Court Opinion

ID: 8894311
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:42:50.188515+00
Date Added: 2024-06-11T17:07:23.342460
License: Public Domain

MANSFIELD, Circuit Judge
(concurring) :
Although I disagree in part with the criteria used by Chief Judge Kaufman for determining the appealability of orders granting class action status, I concur in all other aspects of his characteristically thoughtful and thorough opinion, including the result reached on the issue of appealability at the present posture of this case.
The formulation of principles for determining when an interlocutory order may be treated as an appealable “final decision” under 28 U.S.C. § 1291 has repeatedly been recognized by the Supreme Court to be an extremely difficult task. In Gillespie v. United States Steel Corp., 379 U.S. 148, 152, 85 S.Ct. 308, 311, 13 L.Ed.2d 199 (1964), for instance, Justice Black stated:
“And our cases long have recognized that whether a ruling is ‘final’ within the meaning of § 1291 is frequently so close a question that decision of that issue either way can be supported with equally forceful arguments, and that it is impossible to devise a formula to resolve all marginal cases coming within what might well be called the ‘twilight zone’ of finality. Because of this difficulty this Court has held that the requirement of finality is to be given a ‘practical rather than a technical construction.’ Cohen v. Beneficial Industrial Loan Corp., supra, 337 U.S. at 546 [69 S.Ct. at 1226].”
More recently in Eisen v. Carlisle & Jac-quelin, 417 U.S. 156, 170, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) (“Eisen III”), Justice Powell commented:
“No verbal formula yet devised can explain prior finality decisions with unerring accuracy or provide an utterly reliable guide for the future. We know, of course, that § 1291 does not limit appellate review to ‘those final judgments which terminate an action .,’ Cohen v. Beneficial Loan Corp., 337 U.S. 541, 545, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949), but rather that the requirement of finality is to be given a ‘practical rather than a technical construction.’ Id., at 546 [, 69 S.Ct., at 1226]. The inquiry requires some evaluation of the competing considerations underlying all questions of finality — ‘the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other.’ Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 511, 70 S.Ct. 322, 324, 94 L.Ed. 299 (1950) (footnote omitted).”
With the emphasis thus placed on “practical” construction we are once again required to decide what test should be applied to determine the appealability of an order granting class action status under Rule 23(b)(3), F.R.Civ.P., see, e. g., Herbst v. International Telephone and Telegraph Corp., 495 F.2d 1308 (2d Cir. 1974); and Kohn v. Royall, Koegel & Wells, 496 F.2d 1094 (2d Cir. 1974), as distinguished from orders denying such certification, see, e. g., Eisen v. Carlisle & Jacquelin, 370 F.2d 119 (2d Cir. 1966), cert. denied, 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598 (1967) (“Eisen I”); Green v. Wolf Corp., 406 F.2d 291, 295 n. 6 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969); Korn v. Franchard Corp., 443 F.2d 1301 (2d Cir. 1971); Caceres v. International Air Transport Assn., 422 F.2d 141 (2d Cir. 1970).
While the “three-pronged” test1 embraced by Judge Kaufman sets forth relevant factors that should be considered in deciding whether a class action certification is appealable, not all of them strike me as mandatory conditions precedent to review. Moreover, I fear that too strict or mechanical an adherence to the test, coupled with the en-*657grafting of excessively specific conditions on appealability, will lead to violation of the Supreme Court’s direction that § 1291 be given a “practical rather than a technical construction.” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546, 69 S.Ct. at 1226.
Turning to the first of the three prongs, the requirement that the district court’s order be “fundamental to the further conduct of the case,” see United States v. General Motors Corp., 323 U.S. 373, 377, 65 S.Ct. 357, 359, 89 L.Ed. 311 (1945); Gillespie v. United States Steel Corp., 379 U.S. 148, 153, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964), I do not agree that an order granting class action status should be appealable only upon a showing that the action would otherwise have withered on the vine. Nothing in the origin or history of the “fundamentality” phrase so indicates.2 Where class action status has been denied by the district court, the likelihood that the action will survive as an individual suit or collapse entirely should weigh heavily in the scales of appealability, as Judge Kaufman pointed out in forging the “death knell” doctrine in Eisen I. However, where class certification has been granted by the district court it does not follow that merely because the suit would have continued as an individual action if class certification had been refused, review should be denied. The logic of such a “reverse death-knell” doctrine, although it may have surface appeal to those dedicated to sheer symmetry, escapes me. Nor do I interpret Judge Friendly’s reference in Korn v. Franchard Corp., 443 F.2d 1301, 1307 (2d Cir. 1971) to “equality of treatment as between plaintiffs and defendants” as sponsoring it. Indeed he there voiced serious doubts as to the workability of the “death-knell” doctrine.
