The above-captioned case is a class action brought by an individual user of the Pennsylvania Turnpike, on his own behalf and on behalf of all others who have in the past or will in the future purchase food, gasoline, motor fuel and
“Rule 2230. Class Actions
“(a) If persons constituting a class are so numerous as to make it impracticable to join all as parties, any one or more of them who will adequately represent the interest of all may sue or be sued on behalf of all, but the judgment entered in such action shall not impose personal liability upon anyone not a party thereto.
“(b) An action brought on behalf of a class shall not be dismissed, discontinued, or compromised nor shall a voluntary nonsuit be entered therein without the approval of the court in which the action is pending.” Adopted June 7, 1940. Eff. Feb. 5,1941.
“Note: This subdivision adopts the practice under Pennsylvania equity rule 16 and F. R. C. P. No. 23(a) [28 U.S.C.A.] in providing for a class suit where the members of a class are so numerous as to make it impractical to join all parties.”
Recently, in McMonagle v. Allstate Insurance Company, 227 Pa. Superior Ct. 205 (1974), the majority of the members of our Superior Court expressed the view that Pennsylvania courts should give persuasive effect to the Federal law under the present Rule 23, even though it was substantially changed in 1966. Therefore, we look to Rule 23 and Federal class action cases decided thereunder for guidance in deciding whether the instant action should be permitted to proceed as a class action. Rule 23 provides:
“Rule 23. Class Actions
“(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
“(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
“(1) the prosecution of separate actions by or against individual members of the class would create a risk of
“(A) inconsistent or varying adjudications with respect to individual members of the class which
“(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
“(2) 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; or
“(3) the court finds that the questions 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 matters 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 action.
“(c) Determination by Order Whether Class Action to be Maintained; Notice; Judgment; Actions Conducted Partially as Class Actions.
“(1) As soon as practicable after the commencement oi an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be condi
“(2) In any class action maintained under subdivision (b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all mémbers who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude him from the class if he so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if he desires, enter an appearance through his counsel.
“(3) The judgment in an action maintained as a class action under subdivision (b)(1) or (b)(2), whether or not favorable to the class, shall include and describe those whom the court finds to be members of the class. The judgment in an action maintained as a class action under subdivision (b)(3), whether or not favorable to the class, shall include and specify or describe those to whom the notice provided in subdivision (c)(2) was directed, and who have not requested exclusion, and whom the court finds to be members of the class.
“(4) When appropriate (A) an action may be brought or maintained as a class action with respect to particular issues, or (B) a class may be divided into subclasses and each subclass treated as a class, and the provisions of this rule shall then be construed and applied accordingly.
“(d) Orders in Conduct of Actions. In the conduct of actions to which this rule applies, the court may make appropriate orders: (1) determining the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument; (2) requiring, for the protection of the members of the class or otherwise for the fair
“(e) Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.” As amended February 28, 1966, effective July 1, 1966.
In order for the court to properly decide whether to permit this litigation to proceed as a class action, we ordered plaintiffs and defendants to file memoranda of law and fact with reference to legal authority and factual documentation concerning:
(a) The approximate size of the class which he seeks to represent and how that size was determined;
(b) How many of these persons can be identified through reasonable efforts;
(c) How identified class members are to be notified at each point in the progress of this litigation;
(d) How members who are not capable of identification are to be notified at each point in the progress of this litigation;
(e) The approximate costs of notice and communi
(f) The specific items or products and services involved in the alleged overcharges;
(g) How the plaintiff intends to prove the alleged overcharges, and problems in connection therewith;
(h) An approximation of how much in damages might reasonably be expected to be proved in relation to the class as a whole;
(i) An approximation of the number of members of the class who would be expected to file claims;
(j) An approximation of how much in damages would be expected to be proved by the class members who file claims;
(k) If damages are computed on a class level, and if a lesser sum is actually claimed by class members, how the residue is to be dealt with;
(l) An itemization of the costs which the plaintiff can reasonably be expected to incur, including attorney fees and the costs of notice;
(m) How inquiries from, and communications with members of the class would be handled;
(n) Whether subclasses should be established and the potential membership of each recommended subclass;
(o) If there are subclasses established, whether the cause of action against the various defendants should be severed in any way.
