Opinion
C.A. No. 00C-06-010
Submitted: May 2, 2002
Decided: May 6, 2002
Upon Plaintiff's Application for Certification of an Interlocutory Appeal of the Superior Court's April 5, 2002, Bench Ruling. Denied.
John S. Spadaro, Esquire, and Roger D. Landon, Esquire, of Murphy, Spadaro Landon, Wilmington, Delaware for the Plaintiff.
Nicholas E. Skiles, Esquire, of Swartz, Campbell Detweiler, Wilmington, Delaware, Curtis P. Cheyney, III, Esquire, Pro Hac Vice, James C. Haggerty, Esquire, Pro Hac Vice, for the Defendant.
ORDER
Upon review of the Application of James M. Crowhorn ("Plaintiff") for Certification of an Interlocutory Appeal of the Superior Court's April 5, 2002, Bench Ruling, as well as the response of Nationwide Mutual Ins. Co. ("Defendant" or "Nationwide") thereto, it appears to the Court that:
Background
1. This interlocutory application arises out of a hearing held in this Court on April 5, 2002, from which a bench Order ensued. Plaintiff seeks an interlocutory appeal of that bench ruling. At the April 5th hearing various matters were heard including Plaintiff's Motion to Reinstate the "Insurance Commissioner" Allegations to his complaint. The purpose of Plaintiff's motion was to reinsert paragraphs fourteen through thirty-seven of the First Amended Complaint. These set forth the failure of the Insurance Commissioner's office to regulate insurance company practices. The current issues before the Court stem from the Court's bench ruling on April 5th as to the Plaintiff's motion to reinstate.
2. Previously, by order dated April 26, 2001, this Court struck these allegations from the complaint for the reason that they alleged wrongdoing by the Insurance Commissioner who was not named as a necessary party. Plaintiff moved for reargument.
3. Ruling on the Motion for Reargument, on June 13, 2001, this Court declined to reinsert paragraphs fourteen through thirty-seven back into the Complaint. Nevertheless, the Court said that if Nationwide raised the regulatory process as a defense against punitive damages or within other aspects of the litigation, Plaintiff would be permitted an appropriate response.
4. Plaintiff alleges that after this June 13th ruling Nationwide triggered the regulatory process issue covered by the stricken passages. Consequently, Plaintiff moved to Reinstate the Insurance Commissioner allegations to the complaint.
This is because Nationwide argued (in its Answering Brief on Class Certification) that the Insurance Commissioner's enforcement devices are available for dispute resolution, and are superior to the class-action mechanism.
At the April 5th oral argument on the motion, Plaintiff admitted that relief short of reinserting the stricken paragraphs could be given. Hr'g. Tr. at 11.
5. In response, Nationwide maintained that it had not raised the regulatory theme as a defense to punitive damages, nor identified it with respect to the certification issue. Rather,
[it] simply was that Nationwide, in its response to the class certification motion, pointed out to the Court that there is an alternative forum and the legislative design was that this would give some so-called but potentially punitive class members another option, and the question is for the Court to decide, not the jury, not the question of liability[.] [I]s this the forum that we should concentrate the litigation in, or is there an alternative forum. That is all we said. We didn't raise it as a defense to anything.
6. On April 5, 2002, after review of the submissions of the parties and upon hearing oral argument, this Court denied Plaintiff's Motion to Reinstate the "Insurance Commissioner" Allegations, and issued a bench Order holding:
First, the Court reiterated that by its prior June 13th Order on reargument, Plaintiff was given the right to make an appropriate response and that Order still remains. An appropriate response to allegations of regulatory superiority, however, does not have to be simply to put the paragraphs back in the complaint. Otherwise, the infirmities of doing so are not resolved.
Second, the Court stated that it would allow appropriate discovery to extend to the Plaintiff to develop any evidence pertaining to the insurance regulatory process if it became an issue in the case. This Order still stands.
