Opposition — Windham v. American Brands, Inc.

IN THE JAN 27 1978

Supreme Court of the United Stateg. on . cvwe

Ocronen Trem, 1977 LT

No. 77-925

Roy P. WinpHamM, et al, on behalf of themselves

and all others similarly situated,

Petitioners,

Ve

American Branns, Inc., et al, Respondents,

On Petition for Writ of Certiorari

To the United States Cour! of

Appeals for the Fourth Circuit

BRIEF OF COMPANY RESPONDENTS IN

OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

ee

J. Means MeFavpen lenny L. Kine

Rowinsox, MceFapven, Banrierry H. MeGuime

Moone & Pore Davis Pork & Warpwent,

P.O. Box O44 1 Chase Manhattan Plaza

Columbia, South Carolina 2202 New York, New Vork 10005

Attorneys for R. J, Reynolds Tobacco Company

Hven L. Wittcox Muneay Hl. Barre

Wiiicox, Harper, Pacer, Metvin Sparrn

O°’ arrens., MceLeoo & Boye Arnot & Porter

Willeox Building 1229 Nineteenth Street, N.W

248 W. Evans Street Washington, D.C, 20036

Florence, South Carolina 29501

Attorneys for Philip Morris Incorporated

[Counsel for Other Company Respondents

Listed at End of Brief]

January 1978

—o —

Peess of Byvaon S&S. Avams Punting, Inc, Wasuiweron, D. C.

Page

Queersom PRROBNTED ... 2... nce cece cc cc cece ccceces 2

so «PSP 2

1. The District Court Opinion ................. 3

DB Fad FERN GD oc cc cccsdceencoccaanuwans 5

3. The Decision of the Court of Appeals Sitting

> Pree eee 6

Reasons ron Denyinc THE Writ ................... 7

I. Tae Decisions or THE District CourT AND THE

Ew Bane Court or APPEALS ARE MANIFESTLY Cor-

nect awp Do Not Warrant Tuis Court’s Review 7

A. The Record Provides Overwhelming Factual

Support for the District Court’s Discretion-

ary ial of Class Treatment ............. 8

B. Petitioners’ Approach Would Eliminate the

Diseretion Vested in the District ——

Contrary to Rule 23 and the Decisions o

ee Se 11

Il. Tas Fovurrs Circurr’s En Banc Decision Dogs

Nor Cowruict Wits Any Decision or Tauis

Covrt on or Any Oruer Count or Appgals .... 14

GEERT oc ccccccsececésnecceneseneseee 17

CITATIONS

Cases:

American Pipe é Construction Co. v. Utah, 414 U.S.

ere 14

na petition for cert. pending sub nom. Gulf

Ou orp v. Bogosian, No. 77-740 .............. 15, 16

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.

Gee GHBUUD occcecsccehetcceeccuaasunene 10

ii Citations Continued

Page

Clark v. Watchie, 513 F.2d 994 (9th Cir.), cert. denied,

IE han on nn6n 665 6690604000055

Coopers & Lybrand v. Livesay, cert. granted Nov. 14,

ee aioe ihn eh 05 66 64n0beneees6ens 7

East Texas Motor Freight System v. Rodriguez, 431

TT idue deen eechebeeeenenenee+ens ee 13

Eisen v. Carlisle @ Jacquelin, 417 U.S. 156 (1974) ...12-14

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ..10, 14-15

In re Cessna Aircraft Distributorship Antitrust Liti-

Te 518 F.2d 213 (8th Cir.), cert. denied, 423

ED hi eee nen cendns b¥.ces 7

In re Sugar Antitrust Litigation, 559 F.2d 481 (9th

ES Sree 15

International Brotherhood of Teamsters v. United

States, 431 U.S. 324 (1977) .............cce0e. 10

Kate v. Carte Blanche Corp., 496 F.2d 747 (3d Cir.),

cert. denied, 419 U.S. 885 (1974) ............... 7

New York v. International Pipe & Ceramics Corp., 410

Ee OE, BED nna wncccccsccsiescececse 8,11

Ott wh ne Pub. Co., 518 F.2d 1143 (6th Cir.

