Opposition — Gant v. Union Bank

ama Court, Us

FILED

APR YF 1980

WACHAEL RODAA, 32.

In The

Supreme Court of the United States

OcTOBER TERM, 1979

No. 79-1383

RICHARD A. GANT, ef al.,

Petitioners,

Vv.

UNION BANK, ef al.,

Respondents.

OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Peter R: TAFT

DENNIS E. KINNAIRD

Nancy Y. BEKAVAC

Cary B. LERMAN

CuHar_es D. SIRGAL

Munger, Tolles & Rickershauser

612 South Flower Street

Los Angeles, California 90017

(213) 683-9100

Attorneys for Respondent

Charles D. Prutzman, Jr.

April 7, 1980

PANDICK PRESS WEST COAST, 1945 S. FIGUEROA, LOS ANGELES, CALIFORNIA (213) 747-4321

Opinions Below

Jurisdiction .....

INDEX

snabasdndsodedbdeceseeesdsebddecncenassesoddocepasegesooodoonsesesewsouior’

ecenebecueteukddendesesesdanadecgedeqheseusessejeyedesaasepresccoceesecen

Questions Presented............ssssssesesssessensenensenennensenensncanensnneneaneess

Constitutional Provisions Involved ............:scsseseeeeeeeereeneneeetees

Statement Of the Case ............:csssccesseeseeereseneesereeereesnanssnsaseneeesees

Reasons for Denying the WTit.............scssesseseeeessennseenstseneeenens

1. This Action Is No Longer An Appropriate Vehicle

For Considering The Constitutional Issues Raised

By The Petition.............sssssssesessseserenensnenenensnensesesnsnsens

a.

b.

Of the original 18 consolidated cases, only one

ACLION FTEMAINS .........ccccccncceeneeessesssneeseneeneneneeeeees

Petitioners’ constitutional claims arise from

an interlocutory appeal and may be rendered

moot After A jUry trial. ........seseeeeereeeeeseenenreetsess

2. The Jury Trial Issue Has Not Been Sufficiently

Considered By The Courts Of Appeals ............-.+++++

a.

Conclusion......

There is no conflict among the courts of

APPEAS ........cecesesessseserersesesenenenensesseneneneneseneneneses

Procedural innovations to adapt trial by jury

to complex cases should be tried before

eliminating jury trials altogether in such cases.

ebebSbeheobeseS eee eKaecoEsESeRRSaneEsseeseasseoresooeooneDeoeesooesnensoles

9

TABLE OF AUTHORITIES CITED

CASES PAGE

Aapwatden v. TVA, ZS” US. ZOSB.C AGES Y vcvccescccccscrsvecssscoccoscssevevedes )

Blanchette v. Connecticut General Ins. Corps., 419 U.S. 102

og ERNIE ABO AOS Ge ee Da REN SD MY OP Dae 9

Boise Cascade Securities Litigation, In re, 420 F.Supp. 99

re I CT a nests satiasetansicnivsisiicecotsinanapbiias acaeablinsnsnumalei 7

Colgrove v. Battin, 413 U.S. 149 (1973) occcccccceecccceeseseesseeseseeeees 9

Colonial Ventures, Inc. & Colonial Equities, Inc. v. Touche Ross

hg Pe FHI pindlichscottneosibswigetbsivninadassudes, updacceuiienipindisbnadieba 3, 6

COE Vc ara re i ESD CSTE) sais ecisisasintkisndascaccocessndnnecascetenen 5

Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494

Rai disci nisnatnlesscepiaaibessctaRinciendesulisiiekikeinguiphinbhassecnacisaipuaniic 9

Hyde Properties, Inc. v. McCay, 507 F.2d 301 (6th Cir. 1974)...... 7

ILC Peripherals Leasing Corp. v. IBM, 458 F.Supp. 423 (N.D.

Cal. 1978), appeal pending sub nom. Memorex v. IBM Corp.,

Nos. 78-3050, 78-3236 (9th Cir., docketed Sept. 12 and Oct.

