Opinion
No. X08-CV03-0196141S
March 19, 2007
PROCEDURAL BACKGROUND
This action was commenced as a putative class action in 2003 by three auto body repair shops located in Connecticut and by a nonprofit trade association of Connecticut auto body repair shops ("plaintiffs") against the Hartford Fire Insurance Company ("defendant" or "the Hartford"), claiming that the defendant has violated the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. §§ 42-110a et seq., and has been unjustly enriched. Plaintiffs seek money damages and injunctive relief because, they allege, the Hartford has wrongfully steered its insureds and other insurance claimants to auto body repair shops favored by the Hartford and part of the Hartford's Customer Repair Service Program (CRSP). It is also alleged that the Hartford through the use of incentives such as reduced deductibles or guaranteed repairs for the life of the vehicle or employee financial incentives has prevailed upon its own independent appraisers to establish an artificially low standard of hourly labor rates for auto body repair work in Connecticut to the damage and detriment of non-CSRP repair shops such as the plaintiffs. These actions, it is claimed, violate public policy as set forth in Conn. Gen. Stat. § 38a-354 prohibiting appraisers and insurance companies from requiring their customers or insureds to use a specific repair shop or facility. The complaint also alleges that the Hartford's actions violate federal policy as set forth in a federal court consent decree governing and limiting appraisal and auto repair practices in United States v. Association of Casualty and Surety Companies, et al, 63 Civ. 3106 (S.D.N.Y. 1963), a case in which the Hartford was a defendant.
The Hartford denies any wrongdoing and denies the material allegations of the complaint.
On August 30, 2006 the court (Adams, J.) granted plaintiffs' motion for class certification and ordered certification of a class of plaintiffs consisting of Connecticut licensed auto body repair shops, or licensed individuals, that have performed physical auto body repairs paid for directly or indirectly, partially or in full, by Hartford as a result of automobile insurance policies issued by Hartford. (The court also left open the possibility of a subclass consisting of the so-called CRSP shops.) Plaintiffs have proposed a form of order and notice to be sent to the certified class, to which defendants have objected. The defendants moved for reargument of the order certifying a plaintiff class, which motion was denied on October 6, 2006. The defendants appealed the granting of class certification to the Appellate Court on October 24, 2006. The appeal was filed pursuant to Conn. Gen. Stat. § 42-110h (part of the CUTPA statute) which provides that:
The appeal was transferred to the Connecticut Supreme Court on December 19, 2006 where it remains pending.
As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this section may be conditional. And it may be amended before decision on the merits. An order issued under this section shall be immediately appealable by either party.
Now before the court is the plaintiffs' Motion for Declaration That Automatic Stay Does not Apply to An Appeal of Plaintiffs' Class Certification and That No Stay is Warranted in the Exercise of the Court's Discretion, by which the plaintiffs ask the court to declare that the automatic stay of Practice Book § 61-11 occasioned by the filing of an appeal does not apply to the defendants' appeal of the class certification order pursuant to Conn. Gen. Stat. § 42-110h and that a discretionary stay under Practice Book § 61-12 is not warranted. Plaintiffs have requested these determinations because it is their desire not to have the appeal delay the completion of discovery (which they characterize as only "minimal" discovery remaining) and the order for and issuance of the class notice, so that, following resolution of the appeal, the case can be tried in the fall of 2007. The plaintiffs emphasize that they intend to go to trial whether or not class action status is ultimately approved. In support of their position the plaintiffs have submitted an affidavit of Thomas Bivona, president of the Auto Body Association of Connecticut, stating that the practices of the defendants alleged in the complaint in this case "have caused a trend that is depleting the number of auto body repair facilities in Connecticut" and he lists some 35 auto body shops throughout the state that have gone out of business in the last two years.
The parties — or at least the plaintiffs — are hopeful that argument will be scheduled in the Supreme Court not later than the June 2007 term, with a decision promulgated before the start of the September term. The current Case Management Order in this court provides for jury selection to commence on November 13, 2007.
The defendants take the position that the automatic stay of Practice Book § 61-11 went into effect immediately upon the filing of their appeal, and that the provisions of Practice Book § 61-12, permitting the Superior Court to enter a discretionary stay "[i]n noncriminal matters in which the automatic stay provisions of Section 61-11 are not applicable . . .," are themselves not applicable because there is an automatic stay now in effect. Defendants also oppose the plaintiff's request for a declaration that a discretionary stay pursuant to Practice Book § 61-12 is not warranted, and argue that this court should exercise its discretion to stay the proceedings pending appeal if the court should hold that an automatic stay is not in effect.
