Legal Document

417 U.S. 156 94 Supreme Court Reporter 2140 40 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 732 Morton EISEN, etc., Petitioner,v.CARLISLE & JACQUELIN et al. Number 73—203. Argued Feb. 25, 1974. Decided May 28, Syllabus Petitioner brought a class action under Fed.Rule Civ.Proc. 23 on behalf of himself and all odd-lot traders the New York Stock Exchange for certain four-year period, charging respondent brokerage firms, which handled 99% Exchange's business, with violating antitrust securities laws. There followed series decisions by District Appeals. The ultimately decided that suit could be maintained as action, and, after finding some two quarter million members prospective identified name address reasonable effort it would cost $225,000 to send individual notice them, proposed notification scheme providing only limited number publication remainder. then held preliminary hearing merits, petitioner was 'more than likely' prevail at trial, ruled respondents should bear 90% costs scheme. Appeals reversed ordered dismissed disapproving Court's partial reliance notice. Rule 23(c)(2) required identifiable members; had no authority hold merits purpose allocating costs; entire expense fall petitioner; unmanageable 23(b)(3)(D). contends jurisdiction review orders, further, above issues incorrectly. Held: 1. resolution problems constituted 'final' decision within meaning 28 Code KF62 § 1291 therefore appealable right section. Pp. 169—172. (a) Section does not limit appellate 'those final judgments terminate an . .,' but rather requirement finality is given 'practical technical construction.' Cohen versus Beneficial Indus. Loan Corp., 337 541, 545—546, 69 1221, 1225—1226, 93 L.Ed. 1528. 170—172. (b) lawfully involved collateral matter unrelated petitioner's claims 'a disposition claimed ingredient cause require consideration it,' Cohen, supra, 546—547, S.Ct., 1225—1226. Pacific KF135 P2 172. 2. failed comply 23(c)(2). 173—177. express language intent leave doubt must sent who can through effort, Here there nothing show mailed each whose names addresses were easily ascertainable, these clearly 'best practicable' 173—175. facts sending notices prohibitively high petitioner, has $70 stake in matter, or might unnecessary because member large enough justify separate litigation his claim, do dispense individual-notice requirement, since identificable discretionary waived particular case unambiguous 23. 175—176. (c) Adequate representation itself satisfy 23(c)(2), speaks well adequacy requires both provided. Otherwise all, published otherwise, this case. 176—177. 3. class, improper impose part respondents. 177—179. either history gives court any conduct inquiry into order determine whether may indeed, such procedure contravenes allowing representative plaintiff secure benefits without first satisfying requirements Rule. 177—178. A determination substantially prejudice defendant, unaccompanied traditional rules procedures applicable civil trials. 178. Where, here, relationship between parties truly adversary, pay ordinary burden financing own suit. 178 179. 479 Federal Reporter, 2nd 1005, vacated remanded. Aaron M. Fine, Philadelphia, Pa., petitioner. Devereux Milburn William Eldred Jackson, City, Mr. Justice POWELL delivered opinion Court. 1 On 2, 1966, filed other odd-lot1 (the Exchange). complaint charged violations laws demanded damages class. Eight years have elapsed, been one trial claims. Both courts are still wrestling complex questions surrounding attempt maintain We granted certiorari resolve difficulties. 414 908, 235, 38 146 (1973). 2 * Southern York. Originally, he sued buyers sellers odd lots Exchange, subsequently those traded during period from 1, 1962, June 30, 1966. 52 F.R.D. 253, 261 (1971). Throughout trading regular auction market exclusively special dealers, bought sold their accounts principals. Respondent firms Carlisle Jacquelin DeCoppet Doremus together business. S.E.C., Report Special Study Securities Markets, H.R.Doc.No. 95, pt. 88th Cong., 1st Sess., 172 (1963). They compensated differential, surcharge imposed investor addition standard commission roundlot transactions. For question differential 1/8 point (12 1/2¢) per share stocks below $40 1/4 (25¢) share.2 3 monopolized set excessive level violation §§ Sherman Act, 15 treble amount overcharge. also unspecified money its alleged failure regulate protection investors 6 19 Act 1934, 78f 78s. Finally, requested attorneys' fees injunctive prohibition future charges. 