Blue Chip Stamps v. Superior Court

No. 30530. Nov. [L.A. 1976.] al., Petitioners,

BLUE CHIP STAMPS et

THE COURT OF LOS SUPERIOR ANGELES

COUNTY, Respondent; al.,

ELEANOR BOTNEY et Real Parties Interest.

Counsel General, Griffin, C. Évelle J. Deputy Attorney Attorney Philip Younger, McCutchen, Black, G. Richard for General, & Shea and Doty Verleger Petitioners. A. Zumbrun and John H. as Amici Curiae on behalf of

Ronald Findley Petitioners.

No for appearance Respondent. Newman, Daar, Allen E. Daar & P. in David

Judith Taylor, pro. per., Real Parties in Interest. Robbins & for Kay Botney Botney, Opinion vacate its to

CLARK, J. seek to Petitioners respondent court compel and to v. Blue class in Eleanor order Stamps Botney Chip certifying must be case. The class action class action dismiss the portion dismissed. distribute merchants who in turn

Blue sells Chip trading stamps and 28 them to Between March 1967 customers. price April $2.76 $1.68 to the 1,200 for full (a book) ranged stamps schedules, several different merchant. Blue used averaging price Chip $1.90 the four for each of years. to their at a rate

The merchants distributed the customers stamps some bonuses. for each 10 cents of one although gave purchase, stamp merchandise, sales When Blue redeemed charged stamps Chip book, $3 tax reimbursement on the basis of retail estimated value per of the merchandise.1

Blue all tax reimbursements to the State Board of Chip paid Equalization.

It that a of California undisputed high percentage households—per- Blue Between haps percent—received Chip during stamps period. 50 and 60 million books were However, redeemed in 1969 and 1970. recent have decreased to a fraction of those years, redemptions during period question.

1On March Daar, Eleanor and Thelma Botney represented by husbands, their commenced an action on their own behalf attorney and situated, on behalf of to purportedly recover persons similarly seeking the sales tax to Blue relief, also paid Chip. They sought injunctive and fees. Blue punitive damages attorney’s Chip cross-complained the State Board of refund of against sales taxes in Equalization, seeking an amount to rendered it. Judith equal any judgment against Taylor, class, member of the intervened, to the class action purported objecting interest, as to her interest, and the being contrary interest of public other class members situated to her. similarly

Partial determined it was for Blue summary judgment proper Chip collect sales tax reimbursement but the amounts exceeded that permitted State Board of 1671. The court did not by Equalization regulation specify the excess but called for an accounting. motion to

Respondent subsequently granted plaintiffs’ dispense with notice before trial. The court stated that records the members listing unavailable, of the class are that notice would have little pretrial effect, that notice “would class members to practical require potential search their memories and whether had redeemed books of guess they 28, case,” covered this stamps during pre-April period by that as of “most the class members sums, have small overpaid only very cents, and some as little as 18 the likelihood of such members taking trouble to out’ of the class is rather remote.” The court concluded ‘opt class members of the chance to out’ not “depriving ‘opt having notice, mean, of matter, would as a pretrial publication practical 1970, 1On 27 reimbursement, Blue April tax Chip sales stopped collecting changing a “tax included” basis for its transactions. redemption class would not be much” and that this “small very deprived balance, better, on than an ineffective and deprivation meaningless notice or being published posted.” parties, although disputing conclusions, court’s do not the court’s statements as to the dispute the minimal due each absence records or amounts member of the class.2 purported an amendment to correct a defect in the

Following complaint, court certified the class.3 respondent convenience, on considerations of

Resting necessity to further San Jose v. Court attempts justice. (City Superior 447, 12 Cal.3d (1974) 797, 525 P.2d 701]; Daar v. Cal.Rptr. Yellow Cab Co. 67 Cal.2d 433 P.2d Cal.Rptr. However, 732].) because action is also group capable injustice, must show substantial benefit will representative result plaintiff both to and to the court. Court, San Jose v. litigants (City supra, 458-460; Collins v. Rocha 238 [102 1, 497 P.2d 225]; Court (1971) Cal.3d Vasquez Superior 484 P.2d 53 A.L.R.3d As out in pointed Jose, San this actions, court’s of class “despite general support has not been unmindful of the or of accompanying dangers injustice the limited within which these suits beneficial scope serve purposes. Instead, it has admonished trial courts to consistently carefully weigh and benefits burdens and to allow of the maintenance respective where action substantial benefits accrue both to and the only litigants courts. It has also that the same urged [Citations.] procedures facilitating class actions be used to class suits where proper prevent they prove 459; nonbeneficial.” Cal.3d at (12 fn. omitted.) p.

