Opinion
No. X01 CV04 4005268 S
October 12, 2007
MEMORANDUM OF DECISION RE MOTION FOR CERTIFICATION OF CLASS (#148)
I BACKSTORY
The plaintiffs, Richard Gentile Building Co., LLC (Gentile), Peter Smith Building Co., LLC (Smith), The Dowler Group, LLC (Dowler), Paul Coady Construction, LLC (Coady), Neighborhood Builders, Inc. (Neighborhood Builders), and MJM Builders, Inc. (MJM), filed a five-count amended complaint, as a putative class action on January 21, 2005. According to the amended complaint, Gentile, Smith, Dowler, and Coady are Connecticut limited liability companies and small businesses with their principal places of business in Connecticut. Neighborhood Builders and MJM are Connecticut corporations and small businesses with their principal places of business in Connecticut. According to the amended complaint, the defendant, the town of Madison, is a municipal corporation located in New Haven County, Connecticut, and organized pursuant to the laws of the state of Connecticut with a board of selectman form of government.
In the amended complaint, all of the plaintiffs except for Richard Gentile Building Co., LLC, who was not a party to the original complaint, were listed by shortened names that were initially provided in the original complaint filed on December 20, 2004. Paragraphs one though five of section one of the original complaint are incorporated by reference into the amended complaint.
Coady subsequently withdrew from this action.
Count one alleges a violation of General Statutes § 7-130i, count two alleges a violation of General Statutes § 7-148, count three alleges a violation of the constitution of Connecticut, article ten, §§ 1 and 2, count four alleges a violation of 42 U.S.C. § 1983, and count five alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. The plaintiffs are seeking declaratory relief, injunctive relief, damages, and counsel fees and costs, which they allege are based on the "Defendant's unlawful practices related to the collection, use, and allocation of monies collected from the Plaintiffs and others similarly situated, under the mechanism of building permit fees." (Amended complaint, § I, ¶ 8.)
Specifically, the plaintiffs allege that pursuant to the defendant's town ordinance, they and "others similarly situated, are required to obtain building permits in order to conduct their trade, the construction and/or renovation of building structures on parcels of land." (Amended complaint, § III, count one, ¶ 14.) The plaintiffs further allege that as per General Statutes § 7-130i et seq. and case law, "a fee is not a revenue measure, but a means of compensating the government for the cost of offering and regulating a particular service" (amended complaint, § III, count one, ¶ 16); and "[f]ees in excess of the amount which is necessary for offering and regulating a particular service constitute an illegal tax." (Amended complaint, § III, count one, ¶ 17.) According to the plaintiffs, the revenues that the defendant derives from the plaintiffs and others similarly situated are significantly in excess of the cost relating to offering and regulating building activity in Madison. It is alleged that the defendant unlawfully uses the building permit fees collected from the plaintiffs and others similarly situated in part to fund its general operations. The plaintiffs also allege that the defendant unlawfully uses the building permit fees to fund social programs and other initiatives that bear no relationship to the offering and regulating of building activity in Madison.
According to the plaintiffs, the defendant's conduct exceeds the authority provided to municipalities with respect to lawful taxation pursuant to § 7-148. The plaintiffs further allege that the defendant's use of the building permit fees to fund social programs and other initiatives is in violation of article ten, §§ 1 and 2 of the constitution of Connecticut as the defendant has exercised a power that the Connecticut General Assembly has not given to it. In the amended complaint, it is further alleged that the defendant is a local government that acts under color of state law as per 42 U.S.C. § 1983 et seq., and that the "Defendant's building permit fees schedule constitutes an unconstitutional deprivation of property without just compensation in violation of the Fifth Amendment to the United States Constitution, incorporated through the Fourteenth Amendment to apply to the states." (Amended complaint, § III, count four, ¶ 27.) With respect to count four, the plaintiffs are seeking "[a] declaration that [the] Defendant's building permit fees constitute an unconstitutional and illegal taking without just compensation . . ." (Amended complaint, § III, count four, ¶ 31.)
B JOURNEY OF THE PLEADINGS
The defendant filed its answer on February 22, 2005, and following requests to revise filed by the plaintiffs on March 4, 2005, and March 7, 2005, the defendant filed a revised answer and special defenses on March 30, 2005. On April 15, 2005, the plaintiffs filed a reply to the defendant's special defenses, denying each and every one. On March 19, 2007, the plaintiffs filed a motion for class certification accompanied by a memorandum of law in support thereof. On May 15, 2007, the defendant filed a memorandum in opposition to the motion for class certification. On May 16, 2007, the defendant filed a motion for summary judgment accompanied by a memorandum of law in support thereof. Argument was heard before this court on the motion for class certification on June 5, 2007. A post-hearing brief was filed by the defendant on June 18, 2007, and the plaintiffs' post-hearing brief was filed on June 19, 2007.
The two requests to revise appear to be identical to each other.
