Simon Anschul, Individually and on Behalf of All Persons Similarly Situated v. Sitmar Cruises, Inc.

544 F.2d 1364

Opinions

PER CURIAM.

Footnotes

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**

Defendant-appellee Sitmar Cruises, Inc., advertised and sold tickets for a 14-day pleasure cruise departing and returning to Los Angeles, California. The original itinerary included the ports of Acajutla, El Salvador, and Cabo San Lucas. Before departing Sitmar gave notice to various travel agents that these two ports (which were located in the southern tip of the proposed cruise) had been eliminated from the scheduled ports-of-call. Defendant stated that the change in plans was due to the fuel crisis during the winter of 1973-74. The defendant alleges that it was unable to secure a commitment for sufficient fuel in the southern ports. The 757 passengers were still provided with a 14-day cruise. The port of Manganillo was added to the itinerary and the passengers were given an extra day in Acapulco.

The passage contracts had been negotiated on behalf of the defendant by different travel agencies. Notice of the change in itinerary was only given to the respective travel agents. This notice advised the agents to notify the individual passengers who had already booked passage.

The individual passenger tickets contained a provision under paragraph 18(c) requiring that notice of any claim against the carrier be made within fifteen days after completion of the cruise. Within the fifteen day period plaintiff caused a notice of claim to be served on the defendant Sitmar Cruises on behalf of himself and sought to serve notice for all persons similarly situated. This lawsuit followed seeking damages, in the alternative, for (a) the difference in value between the cruise as advertised and as performed, or (b) the amount by which defendant was unjustly enriched by the elimination of the ports-of-call.

The trial court entered an opinion and order denying class action status to the plaintiff on the basis that the plaintiff’s notice of the claim was not effective to preserve or create a cause of action for all the other passengers. Plaintiff seeks a review of the trial judge’s decision.

I. THE DEATH KNELL DOCTRINE

The issue of whether or not an order denying class status is appealable¹ was first seriously presented in 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.]. The case earned immediate fame because of the difficulty of the litigation and its immense proportions.² In Eisen I the Court of Appeals for the Second Circuit said:

“Dismissal of the class action in the present case . . . will irreparably harm [the plaintiff] and all others similarly situated, for, as we have already noted, it will for all practical purposes terminate the litigation. Where the effect of a district court’s order, if not reviewed, is the death knell of the action, review should be allowed.”

Thus nearly ten years ago the “death knell” doctrine was born. However the idea never really has reached maturity. For awhile the Second Circuit used the death knell doctrine as an exception to the finality rule of 28 U.S.C. § 1291 ³ and allowed an interlocutory appeal in cases wherein the plaintiff’s individual claim was so small that continued prosecution of the complaint was improbable. Green v. Wolf Corp., 406 F.2d 291 (2d Cir. 1968); Korn v. Franchard Corp., 443 F.2d 1301 (2d Cir. 1972). We rejected the death knell doctrine in King v. Kansas City Southern Industries, 479 F.2d 1259 (7th Cir. 1973) as did other circuits in Hackett v. General Host Corporation, 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972); Graci v. United States, 472 F.2d 124 (5th Cir.), cert. denied, 412 U.S. 928, 93 S.Ct. 2752, 37 L.Ed.2d 155 (1973); Falk v. Dempsey-Tegeler & Co., Inc., 472 F.2d 142 (9th Cir. 1972). Generally these decisions criticize the death knell doctrine as being too mechanical and having a discriminatory effect in that it does not permit appeals by defendants or by plaintiffs who had the economic ability or personal interest to prosecute the lawsuit on their own behalf. Eventually even in the Second Circuit, “the rumblings of disapproval” were heard⁴ as was noted recently in Shayne v. Madison Square Garden Corp., 491 F.2d 397 (2d Cir. 1974). However, the court decided not to take a second look at the death knell doctrine because of the pendency of the Eisen case in the Supreme Court.

II. THE COLLATERAL ORDER DOCTRINE

In Eisen, preliminary to its decision on the merits, the Supreme Court was required to “decide whether the Court of Appeals in Eisen III had jurisdiction to review the District Court’s orders permitting the suit to proceed as a class action and allocating costs of notice,” 94 S.Ct. 2148. The Supreme Court found the question under its consideration controlled by its prior decision in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). Quoting from Cohen, the Court stated:

“This decision appears to fall in 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.”

The Court then reasoned:

“Analysis of the instant case reveals that the District Court’s order imposing 90% of the notice costs on respondents likewise falls within, ‘that small class’. It conclusively rejected respondent’s contention that they could not lawfully be required to bear the expense of notice to the members of petitioner’s proposed class. Moreover, it involved a collateral matter unrelated to the merits of petitioner’s claims. Like the order in Cohen, the District Court’s judgment on the allocation of notice costs was a ‘final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it,’ id., at 546-547, 69 S.Ct. 1226, and it was similarly appealable as a ‘final decision’ under § 1291 . . . ” 94 S.Ct. 2150, 2149-50.