Schime v. Schine, 367 F.2d 685 (2d Cir. 1966) ......... 11

United Air Lines, Inc. v. McDonald, 432 U.S. 385

FES FE re ee een 14

Warr v. Butz, 379 F. “ys 268 (D.S.C. 1974) ...... 3

West v. Capitol Federal Savings and Loan Ass’n, 558

i. . £ | See 7

Wilcox v. Commerce Bank, 474 F.2d 336 (10th Cir.

tT CER RUUCELe Chbueedhiceecededéuscecess s 8

Statutes aNpD Rvuzgs:

Tee ed i ik as pcan eechcbese 10

A 7

I a 7

Federal Rule of Civil Procedure 23 ............ 6, 8, 10-15

Federal Rule of Civil Procedure 54(b) ............. 7

MISCELLANEOUS:

Advisory Committee Notes to 1966 Amendments to

Rule 23, 39 F.R.D. 73 (1966) .................. 12-13

Recent Development, 62 Cornell L. Rev. 177 (1976) ... 12

IN THE

Supreme Court of the United States

OcToBEeR TERM, 1977

No. 77-925

Roy P. WinpHa\, et al., on behalf of themselves

and all others similarly situated,

Petitioners,

v.

AMERICAN Branps, INc., et al., Respondents.

BRIEF OF COMPANY RESPONDENTS IN

OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

The company respondents * submit this brief in op-

position to a petition for a writ of certiorari filed De-

cember 28, 1977. The petition seeks review of a 5 to 1

en banc decision of the United States Court of Appeals

for the Fourth Circuit, dated October 11, 1977. That

decision affirmed an order of the United States District

Court for the District of South Carolina denying pe-

titioners’ motion for class certification.

? The Secretary of Agriculture is also a respondent.

2

QUESTION PRESENTED

Whether the Court of Appeals correctly concluded

that the District Court had not abused its discretion

in denying class certification based on the detailed fac-

tual record in this case.

STATEMENT

The petitioners, six South Carolina tobacco farmers,

brought this action in 1974, charging the respondent

tobacco companies and the Secretary of Agriculture

with conspiring to fix the prices paid for flue-cured

tobacco sold at auction markets throughout the State

of South Carolina. The complaint also alleged that the

respondents had monopolized or attempted or conspired

to monopolize commerce at the various markets, had

conspired to restrict the amount of flue-cured tobacco

that could be sold at auction, and had conspired to ap-

portion government tobacco inspectors inequitably be-

tween South Carolina and Georgia. The case was

brought as a class action, with the named plaintiffs pur-

porting to represent over 20,000 South Carolinians

with economic interests in the sale of flue-cured tobacco

in South Carolina during the period 1970 through

1974.

Petitioners moved for class certification in October

1974. The parties thereafter had full discovery on the

class action issues, and District Judge Robert F. Chap-

man received extensive documentary evidence and per-

sonally presided at the depositions of more than 20

witnesses. On September 26, 1965, Judge Chapman

rendered an opinion denying petitioners’ motion. That

opinion, as the en banc Court of Appeals commented,

‘carefully and thoughtfully reviewed’’ the record

(Ptn. App. 12a) and set forth factual findings later

3

described by the Court of Appeals panel and by the

entire Court as ‘‘full, precise, and apposite’’ (Ptn.

App. 8a, 28a).

1. The District Court Opinion

Briefly, the District Court found that the flue-cured

tobacco market was characterized by ‘‘[t]he non-stand-

ardization of product and producer’’ (Ptn. App. 59a).

Tobacco is a perishable commodity, the quality of

which is affected by many factors, including soil type,

weather conditions, the skill of the farmer, and the

method of picking and curing. As a reflection of the

many variations in quality, a given pile of tobacco sold

on the auction floor may fall within one of 161 differ-

ent grades utilized by government inspectors.

Prices paid for tobacco varied over a broad range as

well. Indeed, the evidence showed that prices even for

identically-graded tobacco varied from day to day,

month to month, year to year, warehouse to warehouse,

and market to market. The District Court found the

buyers’ conduct to be similarly disparate. Not all of the

respondents purchased tobacco at each of the 36 ware-

houses or in each of the 11 different geographic areas

in which the warehouses are located, and the percent-

age of tobacco purchased by each respondent varied

from area to area, warehouse to warehouse, day to day,

and year to year.

