743 N.E.2d 416 | Ohio Ct. App. | 2000
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *135
On December 18, 1996, Steven Schwab, for himself and as a representative of a consumer plaintiff class allegedly harmed by AOL's offer and inadequate service capacities, filed suit against AOL in the Cook County Circuit Court in Chicago, Illinois (Circuit Court).1 On January 30, 1997, the Circuit Court certified the suit as a class-action *136 with a national class.2 On February 26, 1997, the Circuit Court approved: (1) the on-line Notice of Pendency of Class Action, with its opt-out provisions; and (2) the Summary Notice of Pendency of Class Action to be published in The Chicago Tribune, The Los Angeles Times, The NewYork Times and USA Today. The Circuit Court expressly found that these forms of notice constituted the best notice practicable under the circumstances and that each constituted valid, due and sufficient notice to all members of the national class.
On January 22, 1997, Michael Fine, Rodney Long and Dan Rambo, for themselves and as the representatives of an Ohio consumer plaintiff class (Ohio class), filed another suit in the Lorain County Court of Common Pleas, rooted in the same facts as theSchwab lawsuit. On February 6, 1997, the Common Pleas Court certified this matter as an Ohio-only class-action. Four days later, the court approved and ordered the appropriate notices to issue.
On April 3, 1997, the Schwab class reached a tentative settlement, subject to court approval. The settlement essentially provided a scheme in which class members were to file claims for a refund and/or credit in exchange for a release of all other state and federal claims relating to AOL's inability to manage the increased demand for service after December 1, 1996.3 Again, the Circuit Court ordered and approved on-line notice.Schwab class members were informed of their right to participate in the proposed settlement, their right to object and, for a second time, their right to exclude themselves from the suit.
On November 20, 1997, the Circuit Court conducted a fairness hearing to consider all objections. Counsel for the Ohio class attended this hearing but did not voice any objections. On February 19, 1998, the Circuit Court issued its final approval of the Schwab settlement, finding it both fair and reasonable.
On April 24, 1998, the Ohio class moved the Common Pleas Court for partial summary judgment on the merits, and six days later, on April 30th, AOL likewise moved for summary judgment, claiming preclusion. After reviewing extensive briefs and hearing oral arguments, on July 28, 1998, the Common Pleas Court (1) *137 granted summary judgment in favor of AOL finding that the settlement reached in the Schwab case precluded the Ohio class' suit, and (2) denied the Ohio class' motion for partial summary judgment. From that order, the Ohio class timely appealed, asserting two assignments of error. For ease of discussion, the second assignment of error will be addressed first.
In order to evaluate the parties' arguments, this Court must (1) examine the terms of the Full Faith and Credit Clause, (2) look to Illinois law to determine whether the Ohio class would be barred from raising its claims in an Illinois lawsuit, and (3) determine whether the Illinois judicial system, specifically the Circuit Court, extended due process to the Schwab class when approving the form of notice employed in that action and finding that the class members were adequately represented.4
In order to determine what "credit" the Illinois courts would have given the Schwab case, this Court must engage in a fiction. This Court must first act as if the Ohio class had filed its lawsuit as a separate Illinois action. Then, this Court must give the Schwab
case the same effect or credit that it would have carried in that second, hypothetical suit in Illinois. If the Ohio class would have been precluded from litigating its claims in that hypothetical suit in Illinois, then under full faith and credit principles, the Ohio class would be precluded from litigating its claims in Ohio.Holzemer,
In the case at bar, AOL has demonstrated that the Schwab
class necessarily included the members of the Ohio class. The Circuit Court in its January 31, 1997 order expressly found the class to include "[a]ll AOL subscribers throughout the United States who were subscribers to AOL on December 1, 1996 or became subscribers on said date or thereafter." AOL has further shown that the underlying claims being made in the Schwab case are the same assertions that the Ohio class seeks to litigate. It is readily apparent from the Circuit Court's final entry in theSchwab action, introduced by AOL, that the underlying facts *139
and circumstances are the same. See Schwab v. AOL, Inc.
(February 19, 1998), Cook C.C. 96 CH 13732, unreported, at 1-2. AOL has also demonstrated that the Circuit Court order approving the Schwab
settlement was on the merits. See Majeske,
Traditionally, a court's judgment is binding on parties only if they were given constitutionally sufficient notice and if the court had both personal and subject matter jurisdiction. In the class-action context, the United States Supreme Court has added the requirement of adequate representation and in actions "predominately" for money damages, an "opt-out" right.Matsushita,
By way of collateral attack upon the procedures approved and employed by the Circuit Court in Schwab, the Ohio class has argued that this Court should not enforce the Circuit Court's judgment in Ohio. Specifically, the Ohio class has *140 challenged the notice of settlement and the adequacy of representation, thereby suggesting that this Court has the authority to directly review these matters for purposes of enforcement in Ohio. AOL, in response, has argued that the Circuit Court provided sufficient notice to all the Schwab and Ohio class members and that it ensured all absent class members adequate representation. In short, the parties have collectively argued that this Court must review the Circuit Court's decision de novo. This Court disagrees.