The Court then held that the court of appeals had jurisdiction to review fully the district court’s resolution of the class notice problem in that case. In this Circuit, since we do not believe that the death knell doctrine is a viable test we must determine whether the collateral order doctrine is applicable in light of the Supreme Court’s recent decision. The Court mugt determine whether the decision of the district court denying class action status falls within “that small class” of decisions defined in Cohen, supra, in that it finally determined a claim of right separable from, and collateral to, rights asserted in the action; which claim of right is 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.

We conclude that this case does not fall within that small class.

Unlike the Supreme Court’s decision in Eisen there is no question raised about the cost of notice. Eisen involved a district court order allowing class designation and apportioning the cost of notice. This case only presents the question of whether or not the district court order denying class status was improper. That question can still be reviewed on the merits after the case has reached final judgment. Here there is no claim of right which will escape review.

III. APPELLATE REVIEW UNDER 28 U.S.C. § 1292(b) CERTIFICATION

We fully realize that by our continued refusal to review district court decisions denying and granting class status there is a possibility of procedural problems preventing a proper review of the substantive issues.

In recent years, class actions “have sprouted and multiplied like the leaves of the green bay tree” (Eisen III at 1018), allowing the federal courts the opportunity to deal with important rights of consumers and small claimants whose individual claims might otherwise have never been recognized. Concomitant with these new opportunities provided by Rule 23 F.R.C.P. comes the responsibility, which must be borne by the courts, of developing the law in a way which is consistent with both the limited resources of the federal court system and the rights of the parties to adequately present the appropriate claims and defenses.

The threshold decision of whether to allow class status is enormously important. Since the adoption of Rule 23 eight years ago most decisions have advocated that it be construed liberally. However, there are only a limited number of appellate decisions which provide any meaningful guidelines for the district court in making a determination on class status. Nevertheless a clear majority of the members of the district court have acted admirably in handling these problems. Our judicial system is built in large part on the studied discretion of the individual trial judge. Consequently we are not shocked nor disturbed by the fact that the trial judge alone must make the “big decision.”⁵ The problem, of course, is the case wherein the parties and the court are in agreement that the class decision is unprecedented and difficult. Thus in these few instances where the question of class status is a very close decision a certification under 1292(b) might be appropriate.⁶ This approach has now found some support in the Second Circuit where the death knell doctrine difficulties have become obvious. As Judge Friendly stated in Parkinson v. April Indus., 520 F.2d 650 (2d Cir. 1975):

“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.”

Previously this Court has suggested appeals under § 1292(b)⁷ because we believe this procedure was intended by the Committee that drafted revised Rule 23.⁸ In other circuits interlocutory appeals under § 1292(b) have been granted to review class action determinations.⁹ Thus by our decision today we seek not to broaden our jurisdiction but simply to reaffirm the use of the § 1292(b) procedure in those limited situations wherein the trial judge determines that there is substantial ground for difference of opinion on the question of class status and that an immediate appeal may materially advance the ultimate termination of the case. Since we continue to reject the death knell doctrine and because we do not think that the collateral order doctrine is applicable there is no way we can consider appellant’s claim since it was not raised under § 1292(b). The § 1292(b) procedure does not require that every time a trial judge makes a determination on class status that the question must be certified for appeal. Furthermore, under § 1292(b) this Court has the option not to hear the appeal if certification was improvidently granted.

APPEAL DISMISSED FOR WANT OF JURISDICTION.

The original panel voted 2-1 to allow an interlocutory appeal from denial of class status which would overrule previous decisions of this Court. King v. Kansas City, 479 F.2d 1259 (7th Cir. 1973); Thill Securities Corp. v. New York Stock Exchange, 469 F.2d 14 (7th Cir. 1972). The proposed opinion was circulated to all the active members of the Court pursuant to the Court’s internal rules. However, the entire Court voted against allowing an appeal from a denial of class status as a matter of right. Thus, this per curiam opinion represents the views of Judge Frederick van Pelt Bryan as well as the active members of the Court, except Judges Swygert and Bauer, who dissent.

1

. The question of appealability has been raised from both affirmative and negative orders. For decisions denying class status see King v. Kansas City, 479 F.2d 1259 (7th Cir. 1973) (per curiam); Eisen v. Carlisle & Jacquelin, supra [Eisen I]; Shayne v. Madison Square Garden Corp., 491 F.2d 397 (2nd Cir. 1974); Korn v. Franchard Corp., 443 F.2d 1301 (2nd Cir. 1971); Caceres v. Int. Air Transport Association, 422 F.2d 141 (1970); City of New York v. International Pipe & Ceramics Corp., 410 F.2d 295 (2nd Cir. 1969); Green v. Wolf Corp., 406 F.2d 291 (2nd Cir. 1968); Hackett v. General Host Corp., 455 F.2d 618 (3d Cir. 1972); Graci v. United States, 472 F.2d 124 (5th Cir. 1973); Miller v. Mackey Int’l Inc., 452 F.2d 424, 427, n. 3 (5th Cir. 1971); Gosa v. Securities Investment Co., 449 F.2d 1330 (5th Cir. 1971); Falk v. Dempsey-Tegeler & Co., 472 F.2d 142 (9th Cir. 1972); Gerstle v. Continental Airlines, Inc., 466 F.2d 1374 (10th Cir. 1972). Also cf. Jumps v. Leverone, 150 F.2d 876 (7th Cir. 1945).

