Warren E. Burger: We will hear arguments next in Coopers & Lybrand v. Livesay and the related case. Mr. Walsh you may proceed whenever you are ready.
Thomas C. Walsh: Mr. Chief Justice and may it please the Court. This is the death knell case. The Court today in this matter is being asked to decide the validity of the so called death knell exception to the vulnerable final judgment rule of Section 1291 Title 28 United States Code. The death knell doctrine was first formulated by the Second Circuit in the original Eisen case in 1966, simply stated it permits an appeal by a class action plaintiff from an order refusing to certify the case for a class action treatment if the plaintiff can convince the Court of Appeals that he would abandon his individual claim if he is not permitted to represent the class. Under those circumstances the Court of Appeals in Eisen deemed the refusal to certify to be a final judgment because it sounded the so called death knell of the case. The purpose for the death knell doctrine as originally conceived and as the word has been applied is not to create some special right of action or special right of appeal in a class action plaintiff as the respondents in this case seem to indicate, rather the only purpose for the death knell doctrine was to make sure that an order refusing to certify the class action would not ultimately go unreviewed. In other words, the question is when the order refusing to certify is issued does that whatever mean that this matter will not be maintained as a class action and I think it is important to bear that purpose of the death knell doctrine in mind throughout our discussion in this morning. In the intervening 12 years since Eisen want the death knell doctrine frankly has not faired well. Its validity has repeatedly been questioned by the Second Circuit itself including in particular of Judge Henry Friendly who has called for its abolishing. The doctrine has been rejected flatly by the Third Circuit and the Seventh Circuit. It has been applied and modified form by the Fifth Circuit and in very limited form by the Ninth Circuit and we are hear this morning asking this Court to uphold the judgment of the Third Circuit and the Seventh Circuit to reverse the judgment of the Eighth Circuit in the Eisen case, and if the Court will to sound the death knell for the death knell doctrine. It might be appropriate and helpful at this point to review in summary fashion the facts of the instant case. This is an action brought in 1973 under the Securities Act 1933 and the Securities Exchange Act 1934. The complaint charged that a registration statement and a prospectus issued by the co-petitioner Punta Gorda Oils, Inc. contains certain false statements. Although the original complaint made class action allegations. The plaintiffs themselves waited more than nine months before they initially requested the Court to certify a class and even at that time they did not request a hearing on that issue. Eventually, some 18 months after the action was originally filed, they finally requested a hearing after being prompted to do so by the Court of Appeals. The hearing was held promptly and within one month after the final brief was filed by the parties on the class action question, the District Court in St. Louis certified the case for class action treatment; however, at the same time, the District Court issued an order to the attorney for the class action plaintiffs to show cause why they should not be enjoined from representing the class and the background of that was that it came out in the hearing on the class action question that those attorneys who were representing the plaintiffs in this purported to represent the class had in fact represented one of the underwriters who was involved in the offering. It was on unrelated matters but they had had a continuing relationship with that underwriter and there are refusal to join the underwriters as defendants in the lawsuit caused some questions to come up about whether that judgment was a fair one or whether it might have been contended a conflict of interest. So at the time that the trial judge certified the matter for a class action treatment he also issued an order to show cause to the attorneys why they should not be enjoined. They chose not to contest that and they withdrew from the action at which time present counsel for the respondents appeared. Immediately upon the appearance of new counsel, the trial judge inquired other than whether they intended to join the underwriters in the lawsuit and the judges’ view at that time what we are still not clear who the parties to this case were going to be. He was not given an answer to that question until late in October 1975, at which time it became clear to him that the reasoning underwriters had not been joined was that the statute limitations had entirely run against them while initial counsel for the respondents had been struggling to keep the conflict of interest from coming to the Court’s attention, at that time --
Warren E. Burger: So there was a period when the action could have been taken?
Thomas C. Walsh: Against the underwriters? I believe so yes, sir and at the outset under at least a couple of theories of the respondents in their complaint, the underwriters could properly have been joined as defendants. Upon coming to this realization in October 1975, with trial Court --
John Paul Stevens: They join all the other members the underwriting sequence and we could accept this one?
Thomas C. Walsh: No Your Honor, none of the underwriters were joined.
John Paul Stevens: Oh, none?
Thomas C. Walsh: None of them of course. The parties were Punta Gorda Oils, the issuer its officers and directors and Coopers & Lybrand were coming for.
John Paul Stevens: What would be the theory of proceeding against the underwriters?
Thomas C. Walsh: Well, a standard procedure in securities cases Your Honor to join the underwriters their liability is virtually automatic if you establish the other elements of liability under Section 11 for instance of the 33 Act. It is a fairly routine matter that the trial court just wanted to know why it was not done and never really did get a satisfactory answer and was caused to become concerned that there were other reasons just in the merits of the case --
John Paul Stevens: Not bigger percentage that you are offering that the underwriter with respect to which the conflict existed here?
