Kathleen Hackett, on Behalf of Herself and All Others Similarly Situated v. General Host Corporation

MAX ROSENN, Circuit Judge

(dissenting).

Almost 25 years ago, Mr. Justice Jackson was impressed by the formidable volume of judicial writing on the issue of “the finality of a judgment for purposes of appeal.” Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 508 , 70 S.Ct. 322 , 94 L.Ed. 299 (1949). The passage of almost a quarter of a century and the promulgation of the new class action Rule 23 has not only added to the girth of the judicial writing on the subject but also to its convolutions.

I share with the majority some of their apprehensions for the judicial machinery because of the burdens, pressures and problems generated by the new Federal Class Action Rule. I do not believe, however, that the fear of potential abuses of the new Rule 23 should require us to hold that an order of the district court refusing confirmation of a class shall for all practical purposes be precluded from appellate review. In reaching such a conclusion, I do not pass judgment on the merits of this case nor on the propriety of the action of the district court in finding this class action unmanageable. I do believe, however, that this action is appealable.

I.

It is important to recharacterize the facts before us to show how they relate to the complex and confused question of “finality” under Section 1291. In this case, a collateral order not going to the merits of the anti-trust claim has effectively terminated further consideration of the case on the merits. In reviewing it, there are two considerations to keep in mind: (1) the order under consideration is wholly collateral to the merits; and (2) its effect is to preclude consideration on the merits so that it affects the plaintiff’s substantive case in *627 a decisive, practical sense. Each of these considerations goes to separate definitions of “finality,” each of which, in my opinion, is a sufficient ground for finding that there is an appealable, final order here.

THE COLLATERAL ORDER DOCTRINE

The Supreme Court in Cohen v. Beneficial Finance Co., 337 U.S. 541 , 69 S.Ct. 1221 , 93 L.Ed. 1528 (1949), held that a decision of a district court, requiring a plaintiff in a derivative action to comply with the New Jersey statute ordering a posting of a bond to cover expenses, was: “[an] order [that] . . . did not make any step toward final disposition of the merits of the case and [would] not be merged in final judgment. When that time comes, it will be too late effectively to review the present order, and the rights conferred by the statute, if it is applicable, will have been lost, probably irreparably.” (Id., at 546, 69 S.Ct. at 1225 ) As a result, the order was considered “final” under Section 1291. There are essentially three elements that must be satisfied under the Cohen test: (1) the rights determined must be separable from and collateral to the merits of the case; (2) the question must be too important to deny review at this point; and (3) the time for review is ripe and cannot await the ultimate final judgment because the rights may be lost irreparably through the delay. 9 Moore’s Federal Practice ¶ 110.10, at 133.

Subsequent cases clarified the scope of the Cohen rule. Swift & Co. Packers v. Compañía Colombiana del Caribe, 339 U.S. 684 , 70 S.Ct. 861 , 94 L.Ed. 1206 (1950), held that the order of the district court vacating the attachment of a maritime lien was appealable under Cohen . The Court stressed two elements: (1) the issue was collateral to the merits; and (2) restoring the right to attachment and the lien at a later time “would be an empty rite.” ( Id. at 689, 70 S.Ct. 861 ) Shortly thereafter, Roberts v. United States District Court for Northern Dist. of Cal., 339 U.S. 844 , 70 S.Ct. 954 , 94 L.Ed. 1326 (1950), held the denial of a petition to proceed in forma pauperis collateral and appealable under Section 1291. These two cases demonstrate that the important rights which may be lost through delay need not rise to the level of the constitutional questions involved in Cohen .

So long as the decision affects the basic right of the litigant to proceed, or finally determines a claim separable from and independent of the substantive issues, so that a later review of it when an appeal is taken from the final judgment on the merits becomes an empty rite, the Cohen test is met. This element of irreparably affecting important rights of a party to the litigation has become a cornerstone of the judicial approach to collateral order questions.

More recently, in Diaz v. Southern Drilling Co., 427 F.2d 1118, 1123 (5th Cir. 1970), the Fifth Circuit noted that one important reason for allowing review of the default judgment against one of the parties in the case was that it affected the litigant’s ability to “make important decisions about its further participation in this suit. . . .”