The questions propounded by the court relate to manageability, and are directed at four main areas of inquiry:
(1) the size of the class; (2) the form of notice to the class; (3) how damages are to be calculated and distributed; (4) the likelihood that members of the class will actually recover alleged damages.
Plaintiffs in their memorandum were not able to
We do know, however, that during the six year period approximately 279,187,000 gallons of gasoline alone were sold by the oil company defendants. An Exxon employe estimated that the average turnpike gasoline purchase was 11.5 gallons. That would mean that there were approximately 24,277,000 gasoline purchases during the six years. For the same period, it is estimated that there were 70 million sales transactions at the 26 restaurants on the turnpike, with gross receipts totalling $83,608,000. From these large figures, indicating that there were millions of transactions at defendants’ turnpike facilities, it must be concluded that the purchasers of food and automotive goods and services likewise number in the millions.
From the outset of the hearings in this matter, this court recognized that allowing this suit to proceed as a class action on behalf of such an immense group of people might pose serious constitutional problems with reference to notice, and proof and distribution of damages; and might prove unduly burdensome for the court. However, because we are cognizant of the importance of consumer class actions, we deemed it necessary to afford plaintiffs every opportunity to suggest means of going forth with this action which would comport with the requirements of due process.
IDENTIFICATION AND NOTICE TO THE CLASS
The threshold issue that plaintiffs had to resolve was how to identify the users of turnpike facilities so that they can be given notice of the pendency of the action.
In its affirmance of the Second Circuit Court of Appeals decision dismissing a class action on behalf of over two million odd-lot stock purchasers, the United States Supreme Court in Eisen v. Carlisle & Jacquelin, 417 U. S. 156, 40 L. Ed. 2d 732 (1974), made clear that notice in a class action must be designed to fulfill the requirements of due process. That is, . . [t]he means employed must be such as one desirious of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is itself reasonably certain to inform those affected’ Id. at 746-47, citing Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 315, 94 L. Ed. 865, 874 (1950).
The Supreme Court held that under Rule 23(c)(2) individual notice must be sent to all class members who can be identified with reasonable effort: Id. at 748.
Proper notice is no less important in this proposed class action than it would be in an individual action. Since a judgment or settlement of the class action would bind absent class members, thereby divesting those who do not opt out of their right to sue individually, it would be a gross denial of justice to allow the action to proceed without assuring so far as prac
In the instant action, it appears that approximately two-thirds of the purchases of automotive products on the turnpike were cash transactions, and that all of the purchases of food were cash sales. Obviously, there is no way to identify and notify individually these cash customers.
Plaintiffs have indicated that Exxon and Gulf have records of individual credit card transactions. Exxon, however, has asserted that the expense involved in retrieving their own records would be in excess of $2.2 million and would require the labor of 270 persons for a period of one year.
All parties agree that the identity of credit card users cannot be ascertained by the expenditure of “reasonable effort,” and, therefore, that no member of the proposed class (outside of plaintiffs themselves) is capable of identification and individual notification.
In recognition of this fact, plaintiffs have submitted a proposal for notice by publication which would include:
(1) Posting of notice at all entrances and exits of the Pennsylvania Turnpike and in all restaurants and service areas located on the Pennsylvania Turnpike.
(2) Sending of notices to various automobile clubs with a request that they forward the notice to their members.
(3) Sending of notices to various trucking associations with a request that they forward the notice to their members.
(4) Publication of notices in various selected newspapers in Pennsylvania and in certain adjoining States such as New York, New Jersey, Ohio and West Virginia whose residents may be users of the turnpike.
Plaintiffs’ proposals for notice are not adequate because they are not “reasonably certain to inform those affected.” Placards (14 inches by 11 inches as proposed by plaintiffs), at turnpike entrances and exits would not be readily decipherable by persons in motor vehicles and would serve little purpose. Similar notices, posted in adequate numbers, at gas stations and restaurants would provide some notice to future users of turnpike facilities, but would not assure notice to past users.
Plaintiffs did not indicate how many auto clubs and trucking associations exist or how many persons could be notified through such organizations. Moreover, while plaintiffs propose that the notices be supplied to the clubs and associations, no provision is made for distribution of the notices to members except to “request” that such distribution be made. Reliance on the good-will of others to provide notification to the class is completely lacking in certainty and is not to be countenanced.
