Source: https://www.legalcrystal.com/case/103512/eisen-vs-carlisle-jacquelin
Timestamp: 2019-04-19 16:55:54+00:00

Document:
1. The District Court's resolution of the notice problems constituted a "final" decision within the meaning of 28 U.S.C. § 1291, and was therefore appealable as of right under that section. Pp. 417 U. S. 169 -172.
final judgments which terminate an action . . . ," but rather the requirement of finality is to be given a "practical, rather than a technical construction." Cohen v. Beneficial Loan Corp., 337 U. S. 541 , 337 U. S. 545 -546. Pp. 417 U. S. 170 -172.
(b) The District Court's decision that respondents could lawfully be required to bear the costs of notice involved a collateral matter unrelated to the merits of petitioner's claims and was "a final disposition of a claimed right which is not an ingredient of the cause of action, and does not require consideration with it," Cohen, supra, at 337 U. S. 546 -547. P. 417 U. S. 172 .
2. The District Court's resolution of the notice problems failed to comply with the notice requirement of Rule 23(c)(2). Pp. 417 U. S. 173 -177.
(a) The express language and intent of Rule 23(c)(2) leave no doubt that individual notice must be sent to all class members who can be identified through reasonable effort. Here there was nothing to show that individual notice could not be mailed to each of the two and a quarter million class members whose names and addresses were easily ascertainable, and, for these class members, individual notice was clearly the "best notice practicable" within the meaning of Rule 23(c)(2). Pp. 417 U. S. 173 -175.
(b) The facts that the cost of sending individual notices would be prohibitively high to petitioner, who has only a $70 stake in the matter, or that individual notice might be unnecessary because no prospective class member has a large enough stake to justify separate litigation of his individual claim, do not dispense with the individual notice requirement, since individual notice to identifiable class members is not a discretionary consideration to be waived in a particular case, but an unambiguous requirement of Rule 23. Pp. 417 U. S. 175 -176.
(c) Adequate representation, in itself, does not satisfy Rule 23(c)(2), since the Rule speaks to notice, as well as to adequacy of representation, and requires that both be provided. Otherwise no notice at all, published or otherwise, would be required in this case. Pp. 417 U. S. 176 -177.
3. Petitioner must bear the cost of notice to the members of his class, and it was improper for the District Court to impose part of the cost on respondents. Pp. 417 U. S. 177 -179.
it may be maintained as a class action, and, 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 of the Rule. Pp. 417 U. S. 177 -178.
(b) A preliminary determination of the merits may substantially prejudice a defendant, since it is unaccompanied by the traditional rules and procedures applicable to civil trials. P. 417 U. S. 178 .
(c) Where, as here, the relationship between the parties is truly adversary, the plaintiff must pay for the cost of notice as part of the ordinary burden of financing his own suit. Pp. 417 U. S. 178 -179.
POWELL, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, BLACKMUN, and REHNQUIST, JJ., joined. DOUGLAS, J., filed an opinion dissenting in part, in which BRENNAN and MARSHALL, JJ., joined, post, p. 417 U. S. 179 .
On May 2, 1966, petitioner filed a class action on behalf of himself and all other odd-lot [ Footnote 1 ] traders on the New York Stock Exchange (the Exchange). The complaint charged respondents with violations of the antitrust and securities laws and demanded damages for petitioner and his class. Eight years have elapsed, but there has been no trial on the merits of these claims. Both the parties and the courts are still wrestling with the complex questions surrounding petitioner's attempt to maintain his suit as a class action under Fed.Rule Civ.Proc. 23. We granted certiorari to resolve some of these difficulties. 414 U.S. 908 (1973).
dismissed the suit as a class action. 41 F.R.D. 147. Following denial of his motion for interlocutory review under 28 U.S.C. § 1292(b), petitioner took an appeal as of right under § 1291. Respondents then moved to dismiss on the ground that the order appealed from was not final. In Eisen I, the Court of Appeals held that the denial of class action status in this case was appealable as a final order under § 1291. 370 F.2d 119 (1966), cert. denied, 386 U.S. 1035 (1967). This was so because, as a practical matter, the dismissal of the class action aspect of petitioner's suit was a "death knell" for the entire action. The court thought this consequence rendered the order dismissing the class action appealable under Cohen v. Beneficial Loan Corp., 337 U. S. 541 , 337 U. S. 546 (1949).
odd-lot trading [ Footnote 6 ] could also be identified with reasonable effort. Using the then current first-class postage rate of six cents, the court determined that stuffing and mailing each individual notice form would cost 10 cents. Thus, individual notice to all identifiable class members would cost $225,000, [ Footnote 7 ] and additional expense would be incurred for suitable publication notice designed to reach the other four million class members.
decision within the meaning of 28 U.S.C. § 1291, [ Footnote 8 ] and were therefore appealable as of right under that section; and, second, that the Court of Appeals in Eisen II expressly retained jurisdiction pending further development of a factual record on remand, and that consequently no new jurisdictional basis was required for the decision in Eisen III. Because we agree with the first ground asserted by respondents, we have no occasion to consider the second.
limit appellate review to "those final judgments which terminate an action . . . ," Cohen v. Beneficial Loan Corp., 337 U.S. at 337 U. S. 545 , but rather that the requirement of finality is to be given a "practical, rather than a technical construction." Id. at 337 U. S. 546 . The inquiry requires some evaluation of the competing considerations underlying all questions of finality -- "the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other." Dickinson v. Petroleum Conversion Corp., 338 U. S. 507 , 338 U. S. 511 (1950) (footnote omitted).