This approach to the appealability of a collateral order under Section 1291 is independent of any discretionary appeal under Section 1292(b). 1 If class action orders are collateral, appeal as of right would exist independently and exclusively of the 1958 Act. See Note, Interlocutory Appeal from Orders Striking Class Action Allegations, 70 Colum.L.Rev. 1292, 1302-3 (1970).

I conclude then that when an order will irreparably affect the basic rights of a party and is sufficiently collateral to the merits that subsequent decisions will not involve this question, it has sufficient finality under Cohen to be appeal-able under Section 1291.

*628 Appellant meets those tests in this case. Her appeal is from a decision refusing to confirm the class she is attempting to represent. The basis for the decision is grounded solely on considerations of the proper administration of F.R.Civ.P. Rule 23. The determination in no way is dependent upon, or affects, rights asserted by the appellant under the Sherman and Clayton anti-trust acts. The district court's opinion that the class is unmanageable in no way resolves the substantive question of whether the appellees engaged in an anti-trust price fixing conspiracy that raised the retail price of bread in the Philadelphia area. The decision on manageability is final. Even if Mrs. Hackett were to proceed individually with her case, as is suggested, nothing more would ever be decided about the manageability of the class she once sought to represent. The record on that question is complete, the issue fully argued, and the decision based on the fullest consideration of the district judge. Review of that determination at this point by this court would not in any way invade the province of the district court in its determination of any of the issues still before it.

Furthermore, the district court’s denial of the right to proceed as a class action has certainly affected the subsequent conduct of the litigation. Assuming that the suit will continue on the part of the appellant in her individual capacity, it is inconceivable that either the lawyers or the court will give a $9.00 suit the same consideration and attention due a class action involving hundreds of thousands of persons and many millions of dollars in potential damages. If nothing else, it would be a waste of judicial resources to allocate extensive time to anti-trust litigation over this paltry sum. Even if the appellant had the economic power and her lawyers the fortitude to pursue this complicated antitrust action for $9.00 against this group of bakeries, there would be a strong impulse on the part of the appellees to settle it and not incur the heavy legal fees generated by such an action.

Should the plaintiff proceed to judgment in her individual capacity, the parties would be bound by it, absent error of law. To the extent that the denial of the class action will affect how the case is litigated, the damage will .be irreparable. This court’s reversing the denial of the class will not permit the parties to reopen the judgment on the merits. To the exent this possible result compels the defendants to expend large sums defending the action, although it be for only $9.00, they too have been irreparably damaged if on appeal we confirm the denial of the class by the district court. 2

THE TERMINATION OF LITIGATION DOCTRINE

(The Dickinson, Gillespie, Eisen Formulation)

The second consideration referred to in determining “finality” of judgment is that the order refusing to confirm the class action effectively terminates the litigation. This definition of finality was first developed in Dickinson v. Petroleum Conversion Corp., supra, in which the Court had to decide whether an appellant had appealed in timely fashion from a decision of the district court. The issue turned on which of two decisions was “the final one” for purposes of the litigation. In the first decision, all of the party’s rights were adjudged, but the court reversed decision on apportioning the fund generated by the judgment awarding damages. The appellant did not appeal the first order but waited for the second judgment. The Court balanced “the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay *629 on the other” (Dickinson, 338 U.S. at 511 , 70 S.Ct. at 324 ) and concluded that the appellant should have appealed from the first decision.

The decision did not mention Cohen , although Cohen had been decided only a year earlier. This is understandable because Dickinson dealt with appellate review of the merits of the case, not the collateral issue. The considerations involved in such a decision are different than under the Cohen rule. Finality in Dickinson meant that the merits of the case, insofar as the appealing party is concerned, are effectively determined. The case, as a whole, is at an end for him. Review does not interfere with the district court’s jurisdiction because there is, for all intents and purposes, nothing more for the district court to do.

