Stammco, L.L.C. v. United Tel. Co. of Ohio , 125 Ohio St. 3d 91 ( 2010 )

[Cite as Stammco, L.L.C. v. United Tel. Co. of Ohio, 125 Ohio St.3d 91, 2010-Ohio-1042.]
STAMMCO, L.L.C., D.B.A. THE POP SHOP, ET AL., APPELLEES, v. UNITED
TELEPHONE COMPANY OF OHIO, D.B.A. SPRINT, ET AL., APPELLANTS.
[Cite as Stammco, L.L.C. v. United Tel. Co. of Ohio,
125 Ohio St.3d 91, 2010-Ohio-1042.]
Civ.R. 23 — Class-action certification — Class-action definition certified by trial
court does not allow class members to be readily identified.
(No. 2008-1822 — Submitted October 21, 2009 — Decided March 24, 2010.)
APPEAL from the Court of Appeals for Fulton County,
No. F-07-024, 2008-Ohio-3845.
__________________
LANZINGER, J.
{¶ 1} We accepted this discretionary appeal to consider two propositions
concerning the definition of a class for purposes of a class action under Civ.R. 23.
Appellants, United Telephone Company of Ohio and Sprint Nextel Corporation,
ask us to hold that the trial court’s class certification is improper under Civ.R. 23
and that the case cannot be maintained as a class action. Because the class
definition does not allow the class members to be readily identified, we reverse
the court of appeals’ judgment and remand the case to the trial court so that it may
clarify the class definition.
Case Background
{¶ 2} In June 2005, appellees, Stammco, L.L.C., d.b.a. The Pop Shop
(“Stammco”), and its owners, Kent and Carrie Stamm, filed a complaint on behalf
of themselves and all others similarly situated against United Telephone Company
of Ohio, d.b.a. Sprint (“UTO”), and the Sprint Nextel Corporation (“Sprint”), who
provided appellees with local and long-distance phone service. The complaint
alleged that Stammco and other customers of UTO and Sprint had been damaged
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by appellants’ negligent acts and billing practices. Specifically, appellees alleged
that UTO and Sprint had engaged in the practice of “cramming,” or causing
unauthorized charges to be placed on their customers’ telephone bills. Appellees
highlighted one incident, in which charges from a third party, Bizopia, appeared
on Stammco’s phone bill. Although Bizopia claimed that it had secured from a
Stammco employee authorization to charge fees on the bill, Stammco claimed that
the employee had explicitly told Bizopia that he did not have the authority to
authorize such charges.
{¶ 3} Pursuant to Civ.R. 23, appellees filed a motion for certification of
the following class: “All individuals, businesses or other entities in the State of
Ohio who are or who were within the past four years, subscribers to local
telephone service from United Telephone Company of Ohio d.b.a. Sprint and who
were billed for charges on their local telephone bills by Sprint on behalf of third
parties without their permission. Excluded from this class are defendants, their
affiliates (including parents, subsidiaries, predecessors, successors, and any other
entity or its affiliate which has a controlling interest), their current, former, and
future employees, officers, directors, partners, members, indemnities, agents,
attorneys and employees and their assigns and successors.” The trial court
granted the motion for class certification, named the Stamms and Stammco class
representatives, and designated their counsel as counsel for the class.
{¶ 4} UTO and Sprint appealed the order certifying the class, asserting in
part that the trial court failed to carefully apply the requirements for class
certification under Civ.R. 23 and that, as a matter of law, no class could ever
properly be certified based upon appellees’ claims. After applying the factors in
Civ.R. 23(A) and the four factors in Civ.R. 23(B)(3), the court of appeals held
that the trial court had not abused its discretion in sustaining the motion to certify
the class.
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{¶ 5} After initially declining jurisdiction, Stammco, L.L.C. v. United
Tel. Co. of Ohio, 120 Ohio St.3d 1488, 2009-Ohio-278, 900 N.E.2d 198, this
court granted appellants’ motion to reconsider and accepted discretionary
jurisdiction over appellants’ two propositions of law. Stammco, L.L.C. v. United
Tel. Co. of Ohio, 121 Ohio St.3d 1430, 2009-Ohio-1296, 903 N.E.2d 327. The
first states, “A plaintiff cannot define the class to include only individuals who
were actually harmed.” The second states, “A class action cannot be maintained
when only some class members have been injured.”
