Zahn v. International Paper Co.

Mr. Justice Brennan,

with whom Mr. Justice Douglas and Mr. Justice Marshall join, dissenting.

The Court holds that, in a diversity suit, a class action under Fed. Rule Civ. Proc. 23 (b) (3) is maintainable only when every member of the class, whether an appearing party or not, meets the $10,000 jurisdictional-amount requirement of 28 U. S. C. § 1332 (a). It finds this ruling compelled by the “rationale of this Court's prior cases construing the statutes defining the jurisdiction of the District Court.” I disagree and respectfully dissent.

*303 The jurisdictional-amount provision of § 1332 (a) tersely states that “the matter in controversy [must exceed] the sum or value of $10,000 . . . Those words, substantially unchanged since the passage of the Judiciary Act of 1789, 1 apply to “civil actions,” and say nothing about the requirements applicable to individual claimants and individual claims. Although Congress has several times altered the amount required, 2 generally upward, 3 it has left the task of defining those requirements to the judiciary. 4 The result has been a relatively *304 complex and sensitive set of rules designed to implement Congress’ broad directive in a way that is responsive to the demands of fairness and efficiency in adjudication.

One “bright line” has emerged to control all § 1332 actions: there must be at least one plaintiff, or joint interest, seeking more than the statutory amount. Snyder v. Harris, 394 U. S. 332 (1969); Troy Bank v. G. A. Whitehead & Co., 222 U. S. 39 (1911). The “longstanding” and “well established” rule on aggregation of claims that the Court invokes was developed to determine whether a group of claims was sufficiently interrelated to constitute such a “joint” claim or “common and undivided interest.” 5

*305 Once jurisdiction has attached to the “action,” however, the “aggregation” rule has been but one of several ways to establish jurisdiction over additional claims and parties. In this case, the claims of the named plaintiffs provided the District Court with jurisdiction over the diversity action. And petitioners make no argument inconsistent with the Court’s holding that the theory of “joint” claims or interests will not support jurisdiction over the nonappearing members of their class. Their contention is rather that a second theory, ancillary jurisdiction, supports a determination that those claims may be entertained.

Ancillary jurisdiction to adjudicate claims that cannot be fitted within the aggregation rules has long been recognized by this Court, see Freeman v. Howe, 24 How. 450 (1861); Phelps v. Oaks, 117 U. S. 236 (1886); Wichita R. & Light Co. v. Public Utilities Comm’n, 260 U. S. 48 (1922). But, as one commentator has pointed out, the rules developed to control the exercise of that jurisdiction cannot be explained by “any single rationalizing principle.” C. Wright, Federal Courts § 9, p. 21 (2d ed. 1970). They are instead accommodations that take into account the impact of the adjudication on parties and third persons, the susceptibility of the dispute or disputes in the case to resolution in a single adjudication, and the structure of the litigation as governed by the Federal Rules of Civil Procedure. 6

*306 After consideration of these factors, the Court has sustained the exercise of ancillary jurisdiction over compulsory counterclaims under Rule 13 (a), Horton v. Liberty Mutual Insurance Co., 367 U. S. 348 (1961), aff’g 275 F. 2d 148 (CA5 1960); Moore v. New York Cotton Exchange, 270 U. S. 593 (1926). It has also done so where a party's intervention was held to be a matter of right, as is now provided by Rule 24 (a), Phelps v. Oaks, supra; see 2 W. Barron & A. Holtzoff, Federal Practice & Procedure § 593 (C. Wright ed. 1961). Following this lead, the courts of appeals have sustained ancillary jurisdiction over cross-claims permitted by Rule 13 (g), R. M. Smythe & Co. v. Chase National Bank, 291 F. 2d 721 (CA2 1961); Childress v. Cook, 245 F. 2d 798 (CA5 1957); over impleaded defendants under Rule 14, Pennsylvania R. Co. v. Erie Avenue Warehouse Co., 302 F. 2d 843 (CA3 1962); and over defendants interpleaded under Rule 22, Walmac Co. v. Isaacs, 220 F. 2d 108 (CA1 1955). See Developments in the Law — Multiparty Litigation in the Federal Courts, 71 Harv. L. Rev. 874 passim (1958). 7