Thomas C. Walsh: A small percentage Your Honor that is all. In its October 23, 1975 order the trial court expressly said that he was concerned about the adequacy of the representation of the class that was being interpreted by these respondents and he directed at that time that a notice be sent to the class advising them of what had happened today in the lawsuit and specifically requesting petitions either for intervention or for appointment of a new class representative. It also at that time the Court directed the respondents to initiate discovery as to the names and addresses of the class members for the purpose of sending this notice. He had stayed discovery up to point on the merit, until the class action question could finally result. Again however the respondents did not comply with the order and in fact they waited more than six months been into and formally requested the names and addresses of the class members and more than nine months before they actually initiated the discovery procedures under the rules. At that point in a motion to decertify the class was filed and on September 01, 1976 the Court exacerbated with the behavior of the respondents and vitally concerned about both their adequacy of representation and that the delays that had occurred decertified the class and ordered that the respondents’ individual claims could proceed. At that time, the respondents did not ask for a Section 1292 (b) certification instead they filed a notice of appeal to the Eighth Circuit under Section 1291 and in a separate independent proceeding they asked the Court to issue a writ of mandamus against the decertification order. The Eighth Circuit denied our motion to dismiss the appeal and after argument on the merits held that decertification order was appealed under death knell doctrine and then ruled that the District Court had erred in decertifying the case and it ordered to recertify it without any discussion of whether it should have been in the first place. In permitting the appeal, the Eighth Circuit took note of the fact that the respondents’ individual claim was in the amount of $2,650 and that the expenses of prosecuting the action would exceed that amount and therefore held that the death knell doctrine that the death knell of a case has sounded and it denied a mandamus petition as moved. Primary question presented to this Court on certiorari deals with the jurisdiction of the Court of Appeals to entertain the appeal from the decertification order. Secondary question presented in our petition is that if jurisdiction is found to exist in the Court of Appeals, did the Eighth Circuit overstepped the permissible bounce of judicial appellate review in substituting its judgment for that of the District Court. I will confine my oral remarks primarily to the first point which I think is of most interest to the Court. I think the second point has been adequately briefed and relied principally on our briefs in that connection. We submit that the death knell doctrine has an improper reading of Section 1291 of Title 28. Section 1291 of course embodies the final judgment rule which traces through its back to the first judiciary act of 1789, it has been described as the dominant rule of federal appellate jurisdiction designed to prevent peace appeals and undue litigiousness. In Carroll v. United States which perhaps the closest case on its facts to the instant merit. The Court held that the judgment is final only if determination of the action is the necessary result of the order and it also held that appealability cannot depend on the facts of the given case. Well, the death knell doctrine in our view violates these principles. The order which decertified the class in the present case did not act in anyway upon the claim of the individual respondents. They came into Court with a claim for $2,650 after the class action was certified, they still had a claim for $2,650.
Thurgood Marshall: In some court other than a federal court, they need below $10,000 in the federal court?
Thomas C. Walsh: No, this was under the Securities Act Your Honor, so they qualify without regard in the amount of controversies.
Thurgood Marshall: That is right.
Thomas C. Walsh: After the action was decertified they still had a claim for $2,650.
Thurgood Marshall: But no lawyer?
Thomas C. Walsh: Well, that is not clear either. The record that was made in the District Court of course was not made with a view to our determining whether the death knell would eventually sound and it never is with the few exceptions, but the record does show in this case that the individual respondent sees in Livesay acknowledged in his deposition where he would have asked, “Will you continue to proceed with this case if it does not go forward on a class basis? ”He said, “Well, I will have to think about that, but I have to leave that decision up to my lawyer, if my lawsuit then yes I will proceed.” Well, he personally did not considered the claim to be unviable and it shows that the decision is really that of the lawyer. It is an economic decision by the lawyer rather than an order which acts upon a claim. The decertification order did not act upon their claim. It created a situation in which the lawyer had to make the decision whether he wanted to undertake this claim under these facts at this time. Furthermore, the respondents in an earlier petition for mandamus to the Court of Appeals had told the Court that they intended to continue with the claim even if class action certification was denied. So there they were trying to get the Court that act under representation that they did intend to pursue the matter on an individualized basis and in fact after the decertification order was issued by the Court of Appeals they did continue, while they engaged in considerable discovery at a time when the only thing that was pending for their individual claims and respondents sees in Livesay in opposition to the certification order filed an affidavit in which he said, “I do intend I am committed to this case and I do intend to follow it up.” We think that the death knell doctrine is a judicially created exception to the finality requirement which in practice primarily applies to any trust and securities claims and which ordinarily does not apply to such cases as Civil Rights Actions or adversity cases. We think it ignores the teachings of this Court in Baltimore Contractors v. Bodinger and Liberty Mutual v. Wetzel and which hold that the amendments to the finality requirement of Section 1291 are really matters for Congress and in that area Section 1292 (b) has been created as the vehicle for review of interlocutory orders and that further judicial exceptions to the finality requirement are unwarned and unwise. We think that there are a number of reasons most of which are set forth in our brief at some length, why the death knell doctrine is inadvisable, improper and unwarned. Reason number one has to do with the language of rule 23 itself. Rule 23 in its own terms provides that any order certifying or refusing to certify a class action is conditional and it provides that it may be altered or amended at any time by definition therefore the class action determination is not final, moreover even if rule 23 did not so provide general concepts of judicial husbandry reveal that the trial court has continuing jurisdiction over prior orders and has the power to amend them anytime prior to final disposition of a case.
William H. Rehnquist: The theory of the death knell is not that the order declining to certify is not capable of being changed by the trial Court, but that if it is initially entered it means the case just would not be further prosecuted?
Thomas C. Walsh: It assumes that it will not Your Honor yes.
William H. Rehnquist: So the fact that the trial court might if prosecution continued later changes mind does not undermine the basis for the death knell doctrine I think?
Thomas C. Walsh: Well, the death knell doctrine really is designed to make sure that the determination that this matter shall never be adjudicated on a classwide basis is somehow preserved for appellate review. Now, the fact that the individual petitioner, the individual plaintiff in a case may not choose to go forward does not mean these issues are forever resolves. You have a possibility of intervention, you have a possibility of another class action been filed and you have the possibility that if this plaintiff’s claim really does not have entered that he chooses sooner or later will be able to obtain class certification may be because someone else is willing to come in and join us in intervening.
Thurgood Marshall: In this specific case, the another member who declared to file during the case?
Thomas C. Walsh: Yes, Your Honor I see no reason by notice he could file a --
Thurgood Marshall: Class action?
Thomas C. Walsh: He could certainly seek to maintain a class action.
Thurgood Marshall: No, but could he maintain to that at this stage in this case?
Thomas C. Walsh: There would be no res judicata problem with it. The basis for the --
Thurgood Marshall: And no estoppel?
Thomas C. Walsh: No, Your Honor.
Thurgood Marshall: And no law of the case there?
Thomas C. Walsh: No, Your Honor. The reason why this class action was decertified had to do with the adequacy of the class plaintiffs and with the delay that they had caused if an adequate plaintiff, an adequate representative came in and asked to be name the class representative, we would still contend that the class action is not manageable and improper for other reasons, but there are the same reasons that we have raised before in this proceeding, but there is no res judicata problem with it or a collateral estoppel in my opinion.
Speaker: Do you think the considerations of the same with respect to denial of class certification as they are when there has been a certification and then a decertification?
Thomas C. Walsh: I see more reason to differentiate Mr. Justice White that these rules that have gone up around the death knell doctrine have been applied in both incidences, both were initial refusals to certify and ultimate decertification that seems to me that kind of --
Speaker: None of the cases upholding the death knell doctrine, I have distinguished between the two and I have some other dealt with decertification?
