Civil No. 1:00cv200.
March 1, 2001.
Arlin M. Adams, Schnader, Harrison, Segal Lewis; Mediator.
Neal Lewis, Neal Lewis and Associates; Nicholas E. Chimicles, James R. Malone, Jr., Pamela N. Zetterberg; Chimicles and Tikellis LLP; Richard P. Myers, Paul Reich and Myers, for plaintiff.
Robert D. Moreland, Albert J. Dahm, Frederick B. Jonassen, Baker and Daniels; Mark S. Baldwin, Sandra K. Davis, Brown, Rudnick, Freed Gesmer, for defendant.
This matter is before the court on a motion to reconsider filed by the defendant, Bridgeport Machines, Inc. ("Bridgeport"), on January 29, 2001. The plaintiff, John D. Szabo, d/b/a Zatron ("Szabo"), filed his response to the motion on February 7, 2001, to which Bridgeport replied on February 20, 2001. Also before the court is a motion to strike the Second Supplemental Affidavit of Andrew McNamara, filed by Szabo on February 9, 2001. Bridgeport filed its objection to the motion to strike on February 23, 2001, to which Szabo replied on February 28, 2001.
For the following reasons, the motion to reconsider will be denied and the motion to strike will be deemed moot.
On January 12, 2001, after extensive briefing by the parties, this court granted Szabo's motion for class certification. Bridgeport, without any discussion of the standard by which motions to reconsider are governed, has requested that the court reconsider its order of January 12, 2001.
"Reconsideration is not an appropriate forum for rehashing previously rejected arguments or arguing matters that could have been heard during the pendency of the previous motion." Caisse Nationale de Credit Agricole v. CBI Industries, Inc., 90 F.3d 1264, 1269 (7th Cir. 1996) (citing In Re Oil Spill, 794 F. Supp. 261, 267 (N.D. Ill. 1992)). The Seventh Circuit Court of Appeals has, in no uncertain terms, described a motion to reconsider frivolous if it contains no new evidence or arguments of law explaining why the judge should change the original order. See Magnus Electronics, Inc. v. Masco Corp. of Indiana, 871 F.2d 626, 629 (7th Cir. 1989); Brown v. National Bd. of Medical Examiners, 800 F.2d 168, 173 (7th Cir. 1986). "Motions for reconsideration generally serve a very narrow function and must be supported by a showing of extraordinary circumstances justifying relief from judgment." Commodity Trend Serv. Inc. v. Commodity Futures Trading Comm'n, 149 F.3d 679, 684 (7th Cir. 1988); Bally Export Corp. v. Balicar Ltd., 804 F.2d 398, 400 (7th Cir. 1986). The rulings of a district court are not to be viewed "as mere first drafts, subject to revision and reconsideration at a litigant's pleasure." Ouaker Alloy Casting Co. v. Gulfco Industries. Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988); Amp-Rite Electric Company. Inc. v. International Brotherhood of Electrical Workers, 2000 WL 1368038 (N.D. Ill. Sept. 14, 2000). Additionally, the Seventh Circuit has repeatedly stated that motions for reconsideration are designed to correct manifest errors of law or fact or to present newly discovered evidence." Rothwell Cotton Co. v. Rosenthal Co., 827 F.2d 246, 251 (7th Cir. 1987); see also Publishers Resource, Inc. v. Walker-Davis Publications. Inc., 762 F.2d 557, 561 (7th Cir. 1985).
The court will first discuss Bridgeport's contention that this court should have conducted an evidentiary hearing on the motion for class certification. This contention comes as quite a surprise considering that Bridgeport failed to request such a hearing in the nearly six month period during which Szabo's motion was pending. The Local Rules of this court clearly state:
A request for an evidentiary hearing on a motion or petition may be made by any party after a motion or petition has been filed. The request for hearing shall set forth specifically the purpose of the hearing and an estimate of the time reasonably required for the court to devote to the hearing.
N.D. Ind. R. 7.5 Compliance with the local rules of this court is not optional. Grassi v. Information Resources, Inc., 63 F.3d 596, 602 (N.D. Ind. 1995). Additionally, Bridgeport fails to take into account this court's broad discretion in addressing class certification issues under Rule 23 of the Federal Rules of Civil Procedure (which Rule does not include any provision for an evidentiary hearing). The Seventh Circuit has routinely held that it is within the district court's discretion to hold a hearing or not, depending on the district court's evaluation of the motion to certify. "In certain circumstances, an evidentiary hearing may be necessary for full evaluation of the class issue. But we do not believe that an absolute rule is necessary to insure full explication of the class issue. . . ." Simer v. Rios, 661 F.2d 655, 671 (7th Cir. 1981). As will be discussed more fully below, this court found that a full evaluation of the class issue was attainable solely on the basis of the evidentiary record before the court.
