# Petition — Mercedes-Benz of North America, Inc. v. Link > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1493%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1977 - **Citation:** 431 U.S. 933 ## Text Supreme Court, U. S$, ~FILED «| APR 4 1977, IN THE Supreme Court of the Unite October Term, 1976. No. ¢6* 1356 MERCEDES-BENZ OF NORTH AMERICA, INC. N and DAIMLER-BENZ A. G., Petitioners, hi v. MICHAEL RODAK, JR., CLERK JULES LINK and SOLOMON KATZ, on Behalf of Themselves and All Others Similariy Situated, Respondents. — PETITION FOR A WRIT OF STATUTORY CERTIORARI, AND, IN THE ALTERNATIVE, FOR A WRIT OF COMMON LAW CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT AND MOTION FOR LEAVE TO FILE PETITION. Ropert J. SPIEGEL, SPENCER Ervin, JR., Wicsur Bourne RvuTHRAUFF, 1900 Two Girard Plaza, Philadelphia, Pennsylvania, 19102 Attorneys for Petitioners. Of Counsel: R. Mark ARMBRUST, Gratz, TATE, Sprecet, Ervin & RUTHRAUFF, 1900 Two Girard Plaza, Philadelphia, Pennsylvania, 19102 Daten: April 4, 1977. International Printing Co., 711 So, 60th St., Phila., Pa, 10143 — Tel, (215) 727-8711 INDEX. Motion for Leave to File Petition for a Writ of Common Law Gamthawamd oc ccccccccccccccccccccvscvecccccvcescces Petition for a Writ of Statutory Certiorari, and, in the Alter- native, for a Writ of Common Law Certiorari to the United States Court of Appeals for the Third Circuit ... Cofahoms BaW occcccccccccccccccccccceccccscccces ) | EPPPPETTTTTTTTTTTTITT TTT ee Gopnstiems TOMMGMAGE occ ccccccccccccccccccccescccece Constitutional Provision, Statutes and Rules ........... PE Or OD so cddcccccnceccdccdcesccecess Summary of Reasons for Granting the Writ ........... Reasons for Granting the Writ .........66 cc cee eens I. The Proper Construction of § 1292(b), the In- terlocutory Appeals Act, Is an Important Federal Question Which Should Be Promptly and Defi- nitively Resolved by This Court ............. A. The Narrow Interpretation of “Controlling Question of Law” in § 1292(b) by the Court of Appeals Is Improper and Is in Conflict With Other Circuits ........cccseeeeeees B. Large Class Action Certifications Present Controlling Questions of Law, Because of Their Decisive Impact on the Future Course of the Litigation and Unless Such Certifica- cations Are, Reviewed Immediately, They Are Effectively Insulated From Any Appellate EF cccbivcccccctncceccepecnccocesés Il. This Court Should Exercise Judicial Oversight to Correct the Failure of the District Court Both to Construe Properly the Requirements of F. R. C. P. 23(b)(3) and to Require the Proponents of the Class to Meet Their Burden of Demonstrating Compliance With the Rule . . Page oft COON WN 10 10 14 18 INDEX (Continued). Page A. The District Court's “Contingent” Class Cer- tification Is Impermissible Under F. R, C, P. GREED codcceccccvasenscespcscsseeses 20 B. The District Court Improperly Interpreted and Incorrectly Defined the Rule 23(b)(3) Issues in This § 4 Clayton Act Case ....... 21 III. In a § 4 Clayton Act Case the Issues of Liability and Damages Cannot Constitutionally Be Severed and Tried Before Separate Juries ..... 25 DE vccucseuacouncesnsadenceseaseteannkeeneée6s 31 Appendix: District Court Order (August 7, 1975) ...... 666 e cee ees Al Court of Appeals Order (September 12, 1975) ......... A4 District Court Memorandum Opinion (September 25, ET TTT TTT TT eTTT TTT TTT Tie A5 Court of Appeals Opinion (July 22, 1976) ...........5. Al8 Court of Appeals Judgment (July 22, 1976) ........... A26 Court of Appeals Opinion (February 11, 1977) ........ A27 Court of Appeals Judgment on Rehearing (February 11, PPP PPPEPFOPOTTTTTTTTTTTIT TTT TIT TTT TT ee A63 Court of Appeals Order (February 28, 1977) .......... A64 Constitutional Provision, Statutes and Rules Involved ... A65 U. S. Constitution, Seventh Amendment .......... A65 Sherman Antitrust Act, Section 1 ......... 6.600005 A65 Clayton Act, Section 4 ......ccseceeeceeeeeeeenees A66 Interlocutory Appeals Act of 1958, Section 1292(b) A66 Federal Rules of Civil Procedure: . SD ED cvocvcceccoccccccccscsocesceccecsce A67 PD GED ccccccvccncesscsccessscececseses A70 TABLE OF CITATIONS. Cases: Page Abbott Labs v. Portland Retail Druggists, 425 U. S. 1 (1976) 11 Al Barnett & Sons v. Outboard Marine Corp., 64 F, R. D. 43 CHA TRG BERS) ccncccccccccccccccoccccscccccsoccess 18 American Pipe and Construction Co, v. Utah, 414 U. S, 538 CRUE 6cdecedcceecencdeedoccceoucetccecedeseesess 10, 11 Anschul v. Sitmar Cruises, Inc., 544 F. 2d 1364 (7th Cir. PUP Reccoecccccccoensevisvaccccsevecenscdccdeene 17 Arenson v. Board of Trade of Chicago, 372 F. Supp. 1349 Coes TA Bs BRPED snccccccccccescccccocccccsoccccccee 18 Bersch v. Drexel Firestone, Inc., 519 F. 2d 974 (2d Cir. 1975), cert. denied, 423 U. S, 1018 (1975) .........45. 12 Blackie v. Barrack, 524 F, 2d 891 (9th Cir, 1975) .......... 12, 21 Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723 ERE Kb adScdeancccecbccccevecsceceseeeeeseesssede 16 City of Philadelphia v. Am. Oil Co., 53 F. R. D, 45 (D.N. J. BOE senecnccctecscccnscccovecsdscctccseveessaeee 18 Cohen v. Beneficial Industrial Loan Corporation, 337 U. S. ee MED nen uducsedebbusevcedeuscesseusesonceses 14 Continental Grain Co, v. Barge FBL-585, 364 U. S. 19 DEE SG hee0eneteesdnseieesesdbeededecesesesesess 10 Dairy Queen v. Wood, 369 U. S, 469 (1962) ...........45. 27 DiBella v, United States, 369 U. S. 121 (1962) ............ ll Eisen v. Carlisle & Jacquelin, 417 U. S, 156 (1974) ......... 20 Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U. S. We ED Pek snntecdecenscdscsecesedesscoudbenes 11 Fortnightly Corp. v. United Artists Television Inc., 392 U. S. Se ED nd cdnd neu desdbddesouccesddcececteescces ll Gasoline Products v. Champlin Refining Co., 283 U. S, 494 SEE dhecbedosbeses oebeanadtdedeedesecéccececess 27, 28 Gulf Oil Corp. v. Copp Paving Co., 419 U. S. 186 (1974)... 11 Hadjipateras v. Pacifica, S. A., 200 F. 2d 697 (5th Cir. Dy séshduaventadvesedsaabadatactdeuses 0b50s600% 13, 14 Hawaii v. Standard Oil Co,, 405 U. S. 251 (1972) TABLE OF CITATIONS (Continued), Cases (Continued): Page Herbst v. International Telephone & Telegraph Corp., 495 P. 08 1008 (28 Cle. BOVE) 2. cccccccccsecsencscevcccs 15 Hosie v. Chicago and N. W. Ry. Co,, 282 F. 2d 639 (7th Cir. 1960), cerf> denied, 365 U, S, 814 (1961) .......... 27 Illinois v. Harper & Row Publishers, Inc., 301 F. Supp. 484 (OE, BD. GR BOIDY ooccncvecccccucaususe 18 In re Hotel Telephone Charges, 500 F. 2d 86 (9th Cir, BPE) ncccccccevesccccccccecceccsesesessennenees 15, 19, 30 In re 620 Church Street Bldg. Corp., 299 U. S, 24 (1936) ... i,2 In re Transit Co, Tire Litigation, 67 F. R. D. 59 (W. D. Mo. BORE) 2000000000000000000600080ee Gnenneneenaeen 18 Katz v. Carte Blanche, 496 F, 2d 747, cert. denied, 419 U. S. et | Mere 12, 13, 27 Kline v. Coldwell, Banker & Co., 508 F, 2d 226 (9th Cir, 1974), cert. denied, 421 U. S. 963 (1975) .........005. 15 Lear Siegler, Inc. v. Adkins, 330 F, 2d 595 (9th Cir, 1964) .. 12 Levin v. Mississippi River Fuel Corp., 386 U. S. 162 (1967) 11 Liberty Mutual Insurance Co. v. Wetzel, 424 U. S, 737 CEBMED cvcconsscsecsenes TITTITITTT Tir rr ll Link & Katz v. Mercedes-Benz, N. A. & Daimler Benz A. G., Civil No. 75-2195 (Srd Cir., filed Feb. 11, 1977) ....... 2,6 Matthews v. Weber, 423 U. S, 261 (1976) ..........00000s ll Milliken v. Bradiey, 418 U. S. 717 (1974) .. 0... cc ccc cece ll Mills v, Electric Auto-Lite Co,, 396 U. S, 375 (1970) ....... ll Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Oe, S33 U. G. SRR CERRE) oc ccvsccenssaussuueneen 10 Moragne v. States Marine Lines, Inc., 398 U, §, 375 (1970)... 11 Moss v. Associated Transport, Inc., 344 F. 2d 23 (6th Cir, | JETT eee* 27 Parkinson v. April Ind, Inc., 520 F, 2d 650 (2d Cir, 1975)... 15 Pure Oil Co, v. Suarez, 384 U. S, 202 (1966) ............. ll Ralston v. Volkswagenwerk A. G., 61 F. R. D. 427 (W. D. Ble. BEVO) occcccccccsececconseucnneeesbeaneueennn 18 TABLE OF CITATIONS (Continued). Cases (Continued): Page Reliance Electric Co. v. Emerson Electric Co., 404 U. S. 418 EE TEPC TT TT TTT TTT TTLITT TELE ll Ross v. Bernhard, 396 U. S. 531 (1970) .........--.e-e0es 11, 27 Sanders v. John Nuveen & Co., Inc., 463 F. 2d 1075 (7th Cir. 1972), cert. denied, 409 U. S. 1009 (1973) ............ 12 Schnell v. Eckrich & Sons, 365 U. S. 260 (1961) ........... rs Shumate & Co. Inc. v. National Association of Securities Dealers, Inc., 509 F. 2d 147 (1975), cert. denied, 423 iy ack eed ennddddeceusecocececosccccecs 18, 19 Swofford v. B & W, Inc., 336 F. 2d 406 (5th Cir. 1964), cert. denied, 379 U. S. 962 (1965) ............seeeeeeeee. 27 Tcherepnin v. Knight, 389 U. S. 322 (1967) ............... ll Tidewater Oil Co. v. United States, 409 U. S. 151 (1972) ... 10 Toilet Goods Ass’n., Inc. v. Gardner, 387 U. S. 158 (1967)... ll TSC Industries, Inc. v. Northway, Inc., 426 U. S. 438 (1976) 11 Union Carbide and Carbon Corp. v. Nisley, 300 F. 2d 561 il ens ceeereescesvessocoeees 27 United A.rlines Inc. v. Wiener, 286 F. 2d 302 (9th Cir.), cert. denied, 366 U. S. 924 (1961) ............eeceeeeeeee 27 Usner v. Luckenbach Overseas Corp., 400 U. S. 494 (1971).. ll Windham v. American Brands, Inc., 539 F. 2d 1016 (4th Cir. 1976) (case sub judice, following reargument before the court en banc, February 14, 1977) ...............005: 19, 28 Miscellaneous: All Writs Act (28 U. S. C. § 1651) ..............20e ce eee i Clayton Act, Section 4, 15 U. S.C. §15 ......... 3, 4, 9, 18, 22, 23, 24, 25, 27, 28, 29, 30 I EO GE, OUD o.oo ccccecccccccccccces 10 Federal Rules of Civil Procedure: EE 3, 10, 13, 16, 18, 20, 21, 25 EEE 3, 6, 18, 20, 21 Nee ene sg . cedivescucceecs 20 ee sce cnecccecoveses 3, 28 TABLE OF CITATIONS (Continued). Miscellaneous (Continued): Page Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 Ce GG, Se Be > Ei Bk Oe ccc cdccepcocccceccoccei 20, 29 Hearings Before Subcommittee No. 3 of the House Comm. on the Judiciary on H. R. 6238, 85th Cong. 2d Sess. GU GE GHD Se cdcosececcécécccsgncneensesnnccoess 14 Interlocutory Appeals Act of 1958, 28 U. S. C. § 1292(b) ..3,5,7, 9, 10, 12, 13, 16, 17, 30 Landers, Of Legalized Blackmail and Legalized Theft; Con- sumer Class Actions and the Substance Procedure Dilemma, 47 So. Calif. L. Rev. 842 (1974) ........... 15, 16 Letter of Transmission of the Judicial Conference of the United States, Draft of Section 1292(b) .............. 13 S. Rep. No. 2434, 85th Cong., 2nd Sess. (1958) ........... 13 Sherman Act, Section 1, 15 U.S.C. §1.......... 3, 4, 8, 23, 24, 30 U. S. Cong. and Admin. News, 85th Congress, 2nd Sess. SEED ateceessoresscdenssaninmeadssanididadebnas 13 United States Constitution, Seventh Amendment ........... 3, 27 Wright, Federal Courts (3rd ed. 1976) ................... 17 EP ah. ar Gs SUED. decnuasnsoncbecdenstédaesnsienetas 1,2 Oe ee .. .. .scccccasswenedeasieeen con Se ae Ge We Ge WED Cescnnedendeseucdncissdansoseesaueuel i,1,2 IN THE Supreme Court of the United States Ocroser TERM, 1976 | No. MERCEDES BENZ OF NORTH AMERICA, INC. and DAIMLER BENZ, A. G., Petitioners, ov. JULES LINK and SOLOMON KATZ, On BEHALF oF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Respondents. MOTION FOR LEAVE TO FILE PETITION FOR A WRIT OF COMMON LAW CERTIORARI. Now come Mercedes Benz of North America, Inc. (“Mercedes”) and Daimler Benz A. G. (“Daimler”) and move for leave io file the annexed petition for writ of cer- tiorari pursuant to the All Writs Act (28 U. S. C. § 1651) (See, In re 620 Church Street Bldg. Corp., 299 U. S. 24 (1936) ) directed to the United States Court of Appeals for the Third Circuit, to review an order and judgment of that court entered February 11, 1977 wherein that court refused to review the order of the United States District Court for the Eastern District of Pennsylvania dated August 7, 1975. (i) MERCEDES-BENz OF NorTH AMERICA, INC. AND DAIMLER BEnz A. G. Petitioners By their attorneys, RoBeERT J. SPIEGEL, SPENCER ERVIN, JR., WiLsur BourNE RUTHRAUFF, 1900 Two Girard Plaza, Philadelphia, Pa. 19102 Of Counsel: R. Mark ARMBRUST, Gratz, TATE, SPIEGEL, Ervin & RUTHRAUFF, 1900 Two Girard Plaza, Philadelphia, Pa. 19102 Daten: April 4, 1977 (ii) IN THE Supreme Court of the United States OcrosER TERM, 1976 No. MERCEDES BENZ OF NORTH AMERICA, INC. and DAIMLER BENZ, A. G., Petitioners, vo. JULES LINK and SOLOMON KATZ, On BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Respondents. PETITION FOR A WRIT OF STATUTORY CERTI- ORARI, AND, IN THE ALTERNATIVE, FOR A WRIT OF COMMON LAW CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT. To the Honorable Chief Justice and Associate Justices of the Supreme Court of the United States: Mercedes and Daimler respectfully petition the Court to grant a Writ of Statutory Certiorari pursuant to 28 U. S.C. § 1254(1) or, in the alternative, to grant a Writ of Common Law Certiorari pursuant to 28 U. S. C. § 1651 to review the judgment and opinion of the United States Court of Appeals for the Third Circuit entered in this case on February 11, 1977, which judgment and opinion refused to review the order of the United States District Court for the Eastern District of Pennsylvania dated August 7, 1975. (1) 2 Petition for Writ of Certiorari OPINIONS BELOW. The opinion of the Court of Appeals, not yet reported, is printed in the Appendix beginning at A27. The opin- ion of a panel of the Court of Appeals, 1976 Trade Cases ¥ 61,002, previously rendered in this case but thereafter vacated by the Court of Appeals en banc, Link & Katz v. Mercedes-Benz, N. A. & Daimler Benz A. G., Civil No. 75-2195 (3rd Cir., filed Feb. 11, 1977) is printed in the Appendix beginning at Al8. The order and opinion of the District Court, 1975-2 Trade Cases, § 60,534, is printed in the Appendix beginning at A5. JURISDICTION. The judgment of the Court of Appeals was entered on February 11, 1977. This Court’s jurisdiction is invoked under 28 U. S. C. § 1254(1), which provides in part that “cases in courts of appeals may be reviewed by the Su- preme Court by . . . writ of certiorari.” In the alterna- tive, if this case is not “in” the Court of Appeals because of the refusal of that court to review the order of the Dis- trict Court, jurisdiction is invoked pursuant to the All Writs section of the Judicial Code, 28 U. S. C. § 1651, and a writ of common law certiorari is requested. See In re 620 Church Street Bldg. Corp., supra. Petition for Writ of Certiorari 3 QUESTIONS PRESENTED. 1. Did the court of appeals misinterpret 28 U. S. C. § 1292(b) in refusing to review the order of the district court or to answer the first controlling question of law cer- tified by the district court on the ground that it involved the discretion of the district court and was not attended by “special factors” and “other overriding legal issues”? 