Further, the more than twenty thousand tobacco

producers who comprise the purported class were found

to include owners of land that had allotments,’ lessees

* All of the South Carolina tobacco farmers in the purported class

participate in the price-support program of the United States De-

partment of Agriculture. The program limits tobacco production

according to an ‘‘allotment’’ system. See generally Warr v. Butz,

379 F. Supp. 268 (D.S.C. 1974).

4

of allotments, sharecroppers and tenants—with each

category of producer having a different economic in-

terest in the:sale of tobacco.

Because of the non-uniformity of product, price, de-

fendants’ conduct, and class members’ economic inter-

ests, the District Court found that, even if a general-

ized conspiracy were established, there would be non-

uniformity in the impact of that conspiracy on the

purported class members, both as to fact and amount

of damage. Indeed, the nature of the tobacco auction

market was such that many farmers who produced

lower-quality tobacco actually benefitted from the auc-

tion practices complained of, thereby making it impos-

sible for them to satisfy the fact-of-damage element of

a private antitrust cause of action.

Moreover, the District Court found that individual

questions as to the amount of damage would predomi-

nate even as to class members who could prove injury,

because there is no formula or other method by which

the extent of any class member’s damages could readily

be determined. The necessity for analyzing thousands

of individual transactions of the class members was

further underscored by the fact (which petitioners con-

cede) that a large percentage of the total transactions

was not even subject to the alleged conspiracy—namely,

purchases by warehousemen, by the government stabili-

zation ‘‘pool,’’ and by companies which, for one reason

or another, petitioners did not choose to name as de-

fendants.

Based on these and other facts, the District Court

concluded that common questions did not predominate

over the many individual questions in the case. As a

result, Judge Chapman further concluded that a class

action would be plainly unmanageable, and would, if

ot ee

5

certified, necessarily consume years of the Court’s un-

divided attention.’

2. The Panel Opinion

A divided panel of the Court of Appeals for the

Fourth Circuit reversed. Neither the majority nor the

dissent questioned the District Court’s findings, and

both acknowledged that the denial of class certification

must stand absent an abuse of discretion by the District

Judge. Nevertheless, Senior District Judge Wyzanski

of the District of Massachusetts, sitting by designa-

tion, concluded on behalf of himself and Judge

Craven that the District Court should have certified a

class at least for the purpose of determining whether

the respondents had violated the antitrust laws. Judge

Wyzanski stated that “there is almost a rebuttable

presumption that ... a class action should be allowed

where there is a plausible claim of violation of the Sher-

man Act’’ (Ptn. App. 35a-36a).

In reaching this conclusion, Judge Wyzanski ex-

pressed the view that the case would not present un-

usual complexities ‘‘at least as long as only issues of

violation are before the tribunal’? (Ptn. App. 37a).

He did not, however, disagree with the District Court’s

determination that the case as a whole would be un-

manageable and would present questions which were

predominantly individual rather than common. Nor

did he suggest any workable basis for deciding the

myriad individual questions to which the District

* The District Court conservatively estimated that, were the case

to proceed as a class action, the determination of individual fact

issues would require 20,000 hours, or 10 years of judicial time,

assuming that the case was given undivided attention for 40 hours

per week and 50 weeks per year (Ptn. App. 69a-70a, n.9).

6

Court had referred. Senior Circuit Judge Bryan dis-

sented, citing the District Court’s ‘‘comprehensive and

closely scanned findings of fact and conclusions of law’’

(Ptn. App. 39a).

3. The Decision of the Court of Appeals Sitting En Banc

The Fourth Circuit granted rehearing en banc, re-

versed the panel, and affirmed the denial of class certi-

fication. The Court’s opinion (per Judge Russell) first

took note of a district court’s customary discretion in

deciding the practical and largely factual questions

involved in determining whether a proposed class ac-

tion is manageable (Ptn. App. 9a-10a). The Court then

undertook a thorough review of the factual situation

presented here, focused on the individual issues in the

case, and reaffirmed the District Court’s findings that

it would be impossible to presume class-wide injury in

this case or to compute damage to the individual class

members on the basis of any formula.

The resulting manageability problems, the Court

noted, were increased by ‘‘the variety of claims as as-

serted by the various plaintiffs’’ (Ptn. App. 12a), and

by the fact that proof of liability and proof of dam-

ages were inextricably intertwined in this case (Ptn.

App. 22a). Finding that a class action, even if limited

to the issue of antitrust violation, would ultimately

degenerate into a plethora of time-consuming, separate

‘*mini-trials’’—at odds with the purpose of Rule 23—

the Court of Appeals held that the District Court had

acted within its discretion in denying class certifica-

tion.‘ Petitioners seek review of this judgment.

