Shelter Realty Corp. v. Allied Maintenance Corp.
Shelter Realty Corp. v. Allied Maintenance Corp.
Opinion of the Court
In this case, we are once again confronted with an attempted appeal of an interlocutory order granting class action certification. Since the issues raised manifestly do not satisfy the tripartite test of “fundamentality,” “separability” and “irreparable harm” governing our Court’s extremely limited exception to the final judgment doctrine in class certification cases, we dismissed this appeal in open court. But, in light of the burgeoning caseload borne by this Court,
I.
The facts necessary to our decision may be limned with broad strokes. Appellants, defendants below,
The allegations of the consolidated complaint
In August 1976, appellees moved for class certification under Fed.R.Civ.P. 23(b)(3) and (c)(1). Appellants resisted, “at every trench and barricade emplaced among the subdivisions of Rule 23,” as Judge Frankel commented in the opinion below.
The trial court rejected these arguments, finding the common question of an overall conspiracy having the indirect effect of raising the general price level predominant over individual issues. Judge Frankel noted that impact might be presumed from proof of an overall conspiracy.
Judge Frankel refused to certify an appeal under 28 U.S.C. § 1292(b) (1970) because the “determination allowing a class action to proceed involves a particular appraisal of specific facts and is to a measurable extent discretionary.” Accordingly, he concluded, “this is not a suitable case for burdening the Court of Appeals.” We can only wish that appellants, represented as they are by a stunning array of able counsel, had heeded his words.
II.
Since this appeal has not been certified by the district court, it must be dismissed unless the order falls within “that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1226, 93 L.Ed. 1528 (1949).
A review of the cases that have dealt with the issue presented to us may serve to clarify any confusion which may persist on the question. Several circuits have found that .orders certifying a class action, because of their tentative nature, can never satisfy the Cohen doctrine.
The well-established rule of this circuit is that a class action determination is “fundamental” only when the individual damage claim of the class representative is so small that the suit would not continue as a private action.
It is readily apparent that the viability of the present action does not turn on class certification. If the named plaintiffs are successful, their damages, when trebled, can be expected to be substantial. Moreover, the statutory provision allowing recovery of attorneys’ fees gives plaintiffs’ counsel an incentive to pursue this action regardless of the size of the claims. See Kohn v. Royall, Koegel & Wells, supra, 496 F.2d at 1100; Shayne v. Madison Square Garden Corp., 491 F.2d 397, 402 n.15 (2d Cir. 1974).
Separability
In addition to fundamentality, appellants must also show that an exceptional issue exists that can be conclusively determined without delving into the merits of the underlying claim. Accordingly, we will review finite determinations of judicial power — such as the notice issue decided in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) — but not discretionary decisions which vary from case to case. See General Motors Corporation v. City of New York, 501 F.2d 639, 646 — 47 (2d Cir. 1974).
As noted earlier, appellants’ major contention is that common questions do not predominate because a determination of liability, as well as damages, depends on a showing of impact on each class member. A similar claim was raised in In re Master Key Antitrust Litigation, 528 F.2d 5 (2d Cir. 1975). In dismissing that appeal, we noted that “the question of what must be proven to establish liability is not a matter separable from the claim for relief.” 528 F.2d at 12.
Indeed, Windham v. American Brands, Inc., 565 F.2d 59 (4th Cir. 1977) (en banc), petition for cert. filed, - U.S. -, 98 S.Ct. 1605, 55 L.Ed.2d 58 (1977), the primary case upon which appellants rely in their appeal for the principle that class certification is inappropriate when there are individual issues of impact, supports the view that Judge Frankel’s discretionary decision should be left undisturbed. Wind-ham, involving a denial of class action certification, decided that issues such as the predominance of common questions and manageability were so largely factual that they should be left to the lower court’s discretion.
This Court has repeatedly held that the predominancy question is not an issue capable of separation from the merits. See Parkinson v. April Industries, Inc., supra, 520 F.2d at 656; General Motors Corporation v. City of New York, supra, 501 F.2d at 647; Kohn v. Royall, Koegel & Wells, supra, 496 F.2d at 1100. Similarly, the inadequacy of class representation, another of appellants’ contentions, has also been held unsuitable for interlocutory review under the final judgment doctrine. See Schlick v.
