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filed: December 11, 1981.


No. 2161 Philadelphia, 1980, Appeal from the Order of the Court of Common Pleas, Civil Action-Law, of Philadelphia County, at No. 4918 April Term 1979.


Robert H. Dickman, Philadelphia, for appellant.

Harriet F. Withstandley, Philadelphia, for Bell, appellee.

Thomas E. Zemaitis, Philadelphia, for Donnelley, appellee.

Cercone, President Judge, and Wickersham and Brosky, JJ.

Author: Wickersham

[ 293 Pa. Super. Page 221]

On April 30, 1979, plaintiff-appellant, A.B.C. Sewer Cleaning Company, on behalf of itself and all others similarly situated, commenced this action in the Philadelphia Court of Common Pleas, seeking an accounting, injunctive relief and damages.*fn1 The gravamen of the cause of action is that the

[ 293 Pa. Super. Page 222]

    defendants, Bell of Pennsylvania and The Reuben H. Donnelley Corp. (hereinafter Bell and Donnelley), are the beneficiaries of a monopoly on the publication and distribution of classified telephone directories popularly known as the "Yellow Pages"; that they have a common law duty as such beneficiaries to serve the public at reasonable rates; and that they have conspired together to violate that duty. The essence of the scheme, plaintiff alleges, is the continual creation of new additions to the Yellow Pages directories distributed in the City of Philadelphia. Each "new" directory reaches a smaller audience, so that a purchaser of Yellow Pages advertising who wishes to reach all potential customers throughout Philadelphia must purchase space in more directories, each reaching a smaller audience, at a growing aggregate cost (see Amended Complaint, paras. 20-27).

In accordance with Pa.R.C.P. No. 1703(b), the case was assigned to the Honorable Jacob Kalish.

The defendants filed preliminary objections in the nature of demurrers which were overruled by Judge Kalish November 29, 1979. The defendants then filed responsive pleadings.

Thereafter, plaintiff filed its Motion for Class Action Certification, defining the proposed class as:

[ 293 Pa. Super. Page ]

All persons which, continuously from any date prior to March 1, 1978, purchased display advertisements in any edition of the Philadelphia Yellow Pages and which thereafter purchased display advertisements in the same edition and in either the Business Industrial Directory or any Community Directory, as well.

As used in the foregoing class description, the following definitions apply:

(a) Person means an individual, partnership, corporation or other entity;

[ 293 Pa. Super. Page ]

(b) Display advertisements means all Yellow Pages advertising other than service regular listings.

[ 293 Pa. Super. Page 223]

(c) Directory means classified telephone directory or Yellow Pages.

A hearing was held on the certification motion on August 18 and 19, 1980. At the hearing, Judge Kalish correctly noted that the question before him was legal, not factual, and counsel for defendants agreed that those matters admitted in the pleadings were stipulated for purposes of the hearing. Reproduced Record at 38a-39a. The record reveals the following:

Plaintiff has, since 1935, provided residential, commercial and industrial plumbing services on a wholesale and retail basis to customers throughout the City of Philadelphia, and its environs. The company has some thirty-two employees and gross revenues in excess of three-quarters of a million dollars. Reproduced Record at 35a-36a.

[ 293 Pa. Super. Page ]

Bell is a public utility which provides telephone services and, in conjunction therewith, publishes the Yellow Pages directories. Donnelley is Bell's exclusive agent in Philadelphia for solicitation of advertisements in the Yellow Pages. Amended Complaint and Answers, (hereinafter "pleadings"), paras. 14-16.

[ 293 Pa. Super. Page ]

The Yellow Pages are a unique and distinctive form of advertising. They are distributed free of charge "to every specific place where there is a telephone -- at home, business or industry . . . ." Reproduced Record at 37a-38a; pleadings, para. 18. The majority of plaintiff's customers are obtained through Yellow Pages advertising. Reproduced Record at 37a.

[ 293 Pa. Super. Page ]

The defendants set the rates for Yellow Pages display advertising with no governmental interference or regulation whatsoever. Pleadings, para. 17.

