Court Opinion

ID: 9666980
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:32:02.521355+00
Date Added: 2024-06-11T18:15:33.930474
License: Public Domain

WILLIAM H. BECKER, Judge of the Panel
(concurring).
In addition to full concurrence in the majority opinion, a draft of this concurring opinion was prepared when only the *1389majority opinion was available. The purpose of the original draft was to emphasize the important differences in the facts of this ease compared to the facts of the second Penn Central ease, on which was based the decision to separate the commercial paper cases, pending in other districts, and to transfer them to the Southern District of New York. In re Penn Central Litigation, 325 F.Supp. 309 (Jud.Pan.Mult.Lit.1971).
Only this week did the dissenting opinion become available. There is a temptation to comment on the unusual rhetoric of parts of the minority opinion,1 including the attribution to the majority of a “but for” rule, never formulated, enunciated or applied overtly or covertly, consciously or subconsciously in any decision of the Panel. Except for correcting the inaccurate historical reference to the electrical equipment private antitrust cases, the comment will be limited.

The History of the Electrical Equipment Litigation

In fairness to the able advocates and judges who processed this electrical equipment litigation in cooperation with the Co-Ordinating Committee for Multiple Litigation, it is noted that the CoOrdinating Committee did much more in the electrical equipment cases than that stated in the minority opinion. The minority opinion states that “In a relatively short time the Committee settled 25,000 claims in 1,900 actions filed in 36 districts.” The facts are that the CoOrdinating Committee did not settle any cases. The parties settled the cases after (1) most of them had been prepared for trial through a national pretrial program of discovery and pretrial, (2) many appellate decisions on vital legal questions had been secured, and (3) full trials in a substantial number of representative pilot cases had been conducted to final judgments.2 In the course of the pretrial proceedings, many fully litigated adversary appellate reviews of trial court rulings were submitted and finally decided in the Courts of Appeals. These accomplishments provided the experience and bases for the parties to assess the potential liabilities for negotiating settlements.
The Co-Ordinating Committee and the cooperating judges proceeded on the assumption that any and all actions would be subject to trial until final settlements were filed and incorporated in judgments. See, Neal and Goldberg, The Electrical Equipment Antitrust Cases: Novel Judicial Administration, 50 A.B.A.J. 621 (1964); Peterson and McDermott, Multidistrict Litigation: New Forms of Judical Administration, 56 A.B.A.J. 737 (1970); Bane, The Electrical Equipment Conspiracies: The Treble Damage Actions, Federal Legal Publications, Inc., New York (1973).
Former Chief Justice Earl Warren accurately summarized the history of the processing of the electrical equipment antitrust actions in his address to the 1967 annual meeting of the American Law Institute as follows:
And now I turn to some highly dramatic developments in administration in the federal courts. When I addressed the American Law Institute in 1962, I called to your attention the appearance the year before of unprecedented multi-district litigation arising out of antitrust suits in the electrical equipment industry. Beginning in 1961, there were filed in 35 district courts 25,623 separate civil antitrust claims for relief — 1,912 civil actions, in many of which multiple plaintiffs joined their separate claims in a sin*1390gle action and in many of which there were multiple counts each based on a separate claim. Each claim for relief was a potentially protracted case and, as I reported, this unprecedented multidistrict litigation was imposed upon the ever-increasing burden of the ordinary civil and criminal dockets. Our alarm was understandably great and makes equally understandable the measure of my satisfaction in being able to report to the Institute at this meeting that every single one of these cases has been terminated. Not a single one remains pending. Whatever backlog problems the federal courts may have, they do not include any of these cases.
Now, this is history — stimulating and useful history. This remarkable result was achieved by the foresight and organizing ability of a committee of the Judicial Conference of the United States, with Chief Judge Alfred P. Murrah of the Tenth Circuit as its chairman and with Judge Edwin A. Robson of the Northern District of Illinois and Chief Judge William H. Becker of the Western District of Missouri as successive chairmen of its principal subcommittee. These judges, without a chart and without the power to change the rules of procedure created for less demanding tasks, secured the full cooperation of all the district judges to whom these cases were assigned. They were assisted by a small, temporary staff, provided by the Administrative Office on an emergency basis, and now have succeeded in terminating these 1,912 antitrust cases in a period of six years and two months, which would not be regarded as an unusual length of time for the processing of a single complex antitrust case. If it had not been for the monumental effort of the nine judges on this committee of the Judicial Conference and the remarkable cooperation of the 35 district judges before whom these cases were pending, the district court calendars throughout the country could well have broken down.