* Judge Butzner dissented for the reasons stated in Judge

Wyzanski’s opinion for the panel (Ptn. App. 25a).

7

REASONS FOR DENYING THE WRIT

I. THE DECISIONS OF THE DISTRICT COURT AND THE EN

BANC COURT OF APPEALS ARE MANIFESTLY CORRECT

AND DO NOT WARRANT THIS COURT'S REVIEW

Despite petitioners’ scattershot arguments, this case

involves only the narrow question whether the District

Court abused its discretion by refusing to certify a

class and dismissing the complaint against unnamed

class members.’ That issue, decided by the District

Court and by the Court of Appeals en banc on the par-

ticular facts of this case, is of insufficient general im-

portance to merit Supreme Court review. In any event,

the decision below is correct.

* There is no dispute between the petitioners and the company

respondents as to the appealability of the District Court’s order.

Appellate jurisdiction was specifically based on the District Court’s

entry of an order under Rule 54(b) dismissing the complaint

against unnamed class members. Such an order is an appealable

‘final order’’ under 28 U.S.C. § 1291. See, e.g., Ott v. Speedwriting

Pub. Co., 518 F.2d 1143, 1149 (6th Cir. 1975) ; In Re Cessna Air-

craft Distributorship Antitrust Litigation, 518 F.2d 213, 216 (8th

Cir.), cert. denied, 423 U.S. 947 (1975); Katz v. Carte Blanche

Corp., 496 F.2d 747, 752 (3d Cir.), cert. denied, 419 U.S. 885

(1974) ; but see West v. Capitol Federal Savings and Loan Ass’n,

558 F.2d 977 (10th Cir. 1977). In any event, the order denying

certification in this case could be treated as appealable under

28 U.S.C. § 1292(b), for the opinions of the District Court and the

Court of Appeals panel indicate that § 1292(b) certification would

have been granted and accepted if necessary (Ptn. App. 32a, 75a).

This case is, therefore, wholly unrelated to Coopers & Lybrand v.

Tivesay, cert. granted Nov. 14, 1977, which involves neither Rule

54(b) nor a §1292(b) certification, but simply the question

whether an order denying class certification, without more, is a

‘final order’’ within the meaning of 28 U.S.C. § 1291 under the

so-called ‘‘death-knell’’ doctrine.

8

Rule 23(b)(3) provides, in part, that an action may

be maintained as a class action if the court finds that

‘the questions of law or fact common to the members

of the class predominate over any questions affecting

only individual members, and that a class action is

superior to other available methods for the fair and

efficient adjudication of the controversy.’’ Pertinent

to these findings are ‘‘the difficulties likely to be en-

countered in the management of a class action.”’

The law is clear that the evaluations of manage-

ability and predominance called for by the Rule, and

the ultimate decision whether to certify a class, are

matters within the sound discretion of the District

Court. See, e.g., Barnett v. W. T. Grant Co., 518 F.2d

543, 547 (4th Cir. 1975); Clark v. Watchie, 513 F.2d

994, 1000 (9th Cir.), cert. denied, 423 U.S. 841 (1975) ;

Wilcox v. Commerce Bank, 474 F.2d 336, 347 (10th

Cir. 1973) ; New York v. International Pipe & Ceramics

Corp., 410 F.2d 295, 298 (2d Cir. 1969). Petitioners

concede as much (e.g., Ptn. at 31, 35). Because the Dis-

trict Judge exercised his discretion against certifying

a class action in this case, petitioners must show not

merely that Judge Chapman could properly have cer-

tified the case but that the arguments favoring certifi-

cation were so overwhelming that he erred as a matter

of law when he failed to do so. Petitioners have made

no such showing, and, we submit, could not do so on

the basis of the record below.

A. THE Recorp Provipes OVERWHELMING FAcTUAL

SupPPorRT FOR THE District Court’s DISCRETIONARY

DENIAL OF CLAss TREATMENT

As the en banc Court of Appeals held, the District

Court’s factual findings have abundant support in the

9

record, and provide a solid basis for its determinations

as to the predominance of individual questions and the

unmanageability and inferiority of a class action in

this case. Those findings, which petitioners chose not

to discuss in their legal analysis, demonstrate conclu-

sively that class certification would have turned this

case into a procedural nightmare.