INT A she hitndidaiiiak ediimendeciahiiipadllbsiaabidoniiasihads cu Sapeussnadtinsiaudliveienstpose 7

Indiana Employment Security Division v. Burney, 409 U.S. 540

Bg 1 NESSES th DEERE SE AHI ic SAN AUP ce RC 5

Mremaens ¥. marttay, SOUS, VID CA977 ) vncecccccccccccccccsssscsccccccossceses 5

EF Me, SRT Mu TT GRIPE D vcidcdincerncsectinecescoeseccseseedeccbaesos 9

Rosen v. Dick, 83 F.R.D. 540 (S.D.N.Y. 1979), interlocutory

appeal docketed, No. 79-7844 (2d Cir. Dec. 6, 1979) .........eeee 8

Ross v. Bernhard, 396 U.S. 531 (1970) .....cccccccccesssesscesssseceee x iy Sy

U.S. Financial Securities Litigation, In re, 75 F.R.D. 702

PEE Bcc itdiitneke gid tcesnstiecenkenchcaghtpiilbsacdosncatadestooipniniblddisaumetcn l, 6

U.S. Financial Securities Litigation, In re, 609 F.2d 411 (1979)

Vices seibinsobieb alld ie icaamtiek dip orci aakegeiaslascngS cledecmbdcigeoubecaubnsan bes

Zenith Radio fue. v. Matsushita Electric Industrial Co., 478

F.Supp. 889 (E.D. Pa. 1979), interlocutory appeal docketed,

No. 79-2540 (3rd Cir. Sept. 20, 1979) oo... ce ececesscesseeeseeteees 8, 9

CONSTITUTIONAL PROVISIONS

United States Constitution, Fifth Amendment............... ihschivadabisia 2

iil

STATUTES PAGE

15 U.S.C. § T8j( 1D) .......cccsccscsscssscsssssssrscerseesersssecsscssesssssscsenseesseneens 3

2B U.S.C. $ 1ZSEC1) ..cvcerrocsscsccssccgsescrcsscrcccccss cocescsssssseccscsssoooseoesees 2

28 U.S.C. § 1292(D)....c.cccccccccrsssssssecsscossccserccesssccsssssscsescsssecseennsensees 4

RULES

Rule 10b-5, 17 C.F.R. § 240, LOB-5 oe cecetteeeeenteeeneeeeeneeeeees 3

Sup. Ct. R. 19... cccccsssssssssesesenceseesensesneassescsesessesescnesenenenneaeaceneese ss 7

MISCELLANSOUS AUTHORITIES

Administrative Office of the United States Courts, Annual

Report of the Director (1979)... ih ckasseuse 5

Note, Preserving the Right to Jury Trial in Complex Civil Cases,

32 Stan. L.Rev. 99 (1979) ..........sscccccsessscscccssccscssccecessessecsocssores e)

In The

Supreme Court of the United States

OCTOBER TERM, 1979

No. 79-1383

RICHARD A. GANT, et al.,

Petitioners,

v.

UNION BANK, ef al.,

Respondents.

OPPOSITION TO PETITION FOR WRIT

OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Respondent Charles D. Prutzman, Jr., respectfully prays

that this Court deny the Petition for a Writ of Certiorari to

review the judgment and opinion of the United States Court of

Appeals for the Ninth Circuit entered in this proceeding on

December 10, 1979, filed herein on March 7, 1980.

Opinions Below

The opinion of the United States Court of Appeals for the

Ninth Circuit, reported at 609 F.2d 411 (1979), appears in the

Appendix to the Petition at A-2.* The opinion of the United

States District Court for the Southern District of California,

reported at 75 F.R.D. 702 (1977), appears in the Appendix to

the Petition at page A-48.

* Hereinafter citations to the opinion below will be given as “609

F.2d at .......... Petition at ..........

2

Jurisdiction

The judgment and opinion of the United States Court of

Appeals for the Ninth Circuit was entered on December 10,

1979, and the petition herein was filed within 90 days of that

date. Petitioners have invoked this Court’s jurisdiction under

28 U.S.C. § 1254(1).

Questions Presented

(1) Does the Seventh Amendment permit the striking of a

jury demand in a civil case because of the perceived complexity

of the issues and the nature of the evidence?

