they purport to represent, relied on these promises and agreements concerning the group life insurance program in becoming or continuing as employees, and that they all retired expecting to receive the promised insurance at defendant's sole expense.
Plaintiffs further allege that in a December 29, 1972, letter, sent to all its retired non-union salaried employees, defendant announced that effective February 1, 1973, free life insurance coverage would be reduced in face value below previously promised minimum levels. To receive any coverage above these new reduced levels, the employees were told they must pay one dollar per month per thousand dollars face value of additional coverage.
To establish a cause of action based on promissory estoppel, plaintiffs additionally allege that defendant should reasonably have expected its promises concerning the insurance program to induce plaintiffs and the class members to become or remain employees and continue as employees until retirement. Plaintiffs further allege that the promises did so induce them and the class members, and that injustice can only be avoided through enforcement of the promises.
Plaintiffs seek damages of twenty-five million dollars for themselves and the members of the class.
Defendant argues that before a class action may be maintained, two separate requirements must be satisfied: first, the claims of members of the proposed class must be joinable under sec. 263.04 or sec. 260.10, Stats., and second, the case must meet the conditions contained in sec. 260.12, that the class members be numerous and that their claims present a question of 'common or general interest.' Defendant asserts that since each class member has a separate cause of action and seeks separate relief, joinder would be improper under sec. 263.04, and that, therefore, no class action can be maintained.
On the other hand, plaintiff argue that ability to maintain a class action hinges solely on meeting the requirements of sec. 260.12, Stats. They admit that the individual monetary claims would not be properly joinable under sec. 263.04, and assert that additional qualification under sec. 263.04 is not only unnecessary, but contrary to the basic policy served by the class action doctrine: the avoidance of a multiplicity of suits that involve similar questions of law and fact but which are nevertheless not joinable under restrictive interpretations of joinder statutes.
At the outset it must be noted that the class members' claims could not be joined since the members assert separate causes of action that would not affect all the parties to the action. Viewed under the 'single occurrence' test, 1 each class member has a separate cause of action. The complaint does allege the existence of only one group insurance program providing identical benefits (except as to amount of coverage) to each retired non-union salaried employee. The complaint also alleges that defendant changed the program at the same time and in the same way with respect to all these retired employees. However, the complaint alleges that the benefits of the insurance program devolved upon these employees as part of their separate employment contracts. Thus, when defendant changed the program, in effect it allegedly breached 5,000 separate contracts thereby creating 5,000 similar, but nevertheless legally distinct, causes of action. Since each cause of action affects only one retired employee, the causes of action may not be joined.
For similar reasons, the retired employees could not avail themselves of the party joinder provision 2 of sec. 260.10, Stats., which provides:
'All persons having an interest in the subject of the action or in obtaining the relief demanded may be joined as plaintiffs.'
There is no one 'subject of the action' here. The retired employees do not seek to divide a common fund or determine ownership rights to property in which they all claim an interest. Nor do they have an interest 'in obtaining the relief demanded,' since they each seek a separate damages recovery. 3
Since neither the class members nor their claims may be joined under secs. 260.10 or 263.04, Stats., the issue is crucial whether compliance with these statutes is a necessary prerequisite to maintenance of a class action under sec. 260.12. We conclude that it is not. 4
In a long unbroken line of cases, this court has considered the propriety of maintenance of class actions only in terms of the criteria contained in sec. 260.12, Stats., never once even referring to secs. 263.04 or 260.10. 5 In each of these cases the class action was held proper.
Pipkorn v. Brown Deer is the leading recent case on the subject. 6 After tracing the development of the class action doctrine from its origins in the old equity or chancery practice, this court upheld the right of a few beneficiaries of a water trust to defend an action affecting the trust assets on behalf of all similarly situated beneficiaries. The issue before the court was 'whether the amended complaint pleads a class suit on the part of defendants within sec. 260.12, Stats.' 7 No question of joinder under secs. 263.04 or 260.11 (permissive joinder of defendants) was raised or decided.
This court's treatment of class actions as governed only by sec. 260.12, Stats., is consistent with the familiar rule of statutory construction that where two statutes deal with the same subject matter, the more specific controls. 8 Here, secs. 263.04, 260.10, 260.11, and 260.12 all pertain to joinder of causes of action or parties. However, since sec. 260.12 on its face applies to particular actions involving numerous parties, class actions, its provisions govern rather than those of the other more general joinder statutes.
Unable to rely on any recent cases, defendant tries to garner support from several old cases and a treatise for its argument that compliance with joinder statutes is a prerequisite to maintaining a class action.
1. Pomeroy's treatise. Defendant quotes a portion of sec. 289 of Pomeroy's treatise, Code Remedies, in which the author discusses the proper construction to be given the Field Code class action provision (sec. 260.12, Stats.) in light of the prior equity practice that Pipkorn indicated sec. 260.12 was designed to continue: 9
'. . . The test would be to suppose an action in which all the numerous persons were actually made plaintiffs or defendants, and if it could be maintained in that form, then one might sue or be sued on behalf of the others; but if such an actual joinder would be improper, then the suit by or against one as a representative would be improper, notwithstanding the permission contained in this section of the statute.' 10
Defendant assumes erroneously that the reference to 'joinder' pertains to joinder under statutory joinder provisions. As Pomeroy makes clear, however, in other sections of Code Remedies, and in another treatise, Equity Jurisprudence, courts of equity followed very flexible joinder rules, and were not constrained by the more narrow legal rules. For example, in sec. 162 of Code Remedies he states:
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