Nos. 945 and 946 Pittsburgh, 1980, Appeals from the Order of the Court of Common Pleas of Allegheny County, Civil Division, at No. GD 77-04756.
Michael P. Malakoff, Pittsburgh, for appellant.
John H. Scott, Jr., Pittsburgh, for appellee.
Cercone, President Judge, and Brosky and Hoffman, JJ.
[ 305 Pa. Super. Page 126]
Appellant contends that the lower court erred in denying her petition for class certification. We agree and, accordingly, reverse the order of the court below and certify the class.
Appellant is the primary beneficiary of two life insurance policies purchased from appellee by her late husband. The policies, issued in 1964 and 1966, contained identical "family-income benefit riders" providing that she would receive fifty dollars per month under each during the payment period. Each policy defined the payment period as "65 years less years of issue age." Appellant's husband died in 1969 at the age of 51. Appellant commenced this action seeking damages and declaratory relief on March 3, 1977, alleging, individually and as representative of a class of similarly situated beneficiaries, that the payment period should be determined by subtracting from 65 years the insured's age at the times the policies were issued. According to her construction, her payment periods would be nineteen and seventeen years, respectively. Appellee contends, however, that the period should be determined by subtracting from 65 years the insured's age at the time of death, so that appellant's payment periods would both be fourteen years. Following the denial of appellee's preliminary objections, the court below established a class action discovery timetable, held a class certification hearing, and subsequently denied appellant's motion to certify the class. This appeal followed.*fn1
[ 305 Pa. Super. Page 127]
Appellant contends that the lower court abused its discretion in holding that she had failed to meet her burden of proving each of the requirements and criteria for class certification. Pa.R.Civ.P. 1702, 1708, 1709. We agree. A lower court's decision concerning class certification is a mixed finding of law and fact entitled to "appropriate deference" upon appeal. Bell v. Beneficial Consumer Discount Co., 465 Pa. 225, 235, 348 A.2d 734, 739 (1975), on remand, 241 Pa. Superior Ct. 192, 360 A.2d 681 (1976).*fn2 "Trial courts are vested with broad discretion in determining definition of the class as based on commonality of the issues and the propriety of maintaining the action on behalf of the class." Klemow v. Time, Inc., 466 Pa. 189, 197, 352 A.2d 12, 16 (1975). Accord, Sharkus v. Blue Cross of Greater Philadelphia, 494 Pa. 336, 342-43, 431 A.2d 883, 886 (1981); ABC Sewer Cleaning Co. v. Bell of Pennsylvania, 293 Pa. Superior Ct. 219, 225-226 n. 4, 438 A.2d 616, 619 n. 4 (1981). Consequently, a lower court's order concerning class certification will not be disturbed on appeal unless the court failed to consider the requirements of the rules or abused its discretion in applying them. See, e.g., Sharkus v. Blue Cross of Greater Philadelphia, supra; Klemow v. Time, Inc., supra; Bell v. Beneficial Consumer Discount Co., supra. See also Zeidman v. J. Ray McDermott & Co., 651 F.2d 1030 (5th Cir. 1981).*fn3
[ 305 Pa. Super. Page 128]
[ 305 Pa. Super. Page 129]
It is beyond peradventure that the burden of proof in a class certification proceeding is upon the party seeking certification. Klemow v. Time, Inc., supra; Scott v. Adal Corp., 276 Pa. Superior Ct. 459, 419 A.2d 548 (1980). Accord, Zeidman v. J. Ray McDermott & Co., supra; Senter v. General Motors Corp., 532 F.2d 511 (6th Cir.), cert. denied, 429 U.S. 870, 97 S.Ct. 182, 50 L.Ed.2d 150 (1976). See generally 1 H. Newberg, Newberg on Class Actions §§ 2075-90 (1977 & Supp.1981). The Pennsylvania Rules of Civil Procedure specify five requirements for class certification -- numerosity, common questions of law or fact, typicality, adequacy of representation, and fairness and efficiency. Pa.R.Civ.P. 1702. They specify also certain criteria the court must consider in determining the last two of these requirements. Pa.R.Civ.P. 1708, 1709. The lower court held that appellant failed to meet her burden because she failed to "affirmatively show" facts establishing each of the requirements and criteria for class certification. Such a strict burden of proof is inconsistent with the policy of our Commonwealth that "decisions in favor of maintaining a class action should be liberally made." Bell v. Beneficial Consumer Discount Co., 241 Pa. Superior Ct. 192, 205, 360 A.2d 681, 688 (1976) (after remand) (class suits enable the assertion of many meritorious claims that might not otherwise be litigated). See Esplin v. Hirschi, 402 F.2d 94, 101 (10th Cir. 1968) ("in a doubtful case . . . any error should be committed in favor of allowing the class action"). Moreover, courts in class certification proceedings regularly and properly employ reasonable inferences, presumptions, and judicial notice. See, e.g., Buchanan v. Brentwood Federal Savings & Loan Ass'n, 457 Pa. 135, 320 A.2d 117 (1974) (form