(2) Does the due process clause of the Fifth Amendment

require the striking of a jury demand in a civil case because of

the perceived complexity of the issues and the nature of the

evidence?

Constitutional Provisions Involved

The Seventh Amendment of the United States Constitution

provides, in relevant part, “In Suits at common law, where the

value in controversy shall exceed twenty dollars, the right of

trial by a jury shall be preserved. . . .”

The Fifth Amendment to the United States Constitution

provides, in relevant part, “No person shall be. . . deprived of

”

. . . property, without due process of law. . . .

Statement of the Case

The Statement of the Case presented in the Petition

adequately describes the factual setting and the decision below,

except in two important respects.

First, the Petition overstates the complexity of the litiga-

tion. While this consolidated action at one time consisted of

five class actions and 13 non-class actions, with scores of

defendants and numerous plaintiffs, settlements have signifi-

3

cantly simplified the litigation. At the time the Ninth Circuit

heard oral argument, only five cases were then actively liti-

gated. See Supplemental Brief of Appellants Touche Ross &

Co. and Union Bank, filed May 18, 1979, In re U.S. Financial

Securities Litigation, 609 F.2d 411 (9th Cir. 1979). The other

13 cases either had been settled or were dormant at the time of

the hearing. By the time the Petition was filed on March 7,

1980, all but one of the cases had been settled.' The one

remaining case is Colonial Ventures, Inc. & Colonial Equities,

Inc. v. Touche Ross & Co., No. 74-436-T, R.3141, which is not a

class action, but is brought by individual corporate plaintiffs

under Section 10(b) of the Securities Exchange Act of 1934, 15

U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R §240.10b-5,

promulgated thereunder, and state law.

The Petition’s second deficiency in stating the case below

lies in its interpretation of the Ninth Circuit’s holding. The

Court of Appeals’ discussion of footnote 10 of this Court’s

opinion in Ross v. Bernhard, 396 U.S. 531 (1970), is not as

broad as Petitioners assert. The Petition claims that the Ninth

Circuit “held that . . . the three-pronged Ross test cannot be

used as a means of determining the right to a jury trial... .”

Petition at 5. In fact, the Ninth Circuit applied an “historic

test,” which included both the first and second parts of the Ross

footnote, in deciding that the district court’s order striking the

jury demands violated the Seventh Amendment. 609 F.2d at

423. Petition at A-25-A-26. The court simply did not use the

third, and most problematic, prong of that test, “the practical

abilities and limitations of juries.” Jd. It “‘decline[d] the

invitation to read the Ross footnote as establishing a new

interpretation of the Seventh Amendment.” 609 F.2d at 432,

Petition at A-46.

1 As described in the Memorandum of Touche Ross & Co. in

Opposition to the Petition, filed this date, since the time of the Ninth

Circuit’s hearing, the parties in three class actions have reached

agreements on settlement, but the district court has not yet approved

the settlements, and one private action has been settled.

Sm OP arty eet

4

Reasons for Denying the Writ

Petitioners have asked this Court.to review a “fundamen-

tal” issue of Seventh Amendment jurisprudence. Petition at 7.

But they request this Court to undertake that far-reaching

inquiry when neither this case nor the developing case law

justifies or requires such a review. In their haste to have this

Court create a major and unprecedented exception to the

Seventh Amendment, Petitioners have ignored the prudential

considerations which guide this Court’s decision to grant or

deny a writ of certiorari.

First, changing circumstances have made this action an

inappropriate vehicle for considering the “fundamental” issue

raised in the Petition. The settlement of all but one of the

consolidated cases has substantially altered the factual basis

upon which the jury trial issue was originally decided. More-

over, Petitioners, who are all defendants below, seek this

Court’s review of an interlocutory order certified under 28

U.S.C. § 1292(b). If Petitioners prevail after a jury trial of the

claims against them, their constitutional arguments would be

moot.