The class action has been held when numerous appropriate parties suffer of insufficient size to warrant individual and when action injury denial of relief would result in to the unjust advantage wrongdoer. Rocha, (Collins 7 Cal.3d 237 et supra, seq.; Vasquez Superior book, 2The trial court calculated the to be overcharge 6 cents approximately per that the sales tax indicating book should have been 9 per cents rather than 15. Assuming that one was issued for each 10 cents of stamp member of purchase, class to plaintiff $20,000 $10 recover would have had to redeem stamps representing purchases. to the trial court’s it 3Subsequent was held that a trial court must rulings, adjudicate issues, class action procedural involved, including determination notification of the classes (Home before it determine a may motion partial Sav. summary judgment. (1976) & Loan Assn. v. Court 208 Superior Cal.App.3d Court, 800, 807; Co., Cal.3d Daar v. Yellow Cab 67 Cal.2d supra, supra, A 715.) factor in determining feasibility group ap is the each member proach will come forward probability ultimately, himself and his. identify claim to a of the total prove separate portion Co., (Daar v. Yellow Cab 695, 706, recovery. 713.) supra, However, when to the individual is small potential and when substantial time and would be distribution, consumed in expense class member is to receive purported benefit. unlikely any appreciable action damage without substantial benefit being unmanageable members, to class it must then be dismissed. re (In Hotel Telephone (9th $6 91-92 Charges (potential recovery per class member); Devidian v. Automotive Service Dealers Assn. 978, 986 $10 (most claims or Cal.App.3d Stilson less); 228] Assn., v. Reader’s Inc. Digest Cal.App.3d (millions of class members entitled to nominal Cal.Rptr. 581] damages).) And, when the individual’s interests are no served longer by group action, the not the then becomes the class principal—if sole—beneficiary To allow this is “to sacrifice the for the attorney. goal going,” if not our crowded courts with burdening actions abusing lacking proper Court, (See San Jose v. purpose. 12 Cal.3d supra, 462.) While termination of a defendant’s is a factor alleged wrongdoing to be considered (Daar Yellow Cab 715), supra, does not warrant action for when the members will not' group damage recover and when a damage, such as mandate is simpler remedy Moreover, available. here, when as the assertedly wrongful prac tice has ended filed, before the action is its long termination is requested rather empty prayer.

Here, in methods of class, to the the proposing lawyers of claims either cash suggest informal payment or by upon presentation “fluid of excess tax by collections recovery,” repayment by reducing However, future the of claim charges. established proof requirement Co., Daar v. Yellow Cab 695, 706, 713, 67 Cal.2d must be followed supra, before a claimant recover when may damages, particularly departure will result in others than those who “fluid recovery by paid. Similarly, in the instant case no correlation between those who recovery” provides tax excess and those who the benefit of a future paid might reap reduction in Those who left California after redeem redemption price. their and those benefit; further, who have died will ing stamps hardly that those still indicates redeeming business in the reduction stamp great the excess who a fraction of those than no more paid represent stamps class, a contrast, benefited excess reimbursement larger In tax. any class. includes the which Balancing of California purported citizenry fairness, remain in not treasury? should public overcharge any its the trial court abused class action and an This is improper one.4 in it as discretion certifying court to vacate its

Writ of mandamus shall issue directing respondent and to enter order the class order dismissing certifying recover their costs. action. Petitioners shall Richardson, J., J., McComb, J., concurred. and C.