This line of reasoning was reaffirmed in Gillespie v. United States Steel Corp., 379 U.S. 148 , 85 S.Ct. 308 , 13 L.Ed.2d 199 (1964), in which the Court held that it had jurisdiction to review the denial of several causes of action under Section 1291. The mother of a dead seaman sued her son’s employer under the Jones Act and under general maritime law in a wrongful death action. She joined as co-plaintiffs the decedent’s dependent brothers and sisters. The district court struck off the general tort claim and held the siblings could not recover under the Jones Act, thereby foreclosing their participation in the action. The Court used the same balance struck in Dickirtr son: it looked at the inconvenience in piecemeal litigation as balanced against the danger of denying justice. More importantly, it added that the decision on the propriety of the district court’s decision was “fundamental to the further conduct of the case,” (Gillespie, 379 U.S. at 153 , 85 S.Ct. at 311 ) and held a Section 1291 appeal proper.

Both of these cases illustrate that the Court was using a simple balancing of interests in determining when it should inject itself into appellate review of questions involving the principal matters in the case before the district court. Under this principle, “finality” meant a determination of whether the issue raised at an early stage of the trial was of such character as to effectively dispose of the merits of the case; it did not mean “finality” as used in the collateral rule test under Cohen .

Eisen v. Carlisle & Jacquelin, 370 F. 2d 119 (2d Cir. 1966), followed and relied on the Dickinson-Gillespie formulation, but in a matter involving a question collateral to the merits of the case. Judge Kaufman seems to have reasoned that because of the economic considerations involved in the size of appellant’s claim, the denial of the class action was practically the final decision in the case, and therefore, it was proper to invoke the balancing of interests test to determine if this point was the proper place for the appeals court to step into the litigation. Piecemeal litigation seemed unlikely and the demands of justice in the case compelled Judge Kaufman to conclude Section 1291 applied.

Subsequently, the Second Circuit commented upon Eisen in Caceres v. International Air Transport Association, 422 F.2d 141 (2d Cir. 1970). In explaining the history of the prior case, it stated that the earlier decision was based upon Cohen and Roberts, even though the court made perfectly clear that the test involved had nothing to do with collateral questions, but with Dickinson-Gillespie’s balancing of interests test. Such a reinterpretation of the cases obviously was bound to cause confusion and the ultimate obfuscation of Cohen and the collateral order rule. More importantly, it is clear that by the time the Second Circuit arrived at Caceres it no longer really struck a balance. 3 Rather it had converted the Dickivson-GiUespie doctrine into one question: is there enough mon *630 ey in the single claim that the case will proceed? That point is made perfectly clear by Korn v. Franchard Corp., 443 F.2d 1301 (2d Cir. 1971), in which a party with a $386 claim was allowed to appeal a denial of a class designation, but a party with an $8,500 claim was not. One party was expected to be able to proceed; the other was not. (Id. at 1307).

Such an automatic test, so far removed from the original balancing of the inconvenience of piecemeal litigation against the denial of justice, bothered Judge Friendly who concurred with great reservation. ( 443 F.2d at 1307 ). I agree that such an arbitrary formulation hardly illuminates the underlying issues. My Brother Gibbons’ discussion of whether Mrs. Hackett could continue this litigation in her individual capacity if she wished, illustrates the problems with the Korn test, and how arbitrary that test is. I believe the proper procedure is to return to the principles from which Korn arose.

In fact, under either the Dickinson-Gillespie doctrine or under the simplified test of Korn , Mrs. Hackett has properly brought her appeal before this court. Suffice it to say at this point that under the present Second Circuit Korn test, if Eisen’s $70 claim was too small to carry forward his class action, then this $9 claim is also too small.

