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finding a class definition impermissible because “individual questions abound ... many of them related to the ultimate issues of liability at issue in the case.... [E]ven accepting that the definition might not lead to the classic failsafe class, it still too closely identifies the class definition with a merits determination”
Summary of this case from In re at & T Mobility Wireless Data Serv. Sales Tax Litig..Opinion
A3-01-41
July 11, 2002
MEMORANDUM AND ORDER
I. Introduction
Before the Court is a motion for class certification in the above-captioned case and for oral argument on that motion (doc. #19, 21). Both defendants oppose the motion for class certification. For the reasons set forth below, the motion for class certification is DENIED; the motion for argument is therefore DENIED AS MOOT.
II. Background
The parties agree to the basic factual background. Both named plaintiffs — and the class they seek to represent — own land in North Dakota which is either bisected or bordered, or both, by federally-originated Burlington Northern railroad rights-of-way. Beginning in the mid-1980's, Sprint constructed a fiber optic telecommunications system, installing most of its cable along or under railroad rights-of-way. Plaintiffs" essential claim is that placement of this fiber optic cable along or under the rights-of-way exceeds the scope of those rights-of-way and thus constitutes unjust enrichment and trespass. They seek damages and injunctive relief.
Plaintiffs also seek to certify a class pursuant to Rule 23 of the Federal Rules of Civil Procedure. The proposed "Western States Class" would consist of:
All persons and entities that possess or possessed a fee simple interest in land underlying or adjoining a federal land grant railroad right of way in the states of the Eighth Circuit (Arkansas, Iowa, Minnesota, Nebraska, North Dakota and South Dakota) and the Tenth Circuit (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) on which Sprint entered to install or maintain fiber optic or other telecommunications cable.
Additionally, the proposed "BN Subclass" is defined as:
All persons and entities that possess or possessed a fee simple interest in land underlying or adjoining [a] BN federal land grant right of way in the states of the Eighth Circuit (Arkansas, Iowa, Minnesota, Nebraska, North Dakota and South Dakota) and the Tenth Circuit (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) on which Sprint entered to install or maintain fiber optic or other telecommunications cable.
Defendants resist certification of a class, offering several arguments why such treatment is inappropriate. Upon review of the matter, and as set forth below, the Court agrees, and the motion for class certification is DENIED.
III. Analysis
A. Class definition
One of the first tasks when considering a potential class is reviewing the proffered definition of the class. Class definition is important because it "identifies the persons (1) entitled to relief, (2) bound by a final judgment, and (3) entitled to notice in a Rule 23(b)(3) action." See Manual for Complex Litigation § 30.14 (3d ed. 1999). In light of these concerns, other courts considering telecommunications classes such as that proposed here have devoted great amounts of attention to the question of class definition, see, e.g., Nicodemus v. Union Pacific Corp., 204 F.R.D. 479, 487-89 (D.Wyo. 2001); Chambers v. MCI Worldcom, No. 00-C-348-C, slip op. at 8-14 (D. Wisc. 2001).
The proposed class at issue is defined as:
All persons and entities that possess or possessed a fee simple interest in land underlying or adjoining a federal land grant railroad right of way in the states of the Eighth Circuit (Arkansas, Iowa, Minnesota, Nebraska, North Dakota and South Dakota) and the Tenth Circuit (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) on which Sprint entered to install or maintain fiber optic or other telecommunications cable.
Further, the proposed subclass replaces the phrase "adjoining a federal land grant railroad right of way" with "adjoining a [Burlington Northern] federal land grant right of way." There is no question that this is a broad definition, and defendants raise several objections to it.
First, they argue that it is impermissible as a "failsafe class," that is, a class which cannot be defined until the case is resolved on its merits, meaning potential class members are only bound by a favorable decision; an unfavorable decision on the merits would be the same as a class membership decision and would come late enough to allow them to opt out of the class. Second, defendants urge the class definition must fail because determining whether any individual is a class member depends on an individualized factual inquiry into the details of his or her land ownership. Third, according to defendants, the class is overinclusive, in that it includes both adjoining landowners with no interest in the servient estate as well as landowners whose land adjoins the side of the right of way on which cable was not laid. Finally, defendants claims the class is improperly defined because, based on the first several problems, it does not define who should receive notice of the case.