Thomas C. Walsh: Yes Your Honor, there are at least two --
Speaker: Just one for example.
Thomas C. Walsh: Yes, but in the Korn and Milberg cases in the Second Circuit, one of those was a decertification as distinguished from a refusal to send.
Speaker: Well, until decertification now, the lawsuit was going forward not only on behalf of the name, plaintiff went on behalf of others?
Thomas C. Walsh: That is correct.
Speaker: And that decertifications terminated that case on behalf of others --
Thomas C. Walsh: It has --
Speaker: No question about that is that --
Thomas C. Walsh: Well, it has terminated in this case as a class action and to the extent that their interest were represented --
Speaker: It is terminated to determine whatever this case had to do with others has been terminated. It was going forward on behalf of others although one name?
Thomas C. Walsh: Yes, but not to their prejudice.
Speaker: Well, it does not go forward nevertheless it has been dismissed with respect to others?
Thomas C. Walsh: Yes, that is correct.
Speaker: It is waived that it would not have been had the trial judge simply initially refused to certify that?
Thomas C. Walsh: I think the result is the same as far as the absent class members are concerned.
Speaker: Well, but except before the trial judge initially refuses to certify, there never has been going ahead with respect of class members?
Thomas C. Walsh: Well, the Court has held that for instance statute of limitation purposes that it is a class action until from the time it has filed until an order is entered refusing to certify it.
Thurgood Marshall: When the case was just left there were original denial of certification, were that not?
Thomas C. Walsh: That is correct and that is the way it is usually implied, but our position is that it really does not make any difference --
Speaker: But if notice (Inaudible). you would not think to make any difference would you?
Thomas C. Walsh: Well, you would have to send another notice advising them that it had been terminated I would think, but as a result it would be the same.
Speaker: In terms of finality it would be there with same result even no notice had gone up?
Thomas C. Walsh: Yes, it would not be appealed Your Honor. Second major problem with the death knell doctrine we think is that requires the appellate court to make a determination of finality on a record that it is ordinarily unsuited to such a determination. The record that is made before the trial court on a question of whether the class action should be certified does not address the issue what will happen if it is not certified? Now, the Fifth Circuit has indicated that it will only accept death knell appeals if that record does affirmatively show that in the absence of certification there will be no further continuance, but we think that to the extent of the death knell doctrine interjects the appellate court under the fact finding process in the first instance, it is unwise and it is unsound and usually it requires the Court of Appeals to make a guess as to the intentions of the counsel for the plaintiffs.
William H. Rehnquist: Well, if you in Fifth Circuit and would be appearing before a district judge in the Fifth Circuit would you think that he was acting properly if he reject an offer of proof as to whether or not the action would go forward in view of the Fifth Circuit’s holding?
Thomas C. Walsh: No, I think that would be an appropriate thing for him to inquire into and for you to produce if you are the plaintiff and in the Fifth Circuit you have the burden of establishing that the death knell will sound if you are refused class certification.
William H. Rehnquist: Then the Appellate Court is not engaged in free trial?
Thomas C. Walsh: That is correct. That is one way that the burden of the death knell doctrine has been ameliorated somewhat by one court. We think that except for that kind of a ruling to the death knell doctrine does embody an inefficient use of manpower because of the requirement that the appellate courts try to come through the record made for other purposes to make an informed or perhaps uninformed guess as to whether the plaintiffs’ counsel deemed to this case --
Speaker: What if your class members had noticed that you are perfectly happy in that effect you to light in the case as going forward on behalf of the class which includes you and they you are notified that the case is no longer going forward on your behalf and has been dismissed and you are going to have to spend your own money I guess if you want to litigate. I take that you would say that you could not intervene either an appeal the denial of the decertification?
Thomas C. Walsh: Oh, you are absolutely correct Your Honor. And that is United Airlines v. McDonald I think. That is exactly what was held --
Speaker: Why could that person intervene and appeal?
Thomas C. Walsh: The appeal relates only to the class certification question.
Speaker: So I know but the reason you are suggesting that he could appeal because it has been a final judgment?
Thomas C. Walsh: Well, no he can appeal only at such time as there is a final judgment. I am sorry to the --
Speaker: Well, that is what I asked you? The McDonald did not say to hold that, did they?
Thomas C. Walsh: No, it held that were the refusal to certify occurred and then the case later went either to settlement or judgment then the intervener can come in and test --
Speaker: But what about the it did not hold that the intervener could not intervene earlier?
Thomas C. Walsh: He could intervene certainly, but he could not appeal.
Speaker: Well, why could he not appeal and say there has been the final judgment here the case that was going forward on my behalf has been dismissed?
Thomas C. Walsh: Because the case has not been dismissed in its entirety the final judgment --
Speaker: But what if this case has been dismissed?
Thomas C. Walsh: Well, it is not really his case. The case is filed by --
Speaker: Well, if I noticed that he got notice telling in that was his case?
Thomas C. Walsh: He got notice saying there has been a lawsuit filed and you are a member of the class on whose behalf it is being prosecuted. Now, until that case is dismissed.
Speaker: If he was notified that he was notified to as a class member?
Thomas C. Walsh: That is right, but Your Honor there is no final judgment in any case until an order is entered disposing of all parties and all issues and the fact that two or three plaintiffs are dismissed out of a case or all but one for instance does not make it a final judgment.
Speaker: Well, that were not really dismissed either?
Thomas C. Walsh: Not in McDonalds eventually itself.
Speaker: Rule 54 at least requires that there would be finding by the Court in such a case?
Thomas C. Walsh: That is correct. No just a reason for delay yes. Our third quarrel with the death knell doctrine is that it destroys the certainty and the predictability that Section 1291 was designed to achieve. In some incidences I can conceive if the death knell doctrine is adopted, a lawyer is required to file one appeal in an interlocutory situation just to make sure that the order that was entered is not deemed to final and later if the case is over and therefore he is barred from appeal that was the Dickinson case some years ago. I think it will also spend considerable number of new request for exceptions to the final judgment rule producing a flat of interlocutory appeals which will overwhelm and already overburden federal appellate courts.
Thurgood Marshall: As that happens in 66?