Legal Analysis
{¶ 6} Civ.R. 23 sets forth the requirements for maintaining a class
action. We have noted that there are seven requirements for a class action to be
maintained under this rule: “(1) an identifiable class must exist and the definition
of the class must be unambiguous; (2) the named representatives must be
members of the class; (3) the class must be so numerous that joinder of all
members is impracticable; (4) there must be questions of law or fact common to
the class; (5) the claims or defenses of the representative parties must be typical of
the claims or defenses of the class; (6) the representative parties must fairly and
adequately protect the interests of the class; and (7) one of the three Civ.R. 23(B)
requirements must be met.” Hamilton v. Ohio Sav. Bank (1998), 82 Ohio St.3d
67, 71, 694 N.E.2d 442, citing Civ.R. 23(A) and (B) and Warner v. Waste Mgt.,
Inc. (1988), 36 Ohio St. 3d 91, 521 N.E.2d 1091.
{¶ 7} In the present case, the trial judge and court of appeals determined
that the class was proper under Civ.R. 23(B)(3), which provides that a class action
may be maintained when “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.” However, we
have held that “[a]n identifiable class must exist before certification is
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permissible. The definition of the class must be unambiguous.” Warner v. Waste
Mgt., Inc., 36 Ohio St.3d 91, 521 N.E.2d 1091, paragraph two of the syllabus.
“‘[T]he requirement that there be a class will not be deemed satisfied unless the
description of it is sufficiently definite so that it is administratively feasible for the
court to determine whether a particular individual is a member.’ 7A Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure (2d
Ed.1986) 120-121, Section 1760. Thus, the class definition must be precise
enough ‘to permit identification within a reasonable effort.’ ” Hamilton v. Ohio
Sav. Bank, 82 Ohio St.3d at 71-72, 694 N.E.2d 442, quoting Warner v. Waste
Mgt. at 96.
{¶ 8} In Warner, the plaintiffs filed a lawsuit in response to alleged
activities in and around a dump site by the defendants, including Waste
Management, Inc. The trial court certified a class consisting of people who
“lived, worked, resided or owned real property within a five-mile radius of the
Waste Management * * * site.” Id. at 93. We held that a class defined to include
all people who had ever worked within five miles of a specific site did not permit
identification of its members with a reasonable effort and that the trial court had
abused its discretion in certifying a class whose members were not readily
identifiable. Id. at 96.
{¶ 9} On the other hand, in Hamilton, the trial court had denied
plaintiffs’ motion seeking certification of a class and subclasses consisting of
mortgagors on whose residential loans Ohio Savings Bank calculated interest
according to a certain method. Hamilton, 82 Ohio St.3d at 69, 72, 694 N.E.2d
442. We held that an identifiable class existed because the trial court needed only
to look at the actions or practices of Ohio Savings Bank to determine whether an
individual was a member of the class or subclasses. Id. at 73. We rejected Ohio
Savings Bank’s argument that the trial court would be required to conduct an
individual inquiry into each prospective member’s knowledge or understanding of
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the method for calculating interest before ascertaining whether each person was a
member of the proposed class. Because the bank was able to identify prospective
class members with a reasonable effort, we concluded that there was an
identifiable class. Id. at 72-73.
{¶ 10} In the case now before us, the class certified by the trial court does
not have readily identifiable members and fails to meet the first requirement of
Civ.R. 23—that its definition be unambiguous. The class definition includes
customers who “were billed for charges on their local telephone bills by Sprint on
behalf of third parties without their permission.” This definition does not specify
whether the customers were expected to give Sprint or the third parties
authorization for billing, or whether the third parties were expected to obtain
authorization from the customers for charges on the bill. In addition, in the phrase
“their permission” in the class definition, it is unclear who the word “their” refers
to. While one might assume that the word “their” refers to customers, it could be
read to refer to either customers or third parties. Nor is it clear how authorization
was to be accomplished—that is, whether written, verbal, or any other form of
permission was necessary to authorize billing, and to whom it should be given,
whether directly to Sprint or to the third party. Because the definition is
ambiguous, we are unable to rule on appellants’ objections to the class as
currently defined.