Irreparable Harm
It is also urged that appellants will be irreparably injured if we do not allow this appeal. In considering this question, “[attention . . . must be directed to the incremental costs and time in defending the particular action if it is maintained as a class action.” Kohn v. Royall, Koegel & Wells, supra, 496 F.2d at 1100. In this case, there is a strong argument that the incremental burden imposed by the class action will not be substantial. A countywide conspiracy would still have to be proved were this suit to, proceed as a private action. And appellants will also be defending a very similar action by the International Telephone & Telegraph Corporation. Moreover, the burden of class litigation ipso fac-to does not justify immediate appellate review. See Parkinson v. April Industries, Inc., supra, 520 F.2d at 653-54.
III.
Although perfunctorily acknowledging the tripartite test, appellants in reality are asking us to modify our rule, to permit an appeal of a class certification order whenever the class is numerous.
. Filings in our Court increased 111 percent during the decade ending in July 1977. During the 1976-77 Term alone, we disposed of 2,098 appeals. See Address by Chief Judge Kaufman, “Cost and Delay — The Demons of the Judicial Process; State of the Judicial Business in the Second Circuit,” Second Circuit Judicial Conference, Buck Hill Falls, Pennsylvania, September 9, 1977 in New York Law Journal, Sept. 12, 1977, at 4, col. 1. But, perhaps an even more serious consequence of unnecessary appeals at the preliminary stages of litigation than the taxation of judicial resources is the burden imposed on the litigants. As the author of this opinion noted in the address cited above;
Too often people are deterred from entering the courthouse door by the prospect of exorbitant expense and interminable delays. . Litigation too often resembles the duels of the young gentlemen of San Francisco in the last century, who matched each other tossing gold coins into the Bay until one cried “Enough!” As an alternative to pistols, this procedure has much to recommend it. But it is the very antithesis of law.
. The named defendants-appellants are the Allied Maintenance Corp., Allied Building & Airport Services, Inc., Alpine Industries, Inc., Anchor Cleaning Service, Inc., Arcade Cleaning Contractors, Inc., Coastal Enterprises, Inc., Eastern Maintenance Service, Inc., MacLean
. 15 U.S.C. § 1 (1976).
. The complaint defines “building maintenance services” as “the providing of janitorial, repair, security, elevator, landscaping and other services in connection with the use and occupancy of commercial, industrial or institutional buildings, including but not limited to, interior cleaning and dusting, removal of trash, washing and waxing floors, vacuuming and cleaning carpets; cleaning and washing windows, walls and window coverings; servicing washrooms, operating and repairing elevator, heating, lighting and ventilation facilities; providing security guard services; caring for landscaping; preparation of new buildings for occupancy and other related activities.”
. The named plaintiffs are Shelter Realty Corp., 101-103 Park Avenue, Inc., Penn Seventh Realty Corp., and 600 Group 54th Street. Affidavits submitted in support of the motion to dismiss this appeal reveal that 101-103 Park purchased approximately $900,000 worth of services from defendant Allied Building & Airport Services during the relevant period, and Penn Seventh bought services valued at about $100,-000 from defendant Temco Service Industries and its subsidiaries. Shelter Realty, a nominee for 600 Group 54th Street, also purchased an undisclosed amount of services from Temco and solicited bids from others.
. Shelter Realty Corp. filed the original complaint in this action in January 1976. By order dated August 16, 1976, Shelter Realty’s action was consolidated with actions brought by 101-103 Park Avenue, Inc. and Penn Seventh Realty Corp. 600 Group 54th Street was added as a party plaintiff by order dated December 27, 1976. Plaintiffs-appellees filed the amended consolidated complaint in October 1977.
. United States v. Allied Maintenance Corp., 76 Crim. 613 (July 2, 1976 S.D.N.Y.) Each appellant was fined $15,000 in the criminal action.
. It should be noted that, in April 1976, International Telephone & Telegraph Corp. filed a substantially similar complaint against appellants. ITT intends to pursue its action independent of the class.
. Shelter Realty Corporation v. Allied Maintenance Corporation, 75 F.R.D. 34, 36 (S.D.N.Y. 1977).