Thomas C. Walsh: There were certainly the number of appeals that triples since 1966 Your Honor how many of that are attributable to the death knell doctrine I cannot tell you.
Speaker: But it had not made the Circuits have the death knell doctrine, Second and now the Eighth --
Thomas C. Walsh: Second and the Eighth.
Speaker: And then the Fifth in amount of 54?
Thomas C. Walsh: And the Ninth even more modified.
Speaker: As it increased in the Second Circuit?
Thomas C. Walsh: I do not have any statistics under that --
Thurgood Marshall: Well, then how do you take statements and what you are having?
Thomas C. Walsh: Well, certainly if you --
Thurgood Marshall: And already you had --
Thomas C. Walsh: If you permit any plaintiff who files a class action and then he is denied the right to represent class to file an interlocutory appeal, are you going to increase the number of appeals filed and you are also going to increase the number of class actions that are filed. I can prove that that is what senses tell me. I think also the logical corollary of the death knell doctrine is that any time I can convince an appellate court that I do not want to continue my case any further because it is economically undesirable for me to continue in the lack of an order that has been entered and logically I should be able to appeal that order. That is really what the death knell doctrine says.
Speaker: It is an order denying summary judgment --
Thomas C. Walsh: Anything.
Speaker: Without any respect to class action?
Thomas C. Walsh: Right, irrespective with the class action question anytime I can convince the Court that that order has effectively prevented me from wanting to continue my case further I would be able to appeal it because that is the exact rationale of the death knell doctrine. We think certainly too that the death knell doctrine has thus been recognized by many courts and fairly discriminates against class action defendants and in favor of class action plaintiffs an order refusing to certify a class action is immediately appealable under the death knell doctrine. On the other hand, an order granting class certification is not appealable.
Speaker: Are there some Circuits that allow appeal of orders granting class certification?
Thomas C. Walsh: The Second Circuit has experimented with what they call the reverse death knell doctrine and has applied that in a couple of cases and has earlier concluded that it really has many more workable than the death knell doctrine itself and although I think in my own opinion that more often to not the grant of class certification it is the death knell type of case than the refusal of the grant because experience shows us that overwhelming majority of these class actions particularly in the securities area are settled and not applied because of the interarm (ph) effect of the grant of the class certification, but again that is that calls for speculation as does this whole area and that is why the certainty that the 1291 has built and has been denied.
Warren E. Burger: We will resume that at 1 o’clock. Mr. Weiss you may proceed whenever you are ready.
Melvyn I. Weiss: Mr. Chief Justice and may it please the Court. We have already gone through four and a half years of this litigation. This is a relatively simple case for class treatment. It was brought on behalf of approximately 1800 direct purchases of securities pursuant to our prospectus. Approximately a year after the prospectus was issued, I wanted to go and wrote down the earnings reported in the prospectus. By decreasing one year’s earnings to one third of what was recorded and another year’s earnings to 60% of what was recorded. In spite of those facts most of the time that has been spent in this litigation has been exhaustively spent on the class question.
Warren E. Burger: Well, that is the only question here is it not?
Melvyn I. Weiss: That is correct Your Honor, but I think it is important to see the background so that we can determine whether it was the death knell in the context of this case. During three of the years that District Court stayed discovery on the merits. There is presently a stay entered on the District Court’s own motion of all proceedings and ordered decertifying the action as a class action was entered three years after the action was instituted. The basis --
Thurgood Marshall: But upon that delay, would it a failure to move on class action?
Melvyn I. Weiss: That is not correct Mr. Justice Marshall.
Thurgood Marshall: Well, correct.
Melvyn I. Weiss: The Court had already certified the class after that purported delay exists occurred. We came into the case long after that transpired, we were the second counsel in the case.
Thurgood Marshall: Did that help the delay?
Melvyn I. Weiss: No, it did not Your Honor, not in my view because --
Thurgood Marshall: Change in counsel does not delay a case?
Melvyn I. Weiss: No, I am saying that the nine months at the beginning of the case before the motion was made for the certification of the class did not delay the action. It is not uncommon for the first nine months to be taken up with pleadings of issue, service of interlocutorier, first request for production of documents in response to that the delay as the Eighth Circuit pointed out was provoked almost entirely by the actions of the District Court judge and the defendants in the defense of tactics.
Speaker: But the activities you describe counsel has typically taken the first nine months’ discovery interlocutorier as they are themselves quite expensive and time consuming, Are they not?
Melvyn I. Weiss: That is correct Your Honor.
Speaker: And yet you do that without any knowledge that you will succeed and have you class certified?
Melvyn I. Weiss: That is correct Your Honor.
Speaker: So does that not take something within your death knell claim?
Melvyn I. Weiss: Not really Your Honor because we hope that the class issue will be early determined and the rule in fact requires that to be determined as soon as practical, if a litigant starts an action such as this, he has to assume that the Court is going to adhere to the rule and indeed I think in Eisen there was some urging that that be done quickly. So we have to assume that these things are going to occur quickly, but the out of pocket expenses incurred during that part of the case are certainly a lot less than were actually incurred after one and half years of litigation and that changes the circumstances in this case. We try to fashion a standard for a death knell as I proceed in my argument that I think make some sense and might be applicable on a standard basis throughout the Court’s one of problems I have with the death knell doctrine as that is very difficult to decide what exactly it is. Some court say $70 is what requires and others say $7,500 is that not the death knell and we would have to find out really what the standard should be if it is going forward --
Thurgood Marshall: It is far more because of no record?
Melvyn I. Weiss: Well, no I will demonstrate I hope that on this record in this case we have enough to apply the standard that I will suggest.
Speaker: Oh, that is conceptionally. There is difference of opinion about the death knell doctrine too as there is some one view of being that it is a final judgment as a practical matter and the other view being that it is not a final judgment but nonetheless it is appealable because the peculiar equities of the situation?
Melvyn I. Weiss: And some agreed at that as part of the collateral order doctrine.
Speaker: Right.