III DISCUSSION A Class Action Standards
"A trial court must undertake a rigorous analysis to determine whether the plaintiffs have borne the burden of demonstrating that the class certification requirements of Practice Book §§ 9-7 and 9-8 have been met . . ." (Internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 277 Conn. 617, 626, 894 A.2d 240 (2006). "[A trial court] has broad discretion in determining whether a suit should proceed as a class action . . . Marr v. WMX Technologies, Inc., 244 Conn. 676, 680, 711 A.2d 700 (1998); see also Moore v. PaineWebber, Inc., 306 F.3d 1247, 1252 (2d Cir. 2002)." (Internal quotation marks omitted.) Robichaud v. Hewlett Packard Co., 82 Conn.App. 848, 852, 848 A.2d 495 (2004). "The plaintiff bears the heavy burden of establishing that each of the requirements of Practice Book §§ 9-7 and 9-8 are met. See Arduini v. Automobile Ins. Co. of Hartford, Connecticut, 23 Conn.App. 585, 589, 583 A.2d 152 (1990)." Robichaud v. Hewlett Packard Co., supra, 853. "[I]n determining whether to certify the class, a [trial] court is bound to take the substantive allegations of the complaint as true . . . That does not mean, however, that a court is limited to the pleadings when determining whether the requirements for class certification have been met. On the contrary, [the Connecticut Supreme Court] stated in Collins [v. Anthem Health Plans, Inc., 266 Conn. 12, 836 A.2d 1124 (2003)] that [t]he class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the [plaintiffs'] cause of action . . . and that it [sometimes] may be necessary for the court to probe behind the pleadings before coming to rest on the certification question . . . In determining the propriety of a class action, [however] 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 [the class action rules] are met . . . Although no party has a right to proceed via the class mechanism . . . doubts regarding the propriety of class certification should be resolved in favor of certification (Citations omitted; internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., supra, 626-27.
"`The rules of practice set forth a two step process for trial courts to follow in determining whether an action or claim qualifies for class action status. First, a court must ascertain whether the four prerequisites to a class action, as specified in Practice Book § 9-7, are satisfied. These prerequisites are: (1) numerosity — that the class is too numerous to make joinder of all members feasible; (2) commonality — that the members have similar claims of law and fact; (3) typicality — that the [representative] plaintiffs' claims are typical of the claims of the class; and (4) adequacy of representation — that the interests of the class are protected adequately. Rivera v. Veterans Memorial Medical Center, [ 262 Conn. 730, 738, 818 A.2d 731 (2003)], citing Practice Book § 9-7; accord Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 33.
"`Second, if the foregoing criteria are satisfied, the court then must evaluate whether the certification requirements of Practice Book § 9-8 are satisfied. These requirements are: (1) predominance — that questions of law or fact common to the members of the class predominate over any questions affecting only individual members; and (2) superiority — that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Practice Book § 9-8. Because [Connecticut's] class certification requirements are similar to those embodied in rule 23 of the Federal Rules of Civil Procedure, and [Connecticut's] jurisprudence governing class actions is relatively undeveloped, [the Connecticut Supreme Court] look[s] to federal case law for guidance in construing the provisions of Practice Book §§ 9-7 and 9-8. See Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 32.' (Citation omitted; internal quotation marks omitted.) Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 320-23, 880 A.2d 106 (2005). Finally, [the Connecticut Supreme Court] give[s] greater deference to a trial court's decision to certify a class than to its decision declining to do so. See Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 23-24." Macomber v. Travelers Property Casualty Corp., supra, 277 Conn. 627-28.
The Connecticut Supreme Court has stated: "Class action suits: (1) promote judicial economy and efficiency; (2) protect defendants from inconsistent obligations; (3) protect the interests of absentee parties; and (4) provide access to judicial relief for small claimants. H. Newberg, Class Actions (3d Ed. 1992) § 1.06, p. 1-20; see also United States Parole Commission v. Geraghty, 445 U.S. 388, 402-03, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980)." Grimes v. Housing Authority, 242 Conn. 236, 244, 698 A.2d 302 (1997).
Before this court proceeds to the application of Practice Book §§ 9-7 and 9-8 to the facts of this case, it will address certain arguments made by the plaintiffs and defendant that affect said application. In the plaintiffs' memorandum of law in support of the motion for class certification, the plaintiffs contend that the defendant had used unlicensed building inspectors to conduct building inspections in violation of General Statutes § 29-262 et seq. The plaintiffs further contend that they and putative class members experienced inspection delays and work slowdowns. In the plaintiffs' amended complaint, there are no allegations regarding the use of unlicensed inspectors, inspection delays or work slowdowns. While "[t]he modern trend, which is followed in Connecticut, is to construe pleadings broadly and realistically, rather than narrowly and technically"; (internal quotation marks omitted) Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 24; and "[s]ometimes, it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question;" id.; this court will not entertain the issues of unlicensed building inspectors, inspection delays or work slowdowns in this memorandum of decision as no references were made to them in the amended complaint. Furthermore, on the basis of what transpired at oral argument and on the basis of the plaintiffs' post-hearing brief, it appears that the plaintiffs have abandoned these issues for purposes of this motion for class certification. Therefore, this court will not address any arguments pertaining to whether to certify the class that turn on these issues.