DISCUSSION
The issues raised are whether or not the automatic stay of Practice Book § 61-11 is now in effect, and it so, to what extent it applies to present proceedings or contemplated proceedings in this case; or, if the automatic stay is not in effect, whether or not and to what extent this court should exercise its discretion to stay proceedings under Practice Book § 61-12. These are issues of law to be decided by the court.
A. Automatic Stay.
Practice Book § 61-11(a) provides, in relevant part:
Except where otherwise provided by statute or other law, proceedings to enforce or carry out the judgment or order shall be automatically stayed until the time to take an appeal has expired. If an appeal is filed, such proceedings shall be stayed until the final determination of the cause.
§ 61-11(b) goes on to carve out certain types of proceedings to which the automatic stay does not apply, such as attorney disciplinary proceedings, juvenile matters, administrative appeals, or orders of periodic alimony, custody, support or visitation in domestic relations matters.
The plaintiffs argue that the automatic stay only applies to appeals of final judgments, and does not apply to interlocutory appeals such as this. Although the word "final" is not used in § 61-11(a), plaintiffs argue that § 61-11 makes no mention of interlocutory appeals and they urge the court to read § 61-11 as a whole where, they claim, there are indicia that the automatic stay, like the general right to appeal itself, is limited to appeals from final judgments. For instance, they point out, the carve-out provision includes "administrative appeals" which are defined in § 61-11(b) as ". . . an appeal taken from a final judgment of the trial court or a compensation review board rendered in an appeal from a decision of any officer, board, commission, or agency . . . Plaintiffs also direct the court to the provision of § 61-11(d) authorizing motions to terminate the automatic stay filed prior to judgment which are to be ". . . ruled upon when judgment is entered." Finally, the plaintiffs point out that § 42-110h of the CUTPA statute pursuant to which this interlocutory appeal of a class certification order has been brought is silent on the question of any stay of proceedings, whereas other statutes which authorize interlocutory appeals of various types of orders have specified the extent to which the order appealed from is stayed pending appeal. This is the situation with respect to appeals from an order upholding or invalidating a mechanics' lien under Conn. Gen. Stat. § 49-35c (order automatically stayed for seven-day appeal period; thereafter, if an appeal is filed, stay is determined on a discretionary basis by the trial court); appeals from a decision on an application for prejudgment remedy under Conn. Gen. Stat. § 52-278l(c) (no stay except on the order of the judge who made the order; if stay is ordered appellant must post a bond); and with respect to appeals from summary process judgments pursuant to Conn. Gen. Stat. § 47a-35(b) (automatic stay during five-day appeal period; if appeal is filed stay continues in effect unless trial court finds that appeal is solely for purposes of delay or unless appellant fails to post a bond). Against the backdrop of this statutory scheme the plaintiffs argue that the legislature has not hesitated to state expressly the application and extent of a stay when there is an intent to have a stay, and that the total absence of any mention of a stay in § 42-100h must be interpreted to mean that it did not contemplate that an automatic stay would issue during the appeal of a class certification decision.
Under Practice Book § 61-1 the right to appeal is generally limited to parties aggrieved by a final judgment: "An aggrieved party may appeal from a final judgment, except as otherwise provided by law." See also, Conn. Gen Stat. § 51-197a(a): "Appeals from final judgments or actions of the Superior Court shall be taken to the Appellate Court . . ."
The defendant counters that the absence of the word "final" in Practice Book § 61-11(a) where it speaks simply of the "judgment or order [appealed from]" as contrasted to the use of the term "final judgment" in § 61-1 in defining the general right to appeal, indicates that the automatic stay of § 61-11 is not limited to appeals of final judgments, but applies to appeals of both final judgments and legislatively authorized appeals of what would otherwise be interlocutory orders. And, defendants point out, appeals from class certification orders are not excepted under § 61-11(b) from the operation of the automatic stay. As to the other statutes cited by plaintiffs (appeals from mechanics' lien, prejudgment remedy and summary process orders) which specifically address the issue of stay pending appeal, the Hartford maintains they are not inconsistent with the position that the silence as to any stay in Conn. Gen. Stat. § 42-110h confirms that the automatic stay of Practice Book § 61-11 is in effect, because § 61-11 is prefaced by the caveat "[e]xcept where otherwise provided by statute or other law . . ." indicating that the automatic stay is the "default position" necessitating legislation only when something other than the automatic stay is intended.
There is no Connecticut appellate authority addressing this issue. Federal precedent is not applicable because there is unquestionably no provision under the federal rules for an automatic stay during the interlocutory appeal of a class certification order:
A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.