Melvyn I. Weiss: Yes some cases merged that two concepts and others separate that. I think they fall into both and I think it is final as a practical matter I think it also fits well within the collateral order doctrine and I hope to demonstrate that in this particular case the that Gillespie doctrine is sufficient support to sustain the Eighth Circuit’s findings irrespective of whether or not the death knell doctrine is accepted by this Court as a viable doctrine. What happened was that the District Court decertified the class using a standard that is not mentioned in rule 23, he decertified on the grounds that the actions of plaintiff’s counsel had caused a delay in the litigation thereby taking away rights from the defendants to a speedy trial. The record indicates that the only delay that was involved in that particular aspect of the case was approximately three months where there was a dispute between counsel over the production of transfer records. We have relied upon a letter received from Punta Gorda’s counsel in August 1975, promising to deliver the transfer records at our request after judge has fashioned an order which took something like four months for us to that after we submitted suggested forms. We call the counsel for Punta Gorda and they refused to produce these documents. The record at the hearing on the motion for class certification also indicated that those records were readily available to counsel for Punta Gorda. We argued with them telephonically about this issue and then we sought the assistance of the Court by asking for a conference on this issue when we got to that conference, we were met with a motion by defendant Coopers & Lybrand that decertified the class with failure to prosecute. Three years after the litigation was commenced then after an enormous amount of work was performed by both sides. It was a shocking type of a motion to me and frankly that gave a little credence at the time, I guess I should have treated it with more seriousness because the judge granted. We did put in papers in response we also had motion’s request for production then pending. There was a stay on discovery at the time. So there we were with the respondent with clients whose losses were approximately $2,650. They had already been required to incur substantial out of pocket courses and they had not as yet taken their first deposition of a defendant in the case nor were they able to receive the first document in a discovery from defending Coopers & Lybrand. The economic reality caused by the decertification order was that to continue the litigation with the major portion of the case on the merits still ahead of us would require an expenditure of respondent’s plot of funds far in excess of the amount of their clients. That is clear from the record that even if respondents succeeded in winning their case on the merits at the trial the recovery could not reimburse the for the out of pocket requirements to complete the litigation on the merits. Now, one of the problems with the death knell as I stated before is what standard to apply in these situations and I suggest to Your Honors that the standard should be this if a plaintiff in this kind of a case having one on the merits on an individual claim could not recoup the out of pocket expenses incurred by him during the prosecution of the action. It makes no economic sense for him to proceed and we are not talking about legal fees, legal fees as what he is concerned where at the beginning of the case. He has to attract an attorney to take his case to proceed to stop the case, stop the litigation. Well now, three years into litigation in this case, Chief Livesay and his wife have already incurred certain expenses. They looked down the road and they say we have two thirds of the case yet to go on the merits. It is going to cost $15,000 to litigate it, we do not have a class. The only reason we started this action as because we thought we would have a class so that if we won on the merits we would be reimbursed for the expenses that we laid out on behalf of the class. It makes no economic sense to bring the $2,650 action where if you personally get a judgment at the end for that amount with the taxable cause she cannot recover the $15,000. It only makes sense if you can be a class representative and be assured that after recovery on the merits you will be reimbursed for those expenses.
Speaker: Are you suggesting that taxable cause would be a great deal more if there were class certification than if there were not?
Melvyn I. Weiss: No, but typically Your Honor when a recovery is made on a class basis all of the out of pocket expenses incurred in connection with the prosecution of the action or reimbursed to the party of the --
Speaker: Out of the fund recovery?
Melvyn I. Weiss: Out of the funds recovery.
Speaker: Not from the defendants’ separate and apart from their liability?
Melvyn I. Weiss: Correct. Out of funds recovery. So here Chief Livesay is confronted with a situation where it would be impossible if he continued this action and tried his case on the merits and won for him to recover to recoup these expenses as that --
Speaker: Mr. Weiss to what extent was that possible intervention of people with more a stake relevant. There is something in record about how the clients might have been in absolute recovery to? How do you fit it out that in the whole test in your analysis of the case?
Melvyn I. Weiss: Your Honor I do not think that is a good approach at something that the Ninth Circuit looks at. I think it makes amass of the proceedings at the early stage of the case when the class was decided. It requires evidentiary hearings. It requires the necessity for interventions which American type and Rule 23 seek to avoid was seeking to avoid multiplicity of litigation.
Speaker: But on the other hand if the District Judge thought I do not whether it is greater now but they had thought that there was something wrong with the particular class representative cannot the defect if that one sometimes be cured by getting a new party in with little more financial resources that may be not have the deficiency with first plaintiff?
Melvyn I. Weiss: But how would we go about doing that Your Honor.
Speaker: Well, there was no testimony that the regional counsel represented lot of people who had bought some of the stock and they knew about the action, might have got the notice before the decertification and would have in interest in the assurance (Inaudible)?
Melvyn I. Weiss: Your Honor I am an attorney who has to comply with my ethical responsibilities I can go out and solicit client if the client does not knock on my door I have no client that there was nothing I could do as an attorney in those circumstances to go out and solicit and drum up with patient. At least that is the way I proceed at the time and there is no record that anybody else came to me.
Warren E. Burger: Anything intervention --
Melvyn I. Weiss: And there is nobody intervened.
Warren E. Burger: Anything to prevent your primary client from doing this?
Melvyn I. Weiss: I suppose not but he thought he was an adequate class representatives. I think he is proving that he is. He is diligently stood behind this throughout this hectic litigation for four and half years, indeed I spoke to him last night and why should he have to go out and seek somebody else. He has rights personally under rule 23. His right is to bring a class action and if he feels that he is an adequate class representative and that District Court abused its discretion in decertifying class with him as the class standard there. Why should he have to go out and search for somebody else.
Speaker: But that is true in the case of any plaintiff or any defendant who feels that District Court has made an erroneous ruling against him. He has a right which may have been infringed?
Melvyn I. Weiss: Exactly, but in a death knell situation, he has not got the means to go forward to the end of the case so we can remedy that long after the trial.
Speaker: Frequently in many non class action situations he will not have that means to go ahead and remedy it?
Melvyn I. Weiss: I understand that but rule 23 gives him a right. This is a collateral right and it is a right recognized by the (Inaudible) rule 23 is necessary for him to have his cause heard in Court without that right he cannot be in Court.
Thurgood Marshall: That is not the reason of class action theory. The original class action theory was that this was not a right. It was a procedure by which where the class was too numerous to name they could be brought in, but it did not give any rights to their regional plaintiff at all?