The defendant's key argument against class certification that it has made in its memorandum in opposition to the motion for class certification, in its post-hearing brief and at oral argument relates to whether all the members of the putative class were allegedly injured by the defendant's assessment of allegedly excessive building permit fees. It is the defendant's position that assuming the building permit fees were excessive in violation of the state and federal statutes and the state constitution as enumerated in the amended complaint, an entity suffered a compensable injury only if it ultimately bore the cost of the permit fee itself. Therefore, according to the defendant, assuming the fees were excessive, if an entity initially paid the defendant the building permit fee but then passed the cost onto someone else, such as a homeowner, then that entity has not suffered a legally cognizable injury. If the court adopts the defendant's position, putative class members who initially paid the fee but received reimbursement are on a different legal footing than putative class members who paid the fee and did not receive reimbursement from anyone. Meanwhile it is the plaintiffs' position that the defendant's alleged liability towards an entity who paid the allegedly excessive building permit fee to it attached at the moment that that entity paid to it the cost of the building permit fee. Thus, if the court adopts the plaintiffs' position, putative class members who paid the fee and were able to pass on the cost to someone else are on the same legal footing as putative class members who paid the fee and ultimately bore the cost themselves.
This court turns to case law relating to federal and state antitrust law and CUTPA to guide it in determining which position to adopt. In Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S. Ct. 2224, 20 L.Ed.2d 1231 (1968), Hanover Shoe, Inc. (Hanover) was a shoe manufacturer and the customer of United Shoe Machinery Corporation (United), which manufactured and distributed shoe machinery. Hanover brought an antitrust action against United. The United States District Court for the Middle District of Pennsylvania found that had Hanover had the opportunity, it would have bought the machinery from United instead of leasing it from United. According to the District Court, Hanover would have incurred fewer costs had it had the opportunity to purchase the machinery. Meanwhile, United asserted that Hanover did not sustain a legally cognizable injury as "the illegal overcharge during the damage period was reflected in the price charged for shoes sold by Hanover to its customers and that Hanover, if it had bought machines at lower prices, would have charged less and made no more profit than it made by leasing." Hanover Shoe, Inc., v. United Shoe Machinery Corp., supra, 88 S.Ct. 2228.
Hanover alleged that United violated the Sherman Act, 15 U.S.C. § 2 by its monopolization of the shoe industry as it had a practice of leasing, but not selling important shoe machinery.
Both the District Court and the United States Court of Appeals for the Third Circuit rejected the "passing-on" defense. The United States Supreme Court affirmed that judgment, stating "We think it sound to hold that when a buyer shows that the price paid by him for materials purchased for use in his business is illegally high and also shows the amount of the overcharge, he has made out a prima facie case of injury and damage within the meaning of § 4 [of the Clayton Act, 15 U.S.C. § 15]." Hanover Shoe, Inc. v. United Shoe Machinery Corp., supra, 88 S.Ct. 2229. The United States Supreme Court in Hanover Shoe, Inc. further stated: "If in the face of the overcharge the buyer does nothing and absorbs the loss, he is entitled to treble damages. This much seems conceded. The reason is that he has paid more than he should and his property has been illegally diminished, for had the price paid been lower his profits would have been higher. It is also clear that if the buyer, responding to the illegal price, maintains his own price but takes steps to increase his volume or to decrease other costs, his right to damages is not destroyed. Though he may manage to maintain his profit level, he would have made more if his purchases from the defendant had cost him less. We hold that the buyer is equally entitled to damages if he raises the price for his own product. As long as the seller continues to charge the illegal price, he takes from the buyer more than the law allows. At whatever price the buyer sells, the price he pays the seller remains illegally high, and his profits would be greater were his costs lower." Hanover Shoe, Inc. v. United Shoe Machinery Corp., supra, 88 S.Ct. 2229.
"[T]he term `[p]ass on' is [used to describe] the process by which a middleman in the chain of distribution who has been overcharged by a manufacturer or by a producer adjusts his own prices upward so as to pass on his increased costs to his own customers. Annot., 55 A.L.R. Fed. 919, 922 n. 3 (1981)." Vacco v. Microsoft Corp., 260 Conn. 59, 66, 793 A.2d 1048 (2002).
Section 4 of the Clayton Act, 15 U.S.C. § 15, as amended, provides in relevant part that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold the damages by him sustained . . ." 15 U.S.C.S. § 15(a) (Law. Co-op. 1985).
In Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), the petitioners were manufacturers and distributors of concrete block in the Greater Chicago area. The petitioners sold the concrete block mainly to masonry contractors. These masonry contractors submitted bids for the masonry work of construction projects to general contractors. The general contractors submitted bids for projects to customers including the respondents, thereby making the respondents indirect purchasers of the concrete block. The state of Illinois, one of the respondents, brought an antitrust action on its own behalf and on behalf of local government entities, who were also respondents in the case.
The Illinois Brick Co. petitioners moved for partial summary judgment against all the plaintiffs that were indirect purchasers of the concrete block, arguing that only direct purchasers could sue for any alleged overcharge. The United States District Court for the Northern District of Illinois granted the motion for partial summary judgment, but the United States Court of Appeals for the Seventh Circuit reversed and held that indirect purchasers who were illegally overcharged could recover treble damages providing that they proved that the illegal overcharge was passed on to them. The United States Supreme Court reversed the United States Court of Appeals, stating that it "decline[d] to construe § 4 to permit offensive use of a pass-on theory against an alleged violator that could not use the same theory as a defense in an action by direct purchasers." Illinois Brick Co. v. Illinois, supra, 97 S.Ct. 2069.