The basic thrust of Bridgeport's motion to reconsider is its insistence that the proposed class does not meet Rule 23's requirements and that in finding that the proposed class does meet Rule 23's requirements this court improperly accepted Szabo's complaint as true. While the court will not engage in a blow-by-blow rehash of Bridgeport's prior arguments, the court will address a few of the points raised by Bridgeport for the sole purpose of easing the confusion which apparently exists in the mind of Bridgeport's counsel.
Szabo, who purchased a machining center from Bridgeport, seeks to represent the class of all persons who purchased a machining center or a CNC milling machine from Bridgeport that included a Bridgeport DX-32 Control Unit between January 1, 1996 and the present and were damaged thereby. Szabo's premise is that because the Class members all purchased computer numerically controlled machines with the same defective Control Unit, on the basis of standardized performance representations, a class action is appropriate. Quoting from this court's order of January 12, 2001, the standard of analysis for Rule 23 motions is as follows:
Under Rule 23 of the Federal Rules of Civil Procedure, this court undertakes a two-step analysis in determining whether class certification is proper. Hoffman v. Grossinger Motor Corp., 1999 U.S. Dist. LEXIS 4172, *4 (N.D. Ill. March 29, 1999). First, the court determines whether the four threshold requirements of subsection (a) of Rule 23 have been met. These requirements are as follows:
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 interest of the class.
Fed.R.Civ.P. 23(a); see also Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998). These four factors are often referred to as: "numerosity", "commonality", "typicality", and "adequate representation".
Secondly, the court determines whether the action qualifies for class treatment under at least one of the subdivisions of Rule 23(b). Daniels v. Fed. Reserve Bank of Chicago, 2000 U.S. Dist. LEXIS 6833, *5 (N.D. Ill. March 28, 2000) (citing Alliance to End Repression v. Rochford, 565 F.2d 975, 977 (7th Cir. 1977)). Szabo is proceeding under Rule 23(b)(3), which provides in relevant part as follows:
(b) An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
* * *
(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.
Fed.R.Civ.P. 23(b)(3); Frahm v. Equitable Life Assur. Soc. of United States, 137 F.3d 955 957 (7th Cir. 1998). These two factors are commonly referred to as: "predominance" and "superiority".
Szabo bears the initial burden of advancing reasons why this action meets the requirements of Rule 23. Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). In ruling on a motion for class certification the focus is simply on whether the prerequisites of Rule 23 have been met. The court does not conduct a hearing on the merits when deciding upon certification of a class. Eisen v. Carlisle Jacquelin, 417 U.S. 156, 177-78 (1974). Additionally, since the class determination is made at the pleading stage of the action, the substantive allegations in the complaint are accepted as true for purposes of the class motion. In re Synthroid Marketing Litig., 188 F.R.D. 287, 290 (N.D. Ill. 1999); Jefferson v. Security Pacific Financial Svcs. Inc., 161 F.R.D. 63, 66 (N.D. Ill. 1995). However, "ordinarily the determination should be predicated on more information than the pleadings will provide." Simer v. Rios, 661 F.2d 655, 689 (7th Cir. 1981) (quoting Weathers v. Peters Realty Corp., 499 F.2d 1197, 1200 (6th Cir. 1974)). Rule 23 is to be construed liberally. Anschul v. Silmar Cruises. Inc., 544 F.2d 1364, 1368 (7th Cir. 1976).
Bridgeport takes issue with this court's reliance on established law which states that, at this stage of the litigation, the substantive allegations in the complaint are accepted as true. Bridgeport does not dispute that this proposition is the law in this circuit, but argues that the law is wrong because it misreads the underlying Supreme Court cases, Eisen v. Carlisle Jacquelin, 417 U.S. 156 (1974), and General Tel. Co. of South0west v. Falcon, 457 U.S. 147 (1982). The pertinent discussion in Eisen is as follows:
See also 5 James Win. Moore et al., Moore's Federal Practice § 23.46 (3d ed. 1999)("On a motion for class certification a court may not decide the merits of the case, but must accept the substantive allegations contained in the complaint as true.") (citing Eisen v. Carlisle Jacquelin, 417 U.S. 156, 177 (1974); Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 598-99 (7th Cir. 1993); Gaspar v. Linvatec Corp., 167 F.R.D. 51, 55 (N.D. Ill. 1996)).
We also agree with the Court of Appeals that petitioner must bear the cost of notice to the members of his class. The District Court reached the contrary conclusion and imposed 90% of the notice cost on respondents. This decision was predicated on the court's finding, made after a preliminary hearing on the merits of the case, that petitioner was "more than likely' to prevail on his claims. Apparently, that court interpreted Rule 23 to authorize such a hearing as part of the determination whether a suit may be maintained as a class action. We disagree.