Third, since Nationwide had presented information on the insurance regulatory process for the purpose of only providing information to the Court, which the Court on its own would have to consider, the Court did not see a need for Plaintiff to expend time and energy conducting discovery on this issue. This ruling was made with the caveat that the June 13th Order still stands, and if the issue came up, discovery would be permitted (even if the Court had to interrupt the case at trial to permit it).
Claims of the Parties
7. In the instant motion, Plaintiff takes exception to this three-part ruling. He, therefore, respectfully seeks certification of an interlocutory appeal to the April 25, 2002, Bench Ruling Denying Mr. Crowhorn's Motion to Reinstate "Insurance Commissioner" Allegations. The reasons for the appeal are that: (1) this Court's decision, striking the allegations in the complaint, is in conflict with prior reported decisions of the Superior Court, because when in doubt, the allegations should remain; (2) this Court held that a Plaintiff's allegations should remain stricken even where, as a matter of law, there could be no unfair prejudice in leaving the allegations untouched; (3) this Court has denied Plaintiff due process by allowing the defendant to plead a defense to which Plaintiff is forbidden to respond; (4) this Court has infringed upon the integrity of the judicial process itself because it has prevented Plaintiff from relying on the law of the case.8. Nationwide responds that the elements of interlocutory certification are not met in that: (1) Plaintiff is in fact certifying this Court's decision to strike averments from the complaint; therefore, because Rule 42(c)(i) requires such application to be filed within ten days of the Order in question, they have missed the deadline. Moreover, the Court's promise to allow an appropriate response does not necessarily mean that the allegations should be put back in the complaint; (2) Plaintiff has incorrectly paraphrased this Court's holdings; (3) Plaintiff did have an opportunity to address, directly, the issue of "superiority" under Rule 23 in its Motion for Class Certification. Instead, Plaintiff ignored the superiority issues under the case law, and chose to make additional arguments to reinstate the insurance commissioner allegations.
Clarification of April 5, 2002 Bench Order
9. Upon review of the motions of the parties and the transcript of the April 5th hearing on the Motion to Reinstate the "Insurance Commissioner" Allegations, the foremost goal of this Court is to clarify its ruling. This is appropriate and will bear directly on the elements of interlocutory certification.
10. The Court did not intend to deny all discovery to Mr. Crowhorn on the issue of superiority. I want to clarify that relevant discovery may indeed take place and as a further clarification, the Court will allow Plaintiff to insert a short one-paragraph notice-pleading averment into his complaint asserting that the insurance regulatory process is not able to accomplish what Plaintiff seeks to accomplish by the method of a class action. Of course, Nationwide may also make a one-paragraph notice answer to the complaint so amended.
This is not to say that the Plaintiff may assert multiple paragraphs alleging the inactivity of the insurance commissioner to somehow allege fault, wrongdoing or negligence, or otherwise alleging any claim or cause of action against a non-party defendant. Unless, of course, Plaintiff wishes to bring the Insurance Commissioner in as a party defendant
11. The Court reasons that although Nationwide has not asserted superiority as a defense to punitive damages, the regulatory process is relevant to one of the four elements of the superiority analysis for certification under Superior Court Civil Rule 23(b)(3). Since Plaintiff seeks to conceivably qualify the putative class under that category, Plaintiff bears the affirmative burden of proving superiority under the rule. Regulatory process may be relevant to that issue, especially with respect to Rule 42(b)(3)(C) which addresses the desirability or undesirability of concentrating the litigation of the claims in the particular forum.
Superior Court Civil Rule 23(a) requires Plaintiff to establish four elements in order to bring a class action. Once certified under Rule 23(a), this Court must determine whether to maintain the class action under one of the Rule 23(b) categories. Under Rule 23(b)(3), to maintain the class action this Court must also find: that the question of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matter pertinent to the findings include:
(A) The interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) The extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) The desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) The difficulties likely to be encountered in the management of a class actions.
Rosen v. Juniper Petroleum Corp., Del.Ch., C.A. No. 7016, Berger, V.C. (Apr. 11, 1986), Mem. Op. at 2.