In Vacco v. Microsoft Corp., 260 Conn. 59, 793 A.2d 1048 (2002), the plaintiff was an end-user licensee of Windows 98, a software product manufactured by the defendant. The plaintiff who purchased an Intel-based personal computer onto which Windows 98 had been pre-installed from a retail store, brought an action against the defendant, alleging violations of the Connecticut Antitrust Act (Antitrust Act), General Statutes § 35-24 et seq. and CUTPA. According to the plaintiff "the defendant wielded monopoly power in the computer operating systems market and, in wielding that power, `knowingly licensed its Windows 98 operating system for Intel-based [personal computers] . . . without regard to competition, at a monopoly price in excess of what [the defendant] would have been able to charge in a competitive market.'" Vacco v. Microsoft Corp., supra, 63.
The Vacco defendant moved to strike the complaint, arguing that the plaintiff, as an indirect purchaser of Windows 98, was not eligible to recover under the Antitrust Act. The Vacco defendant further argued that as the plaintiff could not recover under the Antitrust Act, he was ineligible to recover under CUTPA as well. The trial court granted the motion to strike.
On appeal to the Connecticut Supreme Court, the plaintiff asserted that the trial court, in its application of Illinois Brick Co. erroneously concluded that the plaintiff could not bring an antitrust action pursuant to General Statutes § 35-35. The Vacco court, referring to General Statutes § 35-44b, analyzed federal antitrust law and discussed Hanover Shoe, Inc. and Illinois Brick Co. The Vacco court concluded that "allowing only those consumers who purchase directly from the antitrust defendant to bring suit under our state antitrust law ensures that the Antitrust Act remains harmonious with federal antitrust statutes." Vacco v. Microsoft Corp., supra, 260 Conn. 76-77. The Vacco court noted that while there were bills in the Connecticut legislature over the past few decades that were designed to repeal Illinois Brick Co., none of these bills was enacted into law.
General Statutes § 35-44b provides: "It is the intent of the General Assembly that in construing sections 35-24 to 35-46, inclusive, the courts of this state shall be guided by interpretations given by the federal courts to federal antitrust statutes."
The Vacco court concluded that the plaintiff alleged sufficient facts for the Superior Court to determine that the plaintiff indirectly purchased Windows 98 and was therefore barred from bringing an antitrust action under § 35-35. The Vacco court stated: "The mere fact that a direct purchaser, such as an original computer equipment manufacturer or a retailer like Staples, has passed on most or all of the defendant's illegal overcharge does not vault the plaintiff into the status of a direct purchaser." Vacco v. Microsoft Corp., supra, 260 Conn. 82-83.
The Vacco court then turned to the CUTPA claims, analyzing whether an indirect purchaser who could not recover under state antitrust law could nonetheless recover under CUTPA for the same alleged conduct. The Vacco court, quoting Ganim v. Smith Wesson Corp., 258 Conn. 313, 353, CT Page 17341 780 A.2d 98 (2001), stated: "[W]e employed a three part analysis used by the `[federal] courts in their application of the general principle that plaintiffs with indirect injuries lack standing to sue . . . First, the more indirect an injury is, the more difficult it becomes to determine the amount of [the] plaintiffs damages attributable to the wrongdoing as opposed to other, independent factors. Second, recognizing claims by the indirectly injured would require courts to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, in order to avoid the risk of multiple recoveries. Third, struggling with the first two problems is unnecessary whe[n] there are directly injured parties who can remedy the harm without these attendant problems.'" (Emphasis added.) Vacco v. Microsoft Corp., supra, 260 Conn. 89. The Vacco court went on to state that "[t]hese considerations are similar to those on which the direct purchaser rule of Illinois Brick rests." Vacco v. Microsoft Corp., supra, 90.
In performing this three part analysis, the Vacco court determined that the plaintiff lacked standing to set forth a CUTPA claim as his injuries were too remote with regard to the defendant's alleged conduct. With regard to the second factor, the Vacco court stated: "To allow the plaintiff to recover for his injuries under the circumstances of the present case inevitably would lead us into a quagmire whereby we would be required to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, in order to avoid the risk of multiple recoveries . . . These are the same concerns that the court in Illinois Brick identified in declining to allow indirect purchasers to recover under § 4 of the Clayton Act." (Citation omitted; internal quotation marks omitted.) Vacco v. Microsoft Corp., supra, 260 Conn. 91. With regard to the third factor, the Vacco court noted that there are other entities with potential injuries more closely related to the defendant's alleged conduct, including original computer equipment manufacturers and retailers.
Given the Connecticut Supreme Court's reliance on Hanover Shoe, Inc. and Illinois Brick Co. when interpreting state antitrust statute and CUTPA as it pertains to indirect purchasers and given the fact that no Illinois Brick Co. repealer statute has been enacted into law, it appears that for certain causes of action, Connecticut is reluctant to even allow indirect purchasers to bring causes of action and favors direct purchasers bringing these actions as the United States Supreme Court in Hanover Shoe, Inc. did. If direct purchasers are favored to bring actions alleging CUTPA and state antitrust violations, it appears to this court that the putative class members in the present case, as entities who directly paid the allegedly excessive building permit fees, would be the parties favored to bring this cause action against the defendant. Entities who may have ultimately bore the cost of the excessive building permit fees but did not directly pay the defendant the fees, would, it seems, at a minimum, encounter difficulties establishing standing with regard to a CUTPA claim. Therefore, this court concludes that in the present case, any liability of the defendant would attach the moment the putative class members paid the allegedly excessive building permit fees to it, notwithstanding the fact that some putative class members may have passed on these allegedly excessive fees to other entities such as homeowners. With that, the court now turns to the specific requirements of Practice Book §§ 9-7 and 9-8.