Wright, trial court TOBRINER, J. in the conclusion I concur majority’s cannot, I this class an order action. be directed to enter should dismissing however, in the in certain of majority opinion. language join view, far too much upon my places emphasis majority opinion, member, far little too net to each class monetary recovery of the class action the role deterring redressing emphasis upon from each of which exacts dollar A wrongfully wrongdoing. company the class action is will a handsome millions of customers profit; reap (See effective to halt and redress such often exploitation. only way 4 Cal.3d Court (1971) Cal.Rptr. Vasquez Superior Co. 67 Cal.2d Daar v. Yellow Cab P.2d 53 A.L.R.3d 513]; which arise in the 433 P.2d 732].) problems claims do not numerous small action involving management to retain the the defendant that would permit judicial policy justify with that conduct and to continue of its conduct benefits wrongful 715; at Cartt Yellow Cab Daar v. (See p. supra, impunity. Court (1975) Cal.App.3d review final judgment. Delaying have from remedy by appeal 4Petitioners no adequate the unmanage to manage trial court until final attempts judgment—while until after review they obtain mean that the could not appellate able—would parties Thus, appeal which render the damage inappropriate. had costs great paid Witkin, (2d (See ed. Cal. Procedure a final is not a remedy. judgment practical 796, 800, 806-807 3823-3826; (1971) 4 Cal.3d Court cf. [94 pp. Vasquez Moreover, was remedy of another 513].) adequate absence P.2d A.L.R.3d Los City Angeles writ. (E.g., an alternative when we granted this court determined by P.2d Court v. Superior case, however, Blue did not In defendant the Chip Stamps present tax, of sales and terminated from the overcollection profit alleged the action was instituted. before allegedly wrongful practice present case, Moreover, the facts of this neither of claim unusual proof given fluid mechanisms could function as effective nor recovery procedures for the means of class members meaningful affording compensation circumstances, tax. Under these sales alleged overpayments special class suit was improper.

I wish to because the does not particularly emphasize, majority so, fluid mecha- do recovery sufficiently inappropriateness case, here a result of the facts of this and not of nisms is any peculiar inherent in such mechanisms themselves. deficiency

Fluid take either of two forms. The residue of a schemes recovery may class members have filed their individual fund after remaining damages mecha- claims be distributed to class members a market may through would nism.1 second form of fluid grant Alternatively, recovery for use fund to the state some residue of the public damages government with other state residents.2 members along benefitting Plaintiffs here form of fluid first residue of suggest recoveiy. Any contend, fund, should be used to reduce the amount of damages they tax collected in the future from individuals redeeming trading notes, however, As the because of the decline correctly stamps. majority of the there is not of an trading stamps, enough overlap popularity this case between the class of individuals defendant’s conduct injured by who would benefit from distribution of the and the class of individuals fluid the market to render this form of rational fund recovery through class members. means of compensating concluded the Daar in the which ultimately 1This followed settlement approach of, to, settlement There, and superior approved

litigation. parties agreed $950,000 million, $1.4 be returned to the class a reduction of which was to Under the terms of the then maximum authorized fares. taxicab fares below the settlement, existing of Los of Public Utilities Angeles the Board Transportation Comment, (See with the with judgment. was the duty overseeing compliance charged in Consumer Class Actions Calculation Notice Manageability Damage 338, 186.) has been used in a fn. This form of fluid also Mich.L.Rev. (See a rate to customers of a transit action to return overcharge company. litigated (D.C.Cir. 1963) Utilities Commission Bebchick v. Public den., (not L.Ed.2d 83 S.Ct. a class 216], cert. 373 U.S. 913 App.D.C. action).) 1304] Comment, 15; see Distribution 2See 67 Cal.2d at footnote generally Damage page Cy Remedy (1972) Pres 39 U.Chi.L.Rev. 453-458. in Class Actions: The here. also fluid is form of The second recovery inappropriate so small to be without members of class exception claims appear is to claim forward members damages of class likelihood coming any of a result, the residue a the low. As by granting accomplished goal quite action, class since the the is achieved fund to state by denying damages fund. in of the state is overcharge already possession would action at issue inasmuch as the class an unusual one This case is added nor result in serve to deter neither any compensation wrongdoing at least some class for class members. promises Ordinarily, litigation or deterrence. As form of either increased benefit in the compensation Court, at the trial Cal.3d held in we supra, p. Vasquez Superior which a class action would consider both the benefits court must yield or to the defendant to either absent class members unfairness any claims which result from through litigation underlying might trials. This rather than inquiry through separate aggregate procedures not of a common trial of court to only judge consequences requires Court (1974) San Jose of (see, e.g., City Superior liability questions of 525 P.2d 701]; Cal.3d Vasquez Court, of the use of at but also 811-815), supra, pp. if the benefits of which be like fluid necessary might techniques to broad realized. Of are to be only class necessity, subject litigation turn on the restraints, will not the outcome of this constitutional inquiry both the benefits rule: the of significance any general application to the values measured can be of class by looking costs only litigation area In this under which suit is the cause of action reflected in brought.3 law, basis. on a we must case-by-case inevitably proceed Sullivan, J., concurred.