{¶ 11} Furthermore, unlike in Hamilton, the trial court cannot readily
identify prospective class members. In Hamilton, the court needed only to review
the bank’s records to determine whether a person was a member of the class.
Here, however, the court must determine individually whether and how each
prospective class member had authorized third-party charges on his or her phone
bill. The trial court must examine testimony by the person claiming to be a
member of the class and what most likely will be conflicting testimony by Sprint
or the third party. For example, the court must determine whether Stammco’s
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employee had authority to authorize Bizopia’s charges and whether the employee
actually did so. Unlike the class in Hamilton, the class here cannot be ascertained
merely by looking at appellants’ records. While it appears that the class is
intended to consist only of customers who received unauthorized charges, the
class definition prevents the class members from being identified without
expending more than a reasonable effort. We conclude that a class action cannot
be maintained under Civ.R. 23 using the class definition as stated and that the trial
court abused its discretion in certifying the class as so defined.
{¶ 12} Rather than attempt to redefine the class ourselves, we remand the
case to the trial court to do so, for two reasons. First, the parties did not have the
opportunity to present and argue the merits of alternative class definitions in their
briefs before us. Second, the trial judge who conducts the class action and
manages the case must be allowed to craft the definition with the parties. See
Marks v. C.P. Chem. Co., Inc. (1987), 31 Ohio St.3d 200, 201, 31 OBR 398, 509
N.E.2d 1249 (“A trial court which routinely handles case-management problems
is in the best position to analyze the difficulties which can be anticipated in
litigation of class actions. It is at the trial level that decisions as to class definition
and the scope of questions to be treated as class issues should be made”). In
Marks, we noted that “[e]ven if the appellate court does find an abuse of
discretion, it should not proceed to formulate the class or issue itself.” Id. We
thus conclude that it is proper for the trial court to redefine the class on remand.
{¶ 13} Because we remand the case to the trial court to clarify and
complete the class definition, we do not reach appellants’ arguments that the class
is a fail-safe class, that individualized issues predominate the class, that the class
is unmanageable, and that a class action is not suitable for the issues present in
this case.
Conclusion
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{¶ 14} We hold that the class certified by the trial court as presently
defined does not permit its members to be identified with a reasonable effort. We
therefore reverse the judgment and remand the cause to the trial court so that it
may clarify the class definition in a manner consistent with this opinion.
Judgment reversed
and cause remanded.
LUNDBERG STRATTON, O’CONNOR, and O’DONNELL, JJ., concur.
MOYER, C.J., and CUPP, J., concur in part and dissent in part.
PFEIFER, J., dissents and would affirm the judgment of the court of
appeals.
__________________
MOYER, C.J., concurring in part and dissenting in part.
Introduction
{¶ 15} I agree with the majority that the class definition in this case is
ambiguous and that the matter should be remanded in order that the trial court
may redefine the class. Therefore I concur in that portion of the majority opinion.
But I do not completely agree with the analysis used by the majority in reaching
that determination because the majority strays into issues of predominance and
superiority. Therefore, I dissent from that portion of the majority opinion.
{¶ 16} In addition, I dissent from the majority opinion because I would
address the appellants’ propositions of law. When the trial court redefines the
class on remand, the court and the parties would benefit from a ruling on the
issues raised in the propositions of law. Judicial economy would be served by
determining these issues now, rather than allowing the issues to lurk on remand
and resurface in a new appeal.
{¶ 17} I would hold that the class in this case was ambiguously defined,
but was not otherwise improper. The trial court did not abuse its discretion when
it determined that classwide issues are predominant in this case.
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Law and Analysis
The class definition is ambiguous
{¶ 18} To properly establish a class under Civ.R. 23(A), the definition
must define an identifiable group of persons in unambiguous terms. Warner v.