B Application of law 1 Numerosity
Practice Book § 9-7(1) sets forth the requirement that the putative class be "so numerous that joinder of all members is impracticable." "There is no `magic number' that automatically fulfills the numerosity requirement of the rule . . ." Arduini v. Automobile Ins. Co. of Hartford, Connecticut, supra, 23 Conn.App. 590. In the amended complaint, the putative class is described as "a class of persons and entities who have paid building permit fees to Defendant from January 1, 2002 to the present." (Amended complaint, § II, ¶ 9.) In their memorandum of law in support of the motion for class certification, the plaintiffs describe the putative class as "all building permit holders in the Town of Madison from April 1, 2003 to present." (Memorandum of law in support of certification for class, p. 2.) In a footnote to the plaintiffs' description of the putative class in that same memorandum, the plaintiffs state: "For purposes of this Motion permit holders, permit applicants, owners of record, and permit payees are used interchangeably and constitute all eligible persons available for class participation." (Memorandum of law in support of certification for class, p. 2.) In their memorandum of law in support of the motion for class certification, the plaintiffs assert that from the inception of the permit fee increase, there are more than 4,500 permit holders who are eligible for the plaintiffs' putative class. According to the defendant, between April 1, 2003 and December 31, 2006, its building department issued 6,067 separate building permits. Of these 6,067 permits, 1,339 individual contractors/subcontractors paid permit fees and 488 homeowners paid permit fees. If this court is to define the putative class as individuals or entities that directly paid the defendant the allegedly excessive building permit fees during the period of April 1, 2003 to the present, the class would, according to the defendant, be over 1,000 members. This court finds that the plaintiffs have fulfilled the numerosity requirement of Practice Book § 9-7(1).
The plaintiffs state that they have not taken into account the number of permit holders for 2006 and 2007 as the plaintiffs had not received the defendant's supplementary discovery at the time they filed the motion and memorandum.
2 Commonality
"The rules of practice provide in relevant part that `[o]ne or more members of a class may sue . . . as representative parties on behalf of all only if . . . there are questions of law or fact common to the class . . .' Practice Book § 9-7(2); accord Fed.R.Civ.P. 23(a)(2). This requirement is easily satisfied because there need only be one question common to the class. See Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 34 (`[t]he commonality requirement is met if [the] plaintiffs' grievances share a common question of law or of fact' [internal quotation marks omitted]); see also Forbush v. J.C. Penney Co., 994 F.2d 1101, 1106 (5th Cir. 1993) (`[T]he commonality test is met when there is at least one issue whose resolution will affect all or a significant number of the putative class members . . . For this reason, [t]he threshold of commonality is not high.' [Citation omitted; internal quotation marks omitted.]); Thompson v. Community Ins. Co., 213 F.R.D. 284, 292 (S.D. Ohio 2002) (`[a]lthough [r]ule 23[a][2] speaks of "questions" in the plural . . . there need only be one question common to the class'). `The common issue [however] must be one the resolution of which will advance the litigation. The commonality requirement is satisfied as long as the members of the class have allegedly been affected by a general policy of the defendant, and the general policy is the focus of the litigation.' (Internal quotation marks omitted.) Thompson v. Community Ins. Co., supra, 292." Collins v. Anthem Health Plans, Inc., supra, 275 Conn. 324.
"The United States Supreme Court has explained that the two requirements at issue in this claim — commonality and typicality — `tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff[s'] claim . . . and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence. Those requirements therefore also tend to merge with the adequacy-of-representation requirement, although the latter requirement also raises [other] concerns . . .' General Telephone Co. of the Southwest v. Falcon, [ 457 U.S. 147, 157 n. 13, CT Page 17344 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982).] `These requirements effectively limit the class claims to those fairly encompassed by the named plaintiff[s'] claims.' (Internal quotation marks omitted.) Id., 156." Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 33-34.
In their memorandum of law in support of the motion for class certification, the plaintiffs assert that "any permit applicant granted a permit after the institution of the rate increase by the Defendant share the common issues of payment of the fee . . ." (Memorandum of law in support of certification for class, p. 15.) In the present case, if the class is limited to permit holders who directly paid the allegedly excessive fees to the defendant, then the class members share the common issue of having had to pay the fee to the defendant along with the issue of whether these building permit fees were excessive or not. Therefore, this court finds that the commonality requirement of Practice Book § 9-7(2) is satisfied.
3 Typicality
"As the United States Court of Appeals for the Second Circuit has stated, `[t]he commonality requirement is met if [the] plaintiffs' grievances share a common question of law or of fact . . . Typicality, by contrast, requires that the claims of the class representatives be typical of those of the class, and is satisfied when each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability.' (Citations omitted; internal quotation marks omitted.) Marisol A. v. Giuliani, [ 126 F.3d 372, 376 (2d Cir. 1997)]. The typicality criterion does not require that the factual background of each named plaintiffs claim be identical to that of all class members; rather, it requires that the disputed issue of law or fact occupy essentially the same degree of centrality to the named plaintiffs claim as to that of other members of the proposed class.' (Internal quotation marks omitted.) Caridad v. Metro-North Commuter R., 191 F.3d 283, 293 (2d Cir. 1999), cert. denied, 529 U.S. 1107, 120 S.Ct. 1959, 146 L.Ed.2d 791 (2000)." Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 34.