Rule 23(f), Federal Rules of Civil Procedure.
There are Superior Court decisions touching on the issue. In Moye v. Credit Acceptance Corp., Docket No. X01CV99-0157073S, Superior Court (July 16, 2001, Hogdson, J.), 2001 W11763979 (Conn.Super.), 31 Conn. L. Rptr. 265, the issue was whether or not the defendant was entitled to a stay of notice to the class and discovery concerning class members pending an appeal of the class certification order, but the moving party, the defendant, did not assert that the automatic stay of Practice Book § 61-11 applied and instead asked the court to enter a discretionary stay. In denying that request, Judge Hogdson did say, partly in dictum:
The court finds that the plaintiffs' interest in timely adjudication, in a situation in which the rules of court do not provide for an automatic stay, outweighs the interest in delay articulated by the defendant.
It is noteworthy that Moye was decided in July of 2001 before the January 1, 2002 effective date of the amendment to Practice Book § 61-11(a) which added the words "or order" to the present provision which reads: "Except where otherwise provided by statute or other law, proceedings to enforce or carry out the judgment or order shall be automatically stayed . . ." (Emphasis added.) The automatic stay was at issue in Macomber v. Travelers Property Casualty Corp., No. X03 CV99-049671S, Superior Court (September 20, 2005, Lavine, J.) [ 40 Conn. L. Rptr. 29], 2005 WL 2503701 (Conn.Super.) the court held without discussion that the automatic stay of Practice Book § 61-11(a) [as amended effective January 1, 2002] was in effect during the appeal of a class certification order and proceeded to decide contested issues as to the effect of that automatic stay as applied to proceedings in the case (to be discussed, below). In deciding those issues, Judge Lavine made it very clear that the automatic stay of Practice Book § 61-11(a) was applicable and in effect:
The Court concludes, in agreement with Judge Peck's previously stated view that discovery relating to the class action claims are automatically stayed by the operation of Section 61-11. (Emphasis added.)
This court agrees with Judge Lavine's holding in Macomber that the automatic stay of Practice Book § 61-11(a) as amended in 2002 applies to an appeal of a class certification order brought pursuant to Conn. Gen. Stat. § 42-110h. The court is persuaded that the absence of the word "final" in modification of the words "judgment" or "order" in § 61-11(a) as compared to the use of the words "final judgment" in § 61-1 is significant and does indicate an intent that the automatic stay will be applicable to interlocutory appeals as well as appeals of final judgments. The court also notes that an appeal of a class certification order is not among the exceptions listed in § 61-11(b) to the application of the automatic stay. Finally, the court is persuaded by the history of the 2001 amendment (effective January 1, 2002) adding the words "or order" to the first sentence of § 61-11(a). That amendment was recommended favorably by the Advisory Committee on Appellate Rules to the Justices of the Supreme Court and the Appellate Court Judges for enactment pursuant to Practice Book § 86-1. The minutes of the September 24, 2001 meeting of that advisory committee report the following action under New Business:
It is therefore unnecessary for the court to address defendant's alternate argument that all class certification orders are "final judgments" for purposes of appeal. See Rivera v. Veteran's Memorial Medical Center, 262 Conn. 730, 734 n. 6 (2003) and Macomber v. Travelers Property Casualty Corp., 277 Conn. 617, 619, n. 1 (2006).
a. Sec. 61-11 Stay of Execution in Noncriminal Cases
Attorney Gallagher's proposal to add in subsection (b), paragraph 1 the words "or order appealed from" to address the situation where there is an appeal from a decision that is not a final judgment is approved. (Emphasis added.)
The reference to "subsection (b), paragraph 1" seems to be in error. The words "or order appealed from" were added to subsection (a), not subsection (b) of the rule. In Horton and Bartschi, Connecticut Practice Series, Rules of Appellate Procedure, 2007 Edition, § 61-11, the Official Commentary to the January 1, 2002 amendment to Practice Book § 61-11 is quoted as saying that "The change to subsection (a) specifies that the automatic stay applies to orders from which an appeal has been taken as well as to judgments." The words "appealed from" were later deleted from the rule by amendment effective January 1, 2005.