Class actions under Rule 23 (b)(3) are equally appropriate for such treatment. There are ample assurances, *307 in the provisions of the Rule that “the questions of law or fact common to the members of the class [must] predominate over any questions affecting only individual members/' 8 to guarantee that ancillary jurisdiction will not become a facade hiding attempts to secure federal adjudication of nondiverse parties’ disputes over unrelated claims. And the practical reasons for permitting adjudication of the claims of the entire class are certainly as strong as those supporting ancillary jurisdiction over compulsory counterclaims and parties that are entitled to intervene as of right. Class actions were born of necessity. 9 The alternatives were joinder of the entire class, or redundant litigation of the common issues. The cost to the litigants and the drain on the resources of the judiciary resulting from either alternative would have been intolerable. And this case presents precisely those difficulties: approximately 240 claimants are involved, and the issues will doubtless call for extensive use of expert testimony on difficult scientific issues.

It is, of course, true that an exercise of ancillary jurisdiction in such cases would result in some increase in the federal courts’ workload, for unless the class action is permitted many of the claimants will be unable to obtain any federal determination of their rights. But that objection is applicable to every other exercise of ancil *308 lary jurisdiction. It should be a sufficient answer that denial of ancillary jurisdiction will impose a much larger burden on the state and federal judiciary as a whole, and will substantially impair the ability of the prospective class members to assert their claims.

If the State provides a class action device comparable to Rule 23 (b)(3), some of this inefficiency and unfairness may be avoided, but certainly not all. The named plaintiffs, and any other members of their class who can meet the jurisdictional-amount requirement, may choose to litigate those claims in the district courts, as these plaintiffs have shown to be their preference. Moreover, they will probably now be required separately to litigate the common issues in their cases, 10 thus possibly enlarging the federal judiciary's burden, and ironically reversing the Court's apparent purpose.

Moreover, if the State does not provide a Rule 23 (b) (3) device, litigation of the claims of class members who either lack the jurisdictional amount or simply prefer to litigate their claims in the state courts — as they would be free to do under any construction of the jurisdictional requirement — will produce a multitude of suits. And the chief influence mitigating that flood — the fact that many of these landowners’ claims are likely to be worthless because the cost of asserting them on a case-by-case basis will exceed their potential value — will do no judicial system credit.

Not only does the practical desirability of sustaining ancillary jurisdiction bring Rule 23 (b) (3) class actions within the logic of our decisions, but the Court has long *309 since recognized that fact, and has sustained ancillary jurisdiction over the nonappearing members in a class action who do not meet the requirements of traditional rule of complete diversity laid down in Strawbridge v. Curtiss, 3 Cranch 267 (1806). In Supreme Tribe of Ben Hur v. Cauble, 255 U. S. 356 (1921), the Court not only held that only the original named plaintiffs and defendants had to satisfy the diversity requirements, but it also stated that intervention by nondiverse members of the class would not destroy the District Court’s jurisdiction. Id., at 366 . Particularly in view of the constitutional background on which the statutory diversity requirements are written, see 469 F. 2d 1033, 1038 (CA2 1972) (Timbers, J., dissenting), it is difficult to understand why the practical approach the Court took in Supreme Tribe of Ben-Hur must be abandoned where the purely statutory “matter in controversy” requirement is concerned.

Certainly this result is not compelled by Snyder v. Harris, 394 U. S. 332 (1969), for that decision turned solely on whether federal diversity jurisdiction could be established over the “action.” Nor can I accept the Court’s contention that Snyder’s, citation to Clark v. Paul Gray, Inc., 306 U. S. 583 (1939), controls here. That case dealt only with the jurisdictional-amount requirements for the original named plaintiffs who litigated the case. Here petitioners clearly meet that requirement. Snyder’s characterization of Clark as a class action did not turn that case into a precedent for applying the jurisdictional-amount requirements to nonappearing class members who, so far as the Court indicated in Clark , were not even involved in that case.

It would be far more consistent with Clark for the Court to rule, as it did in Supreme Tribe of Ben-Hur, that only the original named plaintiffs must meet the jurisdictional requirements, and that nonappearing class mem *310 bers and intervenors need not. Such a ruling, while going a step farther than petitioners seek, would be reasonable and pragmatically justified. There is a substantial difference between the impact on a case of an appearing party and a nonappearing class member, and intervention poses no threat since the district courts are given discretion by Rule 23 (d) (3) to permit intervention subject to appropriate conditions. See 3B J. Moore, Federal Practice ¶ 23.73 (3), p. 1441 (2d ed. 1969). The question in this case is not whether the class action must be permitted, but whether the District Court has the power to determine whether to permit it, taking into account the elaborate guidance and discretion provided by Rule 23.