Against the background of an industry characterized

by non-uniform products, prices, and conduct, Judge

Chapman correctly concluded that the trial of the lia-

bility issue alone (i.e., violation and fact of damage)

on a class basis would quickly become unmanageable.

Thus, even as to the single element of conspiracy, the

trier of fact would have to determine whether one or

more conspiracies existed, and, if so, whether they op-

erated continually and extended to all South Carolina

producers and warehouses, or covered only certain mar-

kets, warehouses, farmers, types of sales, or grades of

tobacco. The difficulty in making evidentiary determi-

nations, sorting out disputed fact issues, and preserv-

ing a sensible order of proof would escalate according

to the scope of the claims.

The complications relating to the fact-of-damage ele-

ment of the liability issue would also be overwhelming,

in light of the District Court’s uncontradicted finding

that some class members actually benefitted from the

auction practices complained of—thereby precluding

a presumption that all class members were injured

even if one or more conspiracies could be proven. As

the District Court found, trial of the fact-of-damage

element alone would require individual analysis of

each class member’s sales over a four-year period—

hardly the type of factual setting necessary to satisfy

10

the predominance or manageability requirements of

Rule 23(b) (3).°

Even assuming liability could be established, there

would remain the staggering problem of fixing dam-

ages for those class members who could establish that

they were injured. The District Court’s finding, af-

firmed by the Court of Appeals, was that there is in

this case no workable formula or other mechanical

method of computing damages that could eliminate the

need for a virtually endless series of mini-trials to

adjudicate each putative class member’s claim.’

The District Court also found that a bifurcated trial

would not ease the formidable manageability problems

created by the presence of these individual issues. As

Judge Russell’s opinion for the Fourth Circuit en banc

states, bifurcation would be impractical because of the

intertwining in this case of the issues of violation, in-

jury, and amount of damage (Ptn. App. 21a-22a).

Moreover, bifurcation would be a temporary remedy

at best; the deluge of mini-trials required by class cer-

* Petitioners appear to contend that proof of individual injury is

no longer required under the antitrust laws. Citing this Court’s

decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), they

argue that ‘‘[d]amage is assumed .. . for those who deal directly

with the violators’’ (Ptn. at 19). Obviously, Illinois Brick did not

do away with the statutory requirement that the private antitrust

plaintiff must prove that he was ‘‘injured in his business or prop-

erty’’ by the alleged unlawful conduct. Clayton Act § 4, 15 U.S.C.

§ 15. See also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429

U.S. 477 (1977).

’ While petitioners continue to insist, without any factual basis,

that a formula could be developed (Ptn. at 24-26), they have pre-

sented nothing to warrant this Court’s disturbing the concurrent

findings of both lower courts on this issue. See, e.g., International

Brotherhood of Teamsters v. United States, 431 U.S. 324, 343

(1977), and cases cited therein.

ee i nh ect cane ita hm RD tt 5 A - oo

11

tification would not disappear, but would only be post-

poned (Ptn. App. 22a-24a). The facts of this case,

therefore, vividly underscore the statement by the

Court of Appeals for the Second Circuit that whether

to grant a separate trial for part of a case ‘‘is a matter

of common, garden-variety district court housekeep-

ing, an exercise of the district court’s broad discretion

in controlling the order of developing facts and issues

at trial.’’ Schine v. Schine, 367 F.2d 685, 687 (2d Cir.

1966).

In view of the foregoing, Judge Chapman’s decision

to deny class certification was plainly within his dis-

cretion—a discretion that is entitled to particular def-

erence here because the Judge personally supervised

and was intimately familiar with the development of

the complex facts on which his judgment rests. See,

e.g., New York v. International Pipe & Ceramics Corp.,

410 F.2d 295, 298 (2nd Cir. 1969).

B. Petir1oners’ APPROACH WouLD ELIMINATE THE

DISCRETION VESTED IN THE District Courts, Con-

TRARY TO RULE 23 AND THE DECISIONS OF THIS COURT

Petitioners argue in effect that district courts must

grant automatic class certification in virtually every

private treble-damage action that includes an allega-

tion of conspiracy. Petitioners are forced to such an

approach by the absence in the record of any evidence

indicating that this case satisfies the requirements of

Rule 23(b) (3). Indeed, if a district court were held to

have abused its discretion by denying class status on

the facts of this case, then class certification must be

virtually automatic.