"Decisions of the Second Circuit Court of Appeals, although not binding on us, are particularly persuasive." (Internal quotation marks omitted.) Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 34 n. 17.
The plaintiffs argue that they allege "that the claims of the proposed members arise out of the same process administered by the Defendant. Not only are the representatives' claims typical of the class as a whole, they are almost identical, save the calculation of individual damages." (Memorandum of law in support of certification for class, pp. 17-18.) In opposition, the defendant quotes the following language from CT Page 17345 Macomber v. Travelers Property Casualty Corp., supra, 277 Conn. 630: "[C]lass certification is inappropriate where a putative class representative is subject to unique defenses which threaten to become the focus of the litigation . . ." The defendant emphasizes that some of the named plaintiffs, who are in the home construction and/or home remodeling business, passed the building permit fees to their customers in some cases while other named plaintiffs did not. According to the defendant, those who passed the cost of the building permit fees to someone else are not entitled to relief under the operative complaint, and thus, cannot be class members. The defendant asserts that "[c]onsequently, the named Plaintiffs would have to devote considerable time proving that they did not pass along the cost of a building permit fee in a certain case, and are therefore entitled to relief from this Court and to be a member of the class. It is clear that if the named Plaintiffs are so preoccupied, that there is a definite danger that the absent class members will suffer because of this preoccupation. (Memorandum of law in opposition to plaintiffs' motion for certification of class, p. 33.)
This court finds that in the present case that the allegation the defendant charged excessive building permit fees is an allegation that is typical to all the members of the putative class as defined by this court with regard to numerosity. Furthermore, as discussed earlier in this memorandum of decision, any liability of the defendant attaches the moment the allegedly excessive building permit fee is paid, regardless of who ultimately bore the cost. Therefore, the fact that some of the named plaintiffs passed on the allegedly excessive building permit fees to another entity does not mean that they will be preoccupied with the defense that they passed the fee to someone else, as the defendant's liability to a plaintiff who directly paid the defendant for the allegedly excessive building permit fee does not depend on whether that plaintiff ultimately bore the cost of the allegedly excessive building permit fee. Therefore, this court finds that the typicality requirement of Practice Book § 9-7(3) is satisfied.
Adequacy-of-Representation
"The rules of practice provide in relevant part that class certification may be granted `only if . . . the representative parties will fairly and adequately protect the interests of the class.' Practice Book § 9-7(4); accord Fed.R.Civ.P. 23(a)(4). `The adequacy-of-representation requirement addresses concerns about the competency of class counsel and conflicts of interest. Rutherford v. City of Cleveland, 137 F.3d 905, 909 (6th Cir. 1998), citing [ General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 157-58 n. 13, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982); H. Newberg A. Conte, Class Actions (3d Ed. 1992) § 3.22, p. 3-126] (The two factors that are . . . recognized as the basic guidelines for the [adequacy-of-representation] prerequisite are . . . (1) absence of conflict and (2) assurance of vigorous prosecution.). The adequacy requirement is met [when] the representatives: (1) have common interests with the unnamed class members; and (2) will vigorously prosecute the class action through qualified counsel. Senter v. General Motors Corp., 532 F.2d 511, 525 [(6th Cir.)], cert. denied, 429 U.S. 870, 97 S.Ct. 182, 50 L.Ed.2d 150 (1976)]; Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (The [adequacy-of-representation] inquiry . . . serves to uncover conflicts of interest between the named parties and the class they seek to represent.).' (Internal quotation marks omitted.) Thompson v. Community Ins. Co., supra, 213 F.R.D. 294." Collins v. Anthem Health Plans, Inc., supra, 275 Conn. 326-27.
In the present case, the defendant does not challenge the competency of the plaintiffs' counsel. The plaintiffs assert that they have the financial resources to represent the proposed class effectively and that their counsel will be zealous and vigorous in the prosecution of the named plaintiffs' claims as well as the claims of the putative class members. The plaintiffs also state that their counsel enjoys the financial and legal support of the New Haven chapter of the Connecticut Homebuilders Association as well as the National Home Builders Association. Therefore, this court finds that there is an assurance of vigorous prosecution in the present case.
With regard to adequacy-of-representation, the defendant reasserts and incorporates by reference the arguments that it made with regard to typicality, stating that "the Plaintiffs will have to devote a considerable amount of time to defending against the defense that they did not actually bear the cost of the building permit fees and, therefore, they are not entitled to relief pursuant to any of the causes of action set forth in the Plaintiffs' operative complaint and may not even be entitled to be class members. This preoccupation by the Plaintiffs will prevent them from adequately representing the interests of the absent class members." (Memorandum of law in opposition to plaintiffs' motion for certification of class, p. 34.)