1. Collateral Review of Procedural Due Process
Modern constitutional jurisprudence requires that the absent class members' rights to due process be protected not by substantive collateral review, but rather by the application of appropriate procedures in the certifying court and by the courts that review its determinations. Epstein v. MCA, Inc. (C.A.9, 1999),
As one commentator recently noted, one of the more troubling features of modern class-action law is the increasing frequency of overlapping litigation, i.e. class-action suits based on common facts or circumstances filed in more than one court. Miller, Full Faith and Credit to Settlements in Overlapping Class Actions (1998), 73 N.Y.U.L.Rev. 1167, 1167. Such cases present a difficult problem of policy because two competing goals are at stake: efficient enforcement of the law, on the one hand, and on the other, respect for independent sovereignty of the jurisdictions in which the various collateral suits are brought.Id. at 1167-1168. Thus, the benefits that attend effective time management and the preservation of judicial resources must be carefully weighed against the concern for individual state sovereignty.
2. Application
Turning to the matter at bar, this Court concludes that the Ohio class members' due process right to collateral review is properly limited to the determination of (1) whether safeguards to guarantee sufficient notice and adequate representation were in place during the prior litigation, and (2) whether such safeguards were applied. Because the answers to both queries return in the affirmative, this Court holds that the Ohio class was afforded due process in the Schwab action.
Under Illinois law, before a circuit court is permitted to certify a class-action, it must find:
(1) The class is so numerous that joinder of all members is impracticable.
(2) There are questions of fact or law common to the class, which common questions predominate over any questions affecting only individual members.
(3) The representative parties will fairly and adequately protect the interest of the class.
(4) The class action is an appropriate method for the fair and efficient adjudication of the controversy.
Carrao v. Health Care Service Corp. (1983),
3. Summary
The United States Supreme Court once stated, "there has been a failure of due process only in those cases where it cannot be said that the procedure adopted, fairly ensures the protection of the interests of absent parties who are to be bound by it."Hansberry v. Lee (1940),
This Court does not reach the Ohio class' first assignment of error. Pursuant to App.R.12(A)(1)(c), this Court declines to address its merits. *145
The Court finds that there were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common Pleas, County of Lorain, to carry this judgment into execution. A certified copy of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period for review shall begin to run. App.R. 22(E).
Costs taxed to Appellants.
Exceptions.
___________________________ BETH WHITMORE
CARR, J., CONCURS.
Upon Court approval of the Settlement becoming final, the [Schwab] Class members shall have fully, finally and forever released all Released Claims against the Released Parties. "Released Claims" means any and all claims, rights, demands, actions, causes of action [and] suits, including unknown claims, whether under Federal law or the laws of any and all states relating in any way to Class members' use of AOL's online service, the manner in which AOL's online service is or has been marketed, promoted, provided or billed to members, or the costs or alleged damages incurred by Class members in connection with being subscribers of AOL or using or attempting to use AOL's online service, from December 1, 1996 until the date of final Court approval[.]
Moreover, assuming arguendo that this Court did enjoy the authority to engage in more than a facial, procedural review of the proceedings in Schwab, it appears that the Ohio class has failed to carry its burden regarding adequate representation. It has advanced nothing more than mere conjecture for the proposition that counsel for the Schwab class were pressured into settlement. Such empty assertions would not be enough to mount a successful constitutional challenge in any event.
Dissenting Opinion
Though admittedly risking a depletion of Ohio's resources, it seems to me that the notice procedures approved in Schwab are not consistent with any real due process analysis.
This is not to say that there might be some compelling reason why individual, written notice could not have been supplied to each AOL subscriber, much in the same way as his monthly bill for the service is presented. Likewise, there may well be some justification for on-line notification. There is no such justification in this case, however, for the fact that such notification was not captioned so as to draw the attention of AOL subscribers in particular. Not only was personal notice not required, there was not even any requirement that the notice icon be titled in such a way as to draw the attention of subscribers. It is hard to imagine any notice being any less likely to draw the attention of a subscriber and give notice thereto than was the procedure followed in this case.
The difference between an on-line notice captioned "Attention AOL Subscribers" and one captioned "AOL RESOLVES class action suit. Learn the details" is the difference between a serious attempt to notify a group of people and one that is ludicrously short of that standard. As such, I respectfully dissent. *146