[ 293 Pa. Super. Page ]

Until 1966, one edition of the Yellow Pages was distributed throughout the City of Philadelphia. In that year, the defendants divided the city into four geographic sections, publishing a separate Yellow Pages for each section. Thereafter, an advertiser such as plaintiff, which sought its customers throughout the city, had to purchase advertising in

[ 293 Pa. Super. Page 224]

    not one, but four, separate directories. Reproduced Record at 62a-63a, 104a.

In 1978, a fifth directory was created. This was the Business Industrial Directory, or "BID Book". An advertiser seeking commercial or industrial customers now had to advertise in the BID Book; all others had to advertise in what was now designated the "People Book". Thereafter, an advertiser such as plaintiff which sought its customers in all categories had to purchase advertising in no less than five directories. Reproduced Record at 64a-65a, 105a; pleadings, para. 22.

[ 293 Pa. Super. Page ]

The defendants proceeded in 1978 to create a new variety of Yellow Pages for Philadelphia. This was the "Community Directory" for a particular neighborhood or section within one of the four geographical divisions of the city. Telephone subscribers within a designated community would thus receive at least two directories: the "People Book" and the "Community Book" and, in the case of a business subscriber, the "BID Book" as well. The Defendants have created four community directories. Reproduced Record at 38a, and have so promoted them as to make them the primary directory within each community. See Reproduced Record at 99a. Now an advertiser such as plaintiff, seeking all categories of customers throughout Philadelphia, must advertise in the nine separate directories.

There are, by plaintiff's count, approximately three hundred (300) advertisers bearing the same burden as the plaintiff. Reproduced Record at 41a-42a, 100a-103a. These advertisers constitute the proposed class. Judge Kalish ruled that the class was composed of about two hundred and fifty (250) parties and was "adequately defined with some precision." Reproduced Record at 196a; lower ct. op. at 5.

[ 293 Pa. Super. Page ]

The defendants' evidence consisted of an affidavit of Bell's District Staff Manager-Directory-Sales and Service, which was largely devoted to plaintiff's Yellow Pages advertising history; included were 75 pages of copies of the

[ 293 Pa. Super. Page 225]

    duplicative display advertisements purchased by plaintiff from the defendants. Reproduced Record at 104a-191a.*fn2

On August 28, 1980, Judge Kalish entered his order denying plaintiff's Motion for Class Action Certification. Hence, this appeal.*fn3

As we said in Bell v. Beneficial Consumer Discount Company, 241 Pa. Super. 192, 360 A.2d 681(1976):

Broad discretion is vested in the trial court to determine 'definition of the class as based on commonality of issues and the propriety of maintaining the action on behalf of the class.'

Id., 241 Pa. Super. at 205, 360 A.2d at 688(quoting Klemow v. Time, Inc., 466 Pa. 189, 197, 352 A.2d 12, 16 (1976), cert. denied, 429 U.S. 828, 97 S.Ct. 86, 50 L.Ed.2d 91(1976)).*fn4

[ 293 Pa. Super. Page 226]

In Price v. Lucky Stores, Inc., 501 F.2d 1177, 1179 (9th Cir. 1974):

A class action determination under Fed.R.Civ.P. 23 is one of a trial court's considered discretion. As was stated in City of New York v. International Pipe & Ceramics Corp., 410 F.2d 295, 298 (2d Cir.1969), 'the judgment of the trial court should be given the greatest respect and the broadest discretion, particularly if . . . he has canvassed the factual aspects of the litigation.' This is so because the district court is in the best position to consider the most fair and efficient procedure for conducting any given litigation. Such a determination by the court will not be disturbed on appeal unless the party challenging it can show an abuse of discretion. Wilcox v. Commerce Bank of Kansas City, 474 F.2d 336(10th Cir. 1973); Castro v. Beecher, 459 F.2d 725(1st Cir.1972); Hackett v. General Host Corp., 455 F.2d 618(3d Cir.1972); City of New York v. International Pipe & Ceramics Corp., supra.

The prerequisites to class certification are set forth in Pa.R.C.P. No. 1702,*fn5 as follows:

(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;

(4) the representative parties will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709; and

(5) a class action provides a fair and efficient method for adjudication of the controversy under the criteria set forth in Rule 1708.