Melvyn I. Weiss: It did not give --
Thurgood Marshall: Do you agree with that?
Melvyn I. Weiss: I agree that it did not give any substantive right --
Thurgood Marshall: What do you say that it does?
Melvyn I. Weiss: Now, let us -- I do not say it gives some substantive rights, I say it gives some procedural rights. The procedural right is that he can have this in Court by representing a class without that procedural right he has not that in Court, indeed --
Thurgood Marshall: But he has not complained about representing the class. He has complained that because he can pay this bill amount?
Melvyn I. Weiss: He has complained.
Thurgood Marshall: He never has complained about it?
Melvyn I. Weiss: I do not think so Your Honor. I think he would --
Thurgood Marshall: As of right now, as nobody has complained about?
Melvyn I. Weiss: No, I think he is complained --
Thurgood Marshall: But if not what are you complaining?
Melvyn I. Weiss: We are complaining that District Court wrongfully strip them off the ability to go forward as a class representative so that if he wins the case on the merits he can get back his incurred expenses. That is what we are complaining about.
Thurgood Marshall: I do not know how about that?
Melvyn I. Weiss: There are some cases that say you cannot do that Mr. Justice Marshall, but --
Thurgood Marshall: In case if they were lost lack of money to prosecute that why do?
Melvyn I. Weiss: Why do not, suppose four people decide to sue a company. They all have what they think are similar problems and they agree to share expenses and they are all named plaintiffs. Early in the litigation; however, it turns out that the judge thinks three of them are not in the same position and dismisses their case, dismisses the amount of a case. The remaining plaintiff just does not feel that he can get very far by himself. He has got the money now, he is not in a very much different position then your client.
Speaker: Why if they had lost on the merits in that situation?
Melvyn I. Weiss: But that is not appealable.
Speaker: Unless judge make some addition finding that there is no reason for delay they just tell us that even if no one who has been dismissed, cannot appeal?
Melvyn I. Weiss: I would think Your Honor that in that situation 54 (b) might be appropriate and --
Speaker: Why? But not unless the judge is cooperating?
Melvyn I. Weiss: That is correct and I agree that when you have a judge who does not appear to be cooperative, you have a special kind of a problem that is the moment when you --
Speaker: Well, yet that it is not appealable under the rules unless the judge makes whatever he supposed to do and it is not appealable just because the remaining plaintiff may decide I cannot go forward?
Melvyn I. Weiss: But Your Honor if I were in that situation as you portrayed I think I might attempt to go up under the doctrine that was adopted in the in form of Court’s response to the --
Speaker: But that may be so I am asking to know is that a final subject to appeal with --?
Melvyn I. Weiss: Well, I would argue that it is a final decision in those peculiar circumstances.
Speaker: What (Inaudible) was I not heard?
Melvyn I. Weiss: Well, I just am not familiar with that. Well, there is not really much difference between that plaintiff. I just correct than your --
Speaker: Well, I think there is because here you say -- well, if you see the four people certainly had the right under the procedural right under the rules to sue jointly.
Melvyn I. Weiss: Well, the difference is that we have rule 23 which if I can quote a statute for the moment gives certain rights and those rights are rights that Chief Livesay and his wife has. There are no similar rights in your example. There are such similar rights I think in forma pauperis situation.
Speaker: These people are a fortiori, have rights that they are named plaintiffs. They have the right to institute a litigation?
Melvyn I. Weiss: But those are substantive right Your Honor and I am making that distinction --
Speaker: They have procedural rights to have been in Court?
Melvyn I. Weiss: But they do not have rule 23 rights and the frames of rule 23 suggested that this is an important right that they wanted to give to small claims obvious.
Speaker: Your argument suggests that rule 23 is to be elevated against above all other procedural and substantive right?
Melvyn I. Weiss: No, I am saying that rule 23 has to be read together with and that since there is a right under rule 23 to bring this action as a small claim served because of a recognition that without rule 23 you could not bring it.
Speaker: Do you bring to state court?
Melvyn I. Weiss: Not a Section 11 case, I am sorry yes you came with another 10 (b)(5) yes.
Speaker: But this is a Section 11 case?
Melvyn I. Weiss: And 10 (b)(5) if there is an account for 10 (b)(5) here also. Section 11 is mutual but 10 (b)(5) is not.
Speaker: What about attempts to have the parties to a case? And then the say of third party claim that gets dismissed?
Melvyn I. Weiss: Your Honor I do not know if the defendants would like very much having a procedure whereby a notice would be sent out to a track of the people. I think I might enjoy it immensely and who would pay for it is another question. I would take that as an alternative to some of these problems if we can send that a notice to attract the additional people into the case. I do not think the defendants would (Inaudible) for. --
Speaker: Mr. Weiss, you did not seek a 1292?
Melvyn I. Weiss: No, we did not.
Speaker: To engage it?
Melvyn I. Weiss: We did not --
Speaker: Did you have a reason? Did you have a reason not -- although that what was it?
Melvyn I. Weiss: First of all I had been Fourth Circuit’s that had adopted the death knell doctrine at that point. We thought therefore we had an absolute right to appeal, so we filed a notice of appeal and we do not think a discretionary right is equal to an absolute right. Secondly, we felt we had a mandamus situation and we filed the petition for mandamus in the Circuit Court. We thought that it would be inconsistent to go to a District Court judge from whose decisions we were seeking mandamus for abusive discretion asking him to exercise his discretion in our favor. I think it is a practical matter that that is a good reason. Thirdly in the hearings on the class motion the District Court judge himself stated that he wanted to make a record because the plaintiff would have a right to go up under death knell, so we have read that to mean that he himself accepted the death knell doctrine as a viable way to appeal this case whenever you --
Speaker: Would you have any doubt if you have wanted to go the interlocutory appeal the 1292 (b) covered an appeal from a decertification order?
Melvyn I. Weiss: Your Honor there is some doubt on that question because the Court’s differ on what type of order can be appealed under 1292 (b) --
Speaker: Well, it has requirement that may materially advance the although a termination of litigation?
Melvyn I. Weiss: That is one (Voice Overlap) that had already been terminated and two what is a controlling question of law. Now, I think in this case we had it except that it had already terminated by the controlling question of warrant issue. I think we had it because we felt that the judge decertified the class on criteria outside of rule 23 which was a peculiar circumstance and we thought that this was a broader question not just the question as that arose in the litigation. We did not proceed in that fashion for the reasons I stated before.