Comparison with the Penn Central Commercial Paper Litigation

One of the questions presented in this litigation is whether the decision in the majority opinion is consistent with the Penn Central Commercial Paper decision reported at 325 F.Supp. 309 (Jud.Pan.Mult.Lit.1971).
The most important factual difference in the Penn Central Commercial Paper cases was the nature of the obligations of the commercial paper itself and the manner and purpose of its sale and purchase. This commercial paper differed from conventional investment securities, like common stock, preferred stock, and debentures bought for relatively long-term conventional investment, and dependent, wholly or in part, on the amount of earnings of the issuing company for their value and rate of return. The commercial paper in the Penn Central cases consisted of short-term notes purchased from Goldman, Sachs & Co., in great principal amounts, to be used in place of money. It was a unique form of commercial paper in the limited and strict sense noted in the following definition:
commercial paper, comprehensive term for all kinds of short-term negotiable instruments which call for the payment of money and which may be used as COLLATERAL. The term is sometimes loosely applied to contracts and agreements. More strictly it includes only those instruments that are used in commerce in place of money, as distinguished from paper used in investment, personal, estate, speculative, and public transactions. It includes short-term notes, drafts, bills of exchange and checks, acceptances, bills of lading, warehouse receipts, orders for delivery of goods, and express orders. By borrowing on bills of lading or warehouse receipts (receipts from a transportation company or a warehouse showing that specified goods *1391have been delivered to it), wholesale merchants are enabled to handle goods greatly in excess of their capital. The salability of commercial notes is based on the financial strength of the borrower, as they are not backed by collateral. Express orders are issued by express companies for small amounts, payable at any office of the company. They may also be banked like checks. See A. O. Greef, The Commercial Paper House in the United States (1939). The Columbia Encyclopedia, 3rd ed., p. 459, Columbia University Press, 1963.
The exceptional nature of the paper, the exceptional manner and purpose of its sale and purchase, and the alleged concealment and misrepresentations of the seller made those cases, pending in other districts, separable and transferable to the Southern District of New York. In a discriminating decision (abjuring thé mythical “but for” rule) the Panel transferred the similar actions pending in other districts to the Southern District of New York for processing by the able and experienced Honorable David N. Edelstein, now Chief Judge of that district. In refusing to transfer the commercial paper claims for relief pending in the Southern District of New York to the Eastern District of Pennsylvania, to which all other related Penn Central securities actions had been transferred, the Panel said:
We conclude that the commercial paper cases are sufficiently different from the earlier cases that neither the convenience of the parties and witnesses nor the just and efficient conduct of the litigation would be served by their transfer to Philadelphia [for section 1407 pretrial proceedings]. 325 F.Supp. 309, 311 (Jud.Pan.Mult. Lit.1971).
The Uniform Commercial Code recognizes, preserves, and sharpens the distinction between “commercial paper” (described as “money paper”), “documents of title” (described as “commodity paper”), and “investment securities.” Articles 3, 7, and 8, and comment to § 7-104, U.C.C.

Confidence in the Transferee Judge

The majority decision in this litigation is founded on confidence, rather than fears as suggested in the minority opinion. The confidence on which it is founded is confidence in the transferee judge, repeatedly justified by prior experience of the Panel.
There is confidence that the transferee judge will grant all reasonable requests for priority in discovery. See, e. g., In re IBM Antitrust Litigation, 319 F.Supp. 926 (Jud.Pan.Mult.Lit.1970). Arguments and pessimistic prophecies similar to those in the minority opinion have been made repeatedly before the Panel and disproved later by experience. The same dire predictions of delay were made by the minority in the Yarn Processing Patent Validity Litigation decision reported at 341 F.Supp. 376 (Jud.Pan.Mult.Lit.1972), and dispelled by subsequent events.
In the exceedingly complex IBM Antitrust Litigation the less complex Telex and Greyhound Computer actions were transferred under Section 1407 to the District of Minnesota and assigned to the late able Honorable Philip Neville, United States District Judge. In re IBM Antitrust Litigation, 342 F.Supp. 200 (Jud.Pan.Mult.Lit.1972); In re Multidistrict Private Civil Treble Damage Litigation Involving IBM, 319 F.Supp. 926 (Jud.Pan.Mult.Lit.1970). Proper priority in discovery was given to the less complex cases, after which they were transferred or remanded and swiftly tried in the District of Arizona and the Northern District of Oklahoma without awaiting completion of discovery in the more complex actions. See, Greyhound Computer Corp. v. IBM, 342 F.Supp. 1143 (D.Minn.1972). These examples of efficient administration by a transferee judge make it evident that imagined difficulties may be easily avoided.

. The terms “tippee” eases, “trading” cases, and “non-fraud” cases are terms employed by some of the advocates in this litigation opposing transfer. They tend to obscure the common issues of fact in all the actions. Further the designation “non-fraud case” is a misnomer. No one has identified an action in which the alleged fraud is not an essential unadmitted element.

. Panel member Chief Judge Joseph S. Lord III presided with distinction at the trial of the first pilot case which began on March 16, 1964, and concluded with a jury verdict on June 2, 1964.