[ 293 Pa. Super. Page 227]

Recently in Sharkus v. Blue Cross of Greater Philadelphia, 494 Pa. 336, 431 A.2d 883(1981) (Opinion by Mr. Chief Justice O'Brien), our supreme court held:

Rule 1708(a) of the Pennsylvania Rules of Civil Procedure provides that the court, in exercising its discretion to certify or to decline to certify a class action, shall consider, among other factors:

'(1) whether common questions of law or fact predominate over any question affecting only individual members.'

Further, in Klemow v. Time, Inc., 466 Pa. 189, 352 A.2d 12(1976), this Court ruled that an essential requirement for maintaining a class action is the existence and predominance of common issues shared by all class members which can be justly resolved in a single proceeding.

Id., 494 Pa. at 343, 431 A.2d at 886.

[ 293 Pa. Super. Page ]

The gravamen of plaintiff's cause of action is that a de facto monopoly on any service needed by the general public causes that service to become "affected with public interest" and subject to regulation; in the absence of regulation, there is an implied affirmative obligation upon the monopoly to be reasonable in dealing with the public. Hertz Drivurself Stations v. Siggins, 359 Pa. 25, 34, 38, 58 A.2d 464, 470, 472 (1948). Further, the defendants have violated this affirmative obligation by arbitrarily multiplying the number of editions of the Yellow Pages solely and purposefully in order to multiply their revenues. In addition, the multiplication has not increased service; plaintiff and the members of the class are compelled to pay ever-increasing costs for an ever-increasing number of directories, which reach the same audience as was reached before the proliferation was begun. In essence, plaintiff argues, the defendants treat Philadelphia Yellow Pages advertising as a pie. For an advertiser to buy the whole pie, he must buy a continually increasing number of slices, of continually decreasing size, at continually increasing cost.

The proper focus of the lower court's inquiry should have been on the single objective question of whether the defendants

[ 293 Pa. Super. Page 228]

    abused their monopoly position by imposing an unreasonable rate upon the members of the class. If plaintiff is able to prove this violation by the defendants of their common law duty not to abuse their position, the only remaining inquiry will be as to the extent of that abuse by the defendants. An inquiry as to why a member of the plaintiff class advertised in the Yellow Pages, and thus became a victim of the defendants, is clearly unnecessary and irrelevant. Any person who has chosen -- for any reason -- to advertise in the Yellow Pages has a right to advertise at no more than a reasonable rate. The question of what rate is reasonable for the defendants to charge will be answered objectively, one time, for all members of the class.

The only remaining question, if unreasonableness be proved, will be the objective amounts of damage to which individual class members are entitled. Presumably, the same proportion will apply to each class member. Even if there are differences in the amounts of damages, however, a class action is clearly not barred, as was recognized by the lower court. Reproduced Record at 77a. Ross v. Shawmut Development Corp., 460 Pa. 328, 333, 333 A.2d 751, 753 (1975).

Viewed in light of the issues in the case, as delineated by the pleadings, it is clear that there is one question of fact -- the reasonableness vel non of the defendants' exactions; and one question of law -- whether the defendants violated their common law duty not to impose unreasonable rates. Viewed in this light, the representative plaintiff is indeed representative of the class and the second and third prerequisites of Pa.R.C.P. No. 1702 are satisfied.*fn6

[ 293 Pa. Super. Page 229]

The court below did not analyze the fourth prerequisite of Rule 1702, that the representative party be an "adequate" representative, under the criteria of Rule 1709; nor did the court address the fifth prerequisite, that the class action be a "fair and efficient" vehicle for the case. Presumably, this was because plaintiff's evidence at the certification hearing as to its capacity to represent the class was largely unchallenged. Indeed, the only evidence or argument proffered by the defendants at the certification hearing went only to the "common question" issues to which the lower court's opinion is addressed.

Plaintiff below alleges that to maintain a class action would serve a beneficial social purpose and also would avoid a multiplicity of suits. We agree. The case, however, is remanded to the court of common pleas for a determination as to prerequisites (4) and (5) of Pa.R.C.P. No. 1702 under the criteria of Pa.R.C.P. Nos. 1709 and 1708, respectively. See Ablin, Inc. v. Bell Telephone Company of Pennsylvania, 291 Pa. Super. 40, 435 A.2d 208(1981).

Reversed and remanded for proceedings consistent with this opinion.

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