Speaker: Independently if any reservations however you could?
Melvyn I. Weiss: That is right and of course rule 54 (b) is also a discretionary rule and we have the same reasons for not seeking discretionary rule 54 (b) treatment.
Speaker: But if you do not get the favorable exercise of discretion rule 54(b) the order has simply not appealable? It is not final?
Melvyn I. Weiss: The 54 (b) type situation.
Speaker: Yeah.
Melvyn I. Weiss: That is correct. That is inconsistent with our belief that death knell doctrine gave us an absolute right to appeal. Now, we did file the mandamus and it was declared moot by the Eighth Circuit because they gave us our relief under 1291 and we believe that the grant of mandamus can be read into their decision in this case. The rule that the District Court did abuse its discretion and they reversed them. Now, we refute the petitioner’s contention that if this Court does not accept the death knell as meeting the requirements of Section 1291 where the collateral order doctrine exception that this Court does not have the power to remain this case in the Eighth Circuit for a determination of respondents’ mandamus petition. Nine more federal practice paragraph 110, 128 of pages 315 and 316 are recognized us that while the procedure is set forth in the rule for mandamus as rule 21 of the rules of appellate procedure should be followed the Courts of Appeal cannot frequently do to treat a notice of appeal as a petition for mandamus, if the order sought to be reviewed is not applicable, but the question presented is subject to review by mandamus. So the Court had the power to treat the 1291 appeal even if it found that it was not an appropriate appeal remedy as a mandamus petition and as such this case is we are now reviewing that decision and we say that the Eighth Circuit can again take the mandamus petition then.
Thurgood Marshall: And then we give mandamus for every interlocutory order of every trial?
Melvyn I. Weiss: Well, Your Honor that brings me to Gillespie and Gillespie --
Speaker: Even with a --?
Melvyn I. Weiss: No, I do not say that there should be an interlocutory appeal from every order but in a situation when there is conduct at the District Court level that is appropriate for mandamus I think that the right of the party is clear. He should be able to go up on the mandamus petition. The Eighth Circuit did not decided as moot because it had decided in our favor under 1291.
Thurgood Marshall: So that any non final judgment and the appeal about mandamus you do not want it?
Melvyn I. Weiss: Oh, I agree Your Honor that it is a totally inadequate remedy for a person in the death knell situation.
Thurgood Marshall: It was impossible?
Melvyn I. Weiss: And impossible I agree with that and that is one of the reasons why we say we have finality here. Mandamus is not adequate, 1292 (b) is discretionary and we say that that is not adequate so we are left with 1291, but in this particular, that is a general proposition. In this particular case we feel that mandamus was appropriate and before my time runs out I would like to get into Gillespie because this ties my whole argument up. The Gillespie doctrine is one which will avoid the requirement of further findings and rulings at the appellate level on the questions raised in this case. The order being reviewed here was at least of marginal finality. Why was it of marginal finality that District Court had stated that he felt that death knell doctrine was appropriate. The District Court had made a death knell record for other circuits at that point in time had adopted the death knell doctrine. The Eisen Fourth decision appeared to support the theory so there were reasonable grounds for the Eighth Circuit to accept the death knell doctrine. Having now spent all the time and effort in deciding the issues which it did, it was a painstaking decision went into every detail of the lower court’s conduct. It made findings and had reversed. Under these circumstances where the order is fundamental to the further conduct of the case and we say it is and the Circuit Court in good faith accepted the appeal and spent the time in deciding the issue. Gillespie holds that this Court can without further redo accept the decision of the Eighth Circuit.
Warren E. Burger: Yet this Court’s point of view is precisely be opposite of yours? I think Mr. Weiss I understand perfectly what you say about your client but we took the case to decide whether there is such a thing as the death knell doctrine and if decided under Gillespie basis, we decide nothing except that your case can proceed?
Melvyn I. Weiss: Well, I have clients here Your Honor and they are my first concern although I specialize in class action of litigation. I have to tell you that the doctrine itself is less important to me than these people.
Warren E. Burger: You should pursue I am just saying that it may not persuade all of us who have somewhat different point of view?
Melvyn I. Weiss: Well, Your Honor it is possible that Your Honor’s down accepted at the death knell doctrine and so state but at the same time sustained my position in this case or in affect affirm the Eighth Circuit’s decision. I think what I would like to also point out is that Mr. Justice Marshall this morning made a point what would happen in these death knell situation so that what is the appellate courts, I respectfully suggest that I do not think it will. Well these -- I have been in practice and I have rather watched from specializing in this field that this is the first time that we sought a death knell type of an appeal. We do not normally seek it. We think that the final decision rule is a sound one and we try to prevent clocking the courts. There are exceptional circumstances from time to time we think this case is one of them.
Thurgood Marshall: And you promise us that if grant in your favor in the future you would not bring it again?(Laughter) Unless you are going that far I am unimpressed?
Melvyn I. Weiss: But Your Honor, you know the defendants -- there is a great risk to a plaintiff in that situation because the Circuit Court can indeed rule for the defendants and put an end to the litigation and not only put an end to this litigation but put an end to any other case that might seek some other relief as a class where there is a “better representative of the class.” Thank you Your Honors.
Warren E. Burger: Very well, Mr. Walsh you have 2 minutes.
Thomas C. Walsh: Mr. Chief Justice, I just have a couple of brief points to make. First is Mr. Justice Stevens has indicated the death knell doctrine does encourage litigation by class action representatives who have the least at stake as we have pointed out here at this claim by these respondents was some $2,650. Yet the record shows that the counsel that originally filed that on our behalf also represented one claimant without half a million dollar loss and other claimant who had $140,000 loss who was a neighbor of his we know him for 25 years and whom he described as a millionaire. Now, I suggest that it is a fair inference --
Speaker: But what Mr. Walsh, what is your response to counsel’s point that it would have been unethical for him to call up those people and say would you like me to represent you?
Thomas C. Walsh: Your Honor the District Court in its October 23, 1975 order suggested an order that a notice go out to the class members suggesting that they apply for appointment as class representatives and that problem was solved in that manner.
