Court Opinion

ID: 9461999
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:29:27.991152+00
Date Added: 2024-06-11T17:37:21.101960
License: Public Domain

FRIENDLY, Circuit Judge
(concurring):
I agree that, for the reasons developed in Judge Waterman’s admirable opinion, our decisions demand dismissal of this appeal for want of appellate jurisdiction. But I would go further and hold that orders simply granting or denying class action status, as distinguished from a class action designation order, like that in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 170-72, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), which also contains provisions requiring defendants to pay money or take other action not remediable on a review of the final judgment, are appealable only under the procedure for the review of interlocutory orders provided in 28 U.S.C. § 1292(b).
Our court’s first important response to the difficult problem of the appealability of class action orders under revised F.R. Civ.P. 23 was in a case involving denial of class action status and took the form of the “death-knell” doctrine, Eisen v. Carlisle & Jacquelin, 370 F.2d 119, 121 (2 Cir. 1966), cert. denied, 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598 (1967). This *659was shortly followed in Green v. Wolf Corp., 406 F.2d 291, 295 n. 6 (2 Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969). See also Caceres v. International Air Transport Ass’n, 422 F.2d 141, 144 (2 Cir. 1970). Although the Supreme Court’s decision in Eisen, supra, did not expressly reject that doctrine, the Court significantly declined to sanction it; as indicated, appealability, which by this time had become one from an order granting class action status, was there sustained on the ground that the order, compelling the defendants to pay for the sending of notices, was a classic case for application of the principle of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-47, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), since amounts so expended would be forever lost even if defendants ultimately prevailed on -the merits.
Despite its initial appeal, application of the “death-knell” doctrine began to reveal weaknesses. One was the point, raised by Judge Hays’ dissent in City of New York v. International Pipe & Ceramics Corp., 410 F.2d 295, 300-01 (2 Cir. 1969), that, in looking only at the named plaintiff, the claim of which was clearly large enough to justify continuation of the action without class action status, the doctrine ignored the death-knell sounded by the denial of such status for other members of the class having only small claims, since the remaining individual plaintiff would not, at a later point, have reason to take an appeal from the adverse class action determination. Another was the difficulty, often the impossibility, of determining when a denial of class action designation truly rang the death-knell. Although I joined in dismissing the appeal in Milberg v. Western Pacific Railroad, 443 F.2d 1301 (2 Cir. 1971), as not meeting the death-knell stándard, I have later wondered whether it was realistic to expect that a stake of $8,500 (achieved only by adding to Mrs. Milberg’s claim of some $1,000 her lawyer husband’s claim of some $7,500) would as a practical matter justify their pressing an action under the securities laws against two well financed corporate defendants. See also Shayne v. Madison Square Garden Corp., 491 F.2d 397, 402 (2 Cir. 1974) (appeal from denial of class action status dismissed where individual claim was for $7,482). Finally there was the point, mentioned in my concurrence in Korn v. Franchard Corp., 443 F.2d at 1307, that the death-knell doctrine worked only in favor of plaintiffs. Apart from the apparent inequity of this, it would seem odd that appellate courts should sometimes be able to control too grudging a reading of Rule 23 by the district courts by an appeal as of right as from a final decision but could control too expansive a one only by an appeal as from an interlocutory decision by leave.
Our court has now sought to meet this last point by the trilogy of Herbst v. International Telephone & Telegraph Corp., 495 F.2d 1308 (2 Cir. 1974); Kohn v. Royall, Koegel & Wells, 496 F.2d 1094 (2 Cir. 1974); and General Motors Corp. v. City of New York, 501 F.2d 639, 644 (2 Cir. 1974). However, the cure may be worse than the disease. The answer to the second prong of the “three-pronged” test laid out in Judge Waterman’s opinion would seem almost always to be “yes”. As to the first prong, I am not sure what is meant by the class action determination being “fundamental to the further conduct of the case”; this sounds like the “death-knell” doctrine in different dress. See General Motors Corp. v. City of New York, supra, 501 F.2d at 644; Kohn v. Royall, Koegel & Wells, supra, 496 F.2d at 1099 (speaking of this prong, the court said that “a necessary though not sufficient element in the appealability equation is whether the action’s viability turns on the class action determination”). The third prong, whether the order will cause “irreparable harm to the defendant in terms of time and money spent in defending a huge class action”, seems to mean that there can be no appeal from the grant of class action designation unless the class is very large — a rule which, among other things, would exclude appeals on the *660ground that the class was not so numerous as to make joinder of all members impracticable, F.R.Civ.P. 23(a)(1).
Admittedly the problem is not an easy one. But experience has led me to the conclusion, expressed by Judge Gibbons for the Third Circuit in Hackett v. General Host Corp., 455 F.2d 618, 621-23, cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972), that except when, as in Eisen, an order is appealable as of right on some other ground, the best solution is to hold that appeals from the grant or denial of class action designation can be taken only under the procedure for interlocutory appeals provided by 28 U.S.C. § 1292(b). Given a choice between the law developed in this circuit and that expressed in Hackett, the Seventh Circuit chose the latter, King v. Kansas City Southern Industries, Inc., 479 F.2d 1259 (1973) (per curiam). The view expressed in Hackett was certainly the prevailing one before the 1966 revision of Rule 23, see Caceres v. International Air Transport Ass’n, supra, 422 F.2d at 143 & n. 5, and “contemporaneous and highly informed commentary” suggested that § 1292(b) would continue to serve as the vehicle for securing any needed clarification thereafter. Id. at 144, citing B. Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 Harv.L.Rev. 356, 390 n. 131 (1967); and ABA Special Comm., Federal Rules of Procedure, Report, 38 F.R.D. 95, 104-05 (1966). Since the need for review of class action orders turns on the facts of the particular case, this procedure is preferable to attempts to formulate standards which are necessarily so vague as to give rise to undesirable jurisdictional litigation with concomitant expense and delay. The § 1292(b) procedure permits determination whether there is to be an appeal within weeks rather than months. To be sure, since that procedure requires initial certification by the district court, there is the possibility that an obdurate judge might thwart review in a case where the court of appeals would be disposed to grant it; but this risk must be weighed against the valuable input which district judges can make in cases of this sort and the disadvantages of any other procedure. Moreover, as said in Hackett v. General Host Corp., supra, 455 F.2d at 624, “If in isolated instances arbitrariness creeps in, there remains the ultimate remedy of mandamus” with respect to the grant or denial of class action status.
Since the attempts to imprison the appealability of orders granting or denying class action designation within judicially-created formulae have proved to be failures and, in my judgment, will continue to be so, we should return to the earlier wisdom.