More importantly, under the Dickinson-Gillespie formulation, if I analyze the balance of potential piecemeal litigation against the denial of justice, I must again conclude that Mrs. Hackett’s appeal should be heard now. Although the majority strongly suggests that Mrs. Hackett could continue this case on her own, it is clear that the potential for piecemeal litigation here is small. She is unlikely to continue the litigation and that is all that is important in striking the balance. Moreover, there are strong questions of justice involved. When the 1966 amendments to the Federal Rules were issued, the A.B.A. Special Committee on Federal Rules of Procedure stated that it hoped that there would be adequate appellate review of many of the questions surrounding the amendments to Rule 23 so that the contours of the amendment would be quickly shaped and clarified. 38 F.R.D. 95 ,104 (1965). Besides these general societal interests, the individual needs of justice for Mrs. Hackett and her class are best served by immediate appellate review. As I have stated before, the character of a suit for $9 is simply not the same as that for several million dollars. It is in the interest of both the defendants and the plaintiff to know precisely where they stand with regard to the amount being litigated.

Finally, for purposes of properly understanding the distinctions between Cohen and Eisen, it is important to note what the cases did not say. Many of the Cohen cases involve situations which effectively terminate the litigation. For instance, in Roberts, the failure to be granted leave to proceed in forma pau-peris was most likely to terminate litigation. However, in holding that the denial was appealable, the Court merely cited Cohen , which made no mention of the possibility that the collateral order would have ended the litigation. That omission is significant because the “importance” criterion established in Cohen left open the possibility of balancing such a factor. In fact, the collateral order in Cohen requiring posting of a bond presumably had precisely that litigation ending effect. (Note, Appealability, 70 Colum.L.Rev. 1292, 1304 (1970)). Although at least one Cohen case has weighed the “importance” question on the basis of its effect in terminating litigation (Redding & Co. v. Russwine Construction Corp., 135 U.S.App.D.C. 153 , 417 F.2d 721, 726 (1969)), it should not generally be thought to be necessary to the Cohen test.

*631 Eisen cites Roberts without comment but presumably for the proposition that collateral decisions that end litigation are appealable. However, its primary test is the one developed in Dickinson and Gillespie and there is never any mention made of the actual Cohen rule that all important collateral matters irreparably affecting the litigation are appeal-able.

In any case, under either the collateral order doctrine announced in Cohen or the termination of litigation doctrine of Diekinson-Gülespie, I am compelled to find that the Supreme Court mandates the decision denying confirmation of the class be held appealable.

II.

The majority opinion suggests, in effect, that the refusal of the district court to confirm the class action does not necessarily terminate the plaintiff’s suit; that although the class action may not be maintained, the suit may be pressed on an individual basis by Mrs. Hackett and others similarly situated. Reference is made to several federal statutes which provide for an award of reasonable attorneys’ fees should Mrs. Hackett, or others who follow, desire to press forward.

Indeed, the statute under which Mrs. Hackett proceeded not only provides for reasonable attorneys’ fees but also provides that one may sue “without regard to the amount in controversy.” Nevertheless, I cannot believe that a capable attorney would press forward a complex antitrust action when the amount in controversy is nine dollars. 4 If attorneys could be found willing to go forward on an individual basis with Mrs. Hackett’s claim, and the claims of others who allegedly comprise the aggrieved class, dockets would indeed be intolerably overcrowded. Nor does the growth of public legal services, also cited by the majority, provide the means by which an individual litigant might secure legal representation. No publicly supported legal service organization could explain or justify the time and effort required to press a nine dollar anti-trust suit. Moreover, publicly supported legal service organizations generally may not proceed on a contingent fee basis. 5

The majority suggests that instead of allowing interlocutory appeal as of right we weigh the effectiveness of “alternative discretionary appellate remedies” for consumer class actions. As I have already indicated, the appeal before us is not interlocutory. Further, “the alternative discretionary appellate remedies” suggested offer little consolation to Mrs. Hackett since she has been denied by the district court the opportunity to use them. Nor do I see any necessity for restricting her to mandamus for appellate review. It has been sparingly applied for such purposes and I am not convinced that it is a reasonable alternative for even an interlocutory appeal. Moreover the variety and number of alternative remedies leaves no assurance that denial of appeal under § 1291 will serve the majority’s purpose to protect “the federal appellate works from being overwhelmed by interlocutory appeals”.