Second, there is no conflict among courts of appeals

regarding the issue presented. Petitioners request the Court to

decide the jury trial issue after only one court of appeals has

considered the issue. Moreover, cases pending before the

United States Court of Appeals for the Second and Third

Circuits, as well as another case pending before the United

States Court of Appeals for the Ninth Circuit, may add further

support to the decision below. Furthermore, Petitioners seek

review before trial courts and counsel have had a sufficient

opportunity to adopt innovative procedural tools both to pre-

serve the jury trial right and to permit counsel to shape cases so

that they can be understood by juries and judges.

Finally, the magnitude of the issue raised in the Petition

must be placed in its proper perspective. The number of

: complex cases comprised less than 0.3% of all the civil cases

5

tried in 1979, and required less than 4% of all trial days for that

year.2 Petitioners seek to create an absolute exception to

Seventh Amendment protections in order to respond to a recent

development involving only a very small number of cases,

before adopting other, less drastic means of ensuring that those

cases are tried before a rational fact-finder.

1. This Action Is No Longer An Appropriate Vehicle For

Considering The Constitutional Issues Raised By The

Petition.

a. Of the original 18 consolidated cases, only one action

remains.

The Petition posits a constitutional dilemma which, as a

factual matter, no longer exists. The Petition assumes that there

are civil cases in which “the complexity of the issues and

evidence. . . is beyond the practical abilities and limitations of

a jury... .3 Even if there are such cases, and even if this

action were once such a case, the question is now purely

hypothetical: there has been no showing that, after settlement

of all but one of the constituent cases, the one remaining case is

of such complexity. This Court has denied petitions for

certiorari where changing circumstances have mooted the ques-

tion posed. Kremens v. Bartley, 431 U.S. 119, 127 (1977);

Craig v. Boren, 429 U.S. 190, 192 (1976); Indiana Employment

Security Division v. Burney, 409 U.S. 540, 541-42 (1973) (per

curiam). This is one such case.

2 Administrative Office of the United States Courts, Annual

Report of the Director, Tables C-8, C-9 at A-38-39, 39-b (1979).

3 One of the principal defects of the question presented is that it

contains no workable standards for determining what cases are too

complex. Although amicus International Business Machines Corp.

suggests various standards, Brief of Amicus Curiae International

Business Machines Corp. at 11, it does not suggest how courts should

weigh those considerations. It is likely that use of those standards will

result in yet more time-consuming appeals from disappointed litigants

arguing that the trial court abused its discretion in either striking, or

failing to strike, jury demands.

6

The Petition states that five class actions and 13 non-class

actions were consolidated to comprise /n re U.S. Financial

Securities Litigation. Petition at 3. At this time, however, only

one lawsuit is active, Colonial Ventures, Inc. and Colonial

Equities, Inc. v. Touche Ross & Co., et al., supra. Each of the

other active actions has been settled. While the Petitioners

acknowledge that “many” of the consolidated cases have been

settled, they continue to maintain that the overwhelming com-

plexity of the remaining action has not been simplified by those

settlements. Petition at 5 n.2. Contrary to Petitioners’ assump-

tions, there was no finding, either by the district court, or by the

Ninth Circuit, that the one remaining case is beyond the

capacity of a jury. Therefore, there is no basis for finding this

case to be sufficiently complex to warrant this Court’s review of

the Court of Appeals’ opinion that the district court erred in

striking the jury demands.4

b. Petitioners’ constitutional claims arise from an inter-

locutory appeal and may be rendered moot after a jury

trial.

Not only is there doubt regarding the complexity of the

remaining action, but Petitioners, who are defendants below.

are prematurely raising their due process argument. There has

been no trial of the claims against them. At the time of the

district court’s order, the Ninth Circuit had never ruled on the

jury trial issue. It was therefore appropriate for that Court to

undertake interlocutory review of an issue of fundamental

importance arising from the then-imminent trial of 18 consoli-

dated cases. However, now that the Ninth Circuit has reviewed

the district court’s order, arid the 18 cases have dwindled to

one, there is no pressing need for this Court’s review of the

decision below. >

If after trial, Petitioners are aggrieved by a jury verdict,

they have a full panoply of remedies, such as a motion for

judgment notwithstanding the verdict, to review the verdict. If

Petitioners prevail before a jury, there will obviously be no

need to address the constitutional issues raised in this case.

