Mathews v. Book-of-the-Month Club, Inc.

MEMORANDUM OPINION AND ORDER SCHNACKE, District Judge. Defendant seeks a determination, pursuant to Rule 23, that this action is not properly maintainable as a class action. The action is brought under the Truth in Lending Act, 15 U.S.C. § 1601 et seq. and Regulation Z' thereunder, 12 C. F.R. § 226.1, et seq., asserting that certain procedures and arrangements employed by defendant in obtaining new members violate the “four installment” rule established by the regulation. We need not comment at this time on the merits of plaintiff’s claim. We need only decide whether, under the circumstances, the tests of Rule 23 have been met. Also, we need not pass on the adequacy or ability of plaintiff and his attorney to act for a class estimated at some 500,000 persons, namely those joining defendant’s organization under the arrangements here attacked during the past year, 15 U.S.C. § 1640(e). The minimum statutory penalty if such a class provided, would, of course, be $50,000,000, together with attorneys’ fees, 15 U.S.C. § 1640(a). Ratner v. Chemical Bank New York Trust Company, 54 F.R.D. 412 (S.D.N.Y. 1972), has come to be the leading case in class actions in Truth in Lending cases, particularly, and generally in statutory actions where Congress has provided for minimum damages and attorneys’ fees. It has been widely cited and followed. See La Mar v. H & B Novelty & Loan Company, 489 F.2d 461 (9th Cir., 1973). It holds, in effect, that the statutory penalties, including attorneys’ fees, are a substitute, in vindicating the rights of the small litigant, for the class action device. It also draws upon the “horrendous, possibly annihilating punishment” (54 F.R.D. at p. 410), unrelated to actual damages, that could flow from permitting aggregation of claims of large [480] classes under the Act and Rule 23. This would clearly be true in the instant case. Our own Court of Appeals has recently expressed “the belief that restrictions on the flexible language of Rule 23 are a necessary contribution to the effort to avoid the intractable problems of massive class actions . . . . ” La Mar v. H & B Novelty & Loan Company, supra, 489 F.2d at p. 468. If plaintiff’s view of the facts and law be correct, Congress has afforded him and others in like position their rights and remedies. Each may pursue his own if he so desires. So be it. Defendant’s motion is granted and the Court hereby determines that this action is not to be maintained as a class action. This order is not conditional and it is not contemplated that it will be altered or amended prior to the decision on the merits'.