See e.g. In re Bridgestone/Firestone, Inc., ___ F.3d ___, 2002 WL 831990 at *5 (7th Cir. Ind.) (finding that regulation by the National Hwy. Trans. Safety Admin., "coupled with tort litigation by persons suffering physical injury, is far superior to a suit by millions of uninjured buyers for dealing with [failure-prone] consumer products").
12. For this reason, the Court acknowledges that regardless of whether or not Nationwide raises superiority as a defense to certification under Rule 23(b)(3), Plaintiff may conduct relevant discovery to establish its burden. In contrast, such discovery may not be conducted for the purposes of establishing punitive damages until or unless Nationwide raises the issue as a defense.
Interlocutory Certification
13. Keeping in mind the elucidation of the April 5th ruling noted above, it is apparent that the defendant does not "meet the three-prong criteria of Rule 42(b)" so as to certify this case for interlocutory appeal. Rule 42(b) provides in pertinent part that:
Celotex Corp. v. Bradley, 1990 WL 168269 at *1 (Del.).
"No interlocutory appeal will be certified by the trial court . . . unless the order of the trial court determines a substantial issue; establishes a legal right and meets 1 or more of the following criteria:
(i) Any of the criteria applicable under Rule 41;
(ii) Controverted jurisdiction;
(iii) An order of the trial court has reversed or set aside a prior decision of the trial court which had determined a substantial issue and established a legal right, and review may terminate the litigation, substantially reduce further litigation, or otherwise serve considerations of justice;
(iv) Prior judgment opened;
(v) Case dispositive issue;
14. Plaintiff's first reason for the interlocutory certification (i.e. that this Court's decision striking the allegations in the complaint is in conflict with prior reported decisions of the Superior Court) is time barred under Rule 42(c)(i). The Court struck the "Insurance Commissioner" language from the pleadings on April 26, 2001. The Court upheld its decision for the third time on April 5, 2002. If Plaintiff believed the Court's decision was in conflict with other trial courts, he should have appealed within ten days of April 26, 2001, or within 10 days of the June 13, 2001 ruling on the Motion for Reargument. Since the Plaintiff did not appeal this issue at that time, the Order of April 26, 2001 must stand until any final review on appeal.
Werb v. D'Alessandro, 606 A.2d 117 (Del. 1992).
15. Plaintiff's second reason for an interlocutory appeal is that this Court held that a Plaintiff's allegations should remain stricken even where, as a matter of law, there could be no unfair prejudice in leaving the allegations untouched in the original complaint. The very reason this Court struck the paragraphs from the pleadings is because of the unfair prejudice they would cause to the Insurance Commissioner, who is not a party to this litigation.
16. Moreover, the Plaintiff admits there are other ways to get at the issue of superiority in this case besides adding back the stricken allegations; therefore, adding back the stricken language cannot be determinative of a substantial issue or a legal right. Where there are alternative methods to accomplish the same goal, the denial of only one cannot finally determine or establish the issue or right.
17. The Court's clarification as to the April 5th ruling, and allowance of limited discovery, moots Plaintiff's last two arguments. Plaintiff has not been denied due process. Nationwide has not been allowed to plead a defense to which Plaintiff is forbidden to respond. Plaintiff may, however, seek relevant discovery to prove his affirmative burden on superiority. Finally, this Court has not infringed upon the integrity of the judicial process itself by preventing Plaintiff from relying on the law of the case. The Court's prior language providing Plaintiff an opportunity to respond, did not mean this Court would reverse itself regarding the necessity of naming the Insurance Commissioner as a necessary party should Plaintiff wish to keep the stricken paragraphs in his complaint.
Technically, Plaintiff is not responding at the present time to a defense as Nationwide has represented that they will not be using regulatory process as a defense to punitive damage claims.
Wherefore, the Court does not find that the standards for an interlocutory application have been met. Plaintiff's Application for Certification of an Interlocutory Appeal of the Superior Court's April 5, 2002, Bench Ruling is DENIED.
IT IS SO ORDERED