This was the implication of the panel opinion written

by Judge Wyzanski, upon which the petitioners so

12

heavily rely. The panel majority attempted to create

a “‘presumption”’ in favor of class certification ‘‘where

there is a plausible claim of violation of the Sherman

Act”? (Ptn. App. 36a). While the presumption pur-

ported to be ‘‘rebuttable,’’ and while the opinion stated

that a class action need not be maintained in every case

(Ptn. App. 35a), it is difficult, if not impossible, to

imagine a case that would not fall within Judge Wy-

zanski’s expansive doctrine." Thus, as one commen-

tator concluded, the panel—*‘ [u]ndaunted by a lack of

precedent’’—would have in effect created ‘‘an anti-

trust exception to the requirements of Rule 23.’’ 62

Cornell L. Rev. 177, 198, 199 (1976).

Such an approach would be wholly inconsistent

with the language and meaning of Rule 23 and the

decisions of this Court. Since class certification is

to be granted under Rule 23(b) only if common

questions ‘‘predominate’’ over individual ones, Judge

Chapman need not have certified a class simply be-

cause this case, like all antitrust conspiracy cases, may

involve some common questions regarding the exist-

ence of a conspiracy. The resolution of the predomi-

nance issue must depend on the facts of each case. As

the Advisory Committee’s Note to Rule 23(b)(3)

states: ‘‘Private damage claims by numerous indi-

viduals arising out of concerted antitrust violations

* Certainly the requirement of a ‘‘plausible claim’’ of Sherman

Act violation is no real limitation. Since Judge Wyzanski con-

ceded in the same paragraph of his opinion that there was no basis

even to intimate that respondents were wrongdoers, a ‘‘plausible

claim of violation’’ apparently means nothing more than the allega-

tions of a well-pleaded complaint. Furthermore, this Court has held

that class certification may not turn on a preliminary inquiry into

the substantive merits of the underlying claim, Lisen v. Carlisle &

Jacquelin, 417 U.S. 156, 197-98 (1974).

13

may or may not involve predominating common ques-

tions.’’ 39 F.R.D. 73, 103 (1966) (emphasis added).

Petitioners attempt tc circumvent the language of

Rule 23 by stressing the importance of the class action

device in vindicating the claims of individual class

members who may lack the means or the incentive to

initiate separate proceedings. The short answer to this

argument is that it cannot be relied upon to justify

the creation of an unmanageable litigation or the de-

parture from the plain letter and meaning of the Rule.

We do not suggest that class certification should be

denied in all complex antitrust cases. By the same

token, there is no support for the notion that a case

is to be deemed certifiable as a class action simply be-

cause it is an antitrust case. Indeed, the concept of

presumptive certification in certain types of cases has

already been rejected by this Court. Only last Term, the

Court unanimously emphasized that in cases involving

racial discrimination—where class treatment is fre-

quently appropriate—certification is not automatic

and ‘‘careful attention to the requirements of Fed.

Rule Civ. Proc. 23 remains nonetheless indispensable.’’

East Tezas Motor Freight System v. Rodriguez, 431

U.S. 395, 405 (1977). Similarly, the Court in Eisen v.

Carlisle & Jacquelin, supra, 417 U.S. at 175-76, en-

forced the ‘‘best notice practicable’’ language of Rule

23(c)(2), despite petitioner’s contention in that case

that to do so would end the suit and frustrate his

attempt to vindicate the antitrust and securities claims

of individual class members.’ As the Court held in

* In this connection we note the District Court’s finding, affirmed

by the Court of Appeals, that several of the named plaintiffs have

the financial incentive to continue this suit even if class certification

is denied (Ptn. App. 72a-73a, 18a).

14

Eisen, Rule 23 must be read as written, and should not

be modified or short-circuited to accommodate any par-

ticular group of plaintiffs or type of action.

Petitioners’ reliance upon a theory of automatic or

presumptive certification for antitrust cases is, in ef-

fect, a concession that the record here contains no

support for a conclusion that the District Court abused

its discretion in denying class certification. As the en

bane Court of Appeals held, the record compels the

conclusion that Judge Chapman was correct in holding

that common questions would not predominate, and

that the case could not be managed as a class action.