2. Do all large antitrust class action certifications under F. R. C. P. 23(b)(3) present “controlling questions of law”, and is interlocutory review of such certifications in large class actions required to prevent the insulation of such orders from effective appellate review? 3. May a district court grant “contingent” class cer- tification while specifically deferring the determination of whether issues raised with regard to “damages” meet the requirements of F. R. C. P. 23(b)(3)? 4. May a district court grant class certification under F. R. C. P. 23(b)(3) when it has misdefined and ignored the issues present in a § 4 Clayton Act class action? 5. In a claim under § 4 of the Clayton Act, do sepa- rate trials of “liability” and “damages,” before different juries violate the Seventh Amendment to the Constitution? CONSTITUTIONAL PROVISION, STATUTES AND RULES. United States Constitution, Seventh Amendment Interlocutory Appeals Act of 1958, 28 U. S. C. § 1292(b) Sherman Act, Section 1, 15 U. S. C. §1 Clayton Act, Section 4, 15 U. S. C. § 15 Rule 23, Federal Rules of Civil Procedure Rule 42(b), Federal Rules of Civil Procedure The text of these are set forth in full in the Appendix beginning at A65. 4 Petition for Writ of Certiorari STATEMENT OF THE CASE. This action was brought by two individuals on be- half of a purported nationwide consumer class of 300,000 Mercedes owners and lessees seeking damages under Sec- tion 4 of the Clayton Act and alleging that the defend- ants, Mercedes and Daimler, conspired with 588 Mer- cedes dealers,’ over a four year period, to artificially raise and fix the prices of parts and labor time spent for all “nonwarranty” repairs to plaintiffs’ automobiles in vio- lation of Section 1 of the Sherman Act (R. 5a et seq.). Plaintiffs and defendants demand a jury trial. Plaintiffs moved before the district court for cer- tification of the action as a class-action and for definition of the class as “. . . all persons, firms or corporations who have had nonwarranty auto repairs performed on Mer- cedes-Benz automobiles, owned or leased by them . . ., during the period March 27, 1970 to March 27, 1974” (A6). Plaintiffs were granted full discovery to develop facts in support of their motion. When the question of certification was presented to the district court it was undisputed that each of the approximately 300,000 poten- tial claimants would have to make a separate factual pres- entation on the issue of whether and to what extent he was injured. Other facts relevant to class certification, as developed during discovery or presented in unchallenged affidavits of defendants, are as follows: (1) during the rel- evant period the number of parts allegedly price fixed ex- ceeded 26,000 and the number of labor operations allegedly priced fixed number in the thousands; (2) the total num- ber of documents which would be involved in an attempt by all of the members of the class to establish whether and to what extent they were damaged would be between 4,800,000 and 12,000,000 customer repair invoices; (3) 1. The dealers are named as “co-conspirators” but not as defendants. See Appendix in the Third Circuit at 7a, certified to this Court as the Record, and hereinafter cited as “R”. ee oe et Petition for Writ of Certiorari 5 tens of millions of different parts and labor operations listed on the invoices; (4) thousands of different labor rates for mechanics’ time set by each of the 588 dealers, In the face of the foregoing record, the district court, in August 1975, granted plaintiffs’ motion for certifica- tion® (Al). In its Order the district court certified the issue of class certification for immediate appellate review,’ stating that: “The undersigned is of the opinion that an imme- diate appeal from this Order is authorized by 28 U.S. C. § 1292(b), in that: 1. It involves controlling questions of law as to which there is substantial ground for dif- ference of opinion, namely, A. Whether it is proper to certify a class of approximately 300,000 members where the proof of damages will vary for each member of the class; B. Whether there can be a bifurcated trial in this case of liability and damages with separate juries for each segment of the case; and 2. An immediate appeal from this Order may materially advance the ultimate termination of this litigation.” (A2). 2. The district court also granted a stay of all proceedings in the case, except Rule 12 Motions (A2-3), pending application to the U. S. Court of Appeals for the Third Circuit for permission to appeal. Successive stays have been thereafter granted by the district court and the court of appeals, so that proceedings in the case remain stayed pending the present petition (A64),. 3, On August 15, 1975, defendants also filed an appeal from the Order of August 7, pursuant to 28 U. S. C. aT n view of the Third Circuit’s order of September 12, 1975, permitting the Bae -bd appeal, the § 1291 appeal was not docketed in the Third ircuit and was dismissed by stipulation in the district court pur- suant to F. R. A. P. 42(a) on February 17, 1976. 6 Petition for Writ of Certiorari In its memorandum opinion, the district court acknowledged the problems presented by certification of such an “enormous” class (A9) where the proof of damages will vary for each member of the class (A15), but con- cluded that those problems could be dealt with by bifur- cated trials (All). Acknowledging that different courts had reached different conclusions on the question of cer- tification where the class was so large, the district court invited immediate review because certification was of “tremendous import” to all parties since such certification would of itself impose heavy burdens on them (A15), A majority of the en banc court “ voted to vacate the earlier order granting permission to appeal, and to remand the case to the district court (A63), Despite the certified questions, in which the district court requested appellate review of the propriety under Rule 23(b)(3) of its class action certification and its as- sumed procedures for the conduct of the trial as a class action,‘ the majority defined the sole issue in the appeal as: “Whether an antitrust action with potentially 300,000 claimants is manageable as a class action . . .” Link & Katz v. Mercedes Benz of N. A. Inc., and Daimler- Benz, A. G., Civil No. 75-2195 (3rd Cir., filed Feb. 11, 1977) (hereinafter cited to appropriate Appendix ref- erence as “Op. A28” ) and answered its own question: 3a. Permission to Appeal was granted (A4), but a second panel declined to review the case and remanded it to the district court (A26); thereafter, re-hearing en banc was granted. 4, Under Rule 23(b)(3), certification is only “proper” if two questions are resolved by the district court. e questions are: predominance of the common issues over individual issues and whether a class action is superior to other means of adjudication. “Manageability” is only one of four “matters pertinent” to the above questions. Petition for Writ of Certiorari 7 “We decline to answer on the ground that the matter is one of fact subject to determination by the district court.” Id. The majority further stated: “In affording immediate appellate review of ‘con- trolling questions of law,’ § 1292(b) was not designed to substitute wholesale appellate certainty for trial court uncertainty . . .” (Op. A31) The majority, treating the second certified question as unrelated to the first, termed it: “. . . essentially a request for an advisory opinion, which we may not honor” (Op. A28), and noted that the case was at a “preliminary stage” (Op. A33). The majority supported the refusal to hear the matter by stating that if after certification the case proved unmanageable, it could be decertified (Op. A33), so that the question of certification might never have to be dealt with. In a concurring opinion, Chief Judge Seitz argued that there was presented a “controlling question of law,” but that there had been no showing that the issues presented “substantial ground for difference of opinion.” (Op. A35- 36). Judge Seitz stated, however, that he might have found that there was “substantial ground for difference of opinion” if the district court’s decision had rested on the assumption that it could later decertify the class (Op. A36). In a dissenting opinion joined in by Judge Rosenn, Judge Adams argued that “a serious and controlling legal question has emerged with respect to the issue of separate juries to try the liability and damage phases . . .” which should be reviewed (Op. A39). Judge Van Dusen also dissented on the basis that the district court failed “to make findings or show considera- tion” of seven key factors “among others” (Op. A41), with- out which it could not have complied with the Rule 8 Petition for Writ of Certiorari 23(b)(3) requirement that it exercise “informed judgment” as to the “superiority” of class treatment (A41 n.1). As to the question of bifurcated jury trial, Judge Van Dusen con- cluded that while in his opinion the Seventh Amendment was no bar to a bifurcation of this trial, he did not believe “that class action treatment is permissible on this record, where a ‘$4 damage action charging price fixing’ is in- volved.” (Op. A44). Judge Gibbons in dissent agreed with Judge Van Dusen that the district court misapprehended, inter alia, “the nature of §4 liability in a Rule 23(b)(3) context .. .” (Op. A48) and further observed: “Assuming that such a price fixing conspiracy did exist, its impact upon the various class members would in all likelihood not present common questions of fact . . . Given 588 individual dealers, and thousands of differ- ent parts and labor rates, it is almost impossible to iew the question of liability as being a common question since such liability determinations necessarily involve the question of impact of the conspiracy upon each individual class member.” (Op. A49 n. 18). Since in Judge Gibbons’ view the district court incor- rectly concluded that a § 4 case could be bifurcated into “liability” and “damages” for separate trials, and since “(t]he decision to have separate juries for each segment of the bifurcated trial was an essential postulate of the court's reasoning in support of its order granting class certifica- tion,” Judge Gibbons concluded that the appeal should have been granted and the jury issue decided (Op. A51-2). Reaching the merits, Judge Gibbons found “no statu- tory or due process barrier” (Op. A58) to trying first before one jury the “common” issue of whether the antitrust laws (§ 1 Sherman Act) were violated by defendants, and then having separate juries try for each complainant the issue of whether and to what extent that complainant was injured (Op. A56). et ek ee Oe: see ne. LO Petition for Writ of Certiorari 9 SUMMARY OF REASONS FOR GRANTING THE WRIT. The proper standards for granting interlocutory appeal under Title 28 U. S. C. § 1292(b) in a purported class action under § 4 of the Clayton Act, and the intercon- nected question of whether there can be a bifurcated jury trial in such cases have never been reviewed by this Court. The restrictive interpretation of interlocutory appealability enunciated by the majority puts the Third Circuit in con- flict with the prior decisions of the Ninth, Seventh and Second Circuits and with its own prior decisions. The majority's improper approval of the device of “contingent” certification upon which the district court’s decision was premised places the Third Circuit in conflict with other circuits and opens the door to improvident certifications based on the erroneous belief that the matter can always later be decertified without harm. However, the very fact of certification with notice to consumers of defendants’ products imposes heavy and irreparable burdens on the parties, as well as consuming needless district court time. The majority refused to deal with the question of bi- furcated jury trial; such procedure impinges upon the con- stitutional right to jury trial, opens the door to devices not authorized by any statutory or other authority and as a practical matter, simply cannot work. Accordingly this case calls for review by this Court. 10 Petition for Writ of Certiorari REASONS FOR GRANTING THE WRIT. I. The Proper Construction of § 1292(b), the Interlocutory Appeals Act, Is an Important Federal Question Which Should Be Promptly and Definitively Resolved by This Court. The court of appeals has improperly narrowed the class of cases reviewable under the Interlocutory Appeals Act of 1958, 28 U. S. C. § 1292(b) ° (see discussion pp. 12- 14, infra), the effect of which narrowing is to insulate Rule 23 class action certifications from any effective appellate review. (See pp. 15-16, infra). The Supreme Court has never had occasion to inter- pret the scope of § 1292(b)°* and should now provide definitive guidance. This Court has made plain its determination that the section should be used to alleviate the rigidity and harsh- ness of the final judgment rule." 5. Section 1292(b) provides that the district judge may certify for review an order which involves ( 1) “controlling question of law,” (2) to which there is “substantial ground for difference of inion,” and (3) the appeal of which “may materially advance the timate termination of the litigation.” Acceptance of the «’ is within the “discretion” cf the court of appeals, 28 U. S. C. 1292(b). The only issue in this case is the meaning of “control- ing question of law” since certification of requirements (2) and ( 3) was not questioned by the court of appeals, except Judge Seitz, concurring. 6. Tidewater Oil Co. v. United States, 409 U. S. 151 ae oO with the Act’s relationship to the Expediting Act, 15 U. S, C, 29. 7. It is significant that this Court granted certiorari in at least twenty-one cases which had been certified below under so ha and thereby was enabled, before final judgment, to clarify the law and shorten litigation on such issues as: transfer orders, Continental Grain Co. v. Barge FBL — 585, 364 U. S. 19 (1960); the tolling of the statute of limitations in both non class and class action antitrust cases, Minnesota Mining & Mfg. Co. v. New Jersey Wood Finishing Co., 381 U. S. 311 (1965) and American Pipe and ~~ - + tee Le ee Oe ae ee —— Petition for Writ of Certiorari 11 “We believe that Congress, in enacting present §§ 1291 and 1292 of Title 28, has been well aware of the dangers of an overly rigid insistence upon a ‘final de- cision’ for appeal in every case, and has in those sections made ample provision for appeal of orders which are not ‘final’ so as to alleviate any possible hardship.” Liberty Mutual Insurance Co. v. Wetzel, 424 U. S. 737, 746 (1976). Mr. Justice Frankfurter, referring to § 1292(b) and other interlocutory appeal statutes, stated: “Since the procedural aspects of law deal with the practical affairs of men and do not constitute an ab- stract system of doctrinaire notions, Congress has recognized the need of exceptions for interlocutory orders in certain types of proceedings where the dam- age of error unreviewed before the judgment is definitive and complete, has been deemed greater than the disruption caused by intermediate appeal.” DiBella v. United States, 369 U. S. 121, 124-25 (1962) (citations omitted ). 