MOSK, J. I dissent. action, the to this

Because of their manifest majority antipathy writ. misuse dangerous sanction extraordinary grave law substantive influence of we acknowledged 3In Daar v. Yellow Cab supra, to be premature mechanisms. Holding of fluid recovery the availability determining under to the state fund revert residue of any damages the state’s that suggestion Proc., 1500-1527), we (Code §§ Civ. Act Uniform of Unclaimed Property Disposition court, the dictates within of the trial lies within the sound discretion noted “[i]t law, will be which further proceedings determine manner any applicable added.) 15.) (Italics (67 conducted.” Cal.2d at fn. p. mistake, the propriety has for analyzing It under the this court adopted is approach actions, a class action whether court to of a trial duty inquire speak 390 of-the far the merits

precedential potential prevailing opinion outweighs of this litigation. reiterate rule of class actions: if majority commonly accepted

it it should be is, dismissed. The “unmanageable,” who question makes the factual determination of the trial court or a manageability, court on a for a writ? reviewing petition this does not to be a

Admittedly cause. If Blue appear sympathetic has collected tax funds it has Chip remitted the improperly, allegedly identical amount to the State of California the Board of through Thus Blue is'not with the brush of Equalization. that Chip painted, greed marked the defendant in Daar v. Yellow Cab Co. 67 (1967) Cal.2d 695 [63 724, 433 P.2d Cal.Rptr. 732].

Nevertheless all of these facts were considered protracted pretrial conducted 1, the trial court. This lawsuit was filed on March hearings 1971. There were in which Blue lengthy discovery proceedings, Chip various and class certification participated fully. During pretrial proceed- no less than 12 Partial ings superior judges presided. summary was in favor of Blue on the first cause of action judgment granted Chip was to as to the second partial summary judgment granted plaintiffs cause of action. two the trial was set for Following years preparation 18, 1975, November 1975. On more than 4 after suit was July years date, filed and before the trial Blue chose approximately to days Chip seek writs of and mandate. The Court of prohibition Appeal properly denied the writs.

This court Babb Court (1971) Cal.3d emphasized Superior 479 P.2d 379], that Cal.Rptr. writs ordinarily prerogative cannot be for review of intermediate of a trial court. employed rulings No was noted for class actions. We reiterated what exception was said in Oceanside Union School Dist. v. Court Superior No manageable. class'action is a court inherently unmanageable; has access to a always variety for techniques, for the costs of example, reducing notice to giving however, class members or for relief. critical is whether the distributing question, unconstitutional, techniques render a class action necessary are manageable or so distort the values a cause of particular action 'is meant to further that class suit would be courts,' Even federal improper. to undertake required rule manageability analysis by Procedure, 23(b)(3) of the Federal Rules of Civil acknowledge character contingent In the (9th case of In re manageability inquiry. leading Hotel Telephone Charges the Ninth Circuit held a class action to be example, after first fluid unmanageable only mechanisms are inconsistent holding 89-90, (See with the 90-92.) reflected in the policies federal antitrust laws. id. at pp. orders, 375, 373 P.2d that where there are “interim 439], a review of the order on must be relegated appeal parties & Tel. discussion in Tel. Co. final see (Also judgment.” Pacific 465 P.2d Court in Babb and related cases is rule from the distilled 854].) analysis discretion, in unusual control a court’s but that a writ cannot be issued to facts, where, can be under the that discretion circumstances a writ will lie exercised in one only way. writ that under the rule