4 critical fact award seeks $70. No competent attorney undertake recover so inconsequential amount. Economic reality dictates proceed all. Opposing counsel engaged prolonged combat over various result exceedingly complicated Second Circuit. To understand labyrinthian litigation, overview prove useful. 5 In beginning, determined maintainable action. appeal, issued known popularly Eisen N Dec. Immigration Nationality Decisions II. thus appealable. second intimated 23, remanded permit consider further. After conducting several evidentiary hearings remand, entered orders intended fulfill Once again, appealed. III ended trilogy denying status now developments more detail. As we seen, began September year 41 147. Following denial motion interlocutory 1292(b), took appeal 1291. Respondents moved dismiss ground appealed final. I, 370 119 (1966), cert. denied, 386 1035, 87 1487, 18 598 (1967). This because, practical dismissal aspect 'death knell' thought consequence rendered dismissing 546, 1225, 1528 (1949). II 7 Nearly months later 391 555 (1968). reaching undertook exhaustive inconclusive analysis Subdivision sets forth four prerequisites maintenance action: '(1) numerous joinder impracticable, (2) law common (3) defenses typical (4) will fairly adequately protect interests class.' experienced little difficulty satisfied three concluded 'fairly class' 23(a)(4). indicated disagreement reasoning behind latter conclusion directed reconsider point. 8 meeting conjunctive 23(a), qualify subdivisions 23(b).3 argued subdivisions. inapplicable suit4 turned attention third subdivision, (b)(3). That subdivision 'questions predominate affecting members' superior vailable methods fair efficient adjudication controversy.' More specifically, identifies factors relevant inquiries. detailed provisions, potential barrier 23(b)(3)(D) directive evaluate 'the difficulties likely encountered management action.' Commonly referred 'manageability,' encompasses whole range render format inappropriate With reference noted distributing ultimate recovery formidable, though necessarily insuperable, commented 'reluctant actions where they benefit anyone lawyers bring them.' F.2d, 567. further mechanics administration present Ibid. 9 most imposing obstacle action—the Due Process Clause Fifth Amendment identified. F.R.D., 151. objected expensive form suffice. declined settle issue, noting '(o)n record before us cannot arrive rational satisfactory propriety resorting means giving necessary whom stated commenced maintained.' 569. 10 outcome remand notice, manageability, representation, 'any matters pertinent proper.' Id., 570. And ruling aroused controversy, expressly purported retain while heard remand. 11 affidavits stipulations provided basis extensive findings fact, holding 253 criteria determining Then difficult manageability. Under general rubric dealt computation damages, administering distribution eventual recovery. last-named problem troubled Appeals, prompting remark if 'class ever judgment, probably continue.' attempted embracing idea 'fluid whereby distributed specific actually injured. suggested fund equivalent unclaimed established reduced until time depleted.' 265. need resort expedient 'next best arose computing awarding multitudinous small basis. 12 up found included six individuals, institutions, intermediaries sorts; address;5 additional 250,000 persons participated investment programs involving trading6 effort. Using current first-class postage rate cents, stuffing mailing cents. Thus $225,000,7 incurred suitable designed reach members. 13 concluded, however, neither nor substantial expenditure outset litigation. Instead, consisting elements: (1) commercial banks trust departments; approximately 2,000 transactions period; 5,000 selected random; prominent Wall Street Journal newspapers California. calculated package $21,720. 