Despite the fact that, if class action status is denied, a class suit may continue as a viable individual action, practical considerations may dictate the advisability in some instances of immediate review of an order granting class action status. One such consideration is the likelihood that because of the sheer size and complexity of the action, the added time, expense and effort needed to defend it as a class suit may force the defendant, despite the doubtful merit of the claims, to settle rather than to pursue the long and costly litigation route required for review of the class action certification. See West Virginia v. Chas. Pfizer & Co., 314 F.Supp. 710 (S.D.N.Y.1970), affd., 440 F.2d 1079 (2d Cir.), cert. denied, 404 U.S. 871, 92 S.Ct. 81, 30 L.Ed.2d 115 (1971); Herbst v. International Telephone and Telegraph Corp., 495 F.2d 1308, 1312-1313 (2d Cir. 1974); American College of Trial Lawyers, Report and Recommendations of the Special Committee on Rule 23 of the Federal Rules of Civil Procedure 15-17 (1972). To be meaningful the review must be from an interlocutory order. *658Otherwise appellate review, although theoretically available years later after trial, becomes prohibitive as a practical matter, principally because of the time and expense factor. Despite the pendency of hundreds of Rule 23(b)(3) class suits, only a handful have been tried to judgment, much less thereafter reviewed by a court of appeals. American College of Trial Lawyers, Report, supra, 15. In the meantime, because most class damage suits prove to be behemoths in the world of litigation, the district court judge who has been saddled with actions that have erroneously been granted class status under Rule 23(b)(3) must assume onerous and time-consuming duties not characteristic of most other litigation. He must make more interlocutory determinations than in other actions. He must identify the class and determine what sub-classes, if any, are to be established. Green v. Wolf Corp., 406 F.2d 291, 299 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969). He must supervise the type and terms of the notice and other communications to be sent to members of the class. He must classify and handle queries from class members, determine whether and when filing of proofs of claim by members will be required. He must register opt-outs, supervise pretrial discovery, formulate pretrial orders, and handle a plethora of motions. He must consider proposed settlements and hold hearings with respect to them. He must preside at trial of common issues, if trial there is to be, preside at such later trials of any individual issues as may occur, and supervise the distribution of awards.
We should not allow this complex, time-consuming and expensive process to be launched without ample justification. As we said recently in Herbst, supra, 495 F.2d at 1313:
“We believe that in the exercise of our supervisory powers over the administration of justice in the district courts it is desirable for us to review orders authorizing class actions before the parties and the district courts expend large amounts of time and money in managing them. Candor compels us to add that as appellate judges we would be reluctant to hold that a class action had been improper after the district court and the parties had expended much time and resources although we might have had serious doubts if we had reviewed the question at the inception of the action. Judicial efficiency requires that appellate review be made before the parties and district courts have spent considerable time, effort, and money, on such actions.”