On the assumption that this is an interlocutory appeal and not an appeal from a final order, the majority expresses the fear that this court may be plagued by interlocutory review. Until we have further experience with class actions, it seems to me that this fear is premature. As the majority points out, its decision operates within a very limited sphere. Indeed, as they say, “no other circuit has had occasion to either adopt or expressly reject the ‘death knell’ rationale.” Moreover, anti-trust litigation seems to be growing slowly in comparison with other fields. For example, in terms of the civil cases commenced in the United States District Courts, civil rights showed an increase of 28.9% in *632 fiscal 1971 over fiscal 1970, commerce cases a 77.9¡% increase, and securities, commodities and exchange cases a 62% increase, 6 while anti-trust cases rose by a mere 15%.6 7 Further, if it is true that there are “alternative discretionary remedies” which may bring to us the issues in cases similar to this one, it would appear that denying review in this particular case, while allowing review in others, does nothing except to arbitrarily shut the door to this one.

Some comment is in order on our recent decision in Greene v. The Singer Co., (Civil No. 71-1835, 3d Cir., Filed Nov. 2, 1971). Of course, I agree with the majority that the Greene case differs from the case at bar in terms of the factual situation presented. However, I cannot agree that the rule which dictated our conclusion in Greene would warrant a different decision in the case now before us. Greene was, in fact, a reaffirmance of the rules which were first articulated in Cohen, and which have been discussed above. As we said in Greene: “To require appellant to await a final judgment on the merits before testing the legality of the order denying the disqualification may, for practical purposes, deny it the reality of appellate processes.” (Slip opinion p. 3). Similarly, in the case now before us, as I have already pointed out, denying appeal in this case will undoubtedly “for practical purposes, deny [Mrs. Hackett] the reality of appellate processes.”

It should also be noted that the rationale which motivated the Greene case has been impaired by the decision which the majority takes today. The court in Greene did not decide that a failure to allow appeal would deny appellant the “reality of appellate process.” It found only that it might deny appellant that reality. It did not hold that if the appeal did not go forward, appellant would suffer irreparable injury; it held only that there existed “the possibility of irreparable injury.” (Emphasis supplied) Mrs. Hackett has at least shown this much.

One final point deserves attention. While the small size of these claims, considered individually, means that for all practical purposes this law suit ends here, the small size does not mean that these claims are insignificant. In fact, this ease may illustrate the usefulness of a class action in the litigation of small consumer claims. 8 Bread is an essential household staple which is purchased regardless of the economic level of an individual family. Those whose incomes are meager feel the pinch of price fixing in such an area. Yet they are the ones who most need to combine resources in order to pursue their rights in the courts.

I would hold therefore that the order of the district court entered July 30, 1970 comes within the collateral rule of Cohen, supra, or in the alternative is final under Dickinson-Gillespie, and, therefore is an appealable order.

. Wright, The Interlocutory Appeals Act of 1958, 23 F.R.D. 199 , 203 (1959).

. Moreover, if plaintiff wins the battle for her $9.00, she will likely lose the war to represent the class because she might be precluded from appellate review. Esplín v. Hirschi, 402 E.2d 94 (10th Cir. 1968), cert. denied 394 U.S. 928 , 89 S.Ct. 1194 , 22 L.Ed.2d 459 (1969).

. Judge Feinberg in Caceres raises the interesting point that the ABA Special Committee Federal Rules of Civil Procedure, 38 F.R.D. 95 , 104-5 (1965), thought that questions involving designation of class actions should be brought up under 28 U.S.C. § 1292 (b), and therefore there is an implication that the au *630 tomatic appeal under Section 1291 was not to be freely utilized. While there is merit in Judge Feinberg’s suggestion, the ABA report involves all the changes made in Rule 28 in 1966, many of which might well not be “important” in any particular litigation and therefore appealable only under Section 1292(b).

. 3B Moore’s Federal Practice IT 23.97, at 23-1952.

. Guidelines for Legal Services Programs, Community Action Program, OEO, IT 6700.35.

. Annual Report of the Director (1971), Administrative Office of the United States Courts, 11-28.

. Id. at 11-107.

. Kahan v. Rosenstiel, 424 F.2d 161, 169 (3d Cir. 1970), reaffirms this circuit’s belief in the value of such class actions for consumer cases.