The Court also appears to rely on Snyder’s rejection of “the notion that the 1966 amendments to Rule 23 were intended to effect, or effected, any change in the meaning and application of the jurisdictional amount requirement insofar as class actions are concerned.” Ante, at 299. Snyder based this rejection on Rule 82’s admonition that the Federal Rules of Civil Procedure are not to be “construed to extend or limit the jurisdiction of the United States district courts . . . .” Reliance on Rule 82 was proper there because the petitioner contended that the restructuring of Rule 23 to abolish “spurious” class actions in favor of a “functional” approach that took into account the nature of the litigation and its effects undercut this Court’s long line of decisions establishing the minimum requirements for diversity jurisdiction over a “civil action.”

But this case presents no suggestion that the 1966 amendments override the Court’s decisions construing § 1332. There are no earlier decisions construing the jurisdictional-amount requirements for the nonappearing members of a “spurious” class, probably because the old Rule did not bind members of the class unless they *311 affirmatively requested inclusion. 11 Nor did the 1966 amendments bring Rule 23 (b)(3) class actions within any other holdings. If anything, they merely made the determination whether the class should be permitted to turn more directly on the kinds of concerns that have motivated the exercise of ancillary jurisdiction. 12

The question in this case ought, instead, to be whether changes in the Civil Rules may affect, and be affected by, the determination whether to exercise existing jurisdiction. Of course, they must. As the Reporter to the Advisory Committee on Civil Rules that prepared the 1966 amendments has' observed: “From the start the Civil Rules, elaborating and complicating actions through joinder of claims and parties, have profoundly influenced jurisdictional result.” 13 The Court’s prior decisions upholding novel exercises of ancillary jurisdiction have made liberal use of the opportunities presented by the Civil Rules and amendments of them, and Rule 82 has stood as no bar to that action.

Indeed, the effects of today’s decision will also be influenced by the form of Rule 23. The District Court, after ruling that ancillary jurisdiction could not be exercised, was confronted with a dilemma that did not exist prior to the 1966 amendments: identification of the members of the class that would be bound by the decision so that they could be provided the required notice. 14 After *312 determining that it was not possible to determine which of the 240 proposed members met the $10,000 requirement, the court denied class action status to all. But few, if any, Rule 23 (b) (3) classes will lend themselves to a determination, on the basis of the pleadings, that each proposed member meets that requirement. Intervention, at least for the purpose of establishing jurisdiction, may be necessary, and that is more than even the old Rule contemplated when it specified that class members had to request inclusion in order to be bound.

Thus, on the basis of the Court’s implicit holding that ancillary jurisdiction would not support recognition of a Rule 23 (b) (3) class, the 1966 amendments will still influence the number of cases in which federal jurisdiction will be exercised. They will, as in this case, simply curtail the exercise of jurisdiction rather than expand it. In view of the Court’s previous concern with practical realities in both its cases involving class actions and its cases involving the exercise of ancillary jurisdiction, I think that this limitation is both unwarranted and unwise.

Section 11, 1 Stat. 78 . The First Judiciary Act used the term “matter in dispute,” ibid., and that phrase was retained until 1911, when the jurisdictional amount was increased from $2,000 to $3,000, Act of Mar. 3, 1911, § 24, 36 Stat. 1091 , and the words “matter in controversy” were substituted.

The amendments are catalogued in n. 1 of the Court’s opinion.

Adjustments for changes in the purchasing power of the dollar generally have been given as the explanation for this phenomenon. See, e. g., S. Rep. No. 1830, 85th Cong., 2d Sess., 4 (1958):

“The present requirement of $3,000 has been on the statute books since 1913 and obviously the value of the dollar in terms of its purchasing power has undergone marked depreciation since that date. The Consumers Price Index for moderate income families in large cities indicates a rise of about 152 percent since 1913, shortly after the present $3,000 minimum was established. . . . Accordingly the committee believes that the standard for fixing jurisdictional amounts should be increased to $10,000.”