Il. THE FOURTH CIRCUIT’S EN BANC DECISION DOES NOT

CONFLICT WITH ANY DECISION OF THIS COURT OR OF

ANY OTHER COURT OF APPEALS

Apart from being correct on its own terms, the de-

cision below accords with the body of law that has

developed in antitrust cases initiated under Rule 23.

While petitioners have cited some 16 instances in which

the Court of Appeals’ en bane decision purportedly

departs from the precedents of this Court and other

Courts of Appeals, these supposed ‘‘conflicts’’ are non-

existent. This case, for example, has nothing to do with

the tolling problems the Court considered in American

Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974),

and United Air Lines, Inc. v. McDonald, 432 U.S. 385

(1977). Similarly, this Court’s decision in Illinois

*° Petitioners also seem to claim that American Pipe and Mc-

Donald are inconsistent with the en banc Court’s dictum concern-

ing a ‘‘test case’’ and collateral estoppel approach (Ptn. App. 17a,

18a & nn. 30-32). Since that discussion was speculative and not

critical to the Court’s reasoning, we do not address it here, except

to state that the Court of Appeals did not, as the petitioners sug-

gest, hold that denial of certification was appropriate because the

anal, Ri Mpnes ele > hah. ant BAe ON tea Ot i Bt ee eh ee Nl VR le is RO OE eens 2 BL ON EN OL CINE et et ty ee. Le

15

Brick Co. v. Illinois, 431 U.S. 720 (1977), is wholly un-

related to the Rule 23 questions presented here.

With regard to claimed conflicts with the decisions

of other Courts of Appeals, the en bance decision below

correctly observed that these so-called ‘‘conflicts’’

‘“*seem to reflect more a factual difference in the cases

themselves than a difference over legal principles’’

(Ptn. App. 15a). Unlike the situation here, in many of

the cases cited by petitioners, classes were certified be-

cause the facts permitted a presumption of common

injury. Further, the amount of damages could be com-

puted by a formula or other workable method short of

individual ‘‘mini-trials.’’ Hence these cases, rather than

pinpointing a need for Supreme Court review, empha-

size the folly of automatic class certification of anti-

trust cases and the wisdom of an approach that allows

district courts the discretion to decide class action

questions in light of the particular circumstances of

each case.

Finally, the Fourth Circuit’s en bane decision does

not conflict with either In re Sugar Antitrust Intiga-

tion, 559 F.2d 481 (9th Cir. 1977), or Bogosian v.

Gulf Oil Corp., 561 F.2d 434 (3d Cir. 1977), petition

for cert. pending sub nom. Gulf Oil Corp. v. Bogosian,

No. 77-740. The Ninth Circuit in In re Sugar Antitrust

Litigation decided only that the order certifying a class

in that case was not reviewable by mandamus. The

Court expressly disavowed any opinion on the merits

of the certification, and cited Judge Wyzanski’s panel

test case approach was superior. Rather, the Court held that the

case was not certifiable because it failed to meet the requirements

of Rule 23(b) (3). The Court then noted, in passing, the possibility

that a ‘‘test case’’ approach might be utilized.

Ee

16

opinion in Windham simply to show that the District

Court’s certification was not such ‘‘clear and indis-

putable errdér’’ that mandamus would lie. 559 F.2d at

483.

Bogosian is a Sherman Act ‘‘tying’’ case, and the

Third Circuit Court of Appeals devoted most of its

opinion to issues involving the substantive elements of

plaintiff’s cause of action—none of which is relevant

here. Significantly, the Court did not order certifica-

tion of a class, but remanded the case to the District

Court to reconsider whether in light of the Court of

Appeals’ substantive rulings, the fact-of-damage issue

could be viewed as a common question. In this connec-

tion, the Court of Appeals observed that ‘‘[w]hether

or not fact of damage can be proven on a common

basis ... depends upon the circumstances of each case.’’

561 F.2d at 454. Regarding the further possibility of

bifurcation, the Third Circuit cited—but, contrary to

note 35a in the Windham en banc opinion (Ptn. App.

21a, n.35a), did not ‘‘approve’’—Judge Wyzanski’s

panel opinion in the present case. The Court in Bogo-

sian never reached the bifurcation issue; if and when

it does so, it will have the benefit of Judge Russell’s en

banc opinion in Windham.