Speaker: Such an order will step you out?
Thomas C. Walsh: Well, it was proposed to go out at the time that the class action was decertified.
Speaker: But it did not go out?
Thomas C. Walsh: It did not go out.
Speaker: So that how was that respond was concerned?
Thomas C. Walsh: Well, if there had been cooperation by the respondents in the preparation and dissemination of that notice, it would have gone out. Your Honor that is what the trial court was trying to do to get a class representative who could find answer then who was adequate.
Speaker: Mr. Walsh about how long would we have (Inaudible) there? If we paid $15,000 to collect $2,600?
Thomas C. Walsh: Well, this particular amount --
Thurgood Marshall: How long would it be if we consistently spent $15,000 to get $2,600?
Thomas C. Walsh: Not very long.
Thurgood Marshall: How he would not be that long?
Thomas C. Walsh: But the millionaire had a loss of $140,000 suppose if they --
Speaker: Mr. Walsh, I think you said in the original argument that you filed with a 1292 (b) appeal was available here and I can say that?
Thomas C. Walsh: No, I said that it is a viable alternative in some of matters but I would not take --
Speaker: Would you have some problems with the --
Thomas C. Walsh: We would oppose it in this case Your Honor yes sir we are. I think it is not a (Inaudible) but I think in the Liberty Mutual case --
Speaker: The application with an attempt within the tax that we have required what is in the 1292 (b) itself would not you have that?
Thomas C. Walsh: In this case I would Your Honor. In a lot of class action analysis it might be appropriate and others it might not.
Speaker: What about mandamus if you would prevail on primarily?
Thomas C. Walsh: Your Honor they have not cross petition from the --
Speaker: Well, I know that, but what would a case have said and are there any cases as to any mandamus?
Thomas C. Walsh: There is only mandamus case in a class action context that I am aware of it is in the Ninth Circuit where it ordered the District Court judge to decertify a class that he had certified. I know if no other cases ordering the Court to certify the case under mandamus.
Speaker: Mr. Walsh suppose as what to trial on the merits and they will get awarded for the $2,650?
Thomas C. Walsh: Yes sir.
Speaker: How he can only get an appeal under decertification order in that circumstances?
Thomas C. Walsh: He will Your Honor he is entitled to appeal under those circumstances because he is not --
Speaker: At that time?
Thomas C. Walsh: Yes, Your Honor that is our position and I think United Airlines against McDonald so contemplates because the rationale there was that the other stewards who was the bystander had the right to assume that --
Speaker: I know but he is at loss at which he wins?
Thomas C. Walsh: Yes.
Speaker: It was $2,650?
Thomas C. Walsh: Yes, that was the assumption. That also has happened in Esplin v. Hirschi in the Tenth Circuit Your Honor and I think --
Speaker: The named plaintiff appealed there in some intervener?
Thomas C. Walsh: Yes, yes Your Honor.
Speaker: McDonald that with a intervener?
Thomas C. Walsh: That is correct, but the assumption --
Speaker: The named plaintiff had won by settlement --?
Thomas C. Walsh: Yes and the intervener --
Speaker: By what was the named plaintiff I am talking about?
Thomas C. Walsh: Yes, the assumption --
Speaker: What was his concern here?
Thomas C. Walsh: The assumption to justify that timeliness holding as to the intervener was that she could expect the class representative the named plaintiff to appeal even if she want.
Speaker: Well, at least up to the time that she want?
Thomas C. Walsh: Yes and judge cites in his conquering opinion in the Gardener case which his next case will here also a reason that if the named plaintiff goes to his or her case and does when he still has a right to appeal a prior denial of class certification.
Thurgood Marshall: Then the Court and what relief does he get if he wins in the Court of Appeals?
Thomas C. Walsh: On the class question?
Thurgood Marshall: No, sir what relief does he get?
Thomas C. Walsh: The case goes back for a trial on a class question.
Thurgood Marshall: Allover here?
Thomas C. Walsh: Yes, sir.
Thurgood Marshall: And then he could look?
Thomas C. Walsh: Well, I am assuming that when the case goes up that is going to be appealed both on his individual claim and on the class claim.
Thurgood Marshall: But what if you would appeal class action point?
Thomas C. Walsh: Yes, well he --
Thurgood Marshall: And then because say yes, you can have a class action and you go back in a trial case allover again?
Thomas C. Walsh: I think you tried as to his individual claim that would be the law of a case.
Thurgood Marshall: But how could it -- what would happen?
Thomas C. Walsh: Well, as I see that if the only question on appeal was the denial of the class certification and that was reversed, the case will go back to the trial court and the class issues would be adjudicated and the claim of the individual plaintiff would no longer --
Thurgood Marshall: Only the real old case called Andre (ph) v. Lee which says you just cannot do that?
Thomas C. Walsh: Well, I think the 1966 amendments to rule 23 were designed to overcome that obstacles of Hansberry v. Lee when they say you can do that now and that would be in my position.
Speaker: Mr. Walsh as I understood my brother Brennan’s earlier question to you about 1292 (b), it was whether a refusal to certify a class action or an order as in this case decertifying a class could ever fall within the definitive language of 1292(b) which requires a controlling question of law and that an appeal may materially advance the element termination of the litigation and I think that was this question and anywhere it is mine?
Thomas C. Walsh: Yes, sir.
Speaker: Is that not arguable that no such order could ever fall even be eligible for discretionary consideration under 1292 (b)?
Thomas C. Walsh: Well, it has been used 1292(b), it has been used in a number of cases.
Speaker: And what is your position you can see that --
Thomas C. Walsh: I can see that it could be in a lot of class action question --
Speaker: And generically it could be available?
Thomas C. Walsh: Yes, in some cases I would have --
Speaker: Has there any Circuit faced that question?
Thomas C. Walsh: Yes, Your Honor we have cited cases in our brief. You may --
Speaker: You probably faced it?
Thomas C. Walsh: Yes, in some cases it could be used to appeal the refusal to certify.
Speaker: Yes sir that is my question.
Thomas C. Walsh: It has been used and I cannot put my finger on --
Speaker: But do not bother if it is not in the brief.
Thomas C. Walsh: Thank you very much Your Honor.
Warren E. Burger: Thank you gentleman. The case is submitted.