State ex rel. Byrd v. Chadwick

• Decision Date: 13 November 1997
• Docket Number: No. WD54805,WD54805
• Citation: 956 S.W.2d 369
• Parties: STATE of Missouri, ex rel. Stephen L. BYRD, et al., v. The Honorable Daniel L. CHADWICK, Circuit Court of Jackson County, Missouri, Respondent.
• Court: Missouri Court of Appeals

Page 369

956 S.W.2d 369

STATE of Missouri, ex rel. Stephen L. BYRD, et al., v. The Honorable Daniel L. CHADWICK, Circuit Court of Jackson

County, Missouri, Respondent.

No. WD54805.

Missouri Court of Appeals,

Western District.

Nov. 13, 1997.

George A. Barton, Rasmussen & Barton, Kansas City, Herbert Hafif, Larry Sackey, Jeanne A. Sterba, Patricia Lytle, Claremont, CA, for relators.

Brant M. Laue, Lawrence A. Rouse, Use, Hendricks, German, May & Shank, P.C., Kansas City, Dennis E. Egan, The Popham Law Firm, Kansas City, Robert A. Horn, Ackwell, Sanders, Matheny, Weary & Lombardi LLP, Kansas City, for respondent.

Before LAURA DENVIR STITH, P.J., and ULRICH and SMART, JJ.

LAURA DENVIR STITH, Presiding Judge.

Between 1986 and 1994, Network 2000 Communications Corp. contracted with more than 50,000 individuals, designated as independent marketing representatives, to solicit long distance telephone customers for Sprint Communications Co. These independent marketing representatives were to be paid commissions and bonuses based on the long-distance usage of the customers they recruited. On August 17, 1992, fifty-nine independent marketing representatives filed suit against Sprint and Network 2000 ("Defendants") on behalf of themselves and a class of persons similarly situated alleging that Sprint and Network 2000 failed to pay the commissions and bonuses they were due. All fifty-nine of the named plaintiffs were represented by the law firm of Saperstein, Goldstein, Demchak & Baller in Oakland, California, and the Popham law firm in Kansas City, Missouri.

On December 18, 1995, the plaintiffs filed a motion for class certification. ¹ Briefing on the class certification issue was complete in December 1996. In the meantime, in August 1996, the parties had begun settlement negotiations with the assistance of a mediator, John Bates. Also in August 1996, three named plaintiffs hired new attorneys, the Law Offices of Herbert Hafif in Claremont, California, and Rasmussen & Barton, L.L.C. in Kansas City, Missouri.

Judge Daniel L. Chadwick ("Respondent") originally scheduled a hearing on the motion for class certification on May 13, 1997. Three days prior to this hearing, on May 10, 1997, Mr. Bates informed Respondent that the Saperstein law firm and counsel for Sprint and Network 2000 were close to reaching a settlement agreement. Therefore, Respondent rescheduled the hearing for June 25, 1997. Shortly before this hearing, Mr. Bates again told Respondent the parties were close to finalizing a settlement, and Respondent continued the hearing to a date "to be determined by the Court."

On Friday, July 18, 1997, the plaintiffs represented by the Saperstein law firm, Sprint, and Network 2000 submitted a Stipulation of Settlement and a proposed Stipulated Order for Preliminary Approval of Stipulation of Settlement. The Stipulated Order certified a temporary settlement class, preliminarily approved the settlement, and designated the Saperstein law firm as class counsel. The named plaintiffs represented by the Hafif law firm and Rasmussen & Barton did not agree to the stipulation and were not parties to the proposed stipulated order for preliminary approval of the settlement. Respondent signed the proposed Order, with one minor correction, on Monday, July 21, 1997. He did so without input from the plaintiffs who were not party to the stipulation.

On July 25, 1997, an additional twelve named plaintiffs terminated the Saperstein law firm and became represented by the Hafif law firm and Rasmussen & Barton. At a hearing on that same day, the plaintiffs represented by the Hafif law firm and Rasmussen & Barton ("Relators") learned that Respondent had signed the proposed Order. Relators objected to the court's preliminary approval of the settlement, but Respondent overruled this objection.