14 issue resolved Because understandably $21,720 litigate $70, presented something dilemma: 'If placed upon (petitioner), end possibly meritorious suit, frustrating policy private admonition new liberal restrictive interpretation, 563. hand, arbitrarily (respondents) point, imposition unfair founded groundless claim. probability encouraging frivolous actions, step (respondents') passing customers, including many case, expenses defending actions.' 269. 16 Analogizing injunctions, strong likelihood success scheduled facilitate determination. $19,548. 54 565, 567 (1972). 17 Relying retention II, 1972, obtained directing clerk certify transmit review. Subsequently, Petitioner's taken denied 29, 1972. 1973, III. 1005. majority disapproved fell plaintiff. rejected fluid-class reasons One judge concurred solely erred requests rehearing en banc denied. 1020. Thus, one-half decisions, endorsed reached original 1966—that procedural history, least, lived Judge Lumbard's characterization 'Frankenstein monster posing F.2d., 572. 20 At decide permitting did not. counter asserting independent bases jurisdiction: first, 12918 section; second, retained pending development factual consequently jurisdictional agree asserted respondents, occasion second. 21 Restricting 'final decisions' prevents debilitating effect judicial caused piecemeal what is, consequence, single controversy. While application cases plain enough, pose close question. verbal formula yet devised explain prior unerring accuracy provide utterly reliable guide future.9 know, course, U.S., 545, 1226. evaluation competing considerations underlying finality—'the inconvenience hand danger justice delay other.' Dickinson Petroleum Conversion 338 507, 511, 70 322, 324, 299 (1950) (footnote omitted). 22 find instant controlled our supra. considered applicability federal diversity forum state statute making stockholder's derivative liable expenses, unsuccessful, entitling corporation demand security advance payment. inapplicable, sought immediate objection grounds. First, 'tentative, informal incomplete.' settled conclusively corporation's claim entitled shareholder post costs. Second, constitute merely 'step toward ..' Rather, concerned reviewed effectively judgment. summarized way: 'This appears finally separable from, to, rights too important deferred adjudicated.' 24 Analysis reveals likewise falls 'that It respondents' contention Moreover, Like judgment allocation id., 1226, similarly decision' view fully court's construe way action.10 25 Turning erroneous respects. Atlantic 26 provides that, (b)(3), shall advised exclude request enter appearance counsel, favorable not, bind requesting exclusion. end, direct practicable circumstances effort.'11 think import unmistakable. Individual ascertained 27 Advisory Committee's Note reinforces conclusion. See App., Page 7765. Committee described (c)(2) 'not discretionary' added 'mandatory pursuant due process course subject.' 7768. explicated incorporation standards citation Mullane Central Hanover Bank Trust Co., 339 306, 652, 865 (1950), like cases. addressed constitutional sufficiency beneficiaries settlement accounts. observed opportunity fundamental requisites guarantee process. 'reasonably calculated, circumstances, apprise interested pendency afford them objections.' 314, 657. continued: 29 'But when person's due, mere gesture employed desirous informing absentee reasonably adopt accomplish it. reasonableness hence validity chosen method defended inform affected.' 315, 30 known.12 cases, disappear less mails (an action's) pendency.' 318, 659. 31 Schroeder City York, 371 208, 83 279, 255 (1962), promulgation amended explained rejection affected person available. 'general rule' 'notice respect very ascertainable .' 212—213, 282. long recognized poor substitute actual justification "difficult best." 213, 283. 32 Viewed context, 2,250,000 each. members, decisions. 33 contends, advances doing so. frustrate vindicate policies Hence, lack incentive opt out even notified. 