We find nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action. Indeed, such a procedure contravenes the Rule by allowing a representative plaintiff to secure the benefits of a class action without first satisfying the requirements for it. He is thereby allowed to obtain a determination on the merits of the claims advanced on behalf of the class without any assurance that a class action may be maintained. This procedure is directly contrary to the command of subdivision (c)(l) that the court determine whether a suit denominated a class action may be maintained as such "(a)s soon as practicable after the commencement of (the) action. . . .' In short, we agree with Judge Wisdom's conclusion in Miller v. Mackey International, 452 F.2d 424 (CAS 1971), where the court rejected a preliminary inquiry into the merits of a proposed class action:
`In determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.' Id. at 427
Additionally, we might note that a preliminary determination of the merits may result in substantial prejudice to a defendant, since of necessity it is not accompanied by the traditional rules and procedures applicable to civil trials. The court's tentative findings, made in the absence of established safeguards, may color the subsequent proceedings and place an unfair burden on the defendant.417 U.S. at 177-78
In General Tel., the Supreme Court stated:
We do not, of course, judge the propriety of a class certification by hindsight. The District Court's error in this case, and the error inherent in the across-the-board rule, is the failure to evaluate carefully the legitimacy of the named plaintiffs plea that he is a proper class representative under Rule 23 (a). As we noted in Coopers Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351, "the class determination generally involves considerations that are "enmeshed in the factual and legal issues comprising the plaintiffs cause of action'" Id., at 469, 98 S.Ct., at 2458 (quoting mercantile Nat. Bank v. Langdeau, 371 U.S. 555, 558, 83 S.Ct. 520, 522, 9 L.Ed.2d 523). Sometimes the issues are plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiffs claim, and sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question. Even after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation. For such an order, particularly during the period before any notice is sent to members of the class, "in inherently tentative." 437 U.S., at 469, n. 11, 98 S.Ct., at 2458 n. 11. This flexibility enhances the usefulness of the class-action device; actual, not presumed, conformance with Rule 23(a) remains, however, indispensable.457 U.S. at 160.
From these two cases Bridgeport has constructed a standard of analysis it doggedly insists this court is required to apply. According to Bridgeport, since it has contested the facts underlying Szabo's assertion that class certification is appropriate, the court cannot accept the facts as alleged in Szabo's complaint but must conduct an inquiry to determine whether Bridgeport's facts, rather than Szabo's facts, are true.
Clearly, Bridgeport's interpretation of Supreme Court law is a bit myopic. It is clear (as this court acknowledged in its order of January 12, 2001), that it is sometimes appropriate for a court to "probe behind the pleadings" when making a decision on certification. However, this is not to say that such a probing is required in every case in which Rule 23 certification is contested (which would be virtually every Rule 23 motion), or that such probing involves deciding contested issues of fact that go to the heart of the plaintiffs' claims. In the present case, Szabo's extensive complaint contains excruciating detail, including specific quotations from internal communications among defendant's employees discussing the problems experienced with machines equipped with the DX-32 Control Unit. Additionally, the court had before it Szabo's deposition transcript, his interrogatory responses (which exceeded 60 pages in length), and a variety of Bridgeport's own documents. Therefore, unlike some cases where the issues are not plain from the pleadings see General Tel., supra, the issues in the present case were fully presented to the court, along with a virtual plethora of facts.
The court fully realizes, however, that it is not barred from examining the issues involved in the litigation in order to determine whether to certify a class. See Elliot v. ITT Corp., 150 F.R.D. 569, 572 (N.D. Ill. 1992) (although court cannot consider arguments on merits, court should consider substantive elements of plaintiffs claims and proof necessary to those elements so as to envision form trial would take). In the present case, the issues were fully examined in the parties' numerous briefs and this court's thirty-one page order.
Moreover, in many instances where Bridgeport claims that the court must accept its version of the facts as true, the facts were not relevant to the issue. For example, in connection with this court's discussion of whether common factual issues predominate, this court noted that Bridgeport's position was that Szabo's claim is one based on oral misrepresentations, which oral misrepresentations would be different for each potential Class member, arguably rendering class certification inappropriate. Order at 9. This court then went on to note that "[i]n any event, the law is clear that the presence of some oral misrepresentations does not preclude class treatment. Order at 10, citing to Scholes v. Stone, McGuire Benjamin, 143 F.R.D. 181, 188 (N.D. Ill. 1992). Therefore, even if Bridgeport's facts had been accepted as true (that the claim was based on oral misrepresentations), under the applicable law class representation was not precluded.
The remainder of Bridgeport's arguments, including the arguments with respect to choice of law, are clearly rehash. This court carefully considered Bridgeport's arguments during its initial consideration of the motion for class certification. Bridgeport has not cited to any new evidence or new law in this matter. Therefore, the court declines Bridgeport's offer to reconsider the order of January 12, 2001.
In fact, the court considered numerous briefs related to issues raised by the motion for class certification.
In light of the fact that this court has not changed its order of January 12, 2001, Szabo's motion to strike the affidavit of Mr. McNamara will be deemed moot.
On the basis of the foregoing, Bridgeport's motion to reconsider is hereby DENIED. Further, Szabo's motion to strike is hereby DEEMED MOOT.