Radio, television and newspaper advertisements would provide an excellent means of reaching a great number of class members. Again, however, plaintiffs’ proposal is inadequate. The Turnpike Commission estimates that approximately 50 percent of the vehicles using the turnpike are from out-of-State. We can well imagine that travellers from all 50 states as well as from Canada and Mexico and other foreign countries have used and will use the turnpike. Plaintiffs, however, propose only ads in newspapers in Pennsylvania, New Jersey, New York, Ohio and West Virginia. Such limited printed notice could not pos
Similarly, while radio and television are excellent media for the dissemination of notice, the advertisements would have to be widespread, in prime time, and could not be limited to a few public service announcements. Moreover, as we said above, plaintiffs cannot be permitted to base their proposals for notice on the possibility of the gratuitous cooperation of others.
In concluding that the widespread notice as set forth above is required, we are especially mindful of the potentially serious consequences inherent in approving inadequate notice. In Greenfield v. Villager Industries, Inc., 483 F. 2d 824 (3d Cir., 1973), rehear.
“This was insufficient notice under any standard of fairness, justice, or due process; it flew in the face of the specific terms of ‘the best notice practicable’ rule; it contravened plaintiffs’ stated representation to use individual notice insofar as possible; and it constituted such a defect to the proceedings in the district court that we will not only reverse the district court’s orders relating to appellants’ requests for extension of time, but we will also vacate the order approving the class action settlement and all orders implementing the settlement”: Id. at 830-31.
Citing Mullane v. Central Hanover Bank & Trust Co., supra, the court further said that “constitutionally mandated notice which is inadequate under the circumstances may be as fatal to due process as no notice at all. Moreover, pro forma gestures will not suffice”: Id. at 834.
We think that in the instant case, plaintiffs’ proposals for notice amount to mere “pro forma gestures.”
Another problem arises with respect to who must bear the cost of notice. In their memorandum, plaintiffs assert that “the cost of notice should be borne
In the instant case, even though much of the notice proposed by plaintiffs is not costly, they have given no indication that they would be willing to pay even those minimal amounts, let alone bear the expense of individual notice
Clearly, none of plaintiffs’ proposals relating to notice are adequate to support the maintenance of a class action.
PROOF AND DISTRIBUTION OF DAMAGES
We turn now to plaintiffs’ proposals for proof and distribution of damages. It must be stressed initially that in determining whether a class action can be
Plaintiff has proposed that the principle of “fluid class recovery” be utilized to prove his claims. In the context of this case, such a recovery would involve a determination of damages at the class level, that is, by computation of total overcharges, with recoveries to class members who can prove their damages, the remainder to be distributed to or be used for the benefit of the class as a whole. Plaintiffs suggest that any residue might be used to reduce gasoline prices on the turnpike or to reduce tolls.
Much of the support for the fluid class recovery came from the Second Judicial Circuit. However, the Court of Appeals for the Second Circuit in Eisen v. Carlisle & Jacquelin, 479 F. 2d 1005, 1018 (1973), emphatically held that the fluid class recovery procedure constituted- “an unconstitutional violation of the requirement of due process of law.” The Supreme Court, in affirming the decision of the Court of Appeals, did not consider the issue: 40 L. Ed. 2d at 745-46, n. 10.
We agree with defendants that the fluid class recovery cannot be used in the instant action to distribute damages. Because the class of persons using the turnpike is constantly changing, benefits conferred
An evaluation of plaintiffs’ memorandum leads to the conclusion that it is unlikely that any such formula can be derived.
Plaintiffs give no information at all concerning the proof of food overcharges except to say that “defendant Howard Johnson’s charges more per pound for its hamburger on the turnpike than it does off the turnpike.” No information is given concerning how plaintiffs propose to compare quality of food, size of portions, type of service and decor.
Howard Johnson’s has indicated that the 26 restaurants it operates on the turnpike vary in size and type of service offered. Fifteen are combination dining room, counter operations; eight offer only counter service; two are combination cafeteria, snack bars; and one is a combination dining room, snack bar and cafeteria. Though menus at all these facilities are nearly identical, they change about four times per year.