Waste Mgt. Inc. (1988), 36 Ohio St.3d 91, 96, 521 N.E.2d 1091. “ ‘The test is
whether the means is specified at the time of certification to determine whether a
particular individual is a member of the class.’ ” Hamilton v. Ohio Sav. Bank
(1998), 82 Ohio St.3d 67, 73, 694 N.E.2d 442, quoting Planned Parenthood Assn.
of Cincinnati, Inc. v. Project Jericho (1990), 52 Ohio St.3d 56, 63, 556 N.E.2d
157.
{¶ 19} The class in this case is defined as follows: “All individuals,
businesses or other entities in the State of Ohio who are or who were within the
past four years, subscribers to local telephone service from United Telephone
Company of Ohio d.b.a. Sprint who were billed for charges on their local
telephone bills by Sprint on behalf of third parties without their permission.
Excluded from this class are defendants, their affiliates (including parents,
subsidiaries, predecessors, successors, and any other entity or its affiliate which
has a controlling interest), their current, former, and future employees, officers,
directors, partners, members, indemnities, agents, attorneys and employees and
their assigns and successors.”
{¶ 20} I agree that the class definition is ambiguous. The phrase “without
their permission” is unclear. We cannot discern whether the customers/plaintiffs
should have given permission to United Telephone Company of Ohio, d.b.a.
Sprint, or to the third parties for the charges, and what form that permission
should have taken. Thus, the definition fails to unambiguously specify the criteria
by which to determine whether a particular person is a member of the class. I
concur in that portion of the majority opinion. As an appellate court, we should
refrain from endeavoring to define the class; that responsibility rests with the trial
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court. Marks v. C.P. Chem. Co. (1987), 31 Ohio St.3d 200, 201, 31 OBR 398,
509 N.E.2d 1249. Therefore, I agree that the matter should be remanded to the
trial court.
The determination of ambiguity under Civ.R. 23(A) should not be confused with
the determination of the predominance of classwide issues and the superiority of a
class action under Civ.R. 23(B)(3)
{¶ 21} In analyzing whether the class definition is ambiguous, the
majority improperly includes issues relating to predominance and superiority
under Civ.R. 23(B)(3). In particular, the majority explains that the class
definition is ambiguous because, among other reasons, the trial court cannot
“readily identify” class members. The majority states: “[T]he trial court cannot
readily identify prospective class members. * * * Here, * * * the trial court must
determine individually whether and how each prospective class member had
authorized third-party charges on his or her phone bill. The trial court must
examine testimony by the person claiming to be a member of the class and what
most likely will be conflicting testimony by Sprint or the third party.”1 Majority
opinion at ¶ 11.
{¶ 22} We have held that a class must be identifiable with “reasonable
effort” and that an amorphous class is not “readily identifiable.” Warner v. Waste
Mgt., 36 Ohio St.3d at 96, 521 N.E.2d 1091. For example, “[c]lasses such as ‘all
people active in the peace movement,’ ‘all people who have been or may be
harassed by the police’ and ‘all poor people,’ are too amorphous to permit
identification within a reasonable effort and thus may not be certified.” Id. The
focus is on the definition itself—whether it is so abstract that it defies utilization.
1. This analysis closely mirrors the predominance analysis in Brown v. SBC Communications,
Inc. (Feb. 4, 2009), S.D.Ill.. No. 05-cv-777-JPG, 2009 WL 260770. When determining whether
questions common to the class predominated over individual questions, the court in Brown found,
“[T]he Court will need to make individual determinations as to whether each proposed class
member authorized the charges for which he was billed by defendants. The result will be multiple
mini-trials, each requiring individual proofs.” Id. at *3.
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{¶ 23} Yet according to the majority’s analysis of the issue, the trial court
cannot “readily identify” class members if there are differing facts and legal
issues among them.