Our initial reaction, upon first being exposed eight years ago to Rule 23(b)(3), was to urge that it be construed liberally, see Eisen II, 391 F.2d 555, 563 (2d Cir. 1968) (“we hold that the new rule should be given a liberal rather than a restrictive interpretation”) (Medina, C. J.) and Green v. Wolf Corp., 406 F.2d 291, 298 (2d Cir. 1968) (the “guiding principle” should be that “if there is to be an error made, let it be in favor of and not against the maintenance of the class action”) (Kaufman, C. J., quoting from Esplin v. Hirschi, 402 F.2d 94, 99 (10th Cir. 1968)). The time may have come for reappraisal of this philosophy, which may prove to have been somewhat overly enthusiastic. However, as long as the district courts in this Circuit are so advised, I question the wisdom, much less the practicality, of adopting a restrictive set of conditions for review. Such tests, especially if applied in a wooden-like fashion, may have the effect of imposing an unnecessary and staggering burden upon the district courts and of delaying justice until the central issue becomes academic. Although the Supreme Court’s decision in Eisen III, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), has dealt a lethal blow to those consumer-type class suits in which the named plaintiffs cannot afford the cost of individual notice to the class, the courtroom doors remain open to numer*659ous actions where the class is smaller than in Eisen and the members are identifiable. See e. g., Illinois v. Harper & Row Publishers, Inc., 301 F.Supp. 484 (N.D.Ill.1969). The present case is but one example. Rather than hold that an order granting class action status will be reviewed only if the action could not have been continued as an individual suit, I would dispense with the “fundamentality” requirement as a condition for such review and use the simple test of weighing “the inconvenience and costs of piecemeal review” against “the danger of denying justice by delay.” See Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 511, 70 S.Ct. 322, 324, 94 L.Ed.2d 299 (1950); Gillespie v. United States Steel Corp., supra, 379 U.S. pp. 152-153, 85 S.Ct. 308.3
Turning to the second requirement— that a class certification, to be appeala-ble, must be “separable from the merits” —strict application of this condition would preclude almost any review of a trial judge’s determination that common questions “predominate” or that a class action is “superior” to other available methods for adjudicating the controversy. In the absence of any judicial or legislative definition of the term “predominate” as it is used in Rule 23(b)(3), the trial judge, upon being faced with some claims and proof common to all class members (e.g. joint action on the part of defendants) and others that are individual to each class member (e.g., differing affirmative representations made to different members, materiality, or proximate cause), looks for some controlling principles of general application. See, e.g., Epstein v. Weiss, 50 F.R.D. 387, 393 (E.D.La.1970); Siegel v. Chicken Delight, Inc., 271 F.Supp. 722, 726 (N.D.Cal.1967). Guiding principles are also required to determine whether injunctive relief, administrative action, or some other remedy would be superior to a damage suit.
For these enormously important threshold decisions, which determine whether the class action genie is to be released from the bottle, the district courts need guidance. Instead, because so few class action determinations ever reach the point of appellate review, the trial judges are asked to “fly by the seat of their pants.” Despite the passage of seven years since the adoption of Rule 23, except in one or two instances, see, e.g., Green v. Wolf Corp., 406 F.2d 291, 300-301 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969); Korn v. Franchard Corp., 456 F.2d 1206 (2d Cir. 1972), we have yet to provide any meaningful guidelines interpreting key terms used in the Rule, such as “predominate” and “superior” found in (b) (3) and “as soon as practicable” in (c)(1). As a result, district judges, left to fend for themselves, have adopted varying individual standards. We cannot disregard the fact that some judges, possibly influenced by our early exhorta*660tions to take a liberal view of the Rule, have tended to “jump the gun” by making an early determination in favor of a class certification without benefit of adequate data. Others, perhaps more aware of the consequences of unleashing the titanic class action weapon, have sought to avoid the harmful effects of an unwarranted or premature grant of class action status in a doubtful case by adopting the principle that “it is preferable to proceed with the claims of those before the Court, without prejudice to subsequent class action treatment if, upon further development of the litigation, it appears appropriate.” Morris v. Burchard, 51 F.R.D. 530 at 536 (S.D.N.Y.1971); See also Schaffner v. Chemical Bank, 339 F.Supp. 329 (S.D.N.Y.1972).
Similarly some judges, at least where the plaintiff’s individual claim is large enough to be prosecuted individually, have refused to grant class certification in the absence of evidence that additional, duplicate suits have been instituted or that a multiplicity of suits is threatened. See, e.g., Caceres v. International Air Transport Ass’n, 46 F.R.D. 89 (S.D.N.Y.1969), appeal dismissed, 422 F.2d 141 (2d Cir. 1970); Free World Foreign Cars, Inc. v. Alfa Romeo, S.p.A., 55 F.R.D. 26 (S.D.N.Y.1972); City of New York v. International Pipe & Ceramics Corp., 44 F.R.D. 584 (S.D.N.Y.1968), appeal dismissed, 410 F.2d 295 (2d Cir. 1969). In contrast, others have indicated that a class action might be warranted in the absence of evidence of other existing or prospective litigation, see Fidelis Corp. v. Litton Industries, 293 F.Supp. 164, 171 (S.D.N.Y.1968).4 In the present case Judge Carter has granted class action status despite the fact that the City would continue its own individual suit for $12,000,000 and despite the fact that, although 17 years have elapsed since the institution of the Government suit upon which the present action is based, and 8 years have passed since the settlement of the Government’s action by entry of a consent decree, no other governmental body has seen fit to institute a coattail action of its own, much less to join as a named co-plaintiff in the City’s suit.