For their part, plaintiffs urge that the class definition suffers none of these failings. Further, they assert that the class definition is virtually identical to the definition defendants have proposed in settlement discussions. Therefore, they urge that their class definition is workable. The Court shares many of the concerns defendants raise, and it is therefore skeptical of the proposed class definition. Most fundamentally, it is difficult to understand how the Court could determine whether a potential class member is in fact a class member without an individualized inquiry. To the contrary, the current class definition would require several factual determinations as to each potential class member.
As a threshold matter, each claimant would have to establish that he or she owned land described in the definition. This would necessitate examination of the title to ensure that the ownership does not somehow prevent this claim, for example because the title documents conveyed less than a fee simple interest. This would lead in turn to a review of the railway's interest, if any, in each class member's parcel. Though not included in the definition, class members who consented or acquiesced to installation would be necessarily excluded from the class; the Court would thus have to make individual determinations of this issue (the complexity here would also be compounded by varying state law standards for consent and acquiescence). Obviously, the Court would also have to determine that cable was in fact placed on the land at issue. Finally, since the class is defined to include "all persons and entities that possess or possessed" such rights, this inquiry would presumably not be limited to the current landholders but would have to account for prior individuals who owned the land when or after cable was laid.
Obviously, individual questions abound in this definition, many of them related to the ultimate issues of liability at issue in the case. Other federal courts have been mindful of precisely these problems when reviewing similar certifications. See Chambers, No. 00-C-348-C, at 13 ("The definition requires extensive factual inquiry and therefore, is inadequate"). This conclusion leads quite naturally to the concern that the class can only be determined after a merits review. See Nicodemus, 204 F.R.D. at 489 ("[T]he proposed definition is insufficient because it requires the Court to review the merits of the case in order to ascertain the class"). This also supports the concern that the class may be overinclusive, as it includes all landowners without regard to any of the identified limiting factors. See Chambers, No. 00-C-348-C, at 13 (finding overinclusivity based on the need for factual determinations). Finally, even accepting that the definition might not lead to the classic failsafe class, it still too closely identifies the class definition with a merits determination, in that class membership depends on resolution of many predicate factual issues related, at least in part, to the ultimate questions in the case. Id.; Nicodemus, 204 F.R.D. at 489. Obviously, notice to class members is a virtual impossibility under these circumstances, since they cannot be identified. Therefore, the Court concludes the class definition is defective.
B. "Class certification
Assuming the definition were permissible, however, the Court concludes the class could not be certified under Rule 23 of the Federal Rules of Civil Procedure. That rule provides that a class may be maintained only if it meets four prerequisites: (1) numerosity; (2) commonality; (3) typicality; and (4) representativeness. Fed.R.Civ.P. 23(a). This determination is not perfunctory: "[A] class action may properly be certified only if the trial court is satisfied, after rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." Bishop v. Committee on Professional Ethics and Conduct of Iowa State Bar Ass"n, 686 F.2d 1278, 1287 (8th Cir. 1982) (quotations omitted).
Only if a court finds these four requirements met does it proceed to analyze what sort of class action is to be maintained. Fed.R.Civ.P. 23(a). There is some degree of overlap, however, since the type of class action proposed effects, in various ways, the analysis of the prerequisites. See generally Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). Thus, the Court must consider, even at this stage, the type of class plaintiffs propose. Id. Plaintiffs here argue they qualify under two possible classes, authorized under Rule 23(b)(2) and (b)(3).
First, Rule 23(b)(2) classes are permissible when "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole[.]" Rule 23(b)(3) actions, on the other hand, may be maintained only if the court finds that common questions of law or fact "predominate over any questions affecting only individual members" and that a class action is superior to any other method for adjudicating the case. This finding of predominance is by its very terms greater than the prerequisite finding of commonality. When making this determination, the Court must consider various factors set forth in the rule. Fed.R.Civ.P. 23(b)(3)(A)-(D). With this review in mind, the Court turns to consider each of the required elements.