While comparing the food at turnpike Howard
With respect to gasoline prices, the situation is not much better. Plaintiffs presently have monthly volume sales of the defendant oil companies for each of their service stations on the turnpike. The prices charged by these defendants were uniform and changed infrequently. Thus, the prices charged by the oil companies for gasoline on the turnpike is readily ascertainable. However, as set forth by plaintiffs themselves: “The prices charged off the turnpike undoubtedly fluctuated more than those on the turnpike, and undoubtedly varied from station to station.” Plaintiffs hope to rely
We are unable to comprehend how a formula for calculating'overcharges at the Brandywine station for the survey period is to be derived from such information, let alone how such a calculation is to be related to alleged overcharges at other stations. The calculation of medium and mean costs would result in different rates of overcharge. If the highest off-turnpike price were used as a base, no overcharge would be established at all. Furthermore, as with the food, each person who had bought gasoline would be required to present evidence of damages.
The United States District Court for the Northern District of Illinois was faced with a not dissimilar situation in Boshes v. General Motors Corporation, 59 F. R. D. 589 (N.D. Ill., 1973). In that case, plaintiff sought certification of a class involving between 30 and 40 million purchasers of General Motors automobiles between 1965 and 1968, alleging violations of anti-trust laws. In denying class certification, the court said:
“Although plaintiffs might prove monopolization and price-fixing, they must also prove that they suffered damages and, with some reasonable degree of certainty, the extent of the damages.
“ [T] he complexities of individual proof of damages in this case are overwhelming.
“No workable formula has been suggested”: Id. at 600.
A similar set of facts was presented in Ralston v. Volkswagenwerk, A.G., 61 F. R. D. 427 (W.D. Mo., 1973). Plaintiff brought a class action on behalf of approximately 4.5 million purchasers of new Volkswagens, alleging a conspiracy on the part of the manufacturer, importer, distributor and dealers to maintain artificially inflated prices. District Judge Urbom analyzed testimony relating to proof of the existence of a “free market price” for Volkswagens and concluded:
“I can find nothing to indicate that Rule 23 has abrogated the traditional means of measuring individual damages. If damages were to be awarded in this action, they should not be based on speculation or a system of averaging. Rather, the compensation due each individual member of the class must necessarily reflect the damages actually suffered by that party”: Id. at 432-33.
The court in Boshes, supra, recognized the impossibility of managing a class of millions of persons:
“It would place an impossible burden upon any court to provide adequate notice to a proposed class of this size and thereafter to attempt to assemble and classify the transactional material required to identify the particular interest of millions of purchasers over this span of years. The mere prospect of these clerical and administrative problems would be enough to justify a determination of unmanageability”: Id., 59 F. R. D. at 599-600.
In Ralston, supra, the court considered manage
“A recognition that each member of the class would have a right to come into court and give evidence raises staggering problems of logistics. Manageability could not be assured, or even predicted. To afford manageability by impinging upon substantial rights— or duties — to present individualized evidence is not an acceptable goal of a class action”: Id., 61 F. R. D. at 433.
The court’s conclusion in Ralston that the action was unmanageable is especially significant in view of the fact that this court also believes that reliance on a fluid class .recovery to distribute damages is unlawful, and that each consumer must present evidence of his actual damages.
Several other courts which have been asked to certify class actions involving potentially millions of consumers have held such actions to be unmanageable. In Hackett v. General Host Corp., Civil No. 70-364 (E.D. Pa., 1970) unreported, the District Court refused to permit the maintenance of a class action by a retail consumer of bread on her own behalf and on behalf of some 6 million consumers in the Philadelphia area, alleging that seven bread bakeries had violated the Sherman Act. Upon review, the ruling was held to be an unappealable interlocutory order: 455 F. 2d 618 (3d Cir., 1972), cert. denied 407 U. S. 925, 32 L. Ed. 2d 812 (1972). In United Egg Producers v. Bauer International Corp., 312 F. Supp. 319 (S.D.N.Y., 1970), class action certification was denied in a suit on behalf of all consumers of eggs in the United States.
In City of Philadelphia v. American Oil Company, 53 F. R. D. 45 (D.N.J., 1971), private anti-trust class actions were brought against gasoline companies by a taxi company, a contractor, the City of Philadelphia
In McMonagle v. Allstate Insurance Co., 227 Pa. Superior Ct. 205 (1974), our Superior Court affirmed, per curiam, the dismissal of a class action brought in the Court of Common Pleas of Allegheny County on behalf of all Pennsylvania holders of Allstate Insurance Company policies who were not reimbursed under the automobile medical payments provisions of Allstate’s policies after an uninsured motorist award was rendered in favor of each respective insured.