7. (Cont’d.) Construction Co. v. Utah, 414 U. S. 538 (1974); the right to a ury trial in a shareholders’ derivative suit, Ross v. Bernhard, 396 . 8. 531 (1970); whether a state can sue on behalf of its citizens the antitrust laws, Hawaii v. Standard Oil Co., 405 U. S. 251 Baa and the jurisdictional reach of antitrust laws, Gulf Oil Corp. v. C Paving Co., 419 U. S. 186 ww See also, TSC Industries, Inc. v. Nort , Inc., 426 VU. S. 438 (1976 Abbott Labs v. Portland Retail s, 45 U.S. 1 ti9v8) Matthews v. Weber, 423 U. S. 261 (1976); Milliken v. Bradley, 418 U. S. 717 (1974); Reliance Electric Co. v. Emerson Electric Co., 404 U. S. 418 (1972); Usner v. Luckenbach Overseas Corp., 400 U. S. 494 (er) + ~ v. States Marine Lines, Inc., 398 IF ills v. Electric Auto-Lite Co., 396 U. S. 375 we} : we. v. United — | aie Ine., 392 . S. ; Tcherepnin v. ' . S. 322 (1967); Toilet Goods y~ a Inc. v. Gardner, U. S. 158 (1967); mil mann Distilling Corp. v. Maier Brewing Co., 386 U. S. 714 (1967); Levin v. Mississippi River Fuel a 386 U. S. 162 (1967); Pure Oil Co. v. Suarez, 384 U. S. 202 (1966); Schnell v. Eckrich & Sons, 365 U. S. 260 (1961). 12 Petition for Writ of Certiorari A. The Narrow Interpretation of “Controlling Ques- tion of Law” in § 1292(b) by the Court of Appeals Is Impropef and Is in Conflict With Other Circuits. The court of appeals has taken an impermissibly nar- row approach to the interpretation and application of § 1292(b) by defining “controlling question of law” as being limited to those issues in which no factual deter- mination or exercise of discretion was involved, and re- quiring that there be additional “special factors” and “other overriding legal issues.” (Op. A30). The refusal to review any issues containing factual determinations or an exercise of discretion is contrary to the interpretation of § 1292(b) followed by the courts of appeals for the ninth, seventh and second circuits. Blackie v. Barrack, 524 F. 2d 891, 900-01 (9th Cir. 1975); Lear Siegler, Inc. v. Adkins, 330 F. 2d 595, 598 (9th Cir. 1964) “[t]he controlling question of law here involved is whether the district court was in error or abused its dis- cretion in granting the stay”); Bersch v. Drexel Firestone, Inc., 519 F. 2d 974, 994 and n. 44a (2d Cir. 1975), cert. denied, 423 U. S. 1018 (1975); Sanders v. John Nuveen & Co., Inc., 463 F. 2d 1075, 1081-83 (7th Cir. 1972), cert. denied, 409 U. S. 1009 (1973). In fact no better example of the correct interpretation of § 1292(b) can be found than Katz v. Carte Blanche, 496 F. 2d 747 (3rd Cir. ), cert. denied, 419 U. S. 885 (1974), wherein the Third Circuit said: “The key consideration is not whether the order involves the exercise of discretion, but whether it truly implicates the policies favoring interlocutory appeal. The determination of what orders are properly re- viewable under § 1292(b) must be made by a prac- tical application of those policies, not by a mechanical ee Cele ce ¥. S : Petition for Writ of Certiorari 13 application of labels such as ‘discretionary’ or ‘non- discretionary.” Katz v. Carte Blanche, supra at 756 (emphasis added). By labeling Rule 23 requirements as “discretionary” the court of appeals has refused to offer any guidelines or supervision to the district courts for determination of Rule 23 class action motions. It has indicated that it will abide by any district court determination if that court, as it did in this case, merely pays lip service to the requirements of Rule 23 by making conclusory statements that the require- ments of the Rule have been met. Furthermore, the court of appeals has improperly engrafted onto “controlling question of law” the additional requirement that such a question must also be attended by special factors, overriding legal issues (Op. A30) or what some courts have termed “exceptional circumstances.” This interpretation has been specifically rejected by the Fifth Circuit in Hadjipateras v. Pacifica, $8. A., 290 F. 2d 697, 703 (5th Cir. 1961), as a “Shibboleth,” frustrating the policy in § 1292(b). This restrictive interpretation of interlocutory appeal- ability is in direct conflict with the expressions of this Court as to the role of § 1292(b) in the appellate process and ignores the meaning of the Act as illuminated by its legislative history." That history demonstrates that the 8. The Interlocutory Appeals Act of 1958 resulted from the “growing awareness of the need for ition of cases pendin before District Courts.” S. Rep. No. 2434, 85th Cong., 2n Sess. (1958), reprinted in U. S. Cong. and Admin. News, 85th Cong., 2nd Sess. at 5256. e provision is an attempt to remedy not only the injustice and burden to a party from an erroneous decision of a determina- tive issue early in the proceedings but also the subsequent waste of judicial resources by the trial court after an erroneous decision. Letter of Transmission of the Judicial Conference of the United 14 Petition for Writ of Certiorari Act’s primary purpose was to provide immediate appellate review of large and complicated lawsuits, the “exceptional cases where a decision of the appeal may avoid protracted and expensive litigation, as in antitrust and similar pro- tracted cases . . .” Hearings before subcommittee No. 3 of The House Comm. on the Judiciary on H. R. 6238, 85th Cong. 2d Sess. ser. 11 (i858) (emphasis added). As noted by Judge Brown, “Moreover, it was a judge-sought, judge-made, judge- sponsored enactment. Federal judges from . . . ex- perience gained in the adjudication of today’s com- plex litigation, were acutely aware . . . [that] there are occasions . . . in which as a practical matter orderly administration is frustrated by the necessity of a waste of precious judicial time while the case grinds through to final judgment as the sole medium through which to test the correctness of some isolated identifiable point of fact, of law, of substance or procedure, upon which in a relative way the whole case or defense will turn.” Hadjipateras v. Pacifica, S.A., supra, at 702- 703 (emphasis added). B. Large Class Action Certifications Present Control- ling Questions of Law, Because of Their Deci- sive Impact on the Future Course of the Litiga- tion and Unless Such Certifications Are Reviewed Immediately, They Are Effectively Insulated From Any Appellate Review. Any large class action determination presents a “con- trolling question of law” because of the decisive impact 8. (Cont'd.) States, Draft of Section 1292(b), reprinted in U. S. Cong. and Admin. News, supra, at 5258. This act followed the judicially created exception to the final judgment rule, the collateral order doctrine embodied in Cohen v. Beneficial Industrial Loan Corporation, 337 U. S. 541 (1949). Petition for Writ of Certiorari 15 which it necessarily has on the subsequent course of the litigation and the requisite commitment of judicial re- sources. It is unarguable that a case claiming damages on be- half of one or two individual plaintiffs will be conducted in a markedly different manner from a case in which dam- ages on behalf of a nationwide class are sought. For ex- ample, the permitted scope of discovery and pre-trial pro- ceedings in general may be considerably broader, more costly and time consuming if a nationwide class is certified. Furthermore, defendants in a nationwide class action suffer irreparable harm to their business goodwill and reputation by the sending of class action notice to the consumers of its product. No later appellate review, no matter how thorough, can ever undo the effect of the notice. Now is the only time for meaningful appellate review of the class certification question. As has been noted: “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 this action.” Herbst v. International Telephone & Telegraph Corp., 495 F. 2d 1308, 1313 (2d Cir. 1974). Further, review of certification now is clearly appropriate since there is growing recognition that class action certifica- tions have an in terrorem effect on settlement. See Op. A43, (Van Dusen, J., dissenting); Parkinson v. April Ind. Inc., 520 F. 2d 650, 654 (2d Cir. 1975); Herbst v. Int'l. Tel. & Telegraph Corp., supra at 1313; cf., Kline v. Coldwell, Banker & Co., 508 F. 2d 226, 236-38 (9th Cir. 1974) (Dun- way, J., concurring), cert. denied, 421 U. S. 963 (1975); See also, In re Hotel Telephone Charges, 500 F. 2d 86 (9th 16 Petition for Writ of Certiorari Cir. 1974); Landers, Of Legalized Blackmail and Legalized Theft; Consumer Class Actions and the Substance Pro- cedure Dilemma, 47 So. Cauir. L. Rev. 842 (1974). As this Court noted in a 10(b)(5) securities class action: “even a complaint which by objective standards may have very little chance of success at trial has a settle- ment value to the plaintiff out of any proportion to its prospect of success at trial so long as he may prevent the suit from being resolved against him by dismissal or summary judgment. The very pendency of the law- suit may frustrate or delay normal business activity of the defendant which is totally unrelated to the law- suit.” Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 740 (1975) (citations omitted ). Of course not every class action certification is review- able under § 1292(b), since the district court also must certify that “there is substantial ground for difference of opinion [on the controlling question of law] and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” A district court will be naturally hesitant to certify that it may have erred. Furthermore if the circuit courts accept their responsibility under § 1292(b) to provide concrete guidelines for Rule 23 determinations, the number of such determinations in which district courts would certify that a “substantial ground for difference of opinion” exists would greatly de- crease. Finally, the appellate court has the discretion to accept or reject the appeal. Thus, acceptance by this Court of the proposition that class certifications present “controlling questions of law” would not result in a substantial increase in § 1292(b) appeals. Petition for Writ of Certiorari 17 The appellate court’s statement that“. . . § 1292(b) was not designed to substitute wholesale appellate cer- tainty for trial court uncertainty . . .” (Op. A31) is a betrayal of the judicial maxim best enunciated by Lord Coke that “the knowne certaintie of the law is the safetie of all.” The court has abdicated a traditional appellate func- tion of providing concrete guidelines to lower courts within which to make factual determinations ® and has retreated behind the excuse that: “Our constantly increasing caseload reinforces the other more philosophical reasons for that policy.” (Op. A30). Judge Gibbons in dissent termed that excuse “insup- portable” (Op. A52), noting that “§ 1292(b) appeals from class action determinations . . . are an insignificant part of the appellate caseload.” *° (Op. A52). The court of appeals has, thus, tacitly approved the legal morass and total uncertainty which has proliferated as a result of the irreconcilable decisions in the circuit and district courts in large class actions to the detriment of both plaintiffs and defendants. 9. The discretionary aspects of } 1292(b) should not be used as a rationale for avoiding the difficult questions presented in class certification. As has been noted: “[The] spirit and purpose [of Rule 23] should not be frustrated by an unarticulated and perhaps subconscious hope on the part of appellate judges that if review of important class action determinations are delayed until the merits of the suit have been decided, the question of such class determina- tion may be mooted and difficult questions avoided.” Anschul v. Sitmar Cruises, Inc., 544 F. 2d 1364, 1373 (7th Cir. 1976) (Swygert & Bauer, J.J., dissenting). 10. According to Professor Wright, all the cases certified under § 1292(b) amount to about 100 per year of which appeal is allowed by the Circuits in about half. Thus § 1292(b) appeals are not any 2 Ty by A.» case =e of —: of appeals which in amounted to 16,436 cases. Wright, Federal rts, 5 (3rd ed. 1978). eee 18 Petition for Writ of Certiorari Il. This Court Should Exercise Judicial Oversight to Cor- rect the Failure of the District Court Both to Construe Properly the Requirements of F. R. C. P. 23(b)(3) and to Require the Proponents of the Class to Meet Their Burden of Demonstrating Compliance With the Rule. The federal court system is presently in irreconcilable conflict on the findings and analysis required of district courts before certifying under Rule 23, particularly in § 4 Clayton Act cases. Therefore, it is imperative that in this §4 Clayton Act action this Court resolve such conflict and furnish definitive guidance to the lower courts. The essential split in the analysis "' and application of Rule 23 in Clayton Act cases is demonstrated by the contrasting views expressed by the Ninth and Fifth Circuits compared with that enunciated by the Fourth Circuit. The Fifth Circuit has made the following analysis of the interplay between the antitrust laws and Rule 23 requirements as a prerequisite to class certification: “The district court denied Shumate class action status because of its conclusion that, even if a conspiracy were proved, the controlling question as to liability was whether a class member had suffered injury . . . [T]he proof of injury to business or property of each class member is critical for the determination of de- fendants’ liability to any individual.” Shumate & Co., Inc. v. National Association of Securities Dealers, Inc., 1l. As might be expected in an area of the law which suffers from lack of appellate peeve, the decisions in the district courts are also irreconcilable and so varied they often cannot be categorized except on the basis of the judge’s predilection towards the social desirability of class actions. Compare of In re Transit Co. Tire Litigation, 67 F. R. D. 59 W. D. Mo. 1975); Ralston v. Volkswagenwerk A. G., 61 F. R. D. (W. D. Mo. 1973); Al Barnett v. Outboard Marine Corp., 64 F. R. D. 43 (D. Del. 1974); with Arenson v. Board of Trade of Chicago, 372 F. Supp. 1349 (N. D., Ill. 1974); City of P lphia v. Am, Oil Co., 53 F. R. D. 45 (D. N. J. 1971); Illinois v. Harper & Row Publishers, Inc., 301 F. Supp. (N. D. Ill. 1969). Petition for Writ of Certiorari 19 509 F. 2d 147, 155 (1975), cert. denied, 423 U. S. 868 (1976) (citations omitted ). Consistent with that view is the Ninth Circuit’s opinion: “The appellee's attorneys have asserted that bur- dening the already strained judicial resources with this class action, which promises no real benefit to class members, is nonetheless justified on the ground that allowing the suit will serve to ‘punish’ and ‘deter’ antitrust violations. But the Congressional scheme does not contemplate that private attorneys are to act as prosecutors to force antitrust violators to disgorge their illegal profits in the general interest of society at large. The antitrust laws focus on the com- pensation of parties actually injured, presupposing that a plaintiff can prove that he was in fact injured as a proximate result of an antitrust violation.” In Re Hotel Telephone Charges, supra at 91-92 (citations omitted ). In contrast, a divided panel of the Fourth Circuit re- cently took the position that the plaintiffs have the benefit of a rebuttable presumption of class certification propriety: “What we do say is that there is almost a rebuttable presumption that such a class action should be al- lowed where-there is a plausible claim of violation of the Sherman Act.” Windham v. American Brands, Inc., 539 F. 2d 1016, 1021 (4th Cir. 1976) (case sub judice, following reargument before the court en banc, February 14, 1977). Similarly, the decision in the district court in this case, although not adopting the “rebuttable presumption” theory, had the same effect, by utilizing a “wait and see” attitude. 20 Petition for Writ of Certiorari The recent enactment of the Hart-Scott-Rodino Anti- trust Improvements Act of 1976, 15 U. S. C. §§ 15¢ to 15h, 18a, 66, providing for vindication of the rights of “society at large” not by class actions but by parens patriae actions, eliminates any justification for expanding the application of Rule 23, and the antitrust laws to ac- commodate plaintiffs for whom class actions would have been the only practical way that individual consumers could recover. A. The District Court’s “Contingent” Class Certifica- tion Is Impermissible Under F. R. C. P. 23(b)(3). The district court erred by holding that plaintiffs, after class certification should “be given an opportunity to develop a method of proving damages . . .” (A10)." The court concluded by claiming that: “In any event the court has the right to decertify the class following a determina- tion of liability . . .” (A11). This procedure violates the provision of Rule 23(c) (1) that: “As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits.” F. R. C. P. 23(c)(1). The majority declined to review the district court's order, observing that: “The district court therefore viewed the scope of its order as limited and contingent.” (Op. A32). Rule 23(c)(1), however, only permits “condi- 12. The requirement that plaintiffs must show compliance with Rule 23 does not involve a mini trial on the merits, forbidden this Court in Eisen v. Carlisle & Jacquelin, 417 U. S. 156 (1974), ba simply how the trial will be conducted as a class action. 7 P : * 4 Petition for Writ of Certiorari 21 tional” certification, ie., certification after showing com- pliance with all requirements of the Rule, conditioned upon plaintiffs’ continued demonstration of compliance therewith. But the rule does not permit “contingent” certification, i.e., certification prior to a showing of com- pliance with all requirements of the rule subject to later showing of compliance." Thus, the court of appeals distorted Rule 23(b) (3) and authorized the district court to certify the action as a class action in the face of known and unresolved problems, anticipating that ultimate decertification—after the parties and court have borne the burdens of class action development—may likely be the only resolution of those problems. This ruling completely distorts the law governing class action certification and should now be reviewed by this court. Furthermore the district court’s contingent certification procedure permits the plaintiffs another opportunity to concoct at their leisure a method of proving damages, after plaintiffs have sent notice to the consumers of defendants’ product and is a procedure which is impermissible under Rule 23 and inherently unfair to the defendants in this and any other consumer class action. B. The District Court Improperly Interpreted and Incorrectly Defined the Rule 23(b)(3) Issues in This § 4 Clayton Act Case. The district court’s formulation of seven “common questions” “* (A7-8) demonstrates its misconception of the 13. “. . . the judge may not conditionally certify an improper class action on the basis of a lative possibility that it may later meet the requirements.” Blackie v. Barrack, supra at 901. 14, The district court's expression of the “common questions” was as follows (A7-8): “[1.] whether defendants combined and conspired to establish retail parts prices to be charged to the class by the 22 Petition for Writ of Certiorari issues and proof required, as the dissenting opinions of both Judges Gibbons and Van Dusen demonstrate. The district court’s questions [1], [2], and [5], ie., whether defendants conspired between themselves, or with the National Dealer Council, to establish the retail price of parts and labor, ignore the language of the com- plaint which alleges a conspiracy between defendants and 588 dealers, and not one between defendants or between defendants and a National Dealer Council (R. 5a, 7a). The district court’s question [4] concerning enforced compliance, is equally irrelevant since the plaintiffs have alleged a conspiracy, or agreement, not coercion (R. lla). The district court thus appears to have considered the issue to be whether Mercedes and Daimler conspired with a dealer-council, and then enforced that conspiracy on all the dealers. The district court’s question [6], whether the plain- tiff class was harmed by the alleged acts of the defendants “ __. demonstrates the court’s misapprehension of the nature of § 4 liability in a Rule 23(b)(3) con- 14. (Cont'd. ) 2.] whether defendants combined and co ired to estab- lish designated labor times to be utilized by dealers in setting prices to the class for nonwarranty repairs of Mercedes-Benz vehicles; (3.] whether documents establishing prices for parts and = _— of designated labor times were circulated among e ; (4.] whether defendants enforced someenaase by the gy in regard to the prices for parts for designated labor (5.] whether the defendants conspired with the Mercedes- Benz National Dealer Council in regard to establishment of fixed prices for parts and designated labor time for repair work in the performance of nonwarranty auto repairs; (6.] whether the plaintiff class was harmed by the alleged acts of the defendants and; [7.] whether the alleged acts of the defendants, if proved, violate the antitrust statutes of the United States.” ee atin ih. a i 4 Petition for Writ of Certiorari 23 text, for obviously only individual members of the class, not the class, can be injured in business or property by a retail price fixing conspiracy . . . [C]ertainly there is nothing in the district court opin- ion, or in the affidavits which have been called to our attention, suggesting that the conspiracy had a like effect upon the business or property of every repair customer of all 588 individual Mercedes dealers.” (Op. A48-49) (Gibbons, J., dissenting ). The district court’s question [7], whether defendants’ alleged acts if proved violate the antitrust laws, further reflects the court’s “misapprehension of the nature of § 4 liability in a Rule 23(b)(3) context,” since whether a part — conspiracy, if — violates § 1 [Sherman ardly seems an open le uestion.” . (Gibbons, J., eceiiiien! ). - sinensis In addition to the above misdefinitions, the district court failed to consider several other tactors present in a § 4 Clayton Act action. As Judge Van Dusen noted in dissent below, the dis- trict court ignored the following: “(a) that the liability aspect of the trial required a decision not only of violation of §§ 1 and 2 of the Sherman Act, 15 U. S. C. §§ 1 and 2, but also deter- mination under 15 U. S. C. § 15 of the fact of damage (an element which would give rise to problems in proving the latter item on a class basis where the class consists of ‘potentially 300,000 claimants’ located in all. 50 states, Puerto Rico, Guam, Sead, uam, and the Virgin (b) that there would be a substantial difference in the quantum and character of liability proof under § 4 of the Clayton Act, 15 U. S. C. 15, if the plaintiffs 24 Petition for Writ of Certiorari included all the above 300,000 individuals alleged to comprise the class, rather than only the named plain- tiffs; (c) that determination of liability itself under § 1 of the Sherman Act might also vary as to each class member, depending upon whether the particular dealer-defendant participated in the conspiracy, so that inquiry is required into whether the common questions predominate over the individual questions making a class action superior under F, R. Civ. P. 23(b) (3); (d) that, on this record, there would appear to be no theoretical or practical formula or method to aid in the computation of damages sustained by different individuals, potentially requiring each class member to produce voluminous documentary evidence of his transactions in order to secure judgment; (e) that, in view of the above, there is a question as to whether the named plaintiffs are typical as re- quired by F. R. Civ. P. 23(a)(3); (f) that, if more than one class is necessary, the named plaintiffs might not adequately represent many members of the group of 300,000 persons treated as members of various classes and subclasses by the dis- trict court, see F. R. Civ. P. 23(d)(4); and (g) that class suits have an in terrorem effect in forcing settlement (cf. Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 740-42 (1975) ).” (Op. A41-43) (footnotes omitted ). The failure of the district court to perceive the elements of § 4 Clayton Act liability is most aptly sum- marized by Judge Gibbons: ee ne ee ee ee i | . ; Petition for Writ of Certiorari 25 “The district court’s misconception of the sub- stantive elements of § 4 liability are clearest in its treatment of the distinction between § 4 ‘liability’ and ‘damages.’ Nowhere does the court show an aware- ness that some degree of injury to business or prop- erty—damages if you will—is a substantive element of § 4 liability. (Op. A50) (dissentirg opinion). III. In a § 4 Clayton Act Case the Issues of Liability and Damages Cannot Constitutionally Be Severed and Tried Before Separate Juries. One of the most puzzling features of the opinion of the majority of the court of appeals, was its refusal to answer the question certified by the district court as to whether there may be separate juries utilized during the liability and damages phases of a bifurcated trial. There were two grounds advanced for this refusal. First, the majority found that since there was no “definitive order” on that subject by the district court, “the inquiry is essentially a request for an advisory opinion, which we may not honor.” (Op. A28). This conclusion is simply contrary to the plain lan- guage and rationale of the district court’s decision. That court was required by Rule 23 to find that the clas action was superior to other procedures as a method ox solving the controversy. However, the court was faced with the acknowledged problem that proof of damages would vary for each of the 300,000 potential claimants. Its premise in granting certification was that this problem could be solved by a bifurcated jury trial, i.e., a common trial on lia- bility followed by a separate damage determination for each claimant. It was precisely because its conclusions on the issue of bifurcated jury trial constituted a key premise for its deci- 26 Petition for Writ of Certiorari sion to grant class action status that the district court cer- tified this issue for review by the court of appeals. There- fore, the majority was clearly wrong in finding that the question as certified constituted merely a request for an “advisory opinion.” The dissenting judges had no difficulty perceiving this fact. Judges Adams and Rosenn concluded that: “. . . a fair reading of the district judge’s opinion indicates that the assumed propriety of that mech- anism [bifurcated trial and separate juries] appears to have been one of the prime predicates of his decision to certify the case as a class action, at least in the first instance.” (Op. A40). And Judge Gibbons, in a part of his opinion expressly adopted by Judge Van Dusen, stated that: “Despite the majority opinion of this court, it is clear beyond dispute that the district court’s decision in favor of Rule 23(b)(3) class action certification was based upon a decision to try the liability and dam- age issues before separate juries.” (Op. A50) “The decision to have separate juries for each segment of the bifurcated trial was an essential postulate of the district court’s reasoning in support of its reasoning in support of its order granting certification. It is clear beyond peradventure that the district judge would not have entered the class action order except for his belief in the legal proposition that he could try liability and damages in a Section 4 Clayton Act case before sepa- rate juries.” (Op. A51). The second reason advanced by the majority was that the parties might later waive their right to jury trial, thus making the question premature and speculative. Such rea- F 4 2 : Petition for Writ of Certiorari 27 soning ignores the decisions of this court in Dairy Queen v. Wood, 369 U. S. 469 (1962) and Ross v. Bernhard, 396 U. S. 531 (1970), both of which reviewed, at the pleading stage, district court rulings on demands for jury trial. The Seventh Amendment to the Constitution does not permit trial before separate juries of the “liability” and “damages” questions in a Clayton Act case, and this court should provide definitive guidance to that effect.’ This court has never ruled upon the availability of separate juries in the initial trial of any case. In Gasoline Products v. Champlin Refining Co., 283 U. S. 494 (1931), this Court permitted a retrial of less than the entire case but only if “it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.” 283 U. S. at 500. The district court’s proposed division would thus be improper. As Judge Gibbons noted, it is not possible to divide a Clayton Act §4 class action into liability and damage, since there can be no liability—no standing to sue—without damage. If there is to be any preservation of the constitutional right to jury trial, then the claims of dam- age of each of the claimants must be subjected to such jury 15. The Third, Sixth, and Seventh Circuits have noted that separate juries would raise substantial constitutional questions. See Katz wv. Carte Blanche, at 761; Moss wv. Associated Transport, Inc., 344 F. 2d 93 (6th Cir. 1965); Hosie v. Chicago and N. W. Ry. Co., 282 F. 2d 639 (7th Cir. 1960), cert. denied, 365 U. S. 814 (1961). The Ninth Circuit has also reserved deci- sion. United Airlines Inc. v. Wiener, 286 F. 2d 302 (9th Cir.), cert. — Fy U. S. 924 a ~— Only - Fifth —— has ro te trials; that appro i tems and did mot involve iovucs as intertwined os those in a Clayton Act case. Swofford v. B & W, Inc., 336 F. 2d 406 (5th Cir. 1964), cert. denied, 379 U. S. 962 (1965). The Tenth Circuit has noted its ible approval of separate juries. See, Union Carbide and Carbon Corp. v. Nisley, 300 F. 2d 561, 589 (10th Cir. 1962). 28 Petition for Writ of Certiorari trial, which means hundreds of thousands of such trials. _ As Judge Gibbons pointed out, “Such a rule [Gasoline Products, supra] is dic- tated for the very practical reason that if separate juries are allowed to pass on issues involving over- lapping legal and factual questions the verdicts ren- dered by each jury could be inconsistent.” (Op. A55). Because the issues of liability and damage are in- dividualized, and the issues of liability and damages over- lap, the requirements of Gasoline Products, supra, and F. R. C. P. 42(b) have not been met. The issues of lia- bility and damages must be tried before the same jury, the proof of “fact of injury” or “damage” to establish liability, and the proof to establish the “amount of such injury” or “damages” would so overlap that the second trial would be but a retrial of the first with the risk of incon- sistent verdicts. Judge Gibbons’ answer to this problem was to endorse the approach devised by Judge Wyzanski in Windham v. American Brands, Inc., supra, under which a trial would first be held to determine whether §1 of the Sherman Act had been violated, i.e., was there a conspiracy among the defendants to fix prices. In the event of an affirmative finding, a second trial—or series of trials—would be held to determine liability and damage under § 4 of the Clayton Act. The approach favored by Judges Wyzanski and Gib- bons is, at first glance, ingenious. It has, however, its own flaws. To begin with, it creates a remedy and procedure which have no basis whatever in the laws passed by Con- gress. Second it provides no more of a “solution” than did the approach of the district court with respect to the adjudication of individual claims. « «eae tedse Ally s . ere i i 25 é 4 : Petition for Writ of Certiorari 29 Judge Wyzanski found support for his approach in the procedure under which a judgment in a government anti- trust suit is prima facie evidence in a subsequent private action. Yet, as Judge Gibbons candidly acknowledged, the analogy is incomplete in two respects. First, the “vi- olation determination” in this case would be not merely prima facie evidence but the law of the case. Second, and even more important in our view: “Congress has not authorized a general roving com- mission for the enforcement of the antitrust laws. Instead, it has authorized private enforcement only by persons suffering actual or threatened injury to their business or property. Under Judge Wyzanski’s approach, however, a party who never really suffered any injury to his business or property might neverthe- less obtain a violation determination having a more significant effect than a decree in a government action. Perhaps concern about such a possibility explains the Fourth Circuit’s recent vote to rehear Windham v. American Brands, Inc., supra, en banc.” (Op. A58). Despite the foregoing reservations, Judge Gibbons concluded that the Wyzanski approach is “consistent with current Congressional intention with respect to antitrust enforcement” (Op. A61). It is curious indeed that Judge Gibbons found reinforcement for his conclusion in the passage of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, supra, since it provides for aggregate dam- ages without separate proof of individual claims. . Further, Judge Gibbons finds in the passage of the Act, evidence that “Congress would prefer an imaginative approach to class action litigation in § 4 cases.” (Op. A62). Yet, here again Judge Gibbons is candid in acknowledging the counter arguments—“that the new § 301 cause of action occupies the field and that its explicit nonretroactivity 30 Petition for Writ of Certiorari shows an intention not to extend the utilization of Rule 23 in the antitrust field” (Op. A62). In the end, Judge Gibbons is forced to conclude that: “The message that one reads into the enactment prob- ably will be essentially a product of his own convic- tion as to the social desirability of consumer class actions” (Op. A62). The convictions of one or more judges as to the “social de- sirability” of class actions is, we submit, not a sufficient basis on which to create a novel remedy by judicial legis- lation. As the Ninth Circuit observed on this point: “Judges should not significantly tamper with legisia- tive enactments simply to satisfy their own individual notions as to sound public policy.” In re Hotel Tele- phone Charges, supra at 92. The Wyzanski-Gibbons approach, like that of the district court does not solve the problems of individual proof. Neither the opinion of Judge Wyzanski in Wind- ham nor the dissent of Judge Gibbons in the present case successfully addresses the question of how the § 4 Clayton Act trials are to be carried out after a § 1 Sherman Act violation has been established. Thereafter, a defendant would still retain the right to a jury trial on any claim as to which the fact or amount of injury was disputed. This would mean in practical terms, successive juries to deter- mine hundreds of thousands of claims, and is simply be- yond the capacity of the district court. Even assuming a certain grouping of claimants, perhaps by dealer, the liti- gation could easily occupy the remaining judicial career of the present district judge and that of his ultimate suc- cessor. Petition for Writ of Certiorari 31 CONCLUSION. For the foregoing reasons, the Court should grant a Petition for Certiorari in this case. Respectfully submitted, Rosert J. SPIEGEL, SPENCER ERVIN, JR., Wiitpur Bourne RUvUTHRAUFF, Attorneys for Petitioners. Of Counsel: R. Mark ARMBRUST, Gratz, TATE, SPIEGEL, Ervin & RUTHRAUFF, 1900 Two Girard Plaza, Philadelphia, Pennsylvania. 19102 Daten: April 4, 1977 APPENDIX. IN THE UNITED STATES DISTRICT COURT For THE EASTERN DIsTRICT OF PENNSYLVANIA. Crvit Action No. 74-771. JULES LINK and SOLOMON KATZ, on Behalf of Themselves and All Others Similarly Situated v. MERCEDES-BENZ OF NORTH AMERICA, INC. DAIMLER-BENZ A.G. ORDER. Anp Now, this 7th day of August, 1975, upon con- sideration of the record herein, including all papers filed relating hereto, it is hereby OrpEnRep that: 1. The Order of July 8, 1975 is hereby vacated. 2. This action shall be maintained as a class action pursuant to Fed. R. Civ. P. 23(b)(3). 3. The class herein is defined as all persons, firms or corporations who have had nonwarranty auto repairs per- formed on Mercedes-Benz automobiles, owned or leased by them, by Mercedes-dealers, during the period March 27, 1970 to March 27, 1974. (Al) A2 District Court Order (8/7/75) 4. Plaintiffs, Jules Link and Solomon Katz, are hereby designated as class representatives. 5. The firm of Harold E. Kohn, P. A., Attorneys at Law, is hereby designated as counsel to the class for the prosecution of this action. 6. Counsel for the class shall meet with counsel for the defendants forthwith in order to attempt to obtain agreement on the method of notifying the class and the form of notice to be sent. 7. The undersigned is of the opinion that an immedi- ate appeal from this Order is authorized by 28 U. S. C. § 1292(b), in that: 1. It involves controlling questions of law as to which there is substantial ground for difference of opinion, namely, A. Whether it is proper to certify a class of approximately 300,000 members where the proof of damages will vary for each member of the class; B. Whether there can be a bifurcated trial in this case of liability and damages with separate juries for each segment of the case; and 2. An immediate appeal from this Order may materially advance the ultimate termination of this litigation. 8. It is Onperep that all proceedings in this case (except those set forth in Paragraph 9, infra) be stayed for ten (10) days from date of entry of this Order. If within such ten (10) days, the defendants shall apply to the United States Court of Appeals for the Third Circuit for permission to appeal from this Order, the proceedings District Court Order (8/7/75) AS herein (except those stated in Paragraph 9, infra) shali p stayed pending determination of such application or the appeal, if it is allowed. 9. The Defendants’ Motions under Rule 12 (Docu- ments 4, 5, 7 and 8 herein) are subject to the following chedule: A. By September 10, 1975 defendants shall have completed their translation of the ae viously selected and translated by plaintiffs, an parties shall have met and endeavored to agree upon a translation or summary for such documents; B. Plaintiffs’ reply brief and affidavits, if any, shall be served on September 19, 1975; C. Defendants’ rebuttal brief and affidavits, if any, shall be served on September 30, 1975; D. A Pre-Trial Conference and argument on the said Motions are scheduled for October 7, 1975, at 1] a.m. | 10. A Memorandum Opinion with the Court's findings will be filed hereafter. Epwarp N. CAHN Edward N. Cahn, J. A4 Court of Appeals Order (9/12/75) UNITED STATES COURT OF APPEALS For THE Tuirp Circuit C. A. Misc. Record No. 75-8167 JULES LINK and SOLOMON KATZ, on behalf of themselves and all others similarly situated v. MERCEDES-BENZ OF NORTH AMERICA, INC. DAIMLER-BENZ A. G. (D. C. Civil No. 74-771) Present: KALODNER, VAN Dusen and HunTER, Circuit Judges ORDER. It is Orperep that the PeTITION FoR PERMISSION TO APPEAL is granted. By THE COURT:— Van Dusen Circuit Judge Dated: September 12, 1975 District Court Opinion (9/25/75) A5 IN THE UNITED STATES DISTRICT COURT For THE EASTERN DisTRICT OF PENNSYLVANIA Civil Action No. 74-771 JULES LINK and SOLOMON KATZ, on behalf of themselves and all others similarly situated v. MERCEDES-BENZ OF NORTH AMERICA, INC., DAIMLER-BENZ A. G. MEMORANDUM OPINION. Cann, J. September 25, 1975 The plaintiffs, Jules Link and Solomon Katz, are owners of Mercedes-Benz automobiles. They have filed a complaint containing class action allegations against Daimler-Benz A. G., the manufacturer of Mercedes-Benz automobiles and parts, and its agent and wholly-owned subsidiary, Mercedes-Benz of North America, Inc., the exclusive United States distributor of Mercedes-Benz auto- mobiles and parts. The basis of the complaint, which seeks treble damages and injunctive relief, is alleged price fixing in regard to nonwarranty repair work on Mercedes- Benz automobiles in violation of Section 1 of the Sher- man Act (15 U. S. C. §1) and Sections 4 and 16 of the Clayton Act (15 U. S. C. § 15 & § 26). On July 8, 1975, an Order was entered certifying this case to class action status. The class was defined: A6 District Court Opinion (9/25/75) . as all persons, firms or corporations who have had nonwarranty auto repairs performed on Mer- cedes-Benz automobiles, owned or leased by them, by factory authorized Mercedes dealers, during the period March 27, 1970, to March 27, 1974.” The July 8 Order also provided for certification pursuant to Fed. R. Civ. P. 23(b)(1), 23(b)(2) and 23(b)(3). Thereafter, the defendants moved the court to amend the iy 8, ee to stay all proceedings and certify an immediate appeal is warran potty ppe ted under 28 U. S. C. Following a conference with counsel an Order was entered on August 8, 1975, which vacated the Order of July 8, 1975. The latter Order provided that the class action shall be maintained pursuant to Fed. R. Civ. P 23(b)(3) only, eliminated the phrase “factory authorized” from the definition of the class, certified that an immedi- ate appeal is authorized in accordance with 28 U. S. C. § 1292(b), stayed proceedings if the defendants within 10 days apply to the United States Court of Appeals for the Third Circuit for permission to appeal and stated that a Memorandum Opinion would be filed. 1. gy C. § 1292(b) provides: ccs When a distri ct . d . ] . . * * . order not otherwise eqpestall . ‘aldee this ab hg S of the opinion that such order involves a controlling question of law as to which there is substantial ground for Giese of opinion and that an immediate a from the order ma materially advance the ultimate termination of the liti tion, S Sat co Cate tn wetitn in such order. The Court of A ay thereupon, in its discretion, it - such order, if application tT X- it par bag yo ifter the entry of the order: Provided, however, That pot ng diotrit cout Salome the distice dons he Cane Pe ess istrict j or a judge thereof shall so —" a District Court Opinion (9/25/75) A7 The first matter for consideration is whether the four mandatory requirements of Fed. R. Civ. P. 23(a) have been met. The test of this rule is as follows: “(a) Prerequisites to Class Action. One or more members of a class may sue or be sued as represent- ative parties on behalf of all only if (1) the class is so numerous that joinder of all members is imprac- ticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the repre- sentative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.” The affidavits filed by the defendants state that the class will number approximately 300,000. The class is suf- ficiently numerous so that joinder of all members is not practicable. Defendants do not contest this point. The second prerequisite is the existence of questions of law or fact common to the class. In this case the plaintiffs allege a nationwide conspiracy involving the two named defendants and Mercedes-Benz dealers * to fix prices for nonwarranty repair work and replacement parts. The plaintiffs contend that the defendants and dealers have circulated and agreed to abide by certain price lists pertaining to the prices to be charged for parts and the prices to be charged for performing designated items of repair work. The common questions for determination include: whether defendants combined and conspired to establish retail parts prices to be charged to the class by the dealers; whether defendants eombined and conspired to establish designated labor times to be utilized by dealers in setting prices to the class for nonwarranty repairs of Mercedes-Benz vehicles; whether documents 2. The dealers are not parties to this litigation. A8 District Court Opinion (9/25/75) establishing prices for parts and the amount of designated labor time were circulated among the dealers; whether defendants enforced compliance by the dealers in regard to the prices for parts for designated labor time; whether the defendants conspired with the Mercedes-Benz Na- tional Dealer Council in regard to establishment of fixed prices for parts and designated labor time for repair work in the performance of nonwarranty auto repairs; whether the plaintiff class was harmed by the alleged acts of the defendants and whether the alleged acts of the defendants, if proved, violate the antitrust statutes of the United States. The defendants argue that commonality is lacking because this class action will encompass a vast number of separate transactions throughout the United States. However, the foregoing issues are common to the class and defendants’ argument will be considered, infra, on the question of whether the common issues predominate over separate issues. The third requirement of typicality of claims and the fourth requirement of adequacy of representation are sometimes considered together. Ungar v. Dunkin’ Donuts of America, Inc., — F. Supp. — (E. D. Pa. 1975), 1975-1 Trade Cases { 60,204 at 65,781. I find that the claim of the plaintiffs as individuals is typical of the claims of the class, especially on the liability issue. 1 further find that the adequate representation requirement is met because the plaintiffs do not have interests antagonistic to the class and their attorney has a nationwide reputation for outstanding competence in this type of litigation.’ 3. The high standing of plaintiffs’ counsel is evident from a review of the following cases: Aronson v. Board of Tr City of Chicago, 372 F. Supp. 1349 (N. D. IIL. 1974), Philadephia Electric Co. v. Anaconda American Brass Co., 47 F. R. D. 557 (E. D. Pa. 1969), and Lindy Brothers Builders, Inc., of Philadelphia v. American Radiator and Standard Sanitary Corp., 341 F. Su lor? (E. B Pa. 1972) vacated on other grounds 487 F. 2d 161 (3d District Court Opinion (9/25/75) AQ In addition to determining whether the four pre- requisites of Fed. R. Civ. P. 23(a) are satisfied it must be determined if the class action is maintainable under the provisions of rule 23(b). Rule 23(b) has~three sub- parts and if one of those subparts is applicable.the matter may proceed as a class action. In the July 8, 1975, Order it was held that the class action could be maintained under all three subparts of rule 23(b). Initially this was done to give the trial court greater flexibility in dealing with an enormous class. However, since money dameges are a substantial element of plaintiffs’ claim and since declaratory and injunctive relief can be awarded in a (b)(3) action, the August 8, 1975, Order was entered to provide that the class action is maintainable only under (b)(3). A similar approach was taken in Ungar u Dunkin’ Donuts of America, Inc., supra: “We agree with Judge VanArtsdalen and Pro- fessor Moore. While there are very significant claims for declaratory and injunctive relief involved in the present case, we believe that the damage aspect is so important that (b)(2) certification would be inappropriate. Declaratory and injunctive relief can be awarded in a (b)(3) action which also carries with it greater safeguards.” In order to find that a class action is maintainable under rule 23(b)(3) the questions of law or fact common to the members of the class must predominate over ques- tions affecting individual class members, and the class action must be a superior method for the fair and efficient resolution of the controversy. Katz v. Carte Blanche Corporation, 496 F. 2d 747 (3d Cir. 1974). It is on these issues that the defendants raise their most serious objec- tions to the class action determination. The contention of the defendants is set forth in their brief as follows: Al0 District Court Opinion (9/25/75) “In summary, if the class action motion is granted this Court at trial will be faced with proof supposedly relating to a nationwide conspiracy between over 570 dealers and two companies, and the question of damages to some 300,000 plaintiffs, no one of whom has purchased more than a small amount of the mil- lions of parts alleged to have been sold at fixed prices, and each of whom has had his repairs done in a different labor market.” Defendants contend that the question of damages for each individual class member is different in every case, and, therefore, the individual damage issues predominate over the common liability issue. Defendants further contend that the class action is not a superior method for resolving this dispute. The most appropriate way to proceed in this case is to bifurcate the issues of liability and damages. Discovery on damages would be stayed pending a jury determination on liability. Of course, if the defendants prevail on the liability issue the case would terminate. If the plaintiffs prevail, then the court would direct the plaintiffs to submit proposals for the expeditious resolution of the damage issues. Obviously, the court is not going to hold 300,000 separate jury trials to determine the damages for each member of the class. What the court has in mind is that the plaintiffs should be given an opportunity to develop a method of proving damages which satisfies constitutional and procedural safeguards and still permits the efficient use of court time. For example, it may be possible to utilize a Master to calculate damages of indi- vidual class members. Connecticut Importing Co. v. Frankfort Distilleries, Inc., 42 F. Supp. 225, 226-27 (D. Conn. 1940). Also, plaintiffs may be able to utilize expert District Court Opinion (9/25/75) All testimony, statistical computations and computer analysis to simplify the proof of damages. In any event, the court has the right to decertify the class following a determina- tion of liability against the defendants if the plaintiffs are unable to develop a method of proving damages which will permit the trial to proceed in an efficient manner. The use of bifurcated trials in antitrust cases has been approved in Ungar v. Dunkin’ Donuts of America, Inc., supra, and In re: Master Key Antitrust Litigation, — F. Supp. — (D. Conn. 1975) 1975-1 Trade Cases { 60,377. In 3B Moore’s Federal Practice § 23.45[2] at page 23-758 it states: “The most frequently recurrent types of suits brought under (b)(3) are private treble-damage antitrust suits, and actions based on various types of securities frauds. In both series of cases, courts as a rule approach the problem of predominance from the point of view of the severability of the issues of lia- bility and damages—whether the asserted statutory violations can be effectively adjudicated in a class proceeding independent from the proceeding in which individual damages would be assessed. Here the defendants argument against class action cer- tification is focused primarily on the problems of proving 4. 4 Wigmore, Evidence § 1230 (Chadbourn rev. 1972) states: e a fact could be ascertained only by the inspection of RP number of documents made up of very numerous detailed statements—as, the net balance resulting from a year’s vouchers of a treasurer or a year’s accounts in a bank ledger— it is obvious that it would often be practically out of the ques- tion to apply the present principle by requiring the aes om of the entire mass of documents and entries to be peg y the jury or read aloud to them. The convenience of trials de- mands that other evidence be allowed to be offered, in | shape of the testimony of a competent witness who has perus the entire mass and will state summarily the net result. Such a practice is well established to be proper. Al2 District Court Opinion (9/25/75) damages. Therefore, I find that questions of law or fact common to the members of the class predominate on the issue of liability, and in the event liability is found against the defendant, a further determination will be made as to the continuation of the class action on the damage issue. In determining whether the class action is a superior procedure for resolving the controversy, other possible procedures must be examined. The possibility of utilizing a test case, as was done in Katz v. Carte Blanche Corpora- tion, supra, has been explored with counsel for plaintiffs and defendants. The case sub judice does not lend itself to test case treatment because the defendants insist on the protection against one-way intervention. Also, a nationwide conspiracy is alleged and to proceed on a test case involving plaintiffs who reside in the Eastern District of Pennsylvania may not necessarily encompass proof of a nationwide conspiracy. There does not seem to be any unfairness in proceed- ing as suggested above. Unlike Katz v. Carte Blanche Corporation, supra, the defendants and their dealers should not be affected by a failure to pay repair bills, and the defendants have not raised that argument. In regard to efficiency, it would seem that a denial of the class action would be efficient in the sense of clearing the docket of this court, but that may. result in a multitude of separate suits across the country. On the other hand, it is in the public interest to discourage price fixing through private antitrust litigation. In a case sustaining a national class action, involving anticompetitive practices with respect to library books, it was held that: “Upholding the national class action will facilitate private antitrust litigation and will discourage future [price fixing] conspiracy violations.” State of Illinois v. Harper and Row Publishers, Inc., 301 F. Supp. 484, 493 (N. D. Ill. 1969). District Court Opinion (9/25/75) A13 As a ground for denying class action status defendants assert that there is no pending action by the United States on the antitrust issues and that this is a factor which leads to the conclusion that class treatment is inappro- priate. On this point, 3B Moore's Federal Practice { 23.45[2] at page 23-671 states: “Where a private plaintiff elects to press a claim without the benefit of a previous investigation—and victory—by federal authorities, the genuine existence of a class of parties allegedly injured should be clearly shown. The matter of predominance of common questions in these cases is, however, likely to be less troublesome than other management problems, as the occasions will probably be rare where a private party seeks to represent a highly diverse group which was not subject to relatively uniform treatment. Where the claim to class status is more than colorable, courts have properly tended to grant that status, while stress- ing that the ruling can be modified, and making full use of techniques available to streamline the litiga- tion.” Furthermore, there is no pending litigation involving the issues sub judice, and the concentration of litigation in the Eastern District of Pennsylvania is as convenient as anywhere considering the proximity of the defendants’ main offices, the residences of the plaintiffs and the fact that Philadelphia counsel for both plaintiffs and defendants have expended considerable time in becoming familiar with the issues in this case. Considering all of the fore- going, the court finds that a class action proceeding, at least on the liability issue, is superior to other possible methods for resolving the controversy. We now turn our attention to defendants’ motion for authorization pursuant to 28 U. S. C. § 1292(b) for an Al4 District Court Opinion (9/25/75) interlocutory appeal. An affirmative class action deter- mination is not a final order and, therefore, is not appeal- able under 28 U. S. C. § 1291. Katz v. Carte Blanche Corporation, »upra. While the grant of class action treat- ment is not reviewable under Fed. R. Civ. P. 54(b), it may be reviewable by mandamus if the District Court has acted outside its jurisdiction or disregards procedural safeguards. Assuming this court has acted within its jurisdiction and complied with the requisite procedure, then the grant of class action treatment under rule 23(b) (3) is reviewable only pursuant to 28 U. S. C. § 1292(b). As stated in Katz v. Carte Blanche Corporation, supra, at page 752: “Thus if there is any route open for the interlocutory review of the grant of class action treatment under rule 23(b)(3) in this circuit, it is only pursuant to 28 U.S. C. § 1292(b).” Therefore, the question becomes should the case sub judice be certified for appeal under 1292(b). The statute sets forth the criteria to be considered by the District Court in exercising discretion to grant a § 1292(b) cer- tification. There must be “. . . 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 . . . .” The plaintiffs in resisting 1292(b) cer- tification quote from the Katz case as follows: “A controlling question of law must encompass at the very least every order which, if erroneous, would be reversible error on final appeal.” (496 F. 2d 747 at 755) However, in the same paragraph which contains the above- quoted sentence, Judge Gibbons rhetorically asks: District Court Opinion (9/25/75) Al5 “What remains is the question whether in order for one question to be ‘controlling’ must it be one which if decided erroneously would lead to a reversal on appeal?” In answering this rhetorical question Judge Gibbons stated: “The key consideration is not whether the order in- volves the exercise of discretion, but whether it truly implicates the policies favoring interlocutory appeals. The determination of what orders are properly re- viewable under § 1292(b) must be made by a prac- tical application of those policies, not by a mechanical application of labels such as ‘discretionary’ or ‘non- discretionary. Those policies, both before and since the enactment of § 1292(b) have included the avoid- ance of harm to a party pendente lite from a possible erroneous interlocutory order and the avoidance of possibly wasted trial time and litigation expense.” From a practical standpoint I think the grant of class action status is of tremendous import to the defendants as well as to the class. There is considerable economic significance to the individual plaintiffs since they have agreed to underwrite the cost of notice to the 300,000 members of the class.> Therefore, the troublesome ques- tion in certifying the class involves the problems antici- pated in proving damages on behalf of 300,000 separate class members. This argument was the basic contention 5. At oral ent on plaintiffs’ motion to grant class action status, sleiattl’ counsel edvend the court that the names and ad- dresses of the owners of Mercedes-Benz automobiles for the years in question could be obtained from the Polk Company and that the proposed class was identifiable by name and address from such records. The court was impressed with the argument that the pe class could be totally identified and that plaintiffs are ing and able to pay for the cost of giving notice. A16 District Court Opinion (9/25/75) made by the defendants to resist the certification of the class. The parties should not be subjected to the trial of an antitrust matter involving a class of 300,000 members if it is the judgment of the Third Circuit Court of Appeals that anticipated problems in proving damages render the certification inappropriate. Considering that question the district court has decided the problem can best be ap- proached by bifurcating the issues of liability and damages. However, there is room for a substantial difference of opinion on that question. Some courts have rejected class action certification on the ground that a class of this type is unmanageable. Ralston v. Volkswagenwerk, A. G., 61 F. R. D. 427 (W. D. Mo. 1973); Boshes v. General Motors Corporation, 59 F, R. D. 589 (N. D. Ill. 1973). Another instance where the huge size of a class has been a sig- nificant factor in holding a proposed class action to be unmanageable is Hackett v. General Host Corp., 455 F. 2d 618 (3d Cir. 1972). On the other hand, numerous cases hold that sheer size of a class does not defeat the superior- ity of a class action. In re: Master Key Antitrust Litiga- tion, supra. Finally, it appears that if this case is appealed imme- diately the resolution of the dispute may be enhanced. If it is determined on appeal that this case is not suitable for class action treatment, the plaintiffs may elect not to pursue their remedies with the same vigor they would use if they were named class representatives. Even if they did, the scope of the proceedings would be substan- tially narrowed. On the other hand, if the grant of class action treatment is upheld and the court’s comments on resolving the damage issue approved, the chances for settlement will be enhanced if defendants’ counsel become convinced, following discovery, that the plaintiffs’ chances of proving liability are good. In any event, it appears to the trial court that the certification of the class is a close District Court Opinion (9/25/75) Al7 question of tremendous signific.uce to the parties and that it would be helpful for the appellate court to review this decision. In certifying this appeal I have relied on the tests established in Katz, supra, especially the state- ment at 496 F. 2d 756 where it was held: “Commentators on the rule 23 amendments sup- port the view that appeals certified pursuant to § 1292(b) are appropriate for testing whether suit- ability of class action treatment has been correctly determined .. . . As the foregoing discussion indicates, we agree with that view.” For the foregoing reasons, I certified the class action deter- mination for appeal pursuant to 28 U. S. C. § 1292(b). Epwarp N. CAHN Edward N. Cahn, J. Al8 Court of Appeals Opinion (7/22/76) UNITED STATES COURT OF APPEALS For THE Tuirp Circuir No. 75-2195 JULES LINK and SOLOMON KATZ, on behalf of themselves and all others similarly situated, Appellees v. MERCEDES-BENZ OF NORTH AMERICA, INC., AND DAIMLER-BENZ AKTIENGESELLSCHAFT, Appellants APPEAL FROM THE UNITED STATES District COURT FOR THE EASTERN DisTRICT OF PENNSYLVANIA (D. C. Civil No. 74-771) Argued April 22, 1976 Before: ALDISERT, FORMAN and Wels, Circuit Judges. Robert J. Spiegel, Esq. Spencer Ervin, Jr., Esq. Wilbur Bourne Ruthrauff, Esq. Gratz, Tate, Spiegel, Ervin & Ruthrauff 1900 Two Girard Plaza Philadelphia, Pa. 19102 Attorneys for Appellants Court of Appeals Opinion (7/22/76) Al19 Harold E. Kohn, Esq. Stuart H. Savett, Esq. H. Kenneth Kudon, Esq. Cecily A. Waterman, Esq. Kohn, Savett, Marion & Graf, P. C. 1214 IVB Building 1700 Market Street Philadelphia, Pa. 19103 Attorneys for Appellees OPINION OF THE COURT. (Filed July 22, 1976) Wels, Circuit Judge. Whether an antitrust action with potentially 300,000 claimants is manageable as a class action is the question directed to us in this § 1292(b) appeal. We decline to answer on the ground that the matter is one entrusted to the discretion of the district court. A second query asks whether there may be separate juries utilized during the liability and damage phases of a bifurcated trial. In the absence of a definitive order on that subject by the district court, the inquiry is essentially a request tor an advisory opinion, which we may not honor. Plaintiffs Link and Katz owned Mercedes automobiles which were repaired at various times by authorized dealers. Believing the costs to be excessive, plaintiffs filed this suit under the Sherman and Clayton Acts alleging a conspiracy to fix prices. They requested a class action certification and sought injunctive relief as well as treble damages and attorneys fees. The plaintiffs contend that defendant Daimler-Benz A. G., the parent corporation located in West Germany, A20 Court of Appeals Opinion (7/22/76) and an American subsidiary, Mercedes-Benz of North America, conspired with Mercedes dealers in the United States to maintain high prices for nonwarranty repairs. It is alleged that there was an illegal agreement to base repair rates on artificially-maintained prices of parts and flat labor repair times set out in the manufacturer's manual. Pursuant to Fed. PR. Civ. P. 23(b)(3), the district court certified the plaintiff class, consisting of some 300,000 persons in the United States who had Mercedes cars repaired during the four years in question." The court also stated two questions for appeal under 28 U. S. C. § 1292(b): A. Whether it is proper to certify a class of approxi- mately 300,000 members where the proof of dam- ages will vary for each member of the class; B. Whether there can be a bifurcated trial in this case of liability and damages with separate juries for each segment of the case. A panel of this court allowed the appeal, and two weeks later the district court filed its “Memorandum Opin- ion” explaining the reasons for its belief that immediate appellate review was indicated. We have held that a grant or denial of class action certification is not a final order and, hence, not appealable under our general jurisdictional statute, 28 U. S. C. § 1291. Kramer ». Scientific Control Corp., — F. 2d — (Nos. 75-1673, 75-1849, 3d Cir. April 20, 1976); Hackett v. Gen- eral Host Corporation, 455 F. 2d 618 (3d Cir.), cert. 1. The court's original order described the class “. . . all per- by sons, firms or corporations who have had nonwarranty auto performed on Mercedes-Benz automobiles, owned or | them, by factory authorized Mercedes dealers, during the period March 27, 1970 to March 27, 1974.” But this “definition” was later amended by the deletion of the phrase “factory authorized.” Court of Appeals Opinion (7/22/76) A21 denied, 407 U. S. 925 (1972). However, an interlocutory order of this nature may qualify for accelerated appeal under 28 U. S. C. § 1292(b): “When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a con- trolling question of law as to which there is substantial ground for difference of opinion and that an imme- diate 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 to be taken from such order. . . .” This Court does not follow a policy of freely accepting an appeal from the grant of a class action certification where such action is grounded in the discretionary power of the district court. We have taken the position that “[t]o qualify for interlocutory review in this circuit, a class certification decision must be attended by special factors which take it outside the ambit of the general rule. Katz v. Carte Blanche Corp., 496 F. 2d 747, 756 (3d Cir.), cert. denied, 419 U. S. 885 (1974).” Kramer v. Scientific Con- trol Corp., supra, slip at 4; Ungar v. Dunkin’ Donuts of America, Inc., 531 F. 2d 1211, 1213 (3d Cir.), petition for cert. filed, 44 U. S. L. W. 3645 (U. S. Apr. 10, 1976). We recognize that class action determination has sig- nificant, practical effects on the litigation and an aggrieved party may have a very real interest in securing early appel- late review. But the same considerations apply to many other types of interlocutory orders and we cannot sanction an erosion of the prohibition against “piecemeal” appellate review. Our constantly increasing caseload reinforces the other more philosophical reasons for that policy. A22 Court of Appeals Opinion (7/22/76) Further, as we noted in Johnson v. Alldredge, 488 F. 2d 820 (3d Cir. 1973), cert. denied, 419 U. S. 882 (1974), 28 U.S. C. § 1292(b) is not designed for review of factual matters but addresses itself to a “controlling question of law.” In the cases which we have considered and reversed class action certification, there were other overriding legal issues: e.g., Ungar v. Dunkin’ Donuts, supra, (“individual coercion” and tying arrangements ); Katz v. Carte Blanche, supra, (superiority of test case in Trust in Lending con- text); Kauffman v. Dreyfus Fund, Inc., 434 F. 2d 727 (3d Cir. 1970), cert. denied, 401 U. S. 974 (1971), (eligibility of class representative). Because Rule 23(c) provides that the district court’s determination to permit a class action “may be conditional, and may be altered or amended before the decision on the merits,” that determination, in and of itself, does not present a “controlling question of law” to which this court should be hospitable under § 1292. If the district court has qualms about determining a class, because it has a serious question whether it is “apply[ing] the correct criteria to the facts of the case,” Katz v. Carte Blanche Corp., 496 F. 2d at 756, (a) it should hesitate de- termining the class until reasonably assured of the correct- ness of its ruling and (b) it should not certify for § 1292(b) consideration without stating persuasive reasons why the particular class action question is so unusual as to demand the intervention of an appellate court. In affording immediate appellate review of “controlling ques- tions of law,” § 1292(b) was not designed to substitute wholesale appellate certainty for trial court uncertainty under circumstances where, as here, the Rule gives broad discretion to the district court to revise its class action determination at any time prior to the decision on the merits. One other observation is in order. Section 1292(b) is not intended to grant the appellate courts power to give Court of Appeals Opinion (7/22/76) A23 advice on speculative matters. While counsel and the district court might believe it helpful to have the appel- late court’s view on proposed alternate courses of action, our jurisdiction extends only to orders of the district court. These orders must be definitive, effective, and in a posture capable of affirmance or reversal. Requesting that the Court of Appeals choose from a number of alternatives submitted is not the type of appeal envisioned by § 1292(b). With these concepts in mind, we turn to an analysis of the case at hand. The district court’s memorandum discusses the troublesome problems anticipated in prov- ing the damages of 300,000 separate class members and ~ notes that a number of courts have held a class of that size unmanageable. See Ralston v. Volkswagenwerk A. G., 61 F. R. D. 427 (W. D. Mo. 1973), Boshes v. General Motors Corp., 59 F. R. D. 589 (N. D. Ill. 1973). Contrary authority is also cited for the position that sheer size does not defeat the superiority of a class action. In re: Master Key Antitrust Litigation, M. D. L. Docket No. 45 (D. Conn., filed May 27, 1975), 1975-1 Trade Cases { 60,377. However, earlier in the memorandum, the judge stated: “, .. in the event liability is found against the defend- ant, a further determination will be made as to the continuation of the class action on the damage issue.” The district court therefore has limited the scope of its decision by ordering that there will be: (1) a bifurcated trial on liability and damages, and (2) a re-examination of class certification before the damage phase begins. We have some doubt that the anticipated difficulties of proving damages on behalf of the large class are actually before us. In any event, we conclude that the issue is not one which this Court should decide on interlocutory review. A24 Court of Appeals Opinion (7/22/76) It is obvious that the district court’s concern—a justi- fiable and serious one—is with manageability. This is a practical problem, and primarily a factual one with which a district court generally has a greater familiarity and expertise than does a court of appeals. Consequently, it is an area in which the trial court must of necessity be granted a wide range of discretion. The housekeeping problems involved in notifying an extremely large group of people, reviewing replies, answering inquiries, and processing of claims as well as the effect on other cases on the court’s docket, are all matters which can best be evaluated by the man on the scene. These are often difficult judgments and that fact has not been overlooked in the rules. | Rule 23(c)(1) provides that the determination must be made “as soon as practicable.” That does not neces- sarily mean at the onset of the litigation. The designation should be made at a time when the trial court has had adequate opportunity to acquaint itself with the case and the complexities likely to be encountered in its disposition. Moreover, as we noted earlier, a class certification, once made, is not irrevocable. The rule in a pragmatic approach states that “an order under this section may be condi- tional, and may be altered or amended before the decision on the merits.” Thus, after a determination of liability, the district court is free to decertify the class for a proper reason, and unmanageability would be such a circumstance. The district court also has the option of creating sub- classes if that appears helpful in handling the litigation. In short, the rule is flexible and recognizes that whether the case can be managed must be left to the informed discretion of the trial court which will manage it. There are no circumstances in this case which make manage- ability a controlling question of law, and we therefore will not answer the question submitted. Court of Appeals Opinion (7/22/76) A25 The second question certified by the district court is the propriety of having separate juries for each segment of the bifurcated trial. The court, however, entered no order