4 See Memorandum of Touche Ross & Co. in Opposition to the

Petition for a fuller explanation of the various settlements.

7

2. The Jury Trial Issue Has Not Been Sufficiently Considered

By The Courts Of Appeals.

a. There is no conflict among the courts of appeals.

Petitioners assume what they must prove, that some cases

are so complex that they are beyond the practical abilities and

limitations of a jury. They then ask the abstract question of

whether, in a case in which the claims made and relief sought

are legal, but the action is “complex,” the Seventh Amendment

permits, or due process demands, the striking of the jury. There

is no present conflict among the courts of appeals regarding

that issue and only one appellate court, the Ninth Circuit, has

considered the question.

Four district courts, other than the one below, have struck

jury demands in complex cases, while other district courts have

refused to do so; but this Court does not typically resolve

differences among district courts. See Sup. Ct. R. 19. More-

over, two of those four cases arose within the Ninth Circuit.

The precedential value of one, /n re Boise Cascade Securities

Litigation, 420 F.Supp. 99 (W.D. Wash. 1976), has been

erased by the decision below. The other is presently on appeal.

ILC Peripherals Leasing Corp. v. IBM Corp., 458 F.Supp. 423

(N.D. Cal. 1978), appeal pending sub nom. Memorex Corp. v.

5 Petitioners assert that the decision below creates a conflict

among the circuits regarding the applicability of footnote 10 of Ross v.

Bernhard, supra. Petition at 12-14. There is no such conflict. That

footnote indicated that this Court believed three considerations deter-

mined whether there was a right to a jury trial: pre-merger custom, the

nature of the relief sought and the practical abilities and limitations of

juries. Petitioners argue that the third prong swallows the first two.

But only one of the court of appeals’ opinions cited in the Petition

supports striking a jury demand, and that case did not rely solely upon

the complexity ground. Hyde Properties, Inc. v. McCoy, 507 F.2d 301,

306-07 (6th Cir. 1974). To the contrary, the court in Hyde Properties

found that the nature of the relief sought also militated in favor of

dispensing with a jury. Thus, the cases cited to show a conflict are not

inconsistent with the opinion below.

8

IBM Corp., No. 78-3050, 78-3236 (9th Cir., docketed Sept. 12

and Oct. 6, 1978). The other two district court cases, one of

which is presently on appeal, arose within the Second Circuit.

There are three cases pending in the courts of appeals,

which could in fact lead to a consensus among those courts,

obviating the need for this Court to reconcile their decisions.

The Second Circuit presently has before it Rosen v. Dick, 83

F.R.D. 540 (S.D.N.¥. 1979), interlocutory appeal docketed,

No. 79-7844 (2d Cir. Dec. 6, 1979), a case in-which the district

court found that the right to a jury trial had been waived, and

refused to empanel a jury for an advisory opinion because of

the complexity of the action. In Zenith Radio Corp. v.

Matsushita Electric Industrial Co., 478 F.Supp. 889 (E.D. Pa.

1979), interlocutory appeal docketed, No. 79-2540 (3d Cir. Sept.

20, 1979) (argued Feb. 14, 1980), Judge Becker issued a

carefully reasoned opinion which upheld a jury demand in a

complex antitrust action. The Third Circuit is now reviewing

that decision. Finally, the Ninth Circuit has before it Memorex

Corp. v. IBM Corp., supra, a case in which the district court

struck the jury demand, following a deadlock among the jury.

Because Petitioners’ arguments are both novel and

unprecedented, courts of appeals should be given an opportu-

nity to examine them. Except for the mention of jurors’

“limitations” in the Ross footnote, this Court has never consid-

ered complexity as a factor in favor of striking a jury demand.

See cases cited at 609 F.2d at 426 n.48, Petition at A-32 n.48.