It would seem evident foregoing prerogative in a trial his discretion would not issue to judge exercising prohibit whether or not a class action lawsuit “manageable.” determining Indeed, a trial after numerous is manifestly judge, pretrial proceedings, fact, better to ascertain as a matter of and to qualified manageability therefor, than is a such make project program reviewing determination as a matter of law. in decision as to at the level order to showing required pretrial court,

maintain a action is within the of the and that class discretion trial court’s decision will not be disturbed even on unless the court appeal abuses its discretion. v. Altadena Fed. & Loan Sav. Assn. (Petherbridge 37 199 Eaton v. Ventura Port (1974) 144]; Cal.App.3d Cal.Rptr. [112 Dist. 45 868 (1975) Cal.App.3d Cal.Rptr. [119 The same covers trial decision as to whether the principle judge’s named will of the interests plaintiffs fairly adequately represent class. Sala v. American Sav. & Loan 5 (La Assn. 871 (1971) 849, 489 P.2d Burnham & Vernon v. Drexel Co. 1113]; Cal.Rptr. [97 706, 715, 52 fn. 4 v. Los (1975) 147]; Trotsky Cal.App.3d Cal.Rptr. [125 Fed. Sav. & Loan Assn. 48 134 (1975) Angeles Cal.App.3d Cal.Rptr. [121 Glen, Residents Inc. v. Los 34 637]; (1973) Beverly City Angeles Indian Wells 6 Scott 724]; Cal.App.3d Cal.Rptr. [109 Cal.3d 541 492 P.2d 1137].) It is clear that to maintain a class action the need not plaintiffs establish their As stated court Anthony certainty prevailing. v. General Motors Corp. Cal.App.3d dismissal, when it an “It that it 254], reversed order of is enough appears that evidence in be available when the support plaintiffs’ theory may case to trial.” goes

Refusal of a trial court to dismiss a within was its device,” discretion “to class action was held guard integrity Court (1976) Anthony Cal.App.3d Cal.Rptr. 758].

Federal courts have been more visible in the class action arena than state courts. At three least federal circuit have cases held mandamus is an seek review of trial court decisions to inappropriate procedure or treatment. grant deny

In Gold Strike (10th Christensen Stamp Company the defendant in antitrust class action a writ of mandamus sought a that a trial who had determined class action was against judge had In who ordered notice to class members. appropriate denying writ, the court “We stated (at 792-793): said have that pp. previously of mandamus and are drastic and prohibition extraordinary ‘[w]rits remedies and should be used courts. When used by sparingly appellate court, a trial a there must clear be of abuse of discretion against showing the trial court and the to such relief must clear and by right appear The of whether to allow a suit to undisputable.’ [Citation.] question as a class action is one determination of the proceed primarily trial If case, he the correct criteria to the facts of the judge. applies decision should be considered be to within his discretion. of New City York v. International and Ceramics 410 F.2d 298 (2d Pipe Corp., Cir. 1969).” In Cir. (3d 1971) 438 F.2d Interpace Corporation City Philadelphia of similar, identical, the defendant was faced with two but not class