In the present case, the allegations of the named plaintiffs and those of the putative class as defined by this court in the numerosity section are based on the same questions of fact and law and there is no conflict of interest between the two aforementioned groups. While the defendant argues that the named plaintiffs will be devoting considerable time "to defending against the defense that they did not actually bear the cost of the building permit fees and, therefore . . . are not entitled to relief pursuant to any of the causes of action set forth in the Plaintiffs' operative complaint and may not even be entitled to be class members" (memorandum of law in opposition to plaintiffs' motion for certification of class, p. 34); as discussed earlier in this memorandum of decision, as any liability that the defendant may have to the named plaintiffs or putative class members attaches the moment the allegedly excessive building permit fee was paid, the question of who ultimately bore the cost of the building permit fees does not pertain to any defense of the defendant with respect to its alleged liability to either group of plaintiffs in the underlying cause of action that the named plaintiffs brought. Therefore, this court finds that the adequacy-of representation-requirement of Practice Book § 9-7(4) is satisfied.
5 Predominance
"The rules of practice provide in relevant part: `An action may be maintained as a class action if . . . the judicial authority finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members . . .' Practice Book § 9-8; cf. Fed.R.Civ.P. 23(b)(3). In Collins [v. Anthem Health Plans, Inc., supra, 266 Conn. 50], [the Connecticut Supreme Court] explained that the fundamental purpose of the predominance inquiry is to determine `whether the economies of class action certification can be achieved . . . without sacrificing procedural fairness or bringing about other undesirable results.' (Citation omitted; internal quotation marks omitted.) Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 50. [The Connecticut Supreme Court] stated that `[c]lass-wide issues predominate if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof.' (Emphasis added; internal quotation marks omitted.) Id., 48.
"`In order to determine whether common questions predominate, [a court must] . . . examine the [causes] of action asserted in the complaint on behalf of the putative class . . . Whether an issue predominates can only be determined after considering what value the resolution of the class-wide issue will have in each class member's underlying cause of action.' (Citation omitted; internal quotation marks omitted.) Rutstein v. Avis Rent-A-Car Systems, Inc., 211 F.3d 1228 1234 (11th Cir. 2000), cert. denied sub nom. Zeirei Agudath Israel Bookstore v. Avis Rent-A-Car Systems, Inc., 532 U.S. 919, 121 S.Ct. 1354, 149 L.Ed.2d 285 (2001). `Common issues of fact and law predominate if they ha[ve] a direct impact on every class member's effort to establish liability and on every class member's entitlement to injunctive and monetary relief . . . [When], after adjudication of the classwide issues, [the] plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual[ized] claims, such claims are not suitable for class certification . . . See Perez v. Metabolife Int'l, Inc., 218 F.R.D. 262, 273 (S.D. Fla. 2003) (declining class certification in part because any efficiency gained by deciding the common elements will be lost when separate trials are required for each class member in order to determine each member's entitlement to the requested relief).' (Citation omitted; internal quotation marks omitted.) Klay v. Humana, Inc., 382 F.3d 1241, 1255 (11th Cir. 2004).
"`[N]umerous [federal] courts have recognized [however] that the presence of individualized damages issues does not prevent a finding that the common issues in the case predominate.' Allapattah Services, Inc. v. Exxon Corp., 333 F.3d 1248, 1261 (11th Cir. 2003), aff'd sub nom. Exxon Mobil Corp. v. Allapattah Services, Inc., [ 545 U.S. 546], 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005). In assessing the predominance requirement in cases involving individualized damages, `the [c]ourt's inquiry is limited to whether . . . the proposed methods [for computing damages] are so insubstantial as to amount to no method at all . . . [The plaintiffs] need only come forward with plausible statistical or economic methodologies to demonstrate impact on a classwide basis.' (Internal quotation marks omitted.) Klay v. Humana, Inc., supra, 382 F.3d 1259, quoting In re Terazosin Hydrochloride Antitrust Litigation, 220 F.R.D. 672, 698 (S.D. Fla. 2004). `Particularly [when] damages can be computed according to some formula, statistical analysis, or other easy or essentially mechanical methods, the fact that damages must be calculated on an individual basis is no impediment to class certification.
"`It is primarily when there are significant individualized questions going to liability that the need for individualized assessments of damages is enough to preclude [class] certification. See, e.g., [ Sikes v. Teleline, Inc., 281 F.3d 1350, 1366 (11th Cir.)] (These claims will involve extensive individualized inquiries on the issues of injury and damages — so much so that a class action is not sustainable.) [cert. denied sub nom. Sikes v. American Telephone Telegraph Co., 537 U.S. 884, 123 S.Ct. 117, 154 L.Ed.2d 143 (2002)]; [ Rutstein v. Avis Rent-A-Car Systems, Inc., supra, 211 F.3d 1234, 1240] (declining to certify a class because most, if not all, of the plaintiffs' claims will stand or fall . . . on the resolution of . . . highly case-specific factual issues and liability for damages is a necessarily individualized inquiry).' Klay v. Humana, Inc., supra, 382 F.3d 1259-60; see also Kohn v. American Housing Foundation, Inc., 178 F.R.D. 536, 542-44 (D. Colo. 1998) (class certification inappropriate because injury suffered by each class member was highly individualized and could not be separated from causation inquiry).