Such sharply conflicting views as to the conditions required for maintenance of an action as a class suit under Rule 23(b)(3) indicate that the decision in close cases may depend on the interpretation and philosophy of the judge rather than upon uniform principles established by appellate review. The uncertainties posed by Rule 23 should be resolved in a manner that will enable district judges to act with some degree of uniformity. For these reasons and to permit meaningful review and appellate formulation of critical guidelines, I would suggest that, in lieu of a “separability from the merits” test (which is not mandated by Cohen v. Beneficial Industrial Loan Corp.), the district court be required, where it has granted class certification, to make definitive findings prior to trial on the issues of “predominance” and “superiority.” Review might then be permitted upon a prima facie showing that the findings are “clearly erroneous.” Cf. Ecology Action v. AEC, 492 F.2d 998, 1001 (2d Cir. 1974). Such a condition would permit review without undue involvement in the merits or excessive examination of record proof. It would also allow the district judge sufficient time to determine prior to trial whether an action that has tentatively been accorded class action status should be decertified.5
With respect to the third requirement of the “tripartite analysis,” i.e., that the defendant demonstrate that the order *661will cause “irreparable harm to the defendant in terms of time and money spent in defending a huge class action,” I take no issue except to state that the additional judicial management necessitated by prosecution of a suit as a class rather than an individual action should also be taken into consideration. Satisfaction of this condition, however phrased, will turn on the facts of the particular case presented for review. If common questions of fact do not predominate over those affecting individual members, the scope of proof, and accordingly the time, expense and resources, required to defend a class suit should be substantially greater than that required to defend an individual action, and the judicial time and energy consumed should be proportionately greater. It therefore would be a rare case where the grant of class action status would not meet this test.
Applying the foregoing considerations to this case, I would at this point in time reach the same conclusion on the issue of appealability as that reached by Judge Kaufman. Of necessity Judge Carter’s conclusions on the essential elements of “predominance” and “superiority” had to be extremely tentative. Having virtually no facts with respect to these essential issues, he based his decision principally upon the allegations of the complaint and his speculation, despite many years of experience to the contrary, that other government units would probably bring similar suits. Under the circumstances he would have been better advised, in my view, to withhold class certification until relevant facts could be developed through pretrial discovery.6 However, as Judge Kaufman accurately observes, nothing prevents the district court, upon presentation of evidence, from concluding at a later point that the action must be de-certified as a class suit because common questions do not predominate. In view of that possibility, it should be recognized that we are not here confronted with a claim of a single price-fixing conspiracy or agreement in violation of § 1 of the Sherman Act where, as with a charge of fraud in violation of the federal securities laws, liability can be established by proof of one set of facts common to all parties, such as a price agreement or fraudulent prospectus. The principal claim here is monopolization in violation of § 2 of the Sherman Act, which presents a potential for widely varying questions of law and fact that may not, at this early stage in the proceedings have been fully appreciated.
The complaint, which is virtually a copy of a civil complaint filed by the Government years ago, charges monopolization on a nationwide scale and alleges a series of some 12 or more separate and distinct monopolization activities. GM has offered to show that the relevant facts and circumstances with respect to many members of the proposed class differ radically from those existing as to others, thus giving rise to what in effect is a series of separate relevant markets and different competitive conditions in different municipalities within the purported class. Pretrial discovery may disclose that non-federal governmental purchasers differ widely in their modes of purchase, use differing competitive bidding arrangements, purchase different types and sizes of buses (“city,” “intercity,” and smaller sizes not manufactured by GM) and have available different competitive *662means of mass transportation (e.g., small buses, subways, trains, electric trolleys). If this proof should indicate that there was not one nationwide market as alleged in the complaint but a series of individual dissimilar relevant local markets, there would be little purpose in permitting the suit to proceed on behalf of a nationwide class of municipalities. Indeed such a suit might prove to be a chaotic affair, joining a series of individualized issues that could be resolved more efficiently in individual suits. Common questions of fact would not predominate. Evidence of GM monopolization in Atlanta or Albuquerque, which have no subways, would not be probative on the question of whether there has been monopolization in New York, which not only has subways but other competitive means of transportation, or in some smaller city which may be in a position to switch its purchases at will from GM to a competing manufacturer of smaller buses. Proof that GM may have rigged bid specifications to exclude competitiors in one city would be of questionable relevance in proving monopolization in another.