On August 4, 1997, the court mailed notice to approximately 116,000 potential class members, notifying them that a class action had been filed, that a settlement had been proposed, and that the trial court had temporarily certified the class for purposes of settlement. It informed potential class members that they must file a claim form by October 29, 1997, in order to be considered for an award. The notice also advised class members of their option to object to the proposed settlement at the final fairness hearing on November 24, 1997, or to opt out of the class by September 23, 1997. Finally, the notice stated that Sprint would pay a total of $62,200,000, of which $6,469,061 would go to the named plaintiffs, and that class counsel would request $14,000,000 for fees, costs, and expenses. Notice was also published in The Wall Street Journal and USA Today. ²

On August 21, 1997, Relators filed an Opposition and Objections to and Motion to Strike Stipulation of Settlement and Suggestions and Memorandum of Points and Authorities in Support of Motions to Maintain a Class Action, Certification of Plaintiffs' Class, Appointment of Co-Counsel for Class Members and Opposition to Settlement. Respondent held a hearing on this motion on September 15, 1997, but ultimately denied Relators' motion. Relators then filed their Petition for Writ of Mandamus, in which they requested that we require the court below to withdraw its July 21, 1997, order certifying a temporary settlement class. We granted our preliminary writ. Relators now request us to make our writ permanent.

In support, Relators point out that the court below failed to hold a hearing of any kind or to allow briefing on the issue of settlement prior to temporarily certifying the class for purposes of settlement and preliminarily approving the settlement agreement. Relators request that this Court vacate the order temporarily certifying a settlement class and direct the court below that it must hold a full evidentiary hearing prior to certification of a temporary settlement class and prior to giving tentative approval to the settlement. They further urge that the notice which was sent to the class was inadequate and argue that the court below should receive input from all parties before sending a new notice to the putative class members.

We believe that the issues raised by Relators can most easily be analyzed if they are grouped into two categories. We will therefore first discuss whether the trial court acted within its discretion in certifying a temporary class for purposes of settlement without making a preliminary determination as to either the fairness of the settlement or whether the proposed class meets the requirements for class certification under Rule 52.08. See Section III, infra. Next, we will discuss whether the notice given to the class was adequate. See Section IV, infra.

II. STANDARD FOR ISSUANCE OF WRIT OF MANDAMUS

The first issue we must address is whether the issuance of a writ of mandamus is a proper means of addressing the issues raised by Relators. Respondent argues that it is not, and that any error committed by the trial court in certifying the class or approving the settlement can be corrected on appeal. We agree that this is true insofar as Relators ask us to review the proposed settlement and determine whether it is fair and whether it otherwise meets the requirements of Rule 52.08. Those are issues which must first be determined by the trial court and which we will review under an abuse of discretion standard following final resolution of the issues below. Ralph v. American Family Mut. Ins. Co., 835 S.W.2d 522, 523 (Mo.App.1992). ³

It is proper, however, for us to issue our writ where the court has refused to exercise its discretion, or where it has refused to act where it has a duty to act. State ex rel. Schnuck Markets, Inc. v. Koehr, 859 S.W.2d 696 (Mo. banc 1993); Yeager v. Yeager, 622 S.W.2d 339, 341 (Mo.App.1981). In so doing, we do not direct the trial court as to how it will exercise its discretion, but rather direct it as to what determinations it must make, and then allow it to make those determinations following issuance of our writ. Whether those determinations ultimately prove to be correct will, of course, be before us if the case is appealed following final resolution of the issues in the trial court.

Relators here do argue that the trial court was without authority to certify a class, even for purposes of settlement, without considering whether the class met the requirements of Rule 52.08, that it was required to determine the fairness of the proposed settlement before sending notice to the class, and that it was required to give proper notice to the class before holding a fairness hearing or requiring the absent class members to decide whether to opt out of the class and whether to file a claim, and that it did none of these things. We agree that these issues are proper subjects of mandamus, and we will address them in the remainder of this opinion.

III. NECESSITY OF PRELIMINARILY DETERMINING WHETHER CLASS MEETS REQUIREMENTS OF RULES 52.08(a),(b)(3), & (e) PRIOR TO CERTIFYING PRELIMINARY SETTLEMENT CLASS

As noted above, Relators argue that the trial court was required to hold a full evidentiary hearing and determine the merits of class certification and the fairness of the settlement before it could give notice to the class of the tentative certification of a class for settlement purposes. Relators elaborate that at this hearing the court should determine whether the prerequisites to class certification under Rule 52.08(a) and (b)(3) have been met; if so, whether the class should be divided into subclasses; and whether preliminary approval of the settlement is warranted. They urge that all of these matters must be determined prior to even tentative approval of a settlement class. Rules 52.08(a), (b)(3), and (e) state:

(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are...