1. "Numerosity
No minimum number of plaintiffs is required for a class action, but federal courts have generally been reluctant to certify classes of less than 40 members. See generally Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001) (citing 5 James Wm. Moore et al., Moore's Federal Practice § 23.22[3][a]). Here, the class is undoubtedly large enough to warrant class treatment, assuming plaintiffs" definition is sufficient and appropriate. Indeed, defendants" sole objection to numerosity is not that the class is too small, but that its size is the subject of speculation. The Court concludes that the class meets the numerosity requirement.
2. "Commonality and typicality
Generally, "[c]ommonality is not required on every question raised in a class action. Rather, Rule 23 is satisfied when the legal question "linking the class members is substantially related to the resolution of the litigation."" DeBoer v. Mellon Mortg. Co., 64 F.3d 1171, 1174 (8th Cir. 1995) (quoting Paxton v. Union Nat'l Bank, 688 F.2d 552, 561 (8th Cir. 1982)). Courts thus usually give the commonality requirement a "permissive application." Mosley v. General Motors. Corp., 497 F.2d 1330, 1334 (8th Cir. 1974); see also In re Marion Merrell Dow Inc., Sec. Litig., 1994 WL 396190, at *2 (W.D.Mo. 1994) (describing low threshold for commonality inquiry). However, when the proposed class action falls under Rule 23(b)(3), plaintiffs must also show that common questions predominate over individual questions, a necessarily higher threshold. In re Marion Merrell Dow Inc., Sec. Litig., 1994 WL 396190, at *2.
The question of typicality is closely related to that of commonality. Typicality generally means that there are "other members of the class who have the same or similar grievances as the plaintiff." Donaldson v. Pillsbury Co., 554 F.2d 825, 830 (8th Cir. 1977). This is not a heavy burden; it is met "so long as other class members have claims similar to the named plaintiff." DeBoer, 64 F.3d at 1174.
Courts considering similar cases have taken varied approaches to these questions. Some have considered commonality and typicality together. Compare Nicodemus, 204 F.R.D. at 489-491 (finding commonality met easily and focusing on typicality) with Hallaba v. Worldcom Network Serv.,196 F.R.D. 630, 635-641 (N.D. Ok. 2000) (focusing on commonality). It is clear, however, that these questions are the lynchpins of the certification question. Related to them, of course, is the question of predominance of common issues over individual questions. The Court's discussion will thus encompass these related questions together.
a. "Commonality
The Court has already addressed above, in its discussion of the class definition, the myriad individual issues presented by this class. These individual factual questions, even if they did not prevent the class from being properly defined, would pose severe problems at this stage as well, since their very existence undercuts commonality, and this is clearly an issue that has troubled other courts as well. See Hallaba, 196 F.R.D. at 635. Footnote
In short, plaintiffs assert that a common factual nucleus derives from the "single over-arching question: whether defendants had the right to permit fiber optic cable companies to install their cables in the subsurface lands beneath Burlington Northern's federally-originated rights-of-way." Arguably, this would meet the "loose" definition of commonality, as other courts have found. See generally Chambers, No. 00-C-348-C, at 17 (finding that the facts, similar to those here, met the "highly permissive" standard of commonality). The Court will assume for purposes of discussion that this is the case, without expressly holding so.
However, this leads directly to another problem, suggested by the Court in Hallaba: "The commonality of the facts flows from their legal significance." 196 F.R.D. at 636. That is, the case centers around questions of property rights, questions in which the significance of certain facts depends on legal principles. Thus, even assuming that questions of fact are common to all potential class members, this is only meaningful if the law applied to each is the same. The Court now turns to this issue, which it believes better regarded as a problem of typicality.
b. "Typicality
The essential questions here, as stated above, concern property rights. Specifically, the case would require resolution of several property-related issues: the extent of the railroad's interest in the land at issue; the extent of each property owner's interest; whether the defendants" activities regarding laying of fiber optic cable exceeded the scope of the railroad's interest vis-a-vis that of the class members; whether any legal defenses exist to bar the claim of each class member, such as consent, acquiescence, or the statute of limitations; and, finally, assuming the claims are legitimate and proven, whether and how much damages are due. The Court concludes that these decisions turn on so many individual questions that the claims of the named plaintiffs are not typical of the class.