For decisions granting class status see: Thill Securities Corp. v. New York Stock Exchange, 469 F.2d 14 (7th Cir. 1972); Eisen v. Carlisle & Jacquelin, 2 Cir., 479 F.2d 1005 [Eisen III] and 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) [Eisen IV]; Parkinson v. April Industries, 520 F.2d 650, ¶ 95,227 CCH Trade Reg. Rep. (2d Cir. 1975); General Motors Corp. v. City of New York, 501 F.2d 639 (2d Cir. 1974); Kohn v. Royall, Koegel & Wells, 496 F.2d 1094 (2d Cir. 1974); Herbst v. International Telephone & Telegraph, 495 F.2d 1308 (2d Cir. 1974); Walsh v. City of Detroit, 412 F.2d 226 (6th Cir. 1969) (per curiam).

2

. Eisen involved a class action on behalf of all odd-lot traders on the New York Stock Exchange for a certain four year period, charging various brokerage firms, which handle 99% of the Exchange’s odd-lot business, and the Exchange itself, with violating the antitrust and securities laws. The district court found that the suit could be maintained as a class action, and, after finding that some 2'M million members of the prospective class would be identified, that it would cost $225,000 to send individual notices to class members.

3

. 28 U.S.C. § 1291 provides that:

“The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts . . ” (emphasis added).

4

. An excellent analysis of the genesis of the death knell doctrine and the problems it created appear in Kohn v. Royall, Koegel & Wells, supra.

5

. We believe that in the rare situation where a trial court acts with total arbitrariness in ruling on class certification, or neglects to issue initial ruling the litigants will be protected by the ultimate remedy of mandamus under the All Writs Act, 28 U.S.C. §. 1651 (1970). But we caution against futile exercises of this remedy in situations wherein it is not warranted. See Shutte v. Armoco Steel Corp., 431 F.2d 22 (3d Cir. 1970), cert. denied, 401 U.S. 910, 91 S.Ct. 871, 27 L.Ed.2d 808 (1971); Swindell-Dressler Corp. v. Dumbauld, 308 F.2d 267 (3d Cir. 1962); Hackett v. General Host Corp., supra; Weight Watchers of Philadelphia, Inc. v. Weight Watchers Int'l., Inc., 455 F.2d 770, 775 (2d Cir. 1972); Gold Strike Stamp Co. v. Christensen, 436 F.2d 791 (10th Cir. 1970); 74 Harv.L.Rev. 351, 375-378.

6

. 28 U.S.C. § 1292(b) (1970) provides, in part:

“When a district judge, in making a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals may thereupon, in its discretion, permit an appeal.”

7

. The Court of Appeals for the Seventh Circuit has previously suggested that this approach might be used on at least three different occasions in King v. Kansas City, supra; in Thill Securities Corp. v. New York Stock Exchange, supra; and in its unpublished orders in Garza v. Chicago Health Clubs, Inc., No. 73-1012 (7th Cir., May 18, 1973); Lupia v. Stella D’Oro Biscuit Co., Inc., No. 73-1-26 (7th Cir., May 18, 1973), cert. denied, 417 U.S. 930, 94 S.Ct. 2639, 41 L.Ed.2d 232 (1974), and Winokur v. Bell Savings and Loan Association, No. 72-2029 (7th Cir., May 18, 1973), cert. denied, 417 U.S. 930, 94 S.Ct. 2639, 41 L.Ed.2d 233 (1974). See also Johnson v. Georgia Highway Express, Inc., 417 F.2d 1122 (5th Cir. 1969); 7A Wright & Miller, Fed. Practice and Procedure § 802; Note 70 Columbia L.Rev. 1292 (1970).

8

. Professor Kaplan, Reporter of the Advisory Committee which drafted revised Rule 23, urged liberal use of the § 1292(b) procedure. Kaplan, continuing work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I).

9

. See Zahn v. International Paper Co., 53 F.R.D. 430, 434, aff'd, 469 F.2d 1033 (2d Cir. 1972), aff'd, 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973); Wilcox v. Commerce Bank of Kansas City, 474 F.2d 336 (10th Cir. 1973); Johnson v. Georgia Highway Express, Inc., 417 F.2d 1122 (5th Cir. 1969).