Under the foregoing circumstances proof adduced in an individual suit by the City of New York would be but a fraction of that presented in a suit on behalf of almost 200 municipalities. A class action would not then achieve any appreciable savings in time, expense or energy for the parties or for the court, particularly when it is doubtful that many other municipalities would think well enough of the claims to institute individual suits on their own behalf.
For these reasons I would prefer to consider our own holding, like that of the district court, to be tentative in nature and without prejudice to consideration upon a future appeal after the district court, upon renewal of the motion by GM on the basis of the additional facts which it proposes to show, makes a more informed determination on the issue of class action status.

. The formula, which would require that the order, to be considered “final,” must (1) be “fundamental to the further conduct of the case,” (2) be separable from the merits, and (3) must cause irreparable harm, appears to have evolved from Judge Medina’s decision in Eisen III, 479 F.2d at 1007 n. 1.

. Prior to our decision in Eisen III, 479 F.2d 1005 (2d Cir. 1972), the only Supreme Court decision in which the ■“fundamentality” phrase was used in considering the finality of a district court interlocutory order was Gillespie v. United States Steel Corp., 379 U.S. 148, 153, 85 S.Ct. 308, 13 L.Ed.2d 199 (1963). There, however, the Court was dealing with an order striking certain claims in a wrongful death action on the ground that they could not be asserted under the Jones Act, which provided the exclusive remedy, and not with an order granting relief to the plaintiff. In concluding that the order was “fundamental to the further conduct of the ease” the Court did not suggest that the plaintiff-Administratrix might otherwise be unable to pursue her remaining Jones Act claims and then appeal from the judgment striking her claims under the Ohio survivor statute and those for the benefit of the decedent’s brother and sisters. Applying a “practical construction” the Court concluded that, although the appeal was “piecemeal” in nature, “tire eventual costs . . . will certainly be less if we now pass on the questions presented here rather than send the case back with those issues undecided,” and that the long delay before those issues would otherwise be resolved “might work a great injustice.” 379 U.S. 153, 85 S.Ct. 311. Thus the term “fundamental to the further conduct of tire case” was not intended to mean that unless review were granted the action would no longer be viable.

. To the extent that “fundamentally” remains a requirement, rather than merely a consideration, in the decision as to appeala-bility, an order granting class status would ordinarily be attended by such fundamentality. In neither of the leading decisions in this area, see p. 1910, supra, is there even a hint of concern for the death-knell or reverse death-knell consequences of the orders being appealed. The Supreme Court was concerned with the ixractical rather than the macabre when it determined the orders to be fundamental. In United States v. General Motors, supra, the Court concluded that a ruling excluding proof of certain items of damage was fundamental to the further conduct of a condemnation proceeding and so appealable. In Gillespie the Court reasoned tliat an order striking certain claims in a Jones Act complaint was likewise fundamental and axipealable. These orders were fundamental because they would in an elemental way affect the course and outcome of the case. In tliat sense it would be difficult’ to imagine an order more fundamental to the conduct of a case than one which certifies a class action. I have sketched above some of the tactical and strategic consequences of a class order. The parties i>ut so much the better xxart of their effort into the work of seeking or opposing the class order precisely because they appreciate these consequences. If the word “fundamental” is to mean anything, it surely must encompass an order of class certification which so dramatically affects the course and {'onduct of a case.

. Judge Bonsai, however, did imply that the existence of a stockholders’ protective committee made it likely that unless class action status was granted more individual suits would be brought, see 293 F.Supp. at 171.

. Even assuming that the trial judge “tentatively” declares that a suit may be maintained as a class action, he certainly should be required to make his final determination of that issue prior to trial. Otherwise the uncertainty as to his ultimate ruling on the issue could reduce the trial to a shambles.

. Rule 23 requires that the court make the class action determination “as soon as practicable after the commencement of an action brought as a class action,” which is a flexible term. The Manual for Complex Litigation § 1.40 at 10 (1973), argues that an early determination of this question is necessary. The cases cited by the Manual for this proposition in fact lend little or no support to the idea. And to the extent that the Manual’s recommendation derives from a concern for the effect of a statute of limitations upon absent members, we need only note that the Supreme Court has now put that fear to rest. American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974).