17

CONCLUSION

For all the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

J. Means McFadden

Rosrnson, McFappen,

Moore & Pops EP écuddnccddccatadesaneeudencees

P.O. Box 944 Henry L. King

Columbia, South Carolina 29202 Bartlett H. McGuire

1 Chase Manhattan Plaza

New York, New York 10005

Attorneys for R. J. Reynolds Tobacco Company

Hugh L. Willcox Arnoitp & Porter

Wu.tcox, Harper, PaLMEr,

O’Fannett, MoLaop & Buyox By ............ccccceccecccccces

Willcox Building Murray H. Bring

248 W. Evans Street Melvin Spaeth

Florence, South Carolina 29501 1229 Nineteenth Street, N.W.

Washington, D. C. 20036

Attorneys for Philip Morris Incorporated

Henry B. Smythe Paul G. Pennoyer, Jr.

Burst, Moorz, SMytHe & McGee Chester J. Hinshaw

P.O. Box 999 CHADBOURNE, PARKE, WHITESIDE

5 Exchange Street & Wo.rr

Charleston, S. C. 29402 30 Rockefeller Plaza

New York, N.Y. 10020

Attorneys for American Brands, Inc.

Richard E. Richards N. R. Coleman, Jr.

Davis Potk & WarDWELL

Ricuarps, Caskey & Ricnarps Muuuican, CoLEMAN, FLETCHER

West Meeting Street at York & Gasy

Lancaster, S. C. 29720 ! P.O. Box 717

Greenville, Tenn. 37743

Attorneys for The Austin Company, Inc. (Greenville, Tennessee)

and Mullins Leaf Tobacco Company, Inc.

18

E. LeRoy Nettles Norwood Robinson

Netties, Taomy, Frorp&Smira Hunpson, Petrez, Stockton,

120 pps Street Stockton & Rosrnson

Lake City, S. C. 29560 610 Reynolds Building

Winston-Salem, N. C. 27101

Attorneys for Brown & Williamson Tobacco Corporation and

Export Leaf Tobacco Company

Jack Nettles Howard Adler, Jr.

McGowan Nerties Ke.ier Larry D. Sharp

& Eaton Bercson BorKLtanp Marcouis

P.O. Box 109 & ADLER

Florence, S. C. 29501 21 Dupont Circle

Washington, D. C. 20036

Attorneys for Dibrell Brothers Inc. and C. W. Walters Co., Inc.

D. Laurence McIntosh Tommy W. Jarrett

Waicat, Scott, BLACKWELL Dess, Dezes, SmitH, PoweLu

& Powers & JARRETT

234 West Cheves Street 105 South John Street

Florence, S. C. 29501 P.O. Box 12

Goldsboro, N. C. 27530

William R. Glendon

Guy C. Quinlan

Rogers & WELLS

200 Park Avenue

New York, N.Y. 10017

Attorneys for Gallaher Limited

C. Weston Houck

C. Weston Hover, P.A.

292 West Evans Street

Post Office Box 1252

Florence, 8S. C. 29501

Z. Hardy Rose

Lucas, Ranp, Rose, Meyer,

Jones & OrncuTr

410-424 First Union National

Bank Building

113 East Nash Street

Wilson, N. C. 27893

19

Fred D. Turnage

Cieary Gotrtiies STEEN

& Hami.Lton

1250 Connecticut Avenue, N.W.

Washington, D. C. 20036

Attorneys for Imperial Group Limited

John W. Thomas Samuel W. Hixon, III

Roserts, Jenninos & THomas Wi.uraMs, Mutuen & Curistian

Barringer Building 510 United Virginia Bank

7th Floor Building

Columbia, S. C. 29202 Richmond, Va. 23219

Attorneys for J. P. Taylor Company, Inc., Universal Leaf Tobacco

Company, Inc.

Joseph O. Rogers, Jr. John Gould

Rocers, Rices & RickENBAKER Wesster & SHEFFIELD

23 W. Boyce Street 1 Rockefeller Plaza

Manning, S. C. 29102 New York, N. Y. 10020

Attorneys for Liggett € Myers Incorporated

Douglas McKay, Jr. Joseph Gelb

McKay, SHeprm., WALKER, Adam Prussin

Townsenp & WILKINS Wet, Gotsnat & Mancgs

1340 Bull Street 767 Fifth Avenue

Columbia, 8. C. 29201 New York, N. Y. 10022

Attorneys for Loew’s Theatres, Inc.