Despite the attractiveness of Petitioners’ proposal for promoting

judicial adminstration by giving courts the discretion to strike

jury demands in complicated cases, it is nevertheless repugnant

to the Seventh Amendment. And the difficulties which inhere

in the proposal to give courts discretion over whether to

empanel a jury in complicated litigation override any attraction:

the unrestrained discretion it gives judges; the potential for

dilatory motions; the uncertainty about which issues and cases

are and which are not inordinately “complex”; the abrupt

departure from this Court’s well-developed historical analysis.

9

b. Procedural innovations to adapt trial by jury to complex

cases should be tried before eliminating jury trials

altogether in such cases.

The genius of our judicial system has been its ability to

adapt the institution of the jury to meet changing needs. £.g.,

Colgrove v. Battin, 413 U.S. 149, 156-57 (1973) (twelve

member jury not required by Seventh Amendment); Gasoline

Products Co. v. Champlin Refining Co., 283 U.S. 494, 498

(1931) (new trial on less than all issues may be ordered,

although common law did not permit setting verdict aside in

part).

In the opinion below, the Ninth Circuit stressed the

availability of numerous procedural devices, such as stipulating

to evidence or facts, separate trials of specified issues, the

appointment of a master, and the use of summaries, as a way of

reconciling the Seventh Amendment’s command with the pre-

sumed limitations of juries. 609 F.2d at 427-29, Petition at A-

35-A-38. Indeed, the brief of amicus curiae International

Business Machines Corporation suggests other “novel modi-

fications of traditional jury trial procedures” that trial courts

might use to reconcile these two competing interests. Brief of

Amicus Curiae International Business Machines Corporation at

9-11. See also Zenith Radio Corp. v. Matsushita Electric

Industrial Co. supra, 478 F.Supp. at 936.

The innovations suggested by the Court below, and by

various commentators, e.g., Note, Preserving the Right to Jury

Trial in Complex Civil Cases, 32 Stan. L. Rev. 99, 115-18

(1979), have not yet been implemented. There is, therefore,

insufficient practical experience to conclude that juries and jury

trials have the inherent disabilities ascribed to them by Petition-

ers and amicus curiae.6 This Court’s review of the jury trial

6In view of the evolving techniques being used by district courts

in large cases and the lack of conflict among courts of appeals, the

issue is not ripe, in a practical sense, for this Court’s review. See

Blanchette v. Connecticut General Ins. Corps., 419 U.S. 102, 138

(1974), citing Ashwander v. TVA, 297 U.S. 288, 346-47 (1938)

(Brandeis, J. concurring) and Poe v. Ullman, 367 U.S. 497 (1961).

10

issue should follow, not precede, efforts by trial courts to tailor

the institution of the jury to the demands of modern litigation.

Indeed, a premature decision in this case could end such

productive experimentation, which may eventually diminish the

calls for a “complex litigation” exception to the Seventh

Amendment.

Petitioners challenge two hundred years of Seventh

Amendment jurisprudence for the assumed benefit of litigants

in a narrow category of cases. Significantly, all of the district

court decisions striking jury trial demands because of perceived

complexity have been made in the past four years. See Petition

at 10-11. They present no empirical evidence to show that as a

general matter juries are incapable of rationally deciding

complex issues. Since the Federal courts have not had time to

adopt the wide range of procedural tools available to make

difficult cases more understandable to jurors, it would be

premature to consider the questions raised in the Petition.

11

Conclusion

For the reasons stated above, Respondent Charles D.

Prutzman, Jr., respectfully requests this Court to deny the

Petition for Writ of Certiorari to the United States Court of

Appeals for the Ninth Circuit.

DATED: April 7, 1980.

Respecifully submitted,

Peter R. TAFT

DENNIS E. KINNAIRD

Nancy Y. BEKAVAC

Cary B. LERMAN

CHARLES D. SIEGAL

Munger, Tolles & Rickershauser

612 South Flower Street

Los Angeles, California 90017

(213) 683-9100

Attorneys for Respondent

Charles D. Prutzman, Jr.