Having decided that the automatic stay is applicable, the next inquiry goes to the scope of the stay in terms of remaining pretrial proceedings in this case. Under Practice Book § 61-11(a) the automatic stay applies to all ". . . proceedings to enforce or carry out the judgment or order [appealed from]." In Macomber v. Travelers Property Casualty Corp., supra, Judge Lavine held that the § 61-11(a) stayed all discovery related to class action claims, but did not stay discovery related to the individual claims of the original named plaintiff. The court agrees with that analysis and ruling. In this case, any remaining discovery relating to the claims of Artie's Auto Body, Inc., AR Body Specialty, Skrip's Auto Body, or The Auto Body Association of Connecticut is not covered by the automatic stay. Discovery relating to claims of other members of the class designated by Judge Adams in his order of August 30, 2006 is covered by the automatic stay of Practice Book § 61-11(a).
The plaintiffs argue that the pending objection to the proposed notice of pendency of class action and to the proposed order directing notice to the class should be adjudicated, and the resulting order and notice should be sent to class members while the appeal is pending, with a modification to let class members know that the defendant is appealing the class certification. The defendant contends that all proceedings as to the class notice and order for class notice are covered by the automatic stay and should be deferred until the appeal has been resolved. Neither party has submitted any authority on the issue of the application of the automatic stay to orders for class notice or the actual publication of a class notice while the appeal is pending, nor has the court's own research disclosed any such authority.
The "judgment or order" appealed from is the granting of plaintiff's motion for class certification and the certification of a plaintiff class — in other words, the conversion of this case from an ordinary civil action brought by named plaintiffs to a class action brought by the named plaintiffs on behalf of themselves and others similarly situated, even though those others are not actually before the court. If a notice were to be sent out to class members or putative class members, the sending of the notice and the wording would require prior court approval under Practice Book § 9-10. There would necessarily be a "proceeding" in this court at which defendant's pending objections to the proposed notice and order would be adjudicated and a detailed order of class notice would issue. The court holds that such a proceeding would be "a proceeding to enforce or carry out the judgment or order" implementing the conversion of this case to a class action. Without such a proceeding or a court order authorizing it, class members would not know of the existence of the action or their potential inclusion in the class, would not know of their right to opt out of the class or to maintain their own separate suit, and would have no mechanism to validate their membership in the class or submit their damages. "Notice is a critical part of class action procedure. It provides the structural assurance of fairness that permits representative parties to bind absent class members." Manual for Complex Litigation, Fourth § 12.31 Class notice does not merely "secure" a right or prepare to implement an order as in All Seasons Services, Inc. v. Guildner, 89 Conn.App. 781 (2005) (Filing a judgment lien and pursuit of postjudgment discovery to identify assets are not proceedings to enforce or carry out a judgment for money damages appealed from.) The class notice is the actual implementation of the class certification order. As such, it is barred by the automatic stay of Practice Book § 61-11(a).
B. Discretionary Stay
The discretionary stay of Practice Book § 61-12 is only available in situations ". . . In which the automatic stay provisions of Section 61-11 are not applicable, and in which there are no statutory stay provisions . . ." The court has held that discovery relating to claims of class members other than the four original plaintiffs and proceedings relating to the class notice or the court order authorizing the class notice are covered by the automatic stay of § 61-11, which means that, of the remaining pretrial matters identified by the parties in their memoranda or at oral argument, only the discovery related to the claims of the four original plaintiffs would even be eligible as the subject of a discretionary stay.
The matters presently before the court are the plaintiffs' Motion for Declaration That Automatic Stay Does not Apply to An Appeal of Plaintiffs' Class Certification and That No Stay is Warranted in the Exercise of the Court's Discretion, and the defendant's response and objection thereto. Although, in its objection, the defendant takes the position that all remaining discovery should be stayed in the discretion of the court to the extent it is not covered by the automatic stay, it has not actually moved under Practice Book § 61-12 for a discretionary stay. Even if the court were to construe the defendant's objection to the plaintiff's motion as a motion for discretionary stay, this court would not rule on such motion because Practice Book § 61-12 requires that any such motion must be submitted in the first instance ". . . to the judge who tried the case unless that judge is unavailable, in which case the motion may be made to any judge of the superior court." Judge Adams who "tried the case" (heard and decided the motion for class certification) is not unavailable and remains assigned to this judicial district in the civil division Any motion for discretionary stay must therefore be made to Judge Adams.
ORDER
For the foregoing reasons the court rules that the automatic stay of Practice Book § 61-11(a) does apply and is in effect as to discovery relating to claims of class members other than the four original plaintiffs and to proceedings relating to the order for class notice and the wording or issuance of a class notice; and that the automatic stay does not apply to and is not in effect as to discovery relating to the claims of the four original plaintiffs, Artie's Auto Body, Inc., AR Body Specialty, Skrip's Auto Body, or The Auto Body Association of Connecticut. The court makes no ruling or order with respect to any suggestion of a discretionary stay.