34 short answer arguments rather, explained, insure exclusion Pages 7765, Accordingly, notified thereby preserve press separately remain perhaps participate suggest tailored fit pocketbooks plaintiffs.13 35 adequate touchstone satisfies commend begin with, argument proves much, quickly leads so, quite apart require, command contrary. conclude effort.14 B 36 contrary predicated finding, made Apparently, interpreted authorize disagree. 37 Indeed, He allowed obtain advanced assurance maintained. directly (c)(1) denominated '(a)s soon commencement (the) short, Wisdom's Miller Mackey International, 452 424 (CA5 1971), 'In plaintiffs met.' 427. 39 Additionally, note necessity accompanied tentative findings, absence safeguards, color subsequent proceedings place defendant. support fail. usual rule initially exceptions cited related situations fiduciary duty pre-existed suit.15 consistently maintained, defined complaint. 1008; instructions defined.16 42 consistent opinion. 43 ordered. 44 DOUGLAS, BRENNAN MARSHALL, concur, dissenting part. 45 am agreement phases touched Court, add few words explore dispositive 46 23(c)(4) provides: 'When appropriate (A) issues, (B) divided subclasses subclass treated provisions construed applied accordingly.' Oakes, speaking Timbers, said below: 47 'The might, example, much smaller lot periods, test abeyance. identified.' 1023 (dissenting banc). 48 Or include monthly plans, payroll deduction plans run houses.1 possibilities, infinite, numerous. 49 power create clear unambiguous. Who how resolve. Notice essential 23(c)(2); 23(c)(2)(A) out. manageable. But light nonmanageability size presently us, apparent sense. 50 limitations, argued, about classes. American Pipe Construction company Utah, 538, 756, 713, start running protects Whether bringing manageability decided.2 sues wins loses, covering larger raised. These answered.3 unresolved insurmountable obstacle, 23(c)(4)(B) authorizes sue lieu full had, forerunner, proposal Weinstein 1960: 51 all.'4 explanation added: 'Such impracticability joinder, (5) defense, (6) absentees. 53 'Almost 'bond association' event legal dispute sufficient itself, factor makes impracticable court. 195 (of Civil Practice Act) rule. Size, modesty monetary interest, inability locate obtaining joinder.'5 permits redefine amending 15, proceeding 23(c)(4). define subclass, so.6 Definition properly accomplished permitted Rules 23(c)(1), amendment filed. alleges purchasers lots, adds, 'Plaintiff persons.' Problems covered arise joined shaping merits. If finds appropriate, started 55 23(c)(1) 'As An conditional, altered merits.' 56 make decides alter 'before permissible changed 'altered' reducing same subsection—Rule (B). 23(a). hurdle passed stage Not iota change restricting subclass. 57 flexibility taking active role Dolgow Anderson, 472, 481—482 (EDNY); Green Wolf 406 291, 298 (CA2), 395 977, 89 2131, 766. Lower discretion proper prosecute being bound plaintiff's See, e.g., 491 493; Philadelphia Elec. Anaconda Brass 452, 462—463 (ED Pa.). generally 7A C. Wright Miller, Procedure 1790, 187; 3B Moore, 23.65. And, indicates, realign classes appropriate. Carr Conoco Plastics, Inc., 423 57, 58 (CA5), 400 951, 91 241, 257; Johnson ITT—Thompson Industries, 323 F.Supp. 1258, 1262 (ND Miss.); Ostapowicz Bronze 465, 466 (WD Pa.); Baxter Savannah Sugar Refining 56, 60 (SD Ga.). full-class preserved bounds narrowed widened amend constraints exist earlier Professor Chafee serves convenience prompt, administration.7 society growing complexity innumerable people disasters, calamities, ventures go begging regard protected Some consumers seem de minimis alone recourse remuneration relief. environmentalists photographic plant ruined air pollution radiation suffer perceptibly smoke, noxious gases, radiation. unnamed ratepayer excessively utility homeowner assessment slowly rising beyond ability pay. 59 remedies claimant against quo.8 strengthen creating system dispenses lowly liberally endowed wealth. Odd shares fewer hundred. Shares units hundred multiples thereof round-lots. July 'breakpoint' raised $55. '(b) Class Actions Maintainable. 