{¶ 24} In Hamilton, we rejected a similar argument: “[E]ven when a class
is appropriately defined by reference to defendant’s conduct, it is nevertheless
indefinite if separate adjudications are likely required to finally determine the
action.” Hamilton, 82 Ohio St.3d at 73, 694 N.E.2d 442. “The focus at this stage
is on how the class is defined. ‘The test is whether the means is specified at the
time of certification to determine whether a particular individual is a member of
the class.’ Planned Parenthood Assn. of Cincinnati, Inc. v. Project Jericho
(1990), 52 Ohio St.3d 56, 63, 556 N.E.2d 157, 165. The question as to whether
there are differing factual and legal issues ‘do[es] not enter into the analysis until
the court begins to consider the Civ.R. 23(B)(3) requirement of predominance and
superiority.’ Marks, supra, 31 Ohio St.3d at 202, 31 OBR at 400, 509 N.E.2d at
1253.” Hamilton at 73. In Planned Parenthood Assn. v. Project Jericho, we
explained that “[t]he fact that members may be added or dropped during the
course of the action is not controlling. The test is whether the means is specified
at the time of certification to determine whether a particular individual is a
member of the class.” 52 Ohio St.3d at 63, 556 N.E.2d 157.
{¶ 25} Thus, we have already rejected an analysis that blends Civ.R.
23(A) concepts, such as a readily identifiable class, with Civ.R. 23(B)(3)
considerations, such as the predominance of individualized issues. Yet the
majority’s decision today blurs the line by injecting issues relating to
predominance and superiority under Civ.R. 23(B)(3) into the analysis of whether
the class definition is readily identifiable under Civ.R. 23(A). This is no small
point. The majority’s analysis will not help the trial court to define the class on
remand, nor will it help clarify the law regarding class actions. Instead, courts
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may be caused to question whether our holding represents a new development in
the law.
{¶ 26} In this case, class definition provided means to determine the class,
which would have sufficed, were it not for the ambiguity. In order to determine
class membership, the trial court would need to determine whether a putative
class member (1) received a bill from United Telephone, (2) was assessed for
third-party charges on that bill, (3) did not give appropriate authorization for the
placement of those charges on that bill, and (4) is not among the exempted
entities. The ambiguity lies in the phrase “without their permission”; the trial
court lacks a method to determine the form and manner that the permission should
have taken. But once that method is clarified, the trial court will possess
sufficient means for determining class membership from the class definition.
The trial court did not abuse its discretion when it found that classwide questions
of law and fact predominate
{¶ 27} Appellants contend in their second proposition of law that the class
was improper under Civ.R. 23(B)(3) because of the predominance of issues
affecting only individual members of the class.2 Appellants argue that the class
cannot be maintained, because the validity of third-party charges would have to
be determined on an individualized, case-by-case basis. I would address this
proposition of law and hold that the trial court did not abuse its discretion in
determining that classwide questions predominate. The four federal court cases
that appellants cite do not persuade me otherwise.
{¶ 28} Appellants’ second proposition of law asks us to apply the long-
settled law controlling class certification.
2. Appellants also assert in their merit brief that the class action is not manageable and is not
superior to other methods of resolving disputes. However, these issues were not raised in the
memorandum seeking jurisdiction or the motion for reconsideration and are therefore outside the
scope of the propositions of law that we accepted for review.
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{¶ 29} A trial court must “find[] that the questions of law or fact common
to the members of the class predominate over any questions affecting only
individual members” before it certifies a class under Civ.R. 23(B)(3).
{¶ 30} We have held that “[t]he mere existence of different facts
associated with the various members of a proposed class is not by itself a bar to
certification of that class. If it were, then a great majority of motions for class
certification would be denied. Civ.R. 23(B)(3) gives leeway in this regard and
permits class certification where there are facts common to the class members.”
In re Consol. Mtge. Satisfaction Cases, 97 Ohio St.3d 465, 2002-Ohio-6720, 780
N.E.2d 556, ¶ 10.
{¶ 31} This case presents the type of claims appropriate for class-action
treatment because it includes common questions regarding significant aspects of
the case which “arise from standardized forms or routinized procedures.”
Hamilton, 82 Ohio St.3d at 84, 694 N.E.2d 442. As the court of appeals correctly
observed, this case will require significant individualized determinations, but the
majority of those determinations as well as classwide determinations can be made
by examining appellants’ computerized records.
