A Philadelphia judge has certified a class action in which the plaintiffs allege that AAA Mid-Atlantic breached its contracts with local tow truck companies providing emergency roadside services to AAA members by instead assigning emergency calls to AAA’s own fleet of tow trucks.
Philadelphia Court of Common Pleas Judge Patricia A. McInerney certified a class of tow truck contractors who entered roadside assistance service provider agreements with AAA Mid-Atlantic from 1990 through September 30, 2005, in an order issued Monday.
There are no fewer than 214 members, McInerney said in her opinion. One of the class counsel, Jonathan Z. Cohen of the Law Offices of David G. Concannon, said that there are at least 120 class members.
An individual case on a similar theory resulted in a $123,000 settlement, and the class representative claims losses of approximately $10,000.
The class representative is Alfa Auto World, which entered two contracts with AAA Mid-Atlantic on July 19, 2001, and November 1, 2002, until the contracts were terminated September 24, 2004.
The judge found that common issues of fact and law predominate over any other individual issues for class members.
“The first issue of fact and law common to the class members is whether AAA improperly assigned to itself emergency roadside calls which AAA was contractually obligated to assign to Alfa and/or other members of the class,” McInerney said. “The second issue of fact and law common to the class members is whether AAA breached its contracts by unilaterally reducing the territories assigned to Alfa and to other class members.”
While AAA argued that the statute of limitations defeats the commonality of the class’ claims, the judge opined that it is an issue of fact if the discovery rule applies and the class members could not ascertain during the statute of limitations period that their contracts were allegedly being breached.
Alfa’s claims also are typical because, McInerney said, “the issue typical to all members of the class remains substantially the same — namely, whether AAA improperly assigned roadside emergency calls to itself instead of assigning them to Alfa and to other members of the class.”
The class does not include any contractors who agreed to new June 2008 contracts containing forum selection clauses, mandatory arbitration in Wilmington, Del., and preclusion of class actions.
But the class does include contractors who agreed to a March 2007 contractual amendment conferring exclusive jurisdiction over disputes to the courts in New Castle County, Del., and to a November 2007 contractual amendment with a forum selection clause, mandatory arbitration and preclusion of class actions.
The contractual revisions were sought after a single plaintiff, Seiple’s Collision & Restoration, won a $143,000 verdict against AAA on a similar breach of contract claim, and that case settled for $123,000, McInerney said.
While the state Superior Court ruled that the June 2008 contract was valid on its face under the Pennsylvania Uniform Written Obligations Act, the court did not overturn a ruling by the late Philadelphia Court of Common Pleas Senior Judge Albert W. Sheppard Jr. that the 2007 contractual amendments were void for lack of consideration.
Thirty-six other contractors settled their breach of contract claims as part of another class action, McInerney said.
While AAA challenged the adequacy of Alfa’s president, Oleg A. Lukovsky, as class representative because he was convicted of robbery and other criminal offenses in 1997, McInerney ruled against the argument.
A criminal record involving “crimes that could impeach his credibility on the stand” might be relevant, but Alfa’s president was not convicted of those sorts of crimes, Cohen said.
McInerney also ruled against the argument that Alfa had a conflict of interest with other members of the class because its assigned territories overlapped with other class members.
The damages include actual damages, consequential damages, damages from lost profits from calls that the class members were entitled to but AAA allegedly shifted to its own fleet, and expenses incurred for equipment, employees and insurance that the contractors undertook in order to meet its obligations to service their AAA territories 24 hours a day, seven days a week, Cohen said.
If the lawsuit was filed today, it would be in federal court because AAA has changed its headquarters to Delaware, Cohen said.
The lawsuit also does not trigger federal jurisdiction under the Class Action Fairness Act of 2005 because the amount of controversy does not exceed $5 million, according to court papers.
One of the defense counsel, E. McCord Clayton of Bazelon Less & Feldman, did not respond to a request for comment immediately Wednesday afternoon.
Plaintiffs’ co-counsel also included Matthew T. Charles.
(Copies of the 24-page opinion in Alfa Auto World v. AAA Mid-Atlantic, PICS No. 12-2124, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •