# Opposition — Young v. United States District Court for the Northern District of California

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition
- **Published:** January 1, 1977
- **Citation:** 434 U.S. 829

## Text

IN THE

Supreme Court of the Unit

OcTOBER TERM, 1976

No. 76-1709

ARTHUR Younc & Company and Ot1s CHANDLER,
Petitioners,

vs.

Unitep States District Court, NORTHERN DISTRICT OF
CaLIFoRNIA, HonoraBLeE WiLtiamM T. SWEIGERT,
United States SENIOR JUDGE PRESIDING;
ALBERT A. KAUFMAN; JOE EBNER; JAMES
HoweENstTINE; and THe 5-H INVESTMENT
CLUB,

Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION TO
PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals

for the Ninth Circuit

FREDERICK P. FurRTH,

THomaS R. FAHRNER,

Rosert C. CaGEn,

FurtH, FAHRNER & WONG,
Suite 1330, Russ Building,

235 Montgomery Street,
San Francisco, California 94104,

RicHarp G. WILSON,
ALLEN, WILSON, GEORGE
& Epemon, INc.,

3728 Atlantic Avenue,
Long Beach, California 90807,

Counsel for Respondents.

PERNAU - WALSH PRINTING CO. - 562 MISSION STREET - SAN FRANCISCO, CA 94108

Page
IEE 6 66 0.60. 06040 Ke EE BREE E ON Abo ekeorcusene 3
ER SES FD Oe ee Se OE Se 3
a cad 5 aaron técetebtaebasadeseees 3
eS. te og ene acckineaseseneees +
ed nd ceed Cee ka eebeneaesceen teen 4
er ee Cl oe oko decdeeetweeehketsnes +
I PSE OEE PEE PE 6
ie Ce EY SUED “occ cccccecucccceestcccases 7
ies ab Sued s henbdabtb ingntad+ 0Saeds¥6s nen saks< nox 10
The controversy here is not ripe for review by the
I icp deed cctedhavgcietosct ous eee Uda de 10

The class action certification order does not abrogate
petitioners’ Seventh Amendment right to a jury trial 14

The district court’s bifureation of issues in the class
action order does not mean that the court has recog-

nized the existence of non-common issues ........... 19
Uncontradicted authority sanctions the “split trial” de-
vice ordered here by the district court .............. 22

There is nothing in the class action certification which
precludes the same jury from deciding both the com-

mon issues and the individual issues ............... 34
The court of appeals did not adopt an incorrect standard
for review of the district court’s orders ............. 37

Table of Authorities Cited

Cases Pages
Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972) 32
American Construction Co. v. Jacksonville, T. & K. W. R.

See, Se Sete NEE IO d.din c:nndenes 04uscenneecndendes 13
Cereal Byproducts Co. v. Hall, 16 Ill App.2d 79, 147 N.E.

OR Se BED idence es ctedpeeseossentdekisntbiasbiace 33
Escott v. Bar Chris Construction Corp., 283 F.Supp. 643

(S.D.N.Y. 1968) ...... . cebensdackeséeesbenkethaitegs es 16
Gasoline Products Co. v. Champlin Refining, 283 U.S. 494

CD awnce'd sevtnuds dee cancodesspauen becéunena 23, 27, 28, 29
Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S.

OE GRE a cdc oe nnedneieetseeneeshantatasass sebavws 33 '
Hosie v. Chicago Western Railway Company, 282 F.2d 639

(7th Cir. 1960), cert. den. 365 U.S. 814 ................ 24, 25
In Re Master Key Antitrust Litigation, 528 F.2d 5 (2nd

Ce Sion a 05 bid oe on RRs wh b5 dak Con esd He 6 35
Igenito v. Bermae Corp., 376 F.Supp. 1154 (S.D. N.Y.

SUED... kk 3 cok bakin 65s RRS ES OE eek 31, 32
Link v. Mercedes-Benz of N. Am., Inc., 550 F.2d 860 (3rd

Cir. 1977), cert. den., 45 U.S.u.W. 3762 ............ 27, 28, 35
Matter of Walter Peterson, 253 U.S. 300 (1920) .......... 23
New Haven Inclusion Cases, 399 U.S. 392 (1970) ........ 11,12
O’Donnell v. Watson Bros. Transportation Co., 183 F.Supp.

OTS COLD. TR BOD ccnssconnecccsincchicteukasaccna 26
Rhode v. Hershberger Explorations Inc., 349 F.Supp. 993

C3 3 BPP irr re ee 33
State of Alabama v. Blue Bird Body Co., Inc., 71 F.R.D.

ee re ee ee rae 28

Swofford v. B & W, Inc., 34 F.R.D. 15 (S.D. Tex. 1963),
aff'd 336 F.2d 406 (5th Cir. 1964), cert. denied 379 U.S.
OB 5 ccvscvscpscccnchec gids ad eee 26, 27

TasLe or AUTHORITIES CITED iii

Pages

United Air Lines v. Wiener, 286 F.2d 302 (9th Cir. 1961),
C—O SK OEE EE 29, 33, 34
United States v. Nixon, 418 U.S. 683 (1974) ............ 11, 12

Constitutions

United States Constitution, Seventh Amendment ........

cennbemedhsésbeeedesneseddbeeséeceeked 2, 22, 24, 26, 29, 37, 38
Rules
Federal Rules of Civil Procedure:
EU aeddéendccadésedene teed sudeeecedes 2, 3, 4, 16, 18
i: ocvbcdn dhecdeubesedusencdieseasens 8, 11,19
i icenctiekbbhmhvbebodedens 6bbe0cbacntes 4
iin ied eid a gidihiad ais diaieatheee eeadaen 16
CT 2:1 cu cdidcskdhie duubcdhsteubb0cueus ver 22, 23
SE 24 ibd Sud bbd6 ds 6 Beca¥e 040% 6.00005 ovaceta 4
Securities Exchange Commission Rule 10b-5 ........... 6, 7, 8, 32
United States Supreme Court Rule 20 .................. 10, 11
Statutes
Securities Exchange Act of 1933:

Section 11 (15 U.S.C. Section 77k) ................. 5
Section 12(2) (15 U.S.C. Section 77(12)) ........... 5
Section 17(a) (15 U.S.C. Tiq(a)) .......cccccccccees 5

Securities Exchange Act of 1934, Section 10(b) (15 U.S.C.
PU TUNED waco sccsncscevscccccccvcccccscens 5, 6, 7,8
ee ED oc cccc cactc ceed coevscecesecees 3
de gbtceceeces +

Texts

C. A. Wright, Federal Courts, 1963 Ed., p. 378 .......... 25

Frankel, Some Preliminary Observation Concerning Civil
Die SE, G&S Pek GE, GT CORSE) oes cccccccccccccccccss 18

IN THE

Supreme Court of the United States

OctoBer TERM, 1976

No. 76-1709

ARTHUR YounG & Company and Ot1s CHANDLER,
Petitioners,

vs.

Unitep States District Court, NORTHERN DISTRICT OF
CaLiFoRNIA, HonoraBLeE WiLLiAM T. SWEIGERT,
Unitep States SENIOR JUDGE PRESIDING;
ALBERT A, KAUFMAN; JOE EBNER; JAMES
HOWENSTINE; and THE 5-H INVESTMENT
CLUB

Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION TO
PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals

for the Ninth Circuit

The petitioners, Arthur Young & Company (“Ar-
thur Young”) and Otis Chandler (“Chandler”) seek
review of an order entered on March 4, 1977, pursu-
ant to the unanimous decision of the United States
Court of Appeals for the Ninth Circuit. That order
denied petitioners’ petition for a writ of mandamus

2

or prohibition, which sought to set aside an order
certifying as class actions three closely related se-
curities fraud actions. The class action certification
order was entered on April 21, 1975, by the United

States District Court for the Northern District of —

California.

Petitioners now claim that the class action order
violates their Seventh Amendment right to a jury
trial. This is the basis upon which the petitioners
seek review of the District Court’s class action certi-
fication order, and of the decision of the Court of
Appeals upholding that order.

Respondent respectfully request that the petition
be denied. The petition contains nothing which could
possibly merit the Court’s review of the class action
certification order. The petitioners portray the class
action order as a radical and unusual departure from
the normal order entered in class action securities
cases. On the contrary, the class action order is as
sound, practicable, and time tested as any class action
order is ever likely to be. Indeed, if petitioners’ argu-
ments were to be accepted here, Rule 23 of the Federal
Rules of Civil Procedure would cease to exist except
on paper. |

Petitioners argue that the substantive law and the
Seventh Amendment right to a trial by jury should
not be “twisted” to comport with Rule 23. Respond-
ents agree, although we strenuously disagree that any
of petitioners’ rights have been abrogated. On the
other hand, it is also imperative that the Seventh
Amendment right to a jury trial not be “twisted” and

3

tortured, as petitioners have done here, in a desperate
attempt to avoid the class certification order.

OPINIONS BELOW

The unanimous opinion and order of the United
States Court of Appeals for the Ninth Circuit is re-
ported at 549 F.2d 686. The class action certification
order entered by the United States District Court for
the Northern District of California, not reported, ap-
pears in the appendix attached to the petition at
pages A28 through A32.

JURISDICTION

Petitioners have invoked the provisions of 28 U.S.C.
§ 1254(1) in asserting jurisdiction.

QUESTION PRESENTED

Whether petitioners’ convoluted and untenable in-
terpretation of the Seventh Amendment right to a
jury trial is adequate reason for this Court to review
the class action certification order, which is interlocu-
tory and by its terms subject to modification by the
District Court as the litigation progresses, and which
complies in all respects with Rule 23 as interpreted
by this Court, by the District Court and by the Court
of Appeals.

4

STATUTORY PROVISIONS

Respondents will discuss where applicable the con-
stitutional and statutory provisions which petitioners
invoke in their petition. These provisions are the
Seventh Amendment to the United States Constitu-
tion, the Rules Enabling Act, 28 U.S.C. § 2072, and
Rule 23, Rule 38(a), and Rule 42(h) of the Federal
Rules of Civil Proeedure.

STATEMENT OF THE CASE

The petition relates to three separate but closely
related securities fraud class actions. These actions
are presently pending before the United States Dis-
trict Court for the Northern District of California.
They have been consolidated for trial and have been
certified as class actions. In each of the three suits,
the plaintiffs charge defendants with violations of the
federal securities law. The petitioners here are two of
the defendants in those three actions. The plaintiffs
in each of the three actions all purchased interests in
oil and gas ventures. The three named plaintiffs and
class representatives are Joe Ebner, James How-
enstine, and Albert Kaufman, the real parties in
interest and respondents to the petition. A brief
description of each of the three cases is as follows
below:

1. The Kaufman Action

The complaint in the Kaufman case was filed on
August 14, 1972. Plaintiff Albert A. Kaufman brought
the action on behalf of himself and all investors (a

5

class of approximately 1,215) who purchased interests
in the GeoTek limited partnership oil and gas pro-
grams, against the corporations which sold the limited
partnership interests, certain officers and directors of
the corporations, and the corporations’ independent
outside creditors. Otis Chandler, one of the corpora-
tion’s directors, and Arthur Young & Company, inde-
pendent auditors for the corporation, were named in
the complaint as defendants, and continue to remain
as defendants in the Kaufman action.

The class members purchased interests in five sep-
arate GeoTek limited partnerships, each named for
the year in which it was created:

GeoTek Resources Fund 1969-1, Ltd.
%

” ” 1970-1, ”
” ” ” 1970-2, ”
” ” ” 1971-1, ”
” ” ” 1971-2, ”

Participating interests in each of the GeoTek lim-
ited partnerships were solid pursuant to a registra-
tion statement filed in April, 1969 with the Securi-
ties and Exchange Commission, and declared effective
on September 15, 1969.

The Kaufman plaintiffs charge that the GeoTek
registration statement and prospectus, as periodically
amended, contained material misstatements and omis-
sions, and that the defendants are liable therefor
under Sections 11, 12(2) and 17(a) of the Securities
Act of 1933 (15 U.S.C. §§ 77k, 77(12) and 77q(a)),
and Section 10(b) of the Securities Exchange Act of

6

1934 (15 U.S.C. § 78j(b)), and SEC Rule 10b-5 there-
under. While the Kaufman complaint also pleads
claims for violations of the California Corporate Se-
eurities Law and common law fraud, plaintiffs have
withdrawn these claims. The complaint also alleges
certain oral misrepresentations. These allegations
have likewise been withdrawn. Accordingly, the class
action trial will be limited to the allegations of ma-
terial misstatements and omissions in the GeoTek
registration statement and prospectus, as amended.

2. The Ebner Action

The Ebner action was filed on February 1, 1973,
and was brought on behalf of plaintiff Ebner and all
other investors in one or more of four joint ventures
known as the J. B. Oil Company 1964, 1965, 1966 and
1967 Oil Exploration Programs. A total of 319 per-
sons invested in these four programs. Each investor
received a standardized printed offering circular,
signed a standard-form Oil Exploration Program
Agreement, and received certain financial statements
certified by petitioner Arthur Young, the independent
outside auditor for the programs.

In the fall of 1969, Petroleum 2000 Corporation
made an offer to all investors in the J. B. 1964
through 1967 Programs to exchange shares of its com-
mon stock for the investors’ participation interests in
the programs. [his exchange offer was made by a
printed offering circular distributed to all the inves-
tors. The requisite number of investors accepted the
offer, and from early 1970 to the present, the members

7

of the Ebner class have been shareholders of Petro-
leum 2000 Corporation.

The Ebner complaint charges seven defendants, in-
cluding petitioner Arthur Young and petitioner Chan-
dler, with material misrepresentations and omissions
in the J. B. Oil Program offering circulars, program
agreements and financial statements, and in the offer-
ing circular distributed in connection with the Petro-
leum 2000 Corporation exchange offer. The Hbner
action is based on Section 10(b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5. Although
certain oral misrepresentations are alleged in the com-
plaint, these allegations have been withdrawn by the
plaintiffs.

3. The Howenstine Action

The Howenstine action was filed on May 3, 1974.
Plaintiffs James Howenstine and The 5-H Investment
Club (an unincorporated association) brought the
action in behalf of themselves and all other investors
in a joint venture known as the J. B. Oil Company
1968 Oil Exploration Program. A total of 187 persons
invested in the 1968 Program. Each investor received
a standardized printed offering circular, signed a
standard-form Oil Exploration Program Agreement,
and received a financial statement certified by Arthur
Young, the independent outside auditor for the pro-

gram.
In the fall of 1970 Petroforce Corporation made

an offer to all investors in the J. B. 1968 Program to
exchange shares of its common stock for the investors’

8

participation interests in the program. The exchange
offer was made by a printed circular distributed to all
the investors. The requisite number of investors ac-
cepted the offer, and from early 1971 to the present,
the members of the Howenstine class have been share-
holders of Petroforce Corporation.

The Howenstine complaint charges eight defendants,
including petitioner Arthur Young and petitioner
Chandler, with material misrepresentations and omis-
sions in the J. B. 1968 Program offering circular,
the program agreement, the Arthur Young & Com-
pany financial statement, and in the offering circular
distributed in connection with the Petroforce Cor-
poration exchange offer, in violation of Section 10(b)
of the Securities Exchange Act of 1934, and SEC
Rule 10b-5. No oral misrepresentations are alleged
in the Howenstine complaint.

In the District Court, plaintiffs moved for an order,
pursuant to Rule 23(b)(3) of the Federal Rules of
Civil Procedure, certifying as class actions the Ebner,
Howenstine, and Kaufman actions. Defendants, in-
cluding the petitioners here, raised every conceivable
argument in their vigorous opposition to class certi-
fication. |

Few class action motions have been so thoroughly
serutinized by any court. The parties submitted vol-
uminous briefs and substantial evidenciary materials
in support of their positions. On at least three sep-
arate occasions, lengthy hearings were held before the
District Court, during which the parties had a full
opportunity to present evidence and argument.

9

On April 21, 1975 the District Court entered its
order certifying the Ebner, Howenstine and Kaufman
actions as class actions. Petitioners immediately filed
a petition for a writ of mandamus with the United
States Court of Appeals for the Ninth Circuit, seek-
ing to vacate and set aside the District Court’s class
action certification order. While the petition was
pending before the Court of Appeals, that tribunal
issued an order staying all proceedings before the
District Court.

In the Court of Appeals, all parties were once again
given a full opportunity to brief and orally argue
their positions. On March 4, 1977, the Court of Ap-
peals denied the petition, vacated the stay, and re-
manded the Ebner, Howenstine and Kaufman actions
to the District Court for further proceedings.

Upon remand, some of the parties brought motions
for summary judgment in each of the three class ac-
tions. These motions have been argued, and have been
taken under submission by the District Court. No
date has been set for trial in any of the three actions.
Nor have any class notices been mailed.

By means of the present petition, petitioners once
again seek interlocutory review of a class action order
already scrutinized and re-scrutinized by the District
Court and by the Court of Appeals.

We respectfully request that this Court now refuse
any further review of the class action certification
order entered by the District Court. The order has
already withstood intense judicial analysis by two
Courts. It is simply contrary to all notions of judi-

10

cial efficiency to now apply, while the three cases are
at an interlocutory stage, a third tribunal’s analysis
to an already microscopically examined class action
certification order. Most importantly, the class action
order is entireiy appropriate and does not abrogate
any of petitioners’ rights, Petitioners’ argument to
the contrary should be rejected.

ARGUMENT

THE CONTROVERSY HERE IS NOT RIPE FOR
REVIEW BY THE SUPREME COURT

Judicial efficiency and the need for prompt dis-
position of these cases in the District Court strongly
militates against granting the petition for a writ of
certiorari. Indeed, Rule 20 of the Rules of the Su-
preme Court of the United States compels a denial of
review of the class action certification order at this
time.

The Ebner, Howenstine and Kaufman actions are
still pending before the District Court. Judgment has
not been entered in any of these cases. In fact, no
trial date has even been set in any of the three cases.
Yet the petitioners now request this Court to bypass
the normal appellate procedure.

Rule 20 precludes petitioners from “short-cutting”
the normal appellate procedure, unless they can dem-
onstrate “. . . that the case is of such imperative pub-
lie importance as to justify the deviation from normal
appellate processes and to require immediate settle-

11

ment in this court .. .”* Rule 20 of Rules of the Su-
preme Court of the United States.

Respondents respectfully submit that the petition-
ers have fallen far short of making the showing a
need for immediate review by this Court. Indeed, the
issue here is simply the propriety of an ordinary,
interlocutory class action order entered by a District
Court pursuant to Rule 23(b)(3) of the Federal
Rules of Civil Procedure. Although petitioners have
exerted herculean efforts in an attempt to inject con-
stitutional issues into the certification of the class
action order, the fact remains that the issue here on
appeal is not of “such imperative public importance
as to justify the deviation from normal appellate
processes and to require immediate settlement in this
court.” If petitioners are now permitted to bypass the
normal appellate procedure, this Court’s docket may
weli become inundated with premature appeals alleg-
ing purported “Seventh Amendment issues” each time
a District Court certifies a case as a class action.

The cases in which this Court has permitted an
appeal, before judgment is given in the Court of Ap-
peals, are clearly and unmistakably ones of “impera-
tive public importance”. V.9., See United States v,
Nixon, 418 U.S. 683 (1974), and New Haven Inclu-

‘We recognize that Rule 20 literally speaks to cases “pending
in a court of appeals”. However, the principle underlying the
Rule should apply with at least equal foree to cases still pendi
before the District Court. The policy upon which Rule 20 is b
is to foster judicial efficiency and expediency, and to insure that
the court dockets are not clogged with interlocutory appeals.
These salutary considerations are undeniably present in the
instant case.

12

sion, Cases, 399 U.S. 392 (1970). In both of these
cases, there were issues so important to the entire
nation as to transcend the otherwise strict policy of
rejecting premature appeals. In the Nigon case, for
example, the Supreme Court granted certiorari before
judgment in a criminal case in which seven indict-
ments had been returned against members of the ex-
ecutive branch of the government and the Committee
for the Re-election of the President, and in which
the President of the United States had been named as
an. unindicted co-conspirator. In such a case, there is
an obvious and urgent need for immediate review by
the Supreme Court. In Nivon, the normal functioning
of the executive branch of the government—clearly
of imperative importance to the entire nation—de-
pended upon a speedy disposition of the issues raised
in the petition for certiorari made to the Supreme
Court.

Here, no such factors exist to compel interference
with the normal appellate procedure. The propriety
of the class action order certifying the Ebner, Howen-
stine, and Kaufman actions, is not a burning issue of
“imperative public importance” which eries out for
immediate disposition by this Court. In fact, the is-
sues presented in the petition are of imperative im-
portance primarily to the petitioners, and to no one
else. The petition does nothing to show otherwise.

This Court has long refused to grant certiorari over
interlocutory orders. Except in extraordinary cir-
cumstances, only a final decree will be reviewed by the
Court:

13

“Whether an interlocutory order may be sepa-
rately reviewed by the appellate court in the
progress of the suit, or only after and together
with the final decree, is matter of procedure
rather than of substantial right; and many orders
made in the progress of a suit become quite un-
important by reason of the final result, or of in-
tervening matters. Clearly, therefore, this court
should not issue a writ of certiorari to review a
decree of the circuit court of appeals or appeal
from an interlocutory order, unless it is necessary
to prevent extraordinary inconvenience and em-
barrassment in the conduct of the cause.” Ameri-
can Construction Co. v. Jacksonville, T. & K. W.
R. Co., 148 U.S. 372, 384 (1892).

The same considerations of judicial economy noted
in American Construction are applicable here. The
class action certification order may become “quite un-
important by reason of the final result, or of inter-
vening matters.” If, for example, petitioners prevail
in their defense on the merits before the District
Court, the class action certification order would be of
no concern to the petitioners.

A premature invocation of the appellate process
here would present a grave danger of interfering with
the proceedings now being held before the District
Court. For example, the class action notices have
not yet been mailed to class members. At a recent
status conference held before the District Court, the
petitioners’ attorneys urged the Court to further
stay the mailing of the notices, on the ground that
petitioners are now asking that the Supreme Court

14

review, by means of a writ of certiorari, the propri-
ety of the class action certification order. That peti-
tioners are able, over two and one half years after
these cases were certified as class actions, to point to
possible Supreme Court review of these orders as a
reason for staying the mailing of class notices, can
only result in further delay of cases which have al-
ready suffered far too much from that malady. Only
by promptly denying petitioners’ writ may this Court
insure that the proceedings before the District Court
go forward, and be terminated, in an expeditious
manner.

If orderly appellate procedures are to be the rule
of our judicial system, and if chaos and impossibly
overcrowded dockets are to be denied free rein
therein, this Court must deny the petition as prema-
ture. .

THE CLASS ACTION CERTIFICATION ORDER DOES NOT ABRO-
GATE PETITIONERS’ SEVENTH AMENDMENT RIGHT TO A
JURY TRIAL.

The class action order entered by the District
Court provides for trial on the “common” issues first,
excluding from the fact-triers consideration, at that
time, any so-called “individual issues”:

“(a) As to issues of liability of general appli-
cation, excluding the following issues: reliance or
causation, duty owed to the individual claimant
insofar as it may vary depending upon the status
of that claimant, knowledge of the claimant in-

vestor as to facts allegedly misrepresented or
omitted, statute of limitations, laches, waiver, es-

15

toppel, ratification, unclean hands and pari de-
licto ;

“(b) As to the issue of damages only to the
extent of determining the value of the interests
received by investors, together with loss of prof-
its, if any, within the meaning of California Civil
Code Section 3343, up to the time of trial.”

As provided in the same order, any “individual is-
sues” will be tried within 90 days after notice to the
class members of a decree or judgment, if such decree
or judgment is in favor of plaintiffs:

“6. As to all issues excluded from class action
maintenance herein, said excluded issues will be
reversed for future determination upon individ-
ual claims filed hereunder by any member of the
classes as above set forth, such claims to be made
within 90 days after notice of such class members
of the decree or judgment herein, if such decree
or judgment in favor of plaintiffs.”

The class action order, then, provides for a trial
which is bifurcated between those issues which are
common to all class members, and those issues, if
any, which are individual to the class members. The
Court of Appeals praised the District Court’s class
action certification order as “novel” and “innovative”.
Petitioners have seized upon the Court’s use of these
terms, in an attempt to make the order appear as a
grotesque and radical departure from any order which
could possibly be entered by a court enforcing the
laws of a civilized nation.

With all due respect to the Court of Appeals, the
Order entered by the District Court is neither novel

16

nor innovative. Instead, the order is a practicable,
sound, and time-tested method of dealing with class
action trials. Not only is bifureation of issues at trial
expressly permitted by Rules 23 and 42 of the Fed-
eral Rules of Civil Procedure, but the courts have ac-
tually entered class action certification orders which
provide for bifurcation of issues:

“We see no sound reason why the trial court,
if it determines individual reliance is an essen-
tial element of the proof, cannot order separate
trials on that particular issue, as on the question
of damages, if necessary. The effective admini-
stration of 23(b) (3) will often require the use
of the ‘sensible device’ of split trials. Green v.
Wolf Corp., 406 F.2d 291, 301 (2d Cir. 1968).

“Defendants have pleaded additional defenses
of estoppel, waiver, release and the statute of lim-
itations. The first three apply, if at all, only to
certain plaintiffs, not to every one. These issues,
therefore, are also deferred.

“T will treat the defense of the statute of limi-
tations in the same way. This may depend to
some extent upon the knowledge of individual
plaintiffs. Therefore, the question can more read-
ily be determined when the evidence with re-
spect to each separate plaintiff is reviewed.”
Escott v. Bar Chris Construction Corp., 283 F.
Supp. 643, 704 (S.D.N.Y. 1968).

As the late Judge Frankel observed, the “split
trial” procedure is a preferable, and sometimes re-
quired, method of dealing with class actions:

17

“In the cases to which I refer, assertedly under
(b)(3)—i.e., having both common issues and is-
sues affecting separately the individual members
of the class—district judges have apparently
thought that all members of the class would have
to be brought before the court—for discovery as
well as trial—before there could be any judgment
affecting the class as a whole. Insofar as this
premise lurks in the cited cases, it would appear
to be unwarranted. Take, for example, the sim-
ple model of the case by an alleged class of
securities purchasers charging fraudulent rep-
resentations. There are, supposedly, common ques-
tions as to the nature of the alleged representa-
tions, falsity, and materiality. If some or all such
questions are decided against the plaintiff class,
the complaint will be dismissed and, always as-
suming adequate representation of the class,
there will be a judgment binding the class with-
out requiring any but the representative members
to have been before the court.

“On the other hand, if the plaintiff class pre-
vails on the common questions, it will then—but
only then—become necessary to try or settle or
otherwise dispose of individual questions like re-
liance, damages, or the like. If the common ques-
tions have been aptly defined, there should be no
need at an earlier stage to have all the individual
class members before the court for discovery or
any other purpose.

“In other words, the effective administration
of (b)(3) actions will probably require wide use
of the already familiar device of split trials. And
I submit that a lively awareness of this sensible
device should serve to postpone or minimize some

18

of the excessively frightening complications that
seem overwhelming from a threshold view of
the case.” Frankel, Some Preliminary Observa-
tion Concerning Civil Rule 23, 43 F.R.D. 39, 47
(1966).

The above-quoted authorities make it clear, then,
that “split trials” are a useful and widely accepted
tool for simplifying class action trials.

Petitioners make three main argumcnts in support
of their contention that the order violates their Sev-
enth Amendment right to a jury trial. First, they
contend that there exist substantial numbers of issues
individual to each member of the class. Second, they
contend that these issues are so “inextricably inter-
twined” with issues common to all members of the
class as to require, as a matter of law, that the same
jury which acts as fact-finder on the common issues
must also do so with respect to the individual issues.
Third, petitioners claim that it would be impossible
for the same jury to hear both the individual and the
common issues, and that the class action order is
therefore violative of petitioners’ constitutional right
to a trial by jury.

None of these arguments has merit. If Rule 23 is
to have a continued meaningful existence, petitioners’
tortured analysis of the right to a jury trial, and of
the relationship of this right to Rule 23, must be sum-
marily rejected by this Court.

\I
t

19

THE DISTRICT COURT'S BIFURCATION OF ISSUES IN THE
CLASS ACTION ORDER DOES NOT MEAN THAT THE COURT
HAS RECOGNIZED THE EXISTENCE OF NON-COMMON
ISSUES.

Petitioners contend that their Seventh Amendment
right to a jury trial is abrogated by the bifurcation
of common and individual issues. This contention is
based, of course, upon the assumption that there are
substantial numbers of individual issues to be tried
in the Ebner, Howenstine and Kaufman cases. This
assumption is incorrect.

The petitioners have long contended, to both the
District Court and the Court of Appeals, that the
three class actions abound with individual issues. Pe-
titioners’ purpose in so contending, of course, was to
persuade these tribunals that common questions of
law and fact do not predominate over individual ques-
tions, and hence that the plaintiffs had not met the
prerequisites of Rule 23(b)(3). However, while pe-
titioners have spent much effort in contending that
individual issues exist in great multitudes, they have
never seen fit to actually present evidence in support
of their contention.’ The petition is a prime example
of petitioners’ willingness to assert the existence of
individual issues, but their unwillingness to present

*By contrast, respondents presented to both the District Court
and the Court of Appeals abundant evidence to demonstrate
that the issues in these cases are common to the class members.
Among the evidence introduced by the respondents were the
GeoTek registration statement and prospectuses, the J. B. Oil
Company offering circulars, the J. B. Oil Company financial
statements, the J. B. Oil Company Program Agreements, the
Petroleum-2000 offering circular, and the Petroforce offering
circular. These are all identically worded documents which were
sent to each class member.

20

anything to the Court to support that assertion. For
example, on page 24 of their petition, the petitioners
point to a number of so-called individual issues, in-
cluding the “defenses of waiver, estoppel, laches,
ratification, unclean hands, statutes of limitations, and
part delicto”, Petition page 24. However, nowhere in
the record before this Court, or any other court, is
there evidence that anything in this impressive pa-
rade of “defenses” bars the claims made by any of
the class members. Petitioners evidently wish this
Court to accept, as an act of faith, their assertion
that “substantial numbers of the purported investor-
class are subject to [individual] defenses .. .” Peti-
tion page 24.

Petitioners contend that “The District Court cor-
rectly recognized the substantial nature of non-com-
mon issues raised by this evidence and that the three
actions could not possibly proceed as class actions
upon these issues” Petition page 10. This statement
is simply incorrect; the District Court has never
ruled that non-common issues are substantial, or
even that they exist at all. This is clear from the face
of class action certification order:

“4, In reserving issues for later determina-
tion, the Court does not intend to rule upon
either the legal or factual sufficiency or necessity
of such issues.” Appendix to Petition, page A31.

The Court of Appeals, in its decision, expressly
noted that petitioners had failed to show that indi-
vidual issues did in fact exist to any substantial

degree :

21

“Another issue reserved for later determination
by the district court’s order concerns the amount
of information which any particular claimant had
or learned about the J. B. Ventures, the GeoTek
partnerships, or any of the related corporations,
either at the time of the purchase of interests or
at some later date prior to the time of fraud
perpetrated by Burke and others was disclosed to
the public. Evidence of such knowledge, say the
petitioners, in [sic] relevant to their basic de-
fenses, of non-reliance and to such other defenses
as waiver, estoppel, laches, and statute of limita-
tions. To the extent these issues are not common
to the classes, see note 10, supra, we do not think
the district judge erred simply by separating
them out for individual adjudication at the close
of the class trial. The petitioners have again
failed to demonstrate that the existence of this
issue is so prevalent among the claimants that
they will present much proof on the issue at the
later trial. Absent such a showing, we deem it
entirely appropriate for the district judge to sep-
arate out those issues for later adjudication with
respect to the relatively few claims to which they
are pertinent.” Appendix to Petition, page A21.

Petitioners raise the specter of these “individual”
non-issues in a transparent and desperate attempt to
portray the Ebner, Howenstine, and Kaufman actions
as extraordinarily complex actions, in which it will be
necessary at trial for petitioners to examine hundreds
or thousands of investors, in order to properly deter-
mine whether such investors are subject to defenses
such as pari delicto. Petitioners have totally failed
to show the existence of “individual” issues applicable

22

to substantial numbers of the class. On that basis
alone, the Court should deny the petition.

UNCONTRADICTED AUTHORITY SANCTIONS THE “SPLIT
TRIAL” DEVICE ORDERED HERE BY THE DISTRICT COURT.

Petitioners contend that, under the Seventh Amend-
ment, they have an absolute right to a “unitary” jury
trial. According to petitioners, the Seventh Amend-
ment right to a jury trial will be abrogated unless all
issues, whether common or individual, are tried by
one jury at a single hearing.

Clearly, petitioners are entitled to a jury trial
under the Seventh Amendment. Respondents have no
quarrel with that proposition. It is petitioners’ extra-
ordinarily convoluted interpretation of the Seventh
Amendment to which respondents take complete ex-
ception.

The text of the Seventh Amendment itself does not
prohibit the submission of separate issues in the same
ease before different juries. Neither does the amend-
ment explicitly require that all issues be submitted
to a jury at “a single hearing” (petition page 17).

Rule 42(b) of the Federal Rules of Civil Procedure
specifically authorizes district courts to order sepa-

rate trials on “separate issues”:

“(b) SEPARATE TRIALS. The court, in
furtherance of convenience or to avoid prejudice,
or when separate trials will be conducive to expe-
dition and economy, may order a separate trial of
any claim, cross-claim, counterclaim, or third-

23

party claim, or of any separate issue or of any
number of claims, cross-claims, counterclaims, or
third-party claims, or issues, always preserving
inviolate the right of trial by jury as declared by
the Seventh Amendment to the Constitution or as
given by a statute of the United States.” Fed.
Rules Civ. Proc. 42(b) (emphasis added).

The leading case of Gasoline Products Co. v. Cham-
lin Refining, 283 U.S. 494 (1931), makes it clear that
the right to a trial by jury does not preclude courts
from employing innovative methods of effectuating
that right:

“All of vital significance in trial by jury is that
issues of fact be submitted for determination
with such instructions and guidance by the court
as will afford opportunity for that consideration
by the jury which was secured by the rules gov-
erning trials at common law. [Citations omitted].
Beyond this, the Seventh Amendment does not
exact the retention of old forms of procedure.”
283 U.S. at 498 (1931).

As Justice Brandeis stated in the Matter of Walter
Peterson, 253 U.S. 300 (1920) :

“New devices may be used to adapt the ancient
institution [the jury trial] to present needs and
to make of it an efficient instrument in the ad-
ministration of justice. Indeed, such changes are
essential to the preservation of the right. The
limitation imposed by the Amendment is merely
that enjoyment of the right of trial by jury be not
obstructed, and that the ultimate determination
ot ssues of fact by the jurv be not interfered
with.” 253 U.S. 300, 310.

24

Petitioners claim that the Seventh Amendment re-
quires that all issues be presented to the trier of fact
at a single hearing. The rationale behind this claim
is not evident to respondents. The courts have re-
peatedly held that the Seventh Amendment does not
require that all issues be submitited to the trier of
fact during a single hearing. The case of Hoste v.
Chicago Western Railway Company, 282 F.2d 639
(7th Cir. 1960), cert. den. 365 U.S. 814, squarely ruled
that issues need not be submitted to the trier of fact
at a single hearing:

“There remains for consideration the very im-
portant question of whether plaintiff was de-
prived of a jury trial in violation of the Seventh
Amendment of the Constitution of the United
States when the trial court sua sponte and over

the objection of plaintiff, ordered the case to pro-
ceed to trial solely on the issue of liability.

“We hold that in the trial of the instant case,
the essential character of a trial by jury was
preserved. In our view, the Seventh Amendment
does not require the retention of all the old forms
of procedure; nor does it prohibit the introduc-
tion of new methods for ascertaining what facts
are in issue. See Gasoline Products Co. Ine. vy.
Champlin Refining Co., 283 U.S. 494, 497-498, 51
S.Ct. 513, 75 L.Ed. 1188.

* * ”

“Many of the federal district courts of this
country are laboring under the heavy burden of
crowded trial dockets. The Northern District of
Illinois is no exception. The judges of that court
should be commended for their search for meth-
ods and means to expedite the disposition of cases

25

upon their calendars. There is no doubt that in
numerous cases, the severing of the issue of lia-
bility from the issue of damages will result in the
shortening of the time of trial. The instant case
is a good example. Without such severance, hours
or even a day or two might have been consumed
on the issue of damages.” 282 F.2d 639, 642-643.

Professor Wright has made the following observa-
tion:

“There is no doubt that the court can order sep-
arate trials of issues, with the same jury sitting
in each trial, and it seems to be accepted that the
better and preferred practice is to use the same
jury for all issues, even though it may hear the
issues at different times. The issue can thus be
narrowed to whether the admittedly preferred
procedure is consitutionally required. It has been
held, on sound ground, that the Seventh Amend-
ment is not violated by the separate submission
of the issues to a single jury.” Federal Courts,
1963 Ed. Charles Alan Wright, page 378 (cita-
tions omitted).

Petitioners also contend that the same jury which
decides the common issues must also decide the indi-
vidual issues. Petitioners claim, in an effort to con-
vince the Court that certiorari is appropriate here,
that the lower courts which have attempted to deal
with this issue need guidance because of “the un-
settled and contradictory opinions of judges of the
Courts of Appeals ...” Petition page 15.

Contrary to petitioners’ assertions, the lower courts
are not in the least “confused” by the issues presented

26

here. They have uniformly ruled that the Seventh
Amendment does not require all issues to be decided
by one jury.

The courts have often ordered bifurcation between
liability and damage issues at trial. Inevitably, Sev-
enth Amendment issues have been raised in some of
these cases. In the leading case of O’Donnell v. Wat-
son Bros. Transportation Co., 183 F.Supp. 577 (N.D.
Ill. 1960), the Court upheld the constitutionality of its
local rule authorizing separate trials, by different
juries, of the liability and damage issues in civil
Cases:

“The Rule provides that the trial judge may,
in his discretion, order one jury to decide upon
the liability of the defendant and the same or an-
other jury to determine the damages of the
plaintiffs. The judge may recess after a decision
of guilty on liability for pre-trial or settlement
conference or proceed with the trial. The right
to a trial by jury does not require that all issues
be determined by the same jury and severance of

the issues is not violative of any constitutional
guarantee.” 183 F.Supp. 585.

Similarly, in Swofford v. B & W, Inc., 34 F.R.D.
15 (S.D, Tex. 1963), aff'd 336 F.2d 406 (5th Cir.
1964), cert. denied 379 U.S. 962, it was held that
issues of liability and damages could be tried before
different juries without encroachment upon the Sev-
enth Amendment guarantee:

“[P]laintiffs suggest that to try the issues of
liability and damages to separate juries, requisite
in this case if separate trials should be ordered,

27

would be a deprivation of jury trial as contem-
plated by the Seventh Amendment, Although the
question has not yet been authoritatively settled,
the Court feels that there is no violation of the
Seventh Amendment by a separate submission of
issues to separate juries under proper cireum-
stances.” 34 F.R.D. at 20.

The issue of whether bifurcated trials violate a par-
ty’s right to a jury trial has also been raised by de-
fendants in other class action cases in vain attempts
to avoid class certification. In the case of Link v.
Mercedes-Benz of N. Am., lnc., 550 F.2d 860 (38rd
Cir. 1977), cert. den., 45 U.S.L.W. 3762, the Court
relied on Gasoline Products in rejecting an argument
identical to the one which petitioners make here:

“The legal issue which is inextricable from the
merits of the district court’s class action deter-
mination arises from the demand by defendants
for a unitary jury trial of the §4 Clayton Act
damage claim. In making that demand the de-
fendants rely upon the Seventh Amendment
which, they urge, guarantees a trial before a
single jury rather than separate juries as con-
templated by the district court. But defendants
somewhat overstate the reach of that Amend-
ment. In the seminal case, Gasoline Products v.
Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513,
75 L.Ed. 1188 (1931), the Supreme Court held
that the Seventh Amendment right to jury trial
is not abrogated when an appellate court orders
a new trial only on one of the issues originally
tried before a unitary jury in the court below.
The Court reasoned that the Seventh Amend-

ment guaranteed a unitary jury trial only of
issues, not of cases:
* *

“Gasoline Products does not suggest that its
distinction between issues as opposed to cases is
limited to retrials, and given the analysis which
the Court made, no Seventh Amendment policy
suggests such a limitation. Thus, I agree with
the Fifth and Tenth Circuits, and with the com-
mentators, that the Seventh Amendment guaran-
tees a unitary trial of issues, not of cases, even
in the first instance.” 550 F.2d 860, 874-875.

See also the discussion of the interaction between
bifurcated trials and the Seventh Amendment in the
case of State of Alabama v. Blue Bird Body Co., Inc.,
71 F.R.D. 606 at 613-615 (M.D. Ala. 1976). The
Court there concluded that bifurcation of issues did
not preclude class certification by virtue of the Sev-
enth Amendment:

“On the basis of the foregoing reasoning and
its conclusion that the issues of liability and
damages in this action are separable and distinct,
this Court holds, while recognizing that the matter
is not free from doubt, that Defendants’ right
to a jury trial would not be violated by trials
by separate juries of these two issues. The Court,
therefore, finds that a class action would be a
superior means of proceeding with this litigation
ae te by Rule 23(b)(3).” 71 F.R.D. 606,

The lower courts, then, have consistently followed
the principles enunciated in Gasoline Products in
holding that bifurcated trials, decided by more than

29

one jury, are not violative of the Seventh Amend-
ment. In view of the lower courts’ consistent ad-
herence to these principles, it is difficult to understand
how the granting of certiorari would provide valuable
guidance to the lower courts.

It is true that submission of different issues to
different juries may be impermissible in some cir-
cumstances. According to the opinion in Gasoline
Products (followed in United Aty Lines v. Wiener,
286 F.2d 302 (9th Cir. 1961), cert. den., 366 U.S. 924),
separate juries may decide separate issues only if
those issues are “so distinct and separable” from one
another that separate trials “may be had without
injustice.” 286 F.2d 302, 306. Or, as further stated in
the United Air Lines opinion, the question turns on
whether one issue is “so interwoven” with a second
issue that “the former cannot be submitted to the
jury independently of the latter without confusion
and uncertainty which would amount to a denial of a
fair trial.” 286 F.2d 302, 306.

Petitioners assert that the individual issues are
“so interwoven” with the common issues as to require
that one jury decide both the common and the in-
dividual issues. On pages 21 through 25 of the peti-
tion, the petitioners purportedly “analyze” the
individual issues, in an attempt to show that the
individual issues are inextricably interwoven with
the common issues. The effort is unavailing. Only
by indulging in complete fantasy, could one conclude
that the individual issues are inextricably interwoven
with the common issues. As we will demonstrate

30

below, the individual issues, if any, are separate and
distinct from the common issues.

Petitioners claim that four groups of individual
issues are inextricably intertwined with the common
issues. These groups of issues are described as fol-
lows:

(1) Whether the communications to investors
were misleading (petition p. 21);

(2) Whether the investor relied on the mis-
leading communications (petition p. 22) ;

(3) Whether the class members are barred
by the defenses of estoppel, laches, clean hands,
statutes of limitations, and pari delicto (petition
p. 24);

(4) Whether each class member suffered any
damage, and if so, how much (petition p. 25).

The Court of Appeals concluded that these “issues”
do not exist to any substantial degree, and the peti-
tion here does nothing to demonstrate that this con-
clusion was erroneous. However, even if it is assumed
that these defenses are applicable to a substantial
number of class members, such defenses are not “in-
extricably intertwined” with the common issuer. The
petitioners do not show otherwise, nor could +he-+
ever make such a showing.

The petitioners claim that the issue of whether a
particular written communication is misleading is not
separate and distinct from the common issues, and
therefore must be tried before the same jury which

31

also decides the common issues. This argument is
totally devoid of merit for at least two reasons. First,
the class action certification order does not reserve
for later determination the issue of whether the com-
munications were misleading. This is an issue com-
mon to the class which will be tried during the first
phase of the trial. Second, this issue is separate from
other issues in the case. Petitioners claim that:

“In determining whether communications to an
investor were misleading, the trier of fact must
analyze all of the contemporary oral and written
communications in their totality, rather than
focusing upon only one such communication, and
must consider the sophistication, motivations and
actual knowledge of each investor, derived from
sources other than the black and white of a
prospectus, at least here where direct personal
sales, entailing numerous oral communications by
salesmen, sophisticated investors and their ad-
visors, are involved, not broad, impersonal se-
curities market transactions.” Petition page 22.

Petitioners have often employed this argument, al-
ways unsuccessfully, in order to convince the District
Court and the Court of Appeals that class certifica-
tion would result in the “necessity” for thousands of
“mini trials.” In particular, petitioners claim that
evidence of oral statements made to the investors
influences the question of whether a written commu-
nication is misleading. This is simply not the law.
Igenito v. Bermac Corp., 376 F.Supp. 1154 (S.D.
N.Y. 1974) exposes the fallacy of petitioners’ argu-
ment:

32

“Since, as we have noted, reliance on the pros-
pectus need not be proven at trial, it is imma-
terial whether other, possibly non-misleading,
representations were made to the post-prospectus
herdowners in the course of the sales presenta-
tion. Proof that the prospectus was materially
misleading, and that defendants acted with the
requisite scienter . . . is enough to establish lia-
bility, even if plaintiffs bought solely on a tip
from the man in the moon.” 376 F.Supp. at 1169.

The argument that reliance is inextricably inter-
twined with other issues is equally specious. Under
this Court’s decision in Affiliated Ute Citizens v.
United States, 406 U.S. 128 (1972), reliance is not
an element of a Rule 10b-5 claim:

“Under the circumstances of this case, involving
primarily a failure to disclose, positive proof of
reliance is not a prerequisite to recovery. All that
is necessary is that the facts withheld be material
in the sense that a reasonable investor might
have considered them important in the making of
[his investment] decision [citations omitted].
This obligation to disclose and this withholding
of a material fact establish the requisite element
of causation in fact.” 406 U.S. 153-154 (emphasis
added).

As to the third so-called group of “individual is-
sues”—estoppel, laches, ratification, unclean hands,
statutes of limitations, and pari delicto—petitioners
have totally failed to show that they are inextricably
intertwined with any common issues. Petitioners
merely make the gratuitous claim, backed up by no

33

facts or law, that “the resolution of such issues can-
not be accomplished rationally without considering the
total circumstances involved”. Petition page 25.

Lastly, petitioners claim that damage issues are
somehow inseparable from the common issues. Here
again petitioners point to “the totality of the cireum-
stances applicable to each investor,” (petition page
25), including the “tax benefits” which each class
member supposedly received from his investment.
However, it has long been settled that tax savings
which a plaintiff realizes as a result of a defendant’s
wrongdoing are not to be considered in calculating
damages. See, e.g., Cereal Byproducts Co. v. Hall, 16
Til. App.2d 79, 147 N.E.2d 383 (1958) ; Hanover Shoe,
Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 503
(1968) ; Rhode v. Hershberger Explorations Inc., 349
F.Supp. 993, 994 (D.Minn. 1972).

The separability of these issues stands in sharp
contrast to the inseparable issues in United Airlines,
Inc. v. Wiener, supra. In the United case, the Court
held that the same jury which had decided liability
must also decide the amount of punitive damages to
be awarded. Without doubt, punitive damages are
inextricably intertwined with liability issues. The
amount of punitive damages which a jury may award
is dependent on various factors, such as the presence
or absence of malice and the degree of the outrageous
nature of the defendant’s acts. These damage issues
are also issues which must be proven during the lia-
bility phase of the case. Petitioners’ attempt to fit
the three class actions into the United mold is un-

34

availing; the facts are simply not similar to those
in United. |

The Court of Appeals concluded, after reviewing
all the evidence which was before the District Court,
that the individual issues were separable from the
common issues. We respectfully submit that this was
the only conclusion which the Court could have prop-
erly reached. This Court should not now review that
decision.

THERE IS NOTHING IN THE CLASS ACTION CERTIFICATION
WHICH PRECLUDES THE SAME JURY FROM DECIDING
BOTH THE COMMON ISSUES AND THE INDIVIDUAL ISSUES.

Even if it is assumed that there are individual is-
sues to be tried, and even if it is assumed that these
issues must be tried before the same jury which
decides the common issues, the class action certifica-
tion order does not abrogate petitioners’ Seventh
Amendment right to a jury trial. There is no reason
why one jury could not decide both the common issues
and the individual issues as well. The class action
certification order does not require that one jury
decide the common issues, and another jury the indi-
vidual issues. The class action certification order is
silent on this point.

It is premature, to say the least, for the petitioners
to complain of a contingency which may never occur.
As the Court of Appeals stated in its opinion:

“Petitioners characterize as ‘disingenuous’ the
suggestion that trial of all issues in these cases
will be had before one jury. There is nothing in

35

the district court order that would preclude such
a procedure, as a practical matter, and we find
nothing inherently wrong with such a procedure.
It may be that the district court does not con-
template this procedure, but it would be pre-
sumptuous of us to assume the district court’s
intention in this regard.” 549 F.2d 686, 693, foot-
note 9.

In the case of Link v. Mercedes-Benz of N. Am.,
Inc., 550 F.2d 860 (3rd Cir. 1977), cert. den., 45 U.S.
L.W. 3762, the Court also dealt with an argument
almost identical to that raised by the petitioners here.
In Link, the Court stated as follows:

“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 sep-
arate juries and whether it will is a matter of
pure speculation at this juncture.” 550 F.2d 860,

864.

In the case of In Re Master Key Antitrust Litiga-
tion, 528 F.2d 5 (2nd Cir. 1975), the Court of Appeals
refused to vacate a class action certification order
entered by the District Court. The Court responded
as follows to petitioners’ arguments that bifurcation
was offensive to the Seventh Amendment:

“Tt would plainly be premature for us to rule
on the appropriateness of using two juries where
only ene, in fact, may be involved. We should
only note that bifurcated trials have frequently
been employed with great success.” 528 F.2d 5,

15 (citations omitted).

36

Petitioners claim that as a practical matter, one
jury could not possibly decide both the common and
the individual issues, because by the terms of the
class certification order, there is at least a 90-day
lapse of time between the trial of the common issues
and the trial, if any, of the individual issues. There
are two simple answers to this contention.

First, a 90-day lapse between the trial of the com-
mon and the individual issues does not necessarily
preclude one jury from deciding issues presented
during both phases of the trial. One jury could well
decide one particular phase of a case, and then return
90 days later and decide the remaining issues. Second,
if the District Court decides that a 90-day interval
between the two phases of the trial is excessive, the
Court may modify its class action certification order
to provide for a shorter time interval. Here, as with
all class actions, the District Court has the power to
modify the class action certification order if such
modification is warranted. Because of the flexibility
which the Court has in altering class action orders,
the petitioners can easily move before the District
Court for a shortening of the 90-day interval set forth
in the District Court’s order, rather than making
matters of this nature the subject of a petition for
a writ of certiorari.

37

THE COURT OF APPEALS DID NOT ADOPT AN INCORRECT
STANDARD FOR REVIEW OF THE DISTRICT COURT'S
ORDERS.

Petitioners also argue that the Court of Appeals
adopted an incorrect standard for review by man-
damus. This argument is based on the premise that
the petitioners’ Seventh Amendment rights have been
abrogated, and that therefore the Court must employ
a standard of review by mandamus less stringent
than “clear and indisputable error.” The premise it-
self, though, is inaccurate; the petitioners’ right to a
jury trial has not been abrogated. Neither do any of
the authorities cited by petitioners hold that a more
liberal standard of review on mandamus must be
employed whenever a party claims that his right to
a jury trial has been abrogated. We submit that the
weak showing made by the petitioners both here and
before the Court of Appeals is insufficient reason to
deviate from the normal standards of mandamus re-

view.

CONCLUSION
It may be true, as petitioners contend, that the
substantive law has sometimes been altered to permit
elass certification. If this is an abuse which this
Court should not tolerate, it is equally important that
this Court reject petitioners’ arguments based on a

38

Seventh Amendment which has been tortured into
unrecognizable form in order to avoid class certifica-
tion. We respectfully submit that the petition is
premature and totally lacks merit, and should be de-
nied by this Court.

FREDERICK P. FuRTH,

THOMAS R, FAHRNER,

Rosert C. Cacen,

Furtu, FAHRNER & Wona,
Suite 1330, Russ Building,
235 Montgomery Street,
San Francisco, California 94104,

RicHARD G. WILSON,
ALLEN, WILSON, GEORGE
& Epemon, INc.,

3728 Atlantic Avenue,
Long Beach, California 90807,

Counsel for Respondents.
August 5, 1977.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1945%3A2. Public record. Not legal advice.