{¶ 32} We have consistently held that a trial court has discretion in
determining whether to certify a class under Civ.R. 23 and that that determination
will not be overturned absent an abuse of discretion. “[A] trial judge is given
broad discretion when deciding whether to certify a class action. * * * Moreover,
‘absent a showing of abuse of discretion, a trial court's determination as to class
certification will not be disturbed.’ [Schmidt v. Avco Corp. (1984), 15 Ohio St.3d
310, 312-313, 15 OBR 439, 473 N.E.2d 822.] An abuse of discretion connotes
more than a mere error of law or judgment, instead requiring a finding that the
trial court's decision was unreasonable, arbitrary, or unconscionable.” In re
Consol. Mtge. Satisfaction Cases, 97 Ohio St.3d 465, 2002-Ohio-6720, 780
N.E.2d 556, ¶ 5.
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{¶ 33} Appellants direct us to four decisions of federal courts, which they
believe should guide the outcome of this case. I would hold that those cases are
distinguishable and that, in any case, the trial court did not abuse its discretion
when it determined that classwide issues were predominant in this case.
{¶ 34} In two of the cited cases, the entanglement of multiple causes of
action and multiple statutes and a lack of standardized practices led the federal
courts to hold that individualized issues predominated. Sikes v. Teleline, Inc.
(C.A.11, 2002), 281 F.3d 1350; Andrews v. AT&T (C.A.11, 1996), 95 F.3d 1014.
{¶ 35} Sikes and Andrews are conceptually similar to Schmidt v. Avco
Corp., 15 Ohio St.3d at 314, 15 OBR 439, 473 N.E.2d 822, in which we held that
“a class action would be inefficient and non-economical * * * because the claims
raised involve noncommon issues that are either inextricably entangled with
common issues or are too unwieldy to be handled adequately on a class action
basis.”
{¶ 36} We distinguished Schmidt from Hamilton by noting that the claims
in Schmidt involved many “inextricably entangled” “noncommon issues.”
Hamilton, 82 Ohio St.3d at 83-84, 694 N.E.2d 442. In Hamilton, we explained
that “class action treatment is appropriate where the claims arise from
standardized forms or routinized procedures” despite the need for individualized
proof on the issue of reliance. Id. at 84. Sikes and Andrews are distinguishable
from this case because they involved a broader spectrum of claims and law and
demanded an inquiry into the state of mind of each individual plaintiff. Sikes and
Andrews do not aid in the disposition of this case.
{¶ 37} Appellants also direct us to Stern v. Cingular Wireless Corp. (Feb.
23, 2009), C.D.Cal. No. CV 05-8842, 2009 WL 481657, and Brown v. SBC
Communications, Inc. (Feb. 4, 2009), S.D.Ill. No. 05-cv-777-JPG, 2009 WL
260770. While those cases are admittedly similar to this case, appellants have
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failed to demonstrate that the trial court abused its discretion in certifying the
class in this case.
{¶ 38} In Stern, the trial court refused to certify a class defined as cell-
phone purchasers who claimed that certain services had been added to their plans
without their permission. Id. at *2. The outcome in Stern was based on the
plaintiffs’ inability to offer any evidence that would establish on a classwide basis
which services had been selected by the customer at the point of purchase and
which had been provided. Id. at *7-8.
{¶ 39} Similarly, in Brown, the plaintiffs claimed that the defendant had
placed unauthorized monthly fees on their local phone bills. 2009 WL 260770 at
*1. The court refused to certify the class, finding that “the Court will need to
make individual determinations as to whether each proposed class member
authorized the charges for which he was billed by defendants. The result will be
multiple mini-trials, each requiring individual proofs. Consequently, there will be
no judicial economy realized from certifying this action as a class action.” Id. at
*3.
{¶ 40} Unlike in Sikes and Brown, the trial court in this case determined
that a class action was appropriate. Relying on Ritt v. Billy Blanks Ents., 171
Ohio App.3d 204, 2007-Ohio-1695, 870 N.E.2d 212, the trial court found that
individualized issues did not predominate and that the policies behind class
actions supported allowing the class in this case. Although the unpublished
district court cases Stern and Brown are somewhat similar to this case, that fact
does not automatically mean that the trial court abused its discretion in certifying
the class.