First, plaintiffs make much of the fact that all the railroad grants at issue originated in the Federal Land Grant Act of July 2, 1864. It is true that other cases declining to certify telecommunications classes involved land grants made under a variety of different acts, which contributed to the lack of typicality. See Nicodemus, 204 F.R.D. at 490-91. Surely, this does help plaintiffs, as it removes one species of potential variation within the class. However, this is not the only potential variety which renders the main claims atypical of the rest of the proposed class.
Initially, of course, it is clear that the railroad's interest in the land is only half of the equation; the other half is the interest of each class member. As the Court discussed when addressing class definition, a potential class member could only be counted in or out after a review of his or her title documents, an individual effort which could rear its head as well in the liability phase of the trial. See Chambers, No. 00-C-348-C, at 13 (discussing factual differences in class members" title in context of class definition). It seems self-evident that the details of any given chain of title will vary from the others in the class, and that some of these differences will be significant (looking for and considering these differences, of course, is yet another individual issue the Court would need to resolve). Further, while the railroad has received all the land at issue under one act, this does not necessarily mean it has not enlarged these rights as to any given parcel since the time of acquisition, potentially further reducing typicality.
Moreover, it is not evident that claims in any one state could be typical of claims in the other eleven states in the putative class. The court in Nicodemus noted, and the Court here agrees, that "different states impose different legal requirements with respect to trespass, acquiescence, the statute of limitations, and unjust enrichment." 204 F.R.D. at 491. Similarly, the court in Hallaba reviewed and emphasized the differences in state law regarding easements, especially railroad easements, in finding a lack of commonality. 196 F.R.D. at 639-40. Other legal issues subject to variation in state law include the propriety of various kinds of relief and the measure of damages. Plaintiffs never explain to the Court why these differences would not be a problem here, nor do they undertake to show the similarity of the relevant law across the states in the proposed class. In light of the conclusions of other courts considering this issue, therefore, the Court concludes that differences in state law render the named plaintiffs atypical of the class. See Id.; see also Nicodemus, 204 F.R.D. at 491.
Finally, the problem of potential conflicts within the class is not insignificant. The court in Chambers dealt with precisely this issue, noting that some plaintiffs would need to focus on rebutting a statute of limitations defense, for example, while others would need to respond to acquiescence or consent defenses. See Chambers, No. 00-C-348-C, at 19. The Chambers court concluded, and the Court here agrees, that these variations within the class also undercut the named plaintiffs" claim to be typical of the class. FootnoteIn short, the Court concludes that typicality here is lacking. Footnote c. "Predominance and superiority
The Court's conclusions about typicality and commonality preclude a finding of predominance or superiority under Rule 23(b)(3). As the Court has explained, and as other courts have found, the common questions here simply do not predominate over the individual questions. See Chambers, No. 00-C-348-C, at 22 ("Because the predominance test is more demanding than the commonality requirement than the commonality requirement that the proposed class fails to meet, I need not address at length whether common issues predominate over individual ones"). In short, as the court in Hallaba wrote, "the numerous factual and legal decisions this Court will have to make in evaluating the interests of every putative class member render this determination an especially particularized one." 196 F.R.D. at 640-41 (collecting and citing supporting cases).
3. "Representativeness
Based on the foregoing analysis, the Court finds that the named plaintiffs do not adequately represent the proposed class. The Court does not for a moment doubt the skill, competence, or integrity of plaintiffs" counsel. Rather, the Court's conclusion that the named plaintiffs" claims cannot be typical of the other claims in the class virtually requires a finding that they cannot adequately represent that class.
Based on the foregoing discussion, the Court concludes that certification is inappropriate here. Therefore, plaintiffs" motion to certify is DENIED, and their motion for a hearing is DENIED AS MOOT.Footnote