. The estimate of class size has grown, by stipulation, from about 10,000 to 25,000 members since Judge Frankel issued his opinion.
. Judge Frankel’s conclusion in this regard was not without foundation in the decisions of this court. See In re Master Key Antitrust Litigation, 528 F.2d 5, 12 n.11 (2d Cir. 1975).
. The Seventh and Third Circuits forbid appellate review of any class certification decision. See King v. K. C. Southern Industries, 479 F.2d 1259 (7th Cir. 1973); Hackett v. General Host Corp., 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972). Judge Friendly has suggested that this circuit adopt a similar holding, permitting review only when the appeal is certified by the district judge, in his concurrence in Parkinson v. April Industries, Inc., 520 F.2d 650, 658-60 (2d Cir. 1975). In the Ninth and Sixth Circuits appeals lie only from a denial of class certification and then only if that denial sounds the “death knell” of the action. See Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975), cert. denied, 429 U.S. 816, 97 S.Ct. 57, 50 L.Ed.2d 75 (1976); Ott v. Speedwriting Publishing Company, 518 F.2d 1143, 1148-49 (6th Cir. 1975); Walsh v. City of Detroit, 412 F.2d 226 (6th Cir. 1969).
. Of course, this definition of “fundamentality” is but a mirror-image of the “death knell” doctrine applied in appeals of decisions denying class certification. See Eisen v. Carlisle & Jacquelin, 370 F.2d 119, 121 (2d Cir. 1966), cert. denied, 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598 (1967) (Eisen I). See also In re Master Key Antitrust Litigation, supra, 528 F.2d at 10-11.
. Windham did not raise the issue of the propriety of appeal under 28 U.S.C. § 1291 since the order denying class status had been certified under Fed.R.Civ.P. 54(b). See also Link v. Mercedes Benz of North America, Inc., 550 F.2d 860 (3d Cir.) (en banc), cert. denied, 431 U.S. 933, 97 S.Ct. 2641, 53 L.Ed.2d 250 (1977) (district court’s certification under 28 U.S.C. § 1292(b) of order granting class status improper since manageability of action involving separate proof of damages for each of 300,000 class members must be left to informed discretion of the trial judge.)
. As to appellants’ argument that the trial court should not have decided the class motion on the basis of the complaint, we simply note that Judge Frankel was prohibited from conducting an inquiry into the merits by the Supreme Court’s decision in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) (Eisen IV)\ that he did consider the criminal information and numerous affidavits and documents relating to the class issues; and that we have previously held that it is proper to accept the complaint allegations as true in a class certification motion. See Shayne v. Madison Square Garden Corp., supra, 491 F.2d at 398; Green v. Wolf Corporation, 406 F.2d 291, 294 n.l (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969).
. In Parkinson, the defendants in a class action also argued that “class action status imposes such staggering burdens . . . that prompt appeal should lie.” While conceding that “the impact of large plaintiff class actions upon defendants is great,” the court dismissed the appeal for failure to satisfy all three prongs of our test for appealability. See 520 F.2d at 653-54.
. In espousing this position, appellants place heavy reliance on our decisions in Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973) (Eisen III), rev’d on other grounds, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) and Herbst v. International Telephone & Telegraph, 495 F.2d 1308 (2d Cir. 1974). These opinions, written during the evolutionary period to which we have referred, preceded the first complete enunciation of the tripartite test in Kohn. Accordingly, they must be read in the light of the construction they have been given in subsequent cases. See Parkinson v. April Industries, Inc., supra, 520 F.2d at 656, nn.6-7.
Reference
- Full Case Name
- SHELTER REALTY CORP., 101-103 Park Avenue, Inc., Penn Seventh Realty Corp., 600 Group 54th Street v. ALLIED MAINTENANCE CORP., Allied Building and Airport Services, Inc., Alpine Industries, Inc., Anchor Cleaning Service, Inc., Arcade Cleaning Contractors, Inc., Coastal Enterprises, Inc., Eastern Maintenance Service, Inc., MacLean Service Company, Inc., National Kinney Corporation, Prudential Building Maintenance Corporation, Temco Service Industries, Inc., and Triangle Maintenance Service, Inc.
- Cited By
- 113 cases
- Status
- Published