contract raises common questions); Zeidman v. J. Ray McDermott & Co., supra (inferences of numerosity); Piel v. National Semiconductor Corp., 86 F.R.D. 357 (E.D.Pa.1980) (counsel presumed competent); Sol S. Turnoff Drug Distributors, Inc. v. N. V. Page 129} Nederlandsche Combinatie Voor Chemische Industrie, 51 F.R.D. 227 (E.D.Pa.1970) (absence of conflict of interest presumed). When the underlying facts are not in dispute, the court may hold the burden more easily satisfied. Ablin v. Bell Telephone Co. of Pennsylvania, 291 Pa. Superior Ct. 40, 50 n. 5, 435 A.2d 208, 214 n. 5 (1981); Wolfson v. Solomon, 54 F.R.D. 584, 591 (S.D.N.Y.1972). The court should take into account the practical inability of the class representative to identify other class members when the class opponent is in control of and refuses to provide the names and addresses of absent class members. Garnet Valley School District v. Hanlon, 15 Pa. Commonwealth Ct. 476, 327 A.2d 215 (1974); Gatling v. Butler, 52 F.R.D. 389 (D.Conn.1971); Herbst v. Able, 47 F.R.D. 11 (S.D.N.Y.1969), amended, 49 F.R.D. 286 (1970). Finally, the stage of proceedings at which the class certification is to be initially determined and the trial court's extensive supervisory powers over class actions obviate the need for a strict burden of proof. A court may not make the initial class action determination until after the close of pleadings to ensure that the class proponent is presenting a non-frivolous claim capable of surviving preliminary objections. Pa.R.Civ.P. 1707; Falkenhan v. Wise, 282 Pa. Superior Ct. 318, 326, 422 A.2d 1135, 1140 (1980). Throughout the class action, the court has extensive powers to protect absent class members and to ensure the efficient conduct of the action. See, e.g., Pa.R.Civ.P. 1710 (subclasses and limiting issues); 1713 (conduct of actions); 1714 (approving settlements); 1716 (approving counsel fees); Ablin, Inc. v. Bell Telephone Co. of Pennsylvania, supra (limiting class); McKenna v. Commonwealth, 54 Pa. Commonwealth Ct. 338, 421 A.2d 1236 (1980) (counsel fees). The court may alter, modify, or revoke the certification if later developments in the litigation reveal that some prerequisite to certification is not satisfied. Pa.R.Civ.P. 1710, 1711; Oas v. Commonwealth, 8 Pa. Commonwealth Ct. 118, 301 A.2d 93 (1973).
Once the class action allegations are well-pleaded, as was conceded here, the class proponent at the class
[ 305 Pa. Super. Page 130]
certification hearing must present evidence of the underlying facts from which the court can conclude that the five class certification requirements are met. See Ablin, Inc. v. Bell Telephone Co. of Pennsylvania, supra; Zeidman v. J. Ray McDermott & Co., supra. Cf. Pa.R.Civ.P. 2329 (petition to intervene) (also requires hearing, intervenor's burden met upon prima facie showing). Because the requirements for class certification are closely interrelated and overlapping, the class proponent need not prove separate facts supporting each; rather, her burden is to sufficiently establish those underlying facts from which the court can make the necessary conclusions and discretionary determinations. See, e.g., Ablin, Inc. v. Bell Telephone Co. of Pennsylvania, supra 291 Pa. Superior Ct. at 40, 435 A.2d at 212 (typicality requirement closely akin to commonality and adequacy of representation); Piel v. National Semiconductor Corp., supra (same). Cf. 1 H. Newberg, Newberg on Class Actions, supra §§ 2075-90. Though this initial burden is not heavy, it requires more than mere conjecture, and conclusory allegations, especially if facts of record tend to contradict the propriety of the class action. Luitweiler v. Northchester Corp., 456 Pa. 530, 319 A.2d 899 (1974); Valentino v. Howlett, 528 F.2d 975 (7th Cir. 1976); Rossin v. Southern Union Gas Co., 472 F.2d 707 (10th Cir. 1973). Well-pleaded class action allegations, if admitted by the class opponent, may be considered as evidence at the class certification hearing. Pa.R.Civ.P. 1706. The prima facie showing shifts to the class opponent the burden of coming forward with contrary evidence, and absent such, would ordinarily satisfy the class proponent's burden. Bell v. Beneficial Consumer Discount Co., supra; Wolfson v. Solomon, supra. Accord, McMonagle v. Allstate Insurance Co., 227 Pa. Superior Ct. 205, 233, 324 A.2d 414, 428 (1974) (HOFFMAN, J., dissenting) (upon well-pleaded complaint setting forth class action elements "with some precision" class action should be presumed valid until proven otherwise), citing Penn Galvanizing Co. v. Philadelphia, 388 Pa. 370, 130 A.2d 511 (1957). If there is an actual conflict on an essential fact, the class proponent bears the risk of non-persuasion.
[ 305 Pa. Super. Page 131]
Rule 1702 of the Pennsylvania Rules of Civil Procedure states the five prerequisites to class certification:
One or more members of a class may sue or be sued as representative parties on behalf of all members in a class action 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;
(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 ...