Although class membership was estimated only to be in excess of 500 persons, Superior Court held that the lower court had not abused its discretion in concluding that “ ‘ [t] here would be a great expenditure of time, effort and expense to have all the claims
The complexity and difficulty foreseen in managing the instant case is virtually beyond comparison with the limited problems which could be anticipated in McMonagle. Therefore, it would be no abuse of discretion on our part to hold that the expenditure of judicial resources that would be involved in the litigation of this action would alone render it unmanageable.
Judge Hoffman, dissenting in McMonagle declared:
“Following the federal practice, Pa. R.C.P. 2230 should likewise yield liberal construction and application. While the court may, in appropriate circumstances, weigh the maintainability of the class action against such considerations as judicial economy and efficient administration, such a balancing test should not frustrate and devitalize a procedural tool by which a group, too numerous to make joinder practicable, seeks to ‘redress a common grievance’. This social purpose and the precedential importance of the class action should be paramount to the convenience of our judiciary”: Id. at 233.
Applying this balancing formula, we believe that the administrative problems which would be produced in this action, outweigh its “social purpose.”
Moreover, Judge Hoffman set forth a criterion for the maintenance of a class action which is especially applicable to this case: “In Pennsylvania, a class action . . . will be maintained only where ‘the relief sought by . . . [the class representative] is in its nature beneficial to all those whom he undertakes to represent’ ”: Id. at 231.
In their memorandum, plaintiffs were unable to approximate the number of members of the class who
Although plaintiffs’ conclusion that few persons would file claims might be based at least in part on the unlikelihood that the notice suggested by them would apprise many persons of the pendency of the action, we think that even if adequate notice by publication were given, relatively few persons would submit claims either because they had no way of ascertaining their damages and proving such; or because their recovery would be too small to be worth the effort.
An action brought on behalf of a class of persons which in the end will benefit few if any of them cannot be maintained.
CONCLUSION
In our June 29, 1973, opinion we held that: “With the exception of certain questions concerning manageability, the maintenance of this action as a class action is superior to other methods for the efficient resolution of this controversy.” (See p. 173 supra.)
After careful consideration of the memoranda submitted, we now hold that the action is unmanageable and not maintainable as a class action because:
(1) The proposals for notice set forth by plaintiffs do not satisfy the requirements of due process;
(2) Plaintiffs do not indicate any willingness to bear the costs of proper notice;
(3) Plaintiffs have not suggested any method for
(4) Plaintiffs have not suggested an adequate method of proving gasoline overcharges;
(5) Few class members can be expected to benefit from the maintenance of the action;
(6) Maintenance of this suit as a class action would be overwhelmingly burdensome to the court and would neither promote judicial economy nor the efficient administration of justice.
ORDER
And now, July 16, 1974, it is hereby ordered that the preliminary objections of defendants Howard Johnson’s Inc., Atlantic Richfield Company, Exxon Corporation and Gulf Oil Corporation to the maintenance of the above captioned case as a class action are sustained, and the case is dismissed without prejudice to the continuance of so much of the claim asserted in the complaints as refers to alleged individual rights of Lieberman and the Commonwealth of Pennsylvania against defendants.
Defendants have indicated that one-eighth page notices in the news and sports sections of the New York Times for three days would cost $8,082. Similar ads in the Philadelphia Evening Bulletin would cost $4,983.30; while the charge to place the notice in one section of the Wall Street Journal, National Edition three times would be $8,410.58.
Plaintiffs have tentatively suggested that the oil companies could send notice in their next mailing to their credit card holders. That method would assure notice to all credit-card holders who have used the turnpike in the past and have not relinquished their accounts. However, printing and handling notice forms for all holders of defendant oil companies’ credit cards throughout the United States would undoubtedly be expensive. Moreover, Exxon estimates that it would cost approximately $500,000 for a single mailing to its credit card holders who would not be billed in a particular month.
While this method would provide individual notice to a large number of class members, in view of plaintiffs’ determination not to bear the cost of notice, this suggestion cannot be considered in evaluating the sufficiency of plaintiffs’ proposals for notice.
Similarly, plaintiffs failed to deal with any automotive product sold by the gas companies except gasoline.
Howard Johnson’s, Inc., indicates that a given menu will list approximately 400 separate items for sale.