{¶ 41} Each class action is different and each trial court will decide issues
of predominance based upon the facts present in the case before it. Thus, one
court may appropriately certify a class, even if it resembles one that was not
certified by another court under Civ.R. 23(B), when the circumstances, claims,
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issues, and evidence alter the analysis. Furthermore, the determination will be
upheld absent an abuse of discretion, so a trial court may certify a diverse range of
classes—even classes similar to those that have been rejected in the past—and
that determination will not be reversed based upon a mere error of law or
judgment. In re Consol. Mtge. Satisfaction Cases, 97 Ohio St.3d 465, 2002-Ohio-
6720, 780 N.E.2d 556, ¶ 5.
The defined class is not a “fail-safe class”
{¶ 42} In their first proposition of law, appellants urge us to find that the
class in this case is a “fail-safe class” and that it is therefore defectively defined.3
“Fail-safe class” refers to a class definition that is improper because the members
of the class cannot be known until a determination has been made as to the merits
of the claim or the liability of the opposing party. Adashunas v. Negley (C.A.7,
1980), 626 F.2d 600, 603. Thus, a fail-safe class “put[s] the cart before the
horse.” Mims v. Stewart Title Guar. Co. (N.D.Tex.2008), 254 F.R.D. 482, 486.
{¶ 43} We can resolve this issue by applying the holding in Ojalvo v. Bd.
of Trustees of Ohio State Univ. (1984), 12 Ohio St.3d 230, 233, 12 OBR 313, 466
N.E.2d 875, that a court cannot reach the merits of a case at the class-certification
stage. Here, the class definition contains the phrase “individuals * * * who were
* * * billed for charges on their local telephone bills * * * on behalf of third
parties without their permission.” Appellants contend that this phrase prohibits
class certification because class membership cannot be determined until a finding
on the issue of liability has been made. In so contending, appellants appear to
concede that the lack of permission equates automatically with liability, but this is
not the case. Defining the class in this way does not require a determination on
3. Appellants’ first proposition of law is phrased: “A plaintiff cannot define the class to include
only individuals who were actually harmed.” Appellants’ arguments under this proposition of law
deal predominantly with the notion of a “fail-safe class.” The remainder of appellants’ arguments
under the first proposition of law deal mainly with alleged errors of the findings that a trial court
must make in certifying a class and are not germane to the resolution of the fail-safe-class issue
that we accepted for review.
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the issue of liability or the merits of the underlying causes, because finding a class
of customers who were assessed charges that they had not authorized does not
require a determination that appellants are liable to the customers.4
{¶ 44} In sum, determination of membership in the class in this case does
not depend on a predetermination of the merits of the case or liability of the
appellants.
Conclusion
{¶ 45} For the foregoing reasons, I concur in part and dissent in part.
CUPP, J., concurs in the foregoing opinion.
__________________
Murray & Murray Co., L.P.A., Dennis E. Murray Sr., and Donna J. Evans,
for appellees.
Baker & Hostetler, L.L.P., Michael K. Farrell, Thomas D. Warren, Karl
Fanter, and John B. Lewis, for appellants.
Aneel L. Chablani, Andrew D. Neuhauser, and Stanley A. Hirtle; Burdge
Law Office Co., L.P.A., and Ronald L. Burdge; and Stephen Gardner, urging
affirmance for amici curiae Advocates for Basic Legal Equality, Inc., and
National Association of Consumer Advocates.
Linda S. Woggon, urging reversal for amicus curiae Ohio Chamber of
Commerce.
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4. Furthermore, appellants contend that they are not liable for the third-party-billing practices
even if a charge was unauthorized. In their notice of appeal, appellants state that “United
Telephone's practice of passing third-party charges along to the customer is a neutral one. Most
charges are unquestionably legitimate, and if one were proved ultimately to be unauthorized, it
would be as a result of the conduct of a third party, not United Telephone.” In appellants’ merit
brief, they explain that even if plaintiffs could prove that the third-party charges were
unauthorized, liability would still not automatically attach: “Even class members who could prove
[that they received and paid a third-party charge for a service that they did not request or use]
would still have to prove that their payment of the charge was caused by United Telephone and
not by their own conduct or the conduct of a third-party service provider.”
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