"These standards inform us that a court should engage in a three part inquiry to determine whether common questions of law or fact predominate in any given case. First, the court should review the elements of the causes of action that the plaintiffs seek to assert on behalf of the putative class. Rutstein v. Avis Rent-A-Car Systems, Inc., supra, 211 F.3d 1234. Second, the court should determine whether generalized evidence could be offered to prove those elements on a class-wide basis or whether individualized proof will be needed to establish each class member's entitlement to monetary or injunctive relief. Klay v. Humana, Inc., supra, 382 F.3d 1255. Third, the court should weigh the common issues that are subject to generalized proof against the issues requiring individualized proof in order to determine which predominate. See Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 48. Only when common questions of law or fact `will be the object of most of the efforts of the litigants and the court' will the predominance test be satisfied. Snyder Communications, L.P. v. Magana, 142 S.W.3d 295, 300 (Tex. 2004)." Collins v. Anthem Health Plans, Inc., supra, 275 Conn. 329-32.
In the present case, the named plaintiffs allege in support of each count in the amended complaint that the defendant charged building permit fees that were in excess of what the defendant needed to offer and regulate its building activity. The question of whether the defendant charged excessive building permit fees is one that is common to the named plaintiffs and the putative class members as defined by this court with regard to numerosity. In the instant case, the named plaintiffs and putative class members will need to proffer generalized evidence, as opposed to individualized evidence, to the court to prove that the building permit fees that the defendant charged them were excessive. If it is determined that building permit fees that the defendant assessed during a defined time period were excessive, then the defendant's records can establish the amount of excessive fees that the named plaintiffs and putative class members were charged. This court finds that the common issues subject to generalized proof predominate over the issues requiring individualized proof as the main issue in this case is whether the defendant assessed excessive building permit fees over a defined time period, and if it is determined that the defendant did indeed assess excessive building permit fees during that time period, then the defendant will be liable to whoever was assessed building permit fees during that time period. Again, if it is found that the defendant's building permit fees were excessive, the defendant's records can establish the amount that the putative class members were overcharged.
Therefore, this court finds that the predominance element of Practice Book § 9-8 is met.
6 Superiority
Practice Book § 9-8 requires that a class action be "superior to other available methods for the fair and efficient adjudication of the controversy." "Several `[f]actors [are] relevant to the superiority of a class action under [r]ule 23(b)(3) includ[ing]: (A) the interest of the 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; and (D) the difficulties likely to be encountered in the management of a class action.' In re Visa Check/Mastermoney Antitrust Litigation, [ 280 F.3d 124, 133 (2d Cir. 2001), cert. denied, 536 U.S. 917, 122 S.Ct. 2382, 153 L.Ed.2d 201 (2002)]." Collins v. Anthem Health Plans, Inc., supra, 266 Conn. 56-57.
"Although the plaintiffs must satisfy both the predominance and superiority requirements of Practice Book § 9-8, these criteria are intertwined; Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1006 n. 12 (11th Cir. 1997); and the manageability issue is relevant to both. Once predominance is determined, considerations of superiority and manageability `should fall into their logical place.' In re Catfish Antitrust Litigation, 826 F.Sup. 1019, 1044 (N.D. Miss. 1993). If the predominance criterion is satisfied, courts generally will find that the class action is a superior mechanism even if it presents management difficulties. See, e.g., id., 1044-45. It also is true, however, that the more individualized issues that predominate, the less superior and more unmanageable a class action will be. See, e.g., Castano v. American Tobacco Co., [ 84 F.3d 734, 745 n. 19 (5th Cir. 1996)]; see also Andrews v. American Telephone Telegraph Co., 95 F.3d 1014, 1023-25 (11th Cir. 1996) (reversing class certification because predominance of individual legal and factual issues would render class action unmanageable); 2 A. Conte H. Newberg, supra, § 4:32, p. 283 (`[w]hen a court determines that common questions do not predominate over individual ones . . . [it] is highly likely to find that a class action is also not superior because of the management difficulties posed by the individual questions')." Collins v. Anthem Health Plans, Inc., supra, 275 Conn. 347.
No party has asserted and the court is unaware of any expressed interest by any individual entity that directly paid the allegedly excessive permit fees to the defendant in controlling the prosecution of a separate action involving the subject matter of this case. The named plaintiffs assert that the amount of permit fees paid by each individual putative class member would appear to militate against an individual putative class member's interest in pursuing a separate claim. This court is unaware of any existing cases raising similar issues by members of the putative class.
The support of the New Haven chapter of the Connecticut Home Builders Association and the National Home Builders Association help to insure that the interests of the putative class members are considered during the cause of the litigation. In the present case, the allegedly excessive building permit fees were assessed in Connecticut and Connecticut statutes and the Connecticut constitution are implicated. Also, when this case was transferred to the complex litigation docket in Waterbury after having been brought in the judicial district of New Haven, no objections were made to the transfer.
This court is unaware of any special difficulties which it would encounter in managing this litigation as a class action. In fact, there are several advantages to adjudicating this action as a class action, including the elimination of the possibility of several lawsuits raising the same legal and factual issues and the attendant duplication of litigation expenses, counsel fees and parties' time. A class action would also decrease the likelihood of inconsistent judicial decisions. For all of these aforementioned reasons, this court finds a class action superior to other causes of action. Therefore, this court finds that the superiority requirement of Practice Book § 9-8 is satisfied.
IV CONCLUSION
In conclusion, the motion to certify a class is granted as to the entire complaint, with the class consisting of entities that directly paid to the defendant the allegedly excessive building permit fees during the period of April 1, 2003 to the present.