See H. R. Rep. No. 1706, 85th Cong., 2d Sess., 3 (1958) (containing identical language). The only decrease, in 1801, is discussed in n. 1 of the Court’s opinion.

The only recent suggestion of congressional purpose is an oft-repeated statement in the legislative history of the 1958 amendments:

“The recommendations of the Judicial Conference [of the United States] regarding the amount in controversy, which this committee approves, is based on the premise that the amount should be fixed at a sum of money that will make jurisdiction available in all substantial controversies where other elements of Federal jurisdiction are present. The jurisdictional amount should not be so high as to *304 convert the Federal courts into courts of big business nor so low as to fritter away their time in the trial of petty controversies.”

S. Rep. No. 1830, supra, at 3-4 (emphasis added); H. R. Rep. No. 1706, supra, at 3 (containing identical language).

See Troy Bank v. G. A. Whitehead & Co., 222 U. S. 39 (1911), and cases cited in n. 3 of the Court’s opinion. The Court also observes, quite correctly, that the same rule on aggregation has been applied to the federal-question jurisdiction, 28 U. S. C. § 1331 . But the assertion, in the Court’s final footnote, that the same jurisdictional rules it announces for § 1332 will apply to § 1331, is even more questionable than its application of those rules in this case. The continued need for exercise of diversity jurisdiction, at least where a showing of prejudice is not made, has been challenged by respected authorities. See Wechsler, Federal Jurisdiction and the Revision of the Judicial Code, 13 Law & Contemp. Prob. 216, 234-240 (1948); Currie, The Federal Courts and the American Law Institute (pts. I & II), 36 U. Chi. L. Rev. 1 , 268 (1968, 1969). Cf. S. Rep. No. 1830, supra, n. 3. But a sharply different view has been taken of the federal-question jurisdiction, and the Court has reflected that view in its decisions upholding the exercise of jurisdiction over pendent claims under state law. See Mine Workers v. Gibbs, 383 U. S. 715 (1966). Similarly significant disincentives to assertion of federal rights in federal forums are likely if claimants are barred from combining to reduce the time and cost of litigation.

See Fraser, Ancillary Jurisdiction and the Joinder of Claims in the Federal Courts, 33 F. R. D. 27 (1963); H. Hart & H. Wechsler, The Federal Courts and the Federal System 1075-1081 (2d ed. 1973). Professor Kaplan, the Reporter for the 1966 amendments, has articulated his expectation that Rule 23 would be similarly accommodated:

“New rule 23 alters the pattern of class actions; subdivision (b)(3), in particular, is a new category deliberately created. Like other innovations from time to time introduced into the Civil Rules, *306 those as to class actions change the total situation on which the statutes and theories regarding subject matter jurisdiction are brought to bear.” Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 Harv. L. Rev. 356 , 399-400 (1967).

See also 7 C. Wright & A. Miller, federal Practice & Procedure § 1756, pp. 564-565 (1972), approving as sound and “a natural corollary to other applications of the ancillary jurisdiction concept,” a holding that only one representative party need meet the jurisdictional-amount requirement to support a class action in Lesch v. Chicago & Eastern Illinois R. Co., 279 F. Supp. 908 (ND Ill. 1968).

Rule 23 (b)(3). This Rule further states:

“The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.”

See 3B J. Moore, Federal Practice ¶¶ 23.02 [1], 23.05 passim (2d ed. 1969).

This is the probable consequence of the District Court's determination, after holding that each class member had to meet the jurisdictional-amount requirement, that it could find “no appropriate class over which [it had] jurisdiction.” 53 F. R. D. 430, 433 (Vt. 1971); see infra, at 311-312.

See Developments in the Law — Multiparty Litigation in the Federal Courts, 71 Harv. L. Rev. 874 , 941-942 and eases cited n. 493 (1958).

See Rules 23(a)(1), (2), (3) and (b)(3)(A), (B), (C). Cf. H. Hart & H. Weehsler, supra, n. 6, at 1078. (“Under the revised rule, which contemplates that in a class action all members of the class not properly excluded will be bound by the judgment, the ‘spurious’ class action no longer exists, and ancillary jurisdiction may support intervention by class members in all cases.”)

Kaplan, supra, n. 6, at 400.

Rules 23 (c)(2), (3).