actions New York The New York court held that a Pennsylvania. class action was but the court ruled that a inappropriate, Pennsylvania class action could then The defendant a writ of proceed. sought mandamus circuit to from the court to compel Pennsylvania writ, vacate its order. circuit court denied the that “not noting eveiy order which is not be reviewed appealable may immediately by mandamus, even is abuse discretion and that “a though charged,” Court of not undertake a de novo evaluation the record may Appeals and itself function which is committed to the exercise discretionary trial court.” “at (Id., 403.) at defendant that p. argued length failed to to establish the respondents maintaining prerequisites action,” but held the court that “this not a argument type proper matter for consideration of mandamus.” by way U.S.C. (28 1292(b)), § an interlocutory appeal permitting Although Cir. 496 F.2d (3d Katz v. Carte Blanche court in Corporation review of class treatment of mandamus assumed the impropriety acts action order outside its “If the court in decisions: entering safe or in procedural disregard appropriate jurisdiction [citations] if mandamus. But the order be reviewable [citation], may guards court has acted within its jurisdiction pursuant appropriate procedural manner, mandamus will not lie. and in a non-arbitraiy safeguards Life 472 F.2d American Insurance v. Continental Solomon 626; . 455 at . . F.2d Cir. Hackett General Host 1973); 1046 (3d Corp. International, Inc. v. Watchers Watchers of Weight Weight Philadelphia Inc., 1972); Cir. (2d Interpace Corp. In 1971).” F.2d (3d describing

Philadelphia, declared, review, the district Katz court standard “[i]f appellate case, it is fair to the facts of the then the correct criteria court has applied at (Id. we to its exercise of discretion.” will defer ordinarily say 756-757.) pp. have review federal courts in normal

Even consistently appellate to the of trial court decisions relating discretionary quality respected Stores, Cir. 1974) v. Inc. (9th of class actions. Lucky Price propriety 1177, 1179, limited was from district court which F.2d an ruling appeal class an the relief available of suing employer injunctive plaintiffs Act (42 title VII of Civil of 1964 and a union for violations of Rights 2000e et The court held that a action determination U.S.C. § seq.). “As was stated in is within trial court’s considered discretion: City v. 410 F.2d New York International and Ceramics Pipe Corp., Cir. ‘the trial should be (2d 1969), given judgment discretion, if he ... has and the broadest particularly greatest respect This is so because the canvassed factual litigation.’ aspects the most fair and efficient district court is in the best consider position Such a determination by any given litigation. procedure conducting will on unless the court not be disturbed challenging party appeal Bank of Kansas Wilcox v. Commerce of discretion. can show abuse Beecher, 725 (1st 459 F.2d Cir. Castro 1973); 474 F.2d 336 (10th City, (3d 1972); 455 F.2d 618 Cir. Host Cir. Hackett General 1972); Corp., & Ceramic New York v. International supra.” Corp., Pipe United States Bermudez v. rule is This also Department recognized 150]; F.2d 1973) Cir. (D.C. App.D.C. Agriculture Deal., Inc. Cir. (5th 1975) Assn. & Inc. National Sec. Shumate Cir. 147, 155; (3d 1975) Mutual Insurance Co. Wetzel v. 509 F.2d Liberty 239, 245; 508 F.2d Kamm v. (9th City Development Company California 205, 210; Cir. 1975) v. Electric Hose & Rubber Rutledge 668, 673; (9th Moore, F.2d see also 3B Company Federal Practice ed. (2d 1969) 23.50. ¶ of a vast and

Unquestionably management complicated ais difficult and administrative task for a trial court. legal It would be understandable if even the most skillful and conscientious trial judge were to resolve doubts the maintenance of a class against action. But determines, once a trial court after appropriate pretrial proceedings, a class action is and that it is I fail to see appropriate manageable, for a court to itself before trial justification the heroic reviewing inject means of a writ to the matter from heard. If prerogative prevent being the trial court erred an is an for the appeal adequate remedy aggrieved party. have issued a cordial invitation to to seek a majority litigants writ in courts whenever a trial court exercises its

prerogative appellate discretion court, to their contentions. As this and Courts of contrary become inundated orders, with writ Appeal, petitions interlocutory we will rue this and the havoc inflicted the rule of Babb and day upon Oceanside.

I would the writ. deny real in interest and Daar for petition parties Botney Mosk, J., was denied December 1976. was of the rehearing opinion should be petition granted.

Case Details

Case Name: Blue Chip Stamps v. Superior Court

Court Name: California Supreme Court

Date Published: Nov 30, 1976

Citation: 556 P.2d 755

Docket Number: L.A. 30530

Court Abbreviation: Cal.