'An satisfied, addition: prosecution risk '(A) inconsistent varying adjudications establish incompatible party opposing '(B) impair impede interests; '(2) acted refused act grounds relief corresponding declaratory whole; '(3) available include: interest individually controlling defense actions; extent nature concerning controversy already class; (C) desirability undesirability concentrating forum; (D) Before dropped qualified (b)(1)(B). (b)(1) consisted entirely claimants, none chance 'inconsistent (b)(2) apply predominantly Note, Proposed Procedure, 7766. transmitted via teletype. By comparing firms' computerized records teletype general-services customer addresses, obtained. 1962 1968, 100,000 individuals participation Monthly Investment Plan operated 150,000 odd-lots Merrill Lynch, Pierce, Fenner Smith. Adjusting figure reflect increase yield $315,000. appeals district States, Canal Zone, Guam, Virgin Islands, except Court.' ago 1892 complained: 'Probably equity practice subject frequent discussion decrees. conceded, altogether harmonious.' McGourkey Toledo Ohio C.R. 536, 544—545, 170, 172, 1079. intervening resolving abated. Black Gillespie Steel 379 148, 152, 85 308, 311, 199 (1964), 'whether frequently supported equally forceful arguments, impossible devise marginal coming called 'twilight zone' finality.' Part opinion, petitoner's defined. correctly recovery, theory jurisdiction. Emphasis added. full: advise him specified date; exclusion; may, desires, counsel.' inadequacies bears attention: 'It idle pretend alone, prescribed reliabe acquainting courts. Chance brings local resident advertisement type inserted back pages newspaper, home outside area newspaper's normal circulation odds information never indeed. when, supposed attract, acquaintances call attention.' 658. argues limitations disposed recent 713 (1974), tolls here (c)(2), (3). terms (b)(2). n. 4, 498—500 (EDNY 1968). We, reveal defined, willing intimate note, originally efforts 15. concentrated sustained investors, bearing manageable created. nonetheless, indication economically Counsel oral shareholders client's Plan, corresponds Lynch participating plan. come forward intervene fits know. houses correspond regularly business printing sheet paper correspondence investor, programing computer paragraph bottom quarterly statements brokers. survey wire revealed customers 259, 267, 10. defining definite discussed, moreover, inherent reduced. readily identifiable, accessible transaction provable damages. complaint, defendants put limitation liability, serving substantive eventually prosecuted 'Within conducted joint principal intervenors.' 555, 767, 713. see Wheaton, Representative Suits Involving Numerous Litigants, Cornell L.Q. 399, (1934). lost, precluded prosecuting successful suits own, day apprised subclass' Hansberry Lee, 311 32, 61 115, 22; KF105 F3 James, 11.26 (1965); 1B 0.411(1) (1974). won, strict doctrine mutuality estoppel usefulness victory 11.31; 0.412(1) (and Supp.1973); therein. Vestal, Preclusion/Res Judicata Variables; Parties, Iowa L.Rev. 27, 55—59 (1964); Geo.Wash.L.Rev. 1010 (1967); Currie, Mutuality Collateral Estoppel: Limits Bernhard Doctrine, Stan.L.Rev. 281 (1957). Weinstein, Revision Procedure: Actions, Buffalso 433, 458. 458—459 (footnotes Were remitted 23(d)(4), instances pleadings eliminate allegations. Notes indicate provision nonclass, exists instance 7767. Z. Chafee, Equity 149 (1950). writing N.Y. Law Journal, col. 3, said: 'Where, public authorities remiss performance responsibility reason inadequate authority, workloads simple indifference, temporary measure desirable corrections occurred. existence play administrative enforcement inducing legislative touches credibility system. Either committed disputes citizens—including deprived human rights, overpay products victimized insider misleading information—or ignore irony ready imprison man steals goods interstate commerce unwilling grant remedy benefited, millions dollars, collusive, illegal pricing public. organization modern society, ours, affords possibility behavior widespread, diffuse consequences, remedy—or least deter—that conduct.'

Classification Label: 8