Rule 23(c)(2) provides that, in any class action maintained under subdivision (b)(3), each class member shall be advised that he has the right to exclude himself from the action on request or to enter an appearance through counsel, and further that the judgment, whether favorable or not, will bind all class members not requesting exclusion. To this end, the court is required to direct to class members "the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." [ Footnote 11 ] We think the import of this language is unmistakable. Individual notice must be sent to all class members whose names and addresses may be ascertained through reasonable effort.
disappear for resort to means less likely than the mails to apprise them of [an action's] pendency." Id. at 339 U. S. 318 .
In Schroeder v. City of New York, 371 U. S. 208 (1962), decided prior to the promulgation of amended Rule 23, the Court explained that Mullane required rejection of notice by publication where the name and address of the affected person were available. The Court stated that the "general rule" is that "notice by publication is not enough with respect to a person whose name and address are known or very easily ascertainable. . . ." Id. at 371 U. S. 212 -213. The Court also noted that notice by publication had long been recognized as a poor substitute for actual notice, and that its justification was " difficult, at best.'" Id. at 371 U. S. 213 .
Adjusting this figure to reflect the subsequent 4˘ increase in first class postage would yield a figure of $315,000.
339 U.S. at 339 U. S. 315 .
Or a subclass might include those on monthly investment plans, or payroll deduction plans run by brokerage houses. [ Footnote 2/1 ] The possibilities, though not infinite, are numerous.
"When there is a question of law or fact common to persons of a numerous class whose joinder is impracticable, one or more of them whose claims or defenses are representative of the claims or defenses of all and who will fairly and adequately protect the interests of all may sue or be sued on behalf of all. [ Footnote 2/4 ]"
"Almost any 'bond of association' in an event or status out of which a legal dispute arose is sufficient to constitute a class. The class must be numerous, but need not be so large that, in itself, this factor makes it impracticable to bring them all before the court. A number of members sufficient to satisfy present Section 195 [of the New York Civil Practice Act] would satisfy the proposed rule. Size, modesty of monetary interest, inability to locate members and difficulty of obtaining jurisdiction should all be considered in determining impracticability of joinder. [ Footnote 2/5 ]"
complaint. See, e.g., Dolgow v. Anderson, supra at 491-493; Philadelphia Elec. Co. v. Anaconda American Brass Co., 43 F.R.D. 452, 462-463 (ED Pa.). See generally 7A C. Wright & A. Miller, Federal Practice and Procedure § 1790, p. 187; 3B J. Moore, Federal Practice Ś 23.65. And, as Rule 23(c)(1) clearly indicates, the courts retain both the power and the duty to realign classes during the conduct of an action when appropriate. See, e.g., Carr v. Conoco Plastics, Inc., 423 F.2d 57, 58 (CA5), cert. denied, 400 U.S. 951; Johnson v. ITT-Thompson Industries, Inc., 323 F.Supp. 1258, 1262 (ND Miss.); Ostapowicz v. Johnson Bronze Co., 54 F.R.D. 465, 466 (WD Pa.); Baxter v. Savannah Sugar Refining Corp., 46 F.R.D. 56, 60 (SD Ga.). That discretion can be fully retained only if the full-class complaint is preserved when a subclass is defined to prosecute the action. The bounds of the subclass can then be narrowed or widened by order of the District Court as provided in Rule 23(c)(1), without need to amend the complaint and without the constraints which might exist if the complaint had earlier been amended pursuant to Rule 15 to include only the subclass.
The class action is one of the few legal remedies the small claimant has against those who command the status quo. [ Footnote 2/8 ] I would strengthen his hand with the view of creating a system of law that dispenses justice to the lowly as well as to those liberally endowed with power and wealth.
American Pipe & Construction Co. v. Utah, 414 U. S. 538 , 414 U. S. 555 . And see Wheaton, Representative Suits Involving Numerous Litigants, 19 Cornell L.Q. 399, 423 (1934).
If the subclass lost, it is argued that other investors not members of that subclass could not be precluded from prosecuting successful suits of their own, since they had never had their day in court or necessarily even been apprised of the subclass' action. See Hansberry v. Lee, 311 U. S. 32 ; F. James, Civil Procedure § 11.26 (1965); 1B J. Moore, Federal Practice Ś 0.411 (1974). If the subclass won, strict application of the doctrine of mutuality of estoppel would limit the usefulness of that subclass victory in suits brought by investors not members of that subclass. See generally F. James, supra, § 11.31; 1B J. Moore, supra, Ś0.41 (and Supp 1973), and cases cited therein. And see Vestal, Preclusion/Res Judicata Variables: Parties, 50 Iowa L.Rev. 27, 55-59 (1964); Note, 35 Geo.Wash.L.Rev. 1010 (1967); Currie, Mutuality of Collateral Estoppel: Limits of the Bernhard Doctrine, 9 Stan.L.Rev. 281 (1957).

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