directing separate juries and whether it will is a matter of pure speculation at this juncture. As the memo- randum points out, the parties may be able to develop a method of proving damages which both satisfies legal standards and permits the efficient use of court time. The utilization of a master is a possibility. A jury waiver would not be unexpected in the damage phase of a trial where the evidence consisted only of the mechanical application of mathematical formulations. In short, the district court has asked for an advisory opinion on an interesting legal proposition but one which may never be invoked in this case. We must decline the invitation. Accordingly, we remand this case to the district court. A26 Court of Appeals Judgment (7/22/76) UNITED STATES COURT OF APPEALS For THE Tuirp CrrcuiT No. 75-2195 JULES LINK and SOLOMON KATZ, on behalf of themselves and all others similarly situated v. MERCEDES-BENZ OF NORTH AMERICA, INC. and DAIMLER-BENZ A. G., Appellants (D. C. Civil Action No. 74-771) On APPEAL FROM THE UNITED STATES Districr Court FOR THE EASTERN DISTRICT OF PENNSYLVANIA Present: ALDISERT, FORMAN and Wels, Circuit Judges JUDGMENT. This cause came on to be heard on the record from the United States District Court for the Eastern District of Pennsylvania and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this Court that the cause is remanded to the district court in accordance with the opinion of this Court. ATTEST: Tuomas F. Quinn Clerk July 22, 1976 Court of Appeals Opinion (2/11/77) A27 UNITED STATES COURT OF APPEALS For tHe Turep Crmcuir No. 75-2195 JULES LINK and SOLOMON KATZ, on behalf of themselves and all others similarly situated, Appellees Vv. MERCEDES-BENZ OF NORTH AMERICA, INC., AND DAIMLER-BENZ AKTIENGESELLSCHAFT, Appellants AppgaL From tHe Unirep States District Court ror THE Eastern District or PENNSYLVANIA (D.C. Civil No. 74-771) Argued April 22, 1976 Before: AupisErT, Forman and Wels, Circuit Judges. Reargued November 4, 1976 Before: Srrrz, Chief Judge, Forman, Van Dusen, ALpIsERT, Apams, Gresons, Rosenn, Hunrer, Weis and GartH, Circuit Judges. Robert J. Spiegel, Esq. Harold E. Kohn, Esq. Spencer Ervin, Jr., Esq. Stuart H. Savett, Esq. Wilbur Bourne Ruthrauff, §H. Kenneth Kudon, Esq. Esq. Carole A. Broderick, Esq. Gratz, Tate, Spiegel, Cecily A. Waterman, Esq. Ervin & Ruthrauff Kohn, Savett, Marion & 1900 Two Girard Plaza Graf, P.C. Philadelphia, Pa. 19102 1214 IVB Building Attorneys for 1700 Market Street Appellants Philadelphia, Pa. 19103 Attorneys for Appellees A28 Court of Appeals Opinion (2/11/77) OPINION OF THE COURT (Filed February 11, 1977) Weis, Circuit Judge. Whether an antitrust action with potentially 300,000 claimants is manageable as a class action is the question directed to us in this §1292(b) appeal. We decline to answer on the ground that the matter is one of fact sub- ject to determination by the district court. A second query © asks whether there may be separate juries utilized during the liability and damage phases of a bifurcated trial. In the absence of a definitive order on that subject by the district court, the inquiry is essentially a request for an advisory opinion, which we may not honor. Plaintiffs Link and Katz owned Mercedes automobiles which were repaired at various times by authorized dealers. Believing the costs to be excessive, plaintiffs filed this suit under the Sherman and Clayton Acts alleging a con- spiracy to fix prices. They requested a class action cer- tification and sought injunctive relief as well as treble damages and attorneys’ fees. : The plaintiffs contend that defendant Daimler-Benz A.G., the parent corporation located in West Germany, and an American subsidiary, Mercedes-Benz of North America, conspired with Mercedes dealers in the United States to maintain high prices for nonwarranty repairs. It is alleged that there was an illegal agreement to base repair rates on artificially-maintained prices of parts and flat labor repair times set out in the manufacturer’s manual. Pursuant to Fed. R. Civ. P. 23(b) (3), the district court certified the plaintiff class, consisting of some 300,000 per- sons in the United States who had Mercedes cars repaired during the four years in question. The court also listed as controlling questions of law under 28 U.S.C. § 1292(b): 1. The court's original order described the class: “. . . all per- sons, firms or corporations who have had nonwarranty auto repairs Court of Appeals Opinion (2/11/77) A29 A. Whether it is proper to certify a class of approx- imately 300,000 members where the proof of dam- ages will vary for each member of the class; B. Whether there can be a bifurcated trial in this case of liability and damages with separate juries for each segment of the case. A panel of this court allowed the appeal, and two weeks later the district court filed its ‘‘Memorandum Opinion’’ explaining the reasons for its belief that immediate appel- late review was indicated. We have held that a grant or denial of class action certification is not a final order and, hence, not appealable under our general jurisdictional statute, 28 U.S.C. § 1291. Kramer v. Scientific Control Corp., 534 F.2d 1085 (3d Cir. 1976) ; Hackett v. General Host Corporation, 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925 (1972). However, an interlocutory order of this nature may qualify for ac- celerated appeal under 28 U.S.C. § 1292(b): ‘*When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a con- trolling question of law as to which there is substan- tial ground for difference of opinion and that an im- mediate 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 to be taken from such order... .”’ This Court does not follow a policy of freely accepting an appeal from the grant of a class action certification 1. (Cont'd. ) performed on Mercedes-Benz automobiles, owned or leased by them, by factory authorized Mercedes dealers, during the period March 27, 1970 to March 27, 1974.” But this “definition” was later amended by the deletion of the phrase “factory authorized.” A30 Court of Appeals Opinion (2/11/77) where such action is grounded in the discretionary power of the district court. We have taken the position that ‘*[t]o qualify for interlocutory review in this circuit, a class certification decision must be attended by special fac- tors which take it outside the ambit of the general rule. Katz v. Carte Blanche Corp., 496 F.2d 747, 756 (3d Cir.), cert. denied, 419 U.S. 885 (1974).’’ Kramer v. Scientific Control Corp., 535 F.2d at 1087; Ungar v. Dunkin’ Donuts of America, Inc., 531 F.2d 1211, 1213 (3d Cir.), cert. denied, 45 U.S.L.W. 3250 (U.S. Oct. 4, 1976). We recognize that class action determination has sig- nificant, practical effects on the litigation and an aggrieved party may have a very real interest in securing early ap- pellate review. But the same considerations apply to many other types of interlocutory orders and we cannot sanction an erosion of the prohibition against ‘‘piecemeal’’ appel- late review. Our constantly increasing caseload? rein- forces the other more philosophical reasons for that policy. Further, as we noted in Johnson v. Alldredge, 488 F.2d 820 (3d Cir. 1973), cert. denied, 419 U.S. 882 (1974), 28 U.S.C. § 1292(b) is not designed for review of factual matters but addresses itself to a ‘‘controlling question of law.’’ In the cases where we have considered and re- versed class action certification, there were other over- riding legal issues: e.g., Ungar v. Dunkin’ Donuts, supra, (‘individual coercion’’ and tying arrangements) ; Katz v. Carte Blanche, supra, (superiority of test case in Truth in Lending context) ; Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727 (3d Cir. 1970), cert. denied, 401 U.S. 974 (1971), (eligibility of class representative). Because Rule 23(c) provides that the district court’s determination to permit a class action ‘‘may be conditional, and may be altered or amended before the decision on the merits,’’ that deter- mination, in and of itself, does not present a ‘‘controlling 2. In eight years, 1969 to 1976 inclusive, the filings in our court have more doubled, although the number of authorized judge- ships has remained the same. On a national average the experience of the other courts of appeals has been similar. Court of Appeals Opinion (2/11/77) A31 question of law’’ to which this court should be hospitable under $1292(b). If the district court has qualms about determining a class, because it has a serious question whether it is ‘‘apply[ing] the correct criteria to the facts of the case,’’ Katz v. Carte Blanche Corp., 496 F.2d at 756, (a) it should hesitate in determining the class until reasonably assured of the correctness of its ruling, and (b) it should not certify for 4 1292(b) consideration with- out stating persuasive reasons why the particular class action question is so unusual as to demand the intervention of an appellate court. In affording immediate appellate review of ‘‘controlling questions of law,’’ §1292(b) was not designed to substitute wholesale appellate certainty for trial court uncertainty under circumstances where, as here, the Rule gives broad discretion to the district court to revise its class action determination at any time prior to the decision on the merits, One other observation is in order. Section 1292(b) is not intended to grant the appellate courts power to give advice on speculative matters. While counsel and the dis- trict court might believe it helpful to have the appellate court’s view on proposed alternate courses of action, our jurisdiction extends only to orders of the district court. These orders must be definitive, effective, and in a posture capable of affirmance or reversal. Requesting that the Court of Appeals choose from a number of alternatives submitted is not the type of appeal envisioned by § 1292(b). With these concepts in mind, we turn to an analysis of the case at hand. The district court’s memorandum dis- cusses the troublesome problems anticipated in proving the damages of 300,000 separate class members and notes that a number of courts have held a class of that size unman- ageable. See Ralston v. Volkswagenwerk A.G., 61 F.R.D. 427 (W.D. Mo. 1973), Boshes v. General Motors Corp., 59 F.R.D. 589 (N.D. Ill. 1973). Contrary authority is also cited for the position that sheer size does not defeat the superiority of a class action. In re: Master Key Antitrust A32 Court of Appeals Opinion (2/11/77) Litigation, M.D.L. Docket No. 45 (D. Conn., filed May 27, 1975), 1975-1 Trade Cases J 60,377. However, earlier in the memorandum, the judge stated: ‘¢... in the event liability is found against the defend- ant, a further determination will be made as to the continuation of the class action on the damage issue.”’ The district court therefore viewed the scope of its order as limited and contingent. It contemplated—but did not order: (1) a bifurcated trial on liability, and (2) a re- examination of class certification before the damage phase begins. We have some doubt that the anticipated difficulties of proving damages on behalf of the large class are actually before us. The district court mused that counsel might be able to devise methods of solving the problem before that time arrived, and listed several possibilities. In any event, we conclude that the issue is not one which this court should decide on interlocutory review. It is obvious that the district court’s concern—a jus- tifiable and serious one—is with manageability. This is a practical problem, and primarily a factual one with which a district court generally has a greater familiarity and expertise than does a court of appeals. Consequently, it is an area in which the trial court must of necessity be granted a wide range of discretion. The housekeeping problems involved in notifying an extremely large group of people, reviewing replies, answering inquiries, and processing of claims as well as the effect on other cases on the court’s docket, are all matters which can best be eval- uated by the man on the scene. These are often difficult judgments and that fact has not been overlooked in the rules. Rule 23(c)(1) provides that the determination must be made ‘‘as soon as practicable.’’ That does not necessarily mean at the onset of the litigation. The designation should es ee ee - - Court of Appeals Opinion (2/11/77) A33 be made at a time when the trial court has had adequate opportunity to acquaint itself with the case and the com- plexities likely to be encountered in its disposition. More- over, as we noted earlier, a class certification, once made, ig not irrevocable. The rule in a pragmatic approach states that ‘‘an order under this section may be conditional, and may be altered or amended before the decision on the merits.’’ Thus, after a determination of liability, the dis- trict court is free to decertify the class for a proper rea- son,® and unmanageability would be such a circumstance. The district court also has the option of creating sub- classes if that appears helpful in handling the litigation. In short, the rule is flexible and recognizes that whether the case can be managed must be left to the informed dis- cretion of the trial court which will manage it. There are no circumstances in this case which make manageability a controlling question of law, and we therefore will not answer the question submitted. The second question certified by the district court is the propriety of having separate juries for each segment of the bifurcated trial. The court, however, entered no »rder directing separate juries and whether it will is a matter of pure speculation at this juncture. As the memorandum points out, the parties may be able to develop a method of proving damages which both satisfies legal standards and permits the efficient use of court time. The utilization of a master is a possibility. A jury waiver would not be un- expected in the damage phase of a trial where the evidence consisted only of the mechanical application of mathe- matical formulations. A consideration important to our decision is that the case is in a preliminary stage. At the time the appeal was taken, the defendants had not yet filed their answers, the early skirmishing having been confined to discovery on jurisdictional issues. Those matters have since been re- solved against the defendants, and the parties are now in 3. See 3B Moore’s Feperat Practice { 23.01[11-4], { 23.65. A34 Court of Appeals Opinion (2/11/77) a position to prepare the case on the merits. We believe that further development of the facts will aid the trial court in choosing among the [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1493%3A1. Public record. Not legal advice.