Petition — International Business Machines Corp. v. Greyhound Computer Corp.

breme Court, U.@ ”

IN THE

MICHAEL RODAK, JR. CLERK

FILED

MAR 10 1980

Supreme Court of the United Siates

OCTOBER TERM, 1979

No.

a

-1396

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Petitioner,

Ye

GREYHOUND COMPUTER CORPORATION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Of Counsel:

NICHOLAS DEB. KATZENBACH

International Business

Machines Corporation

Armonk, New York 10504

BROWN & BAIN

222 N. Central Avenue

Phoenix, Arizona 85004

March 10, 1980

THOMAS D. BARR

CRAVATH, SWAINE & MOORE

One Chase Manhattan Plaza

New York, New York 10005

JAMES S. CAMPBELL

ALAN N. BRAVERMAN

ANDREW N. VOLLMER

WILMER & PICKERING

1666 K Street, N.W.

Washington, D.C. 20006

Counsel for Petitioner

International Business

Machines Corporation

WILSON - EPES PRINTING Co., INC.

- 789-0096 - WASHINGTON, D.C. 20001

| INDEX

rr ee

I

QuUReTION PERSENTES

STATUTORY AND CONSTITUTIONAL PROVI-

en ee

STATEMENT

REASONS FOR GRANTING THE WRIT .................

I. This Petition Raises an Issue of Unusual Im-

portance That Has Produced a Widespread Con-

flict of Views in the Lower Federal Courts. ........

II. The Question of Jury Trials in Complex Cases

Should Be Considered by this Court with both

the U.S. Financial Case and the Instant Case

ISIS SRS ES RR

III. The Ninth Circuit’s View That the Complexity

of a Case Is Irrelevant to Whether It Is Triable

\ as of Right to a Jury Is Historically Wrong and

| Is Contrary to Established Constitutional Prin-

ciples. ain ES

EES ATS RE SR

Co cchsusoneteaieeensocsecce

APPENDIX B ............ és SS

Page

13

15

20

la

2a

ii

TABLE OF AUTHORITIES

Cases: Page

Atlas Roofing Co. v. Occupational Safety and

Health Review Commission, 480 U.S. 442

I oo oes sctisennnevciseananniovedinandorenatnoamsosaconesausecees 19

Barker v. Wingo, 407 U.S. 514 (1972) .............-.---- 15

Beacon Theatres, Inc. v. Westover, 359 U.S. 500

Teac avennnnxtoniecinkadopdeetagenrenaiaahanseounanatonieewtsie 18, 19

Bernstein v. Universal Pictures, Inc., 79 F.R.D. 59

CIty. BIND ii desecnliininiasribdpptnanesodsneneineenumstinnecee 11

In re Boise Cascade Securities Litigation, 420

F. Supp. 99 (W.D. Wash. 1976) ...............--....------ 11

California Computer Products, Inc. v. IBM Corp.,

[1979-1] Trade Cas. { 62,713 (9th Cir. June 21,

pansion inca ctivonianptioeblair 5

Cox v. C.H. Masland & Sons, Inc., 607 F.2d 188

(5th Cir. 1979) as 12

Curtis v. Loether, 415 U.S. 189 ( 1974) pe alee 12, 18

Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962) .... 18

Forro Precision, Inc. v. IBM Corp., Civ. No. 74-

1658 (N.D. Cal. 1977), appeal pending, Nos. 78-

1455, 78-1755 (9th Cir., docketed Mar. 1 and

PN NE atihiciapnnvcsp caconecacns naps cietiteswceaenenewsonnene 5

Greenholtz v. Inmates of the Nebraska Penal &

Correctional Complex, 442 U.S. 1 (1979) .......... 16

Greyhound Computer Corp. v. IBM Corp., [1972]

Trade Cas. 74,205 (D. Ariz. 1972), rev’d in

part, 5659 F.2d 488 (9th Cir. 1977), cert. denied,

re si alaatcaccaiswentinsersennsenciods passim

Hildebrand v. Board of Trustees, 607 F.2d 705

Nichi ciccecchcosticientenianditninndnsncninnpuionest 12

House v. Mayo, 324 U.S. 42 (1945) ..............---.------- 2

Hyde Properties v. McCoy, 507 F.2d 301 (6th

Ce a spe teebinsienisdobmainss 12

ILC Peripherals Leasing Corp. v. IBM Corp., 458

F. Supp. 423 (N.D. Cal. 1978), appeal pending

sub nom. Memorex Corp. v. IRM Corp., Nos. 78-

8050, 78-3236 (9th Cir., docketed Sept. 12 and

ON I oii atts niininncasienntdansnoreiiatenticriensesonesed 5, 11, 14

Katchen v. Landy, 382 U.S. 323 (1966) ............-.....- 18

Mathews v. Eldridge, 424 U.S. 319 (1976) ............. 16

iii

TABLE OF AUTHORITIES—Continued

Minnis v. International Union, UAW, 581 F.2d

Be Se I sch eitnsiedeincs cechnditacennerctsnemocnnmens

Parklane Hosiery Co. v. Shore, 489 U.S. 322

(1979) a

Pons v. Lorillard, 549 F.2d 950 (4th Cir. 1977),

aff'd on other grounds, 434 U.S. 575 (1978)......

Rogers v. Loether, 467 F.2d 1110 (7th Cir. 1972),

aff'd sub nom. Curtis v. Loether, 415 U.S. 189

BIND icshibictoniccanctsher ca tic teacher subs wociesndiaanigsenadientes

Rosen v. Dick, 88 F.R.D. 540 (S.D.N.Y. 1979),

interlocutory appeal docketed, No. 79-7844 (2d

ac cee as III cgcnkiiss Sete ceuing is cnalinasecnlonsianbeouiniol

Ross v. Bernhard, 396 U.S. 531 (1970) -........ 10, 11,

In re 620 Church Street Building Corp., 299 U.S.

RR el ee CE Se

Telex Corp. v. IBM Corp., 367 F. Supp. 258 (N.D.

Okla. 1973), rev’d in part, 510 F.2d 894 (10th

Cir.), cert. dismissed, 423 U.S. 802 (1975) ........

Tidewater Oil Co. v. United States, 409 U.S. 151

| SRR re nC Rea

Tights, Inc. v. Stanley, 441 F.2d 336 (4th Cir.),

cert. denied, 404 U.S. 852 (1971) -............2.22222..

Transamerica Computer Co. v. IBM Corp., [1979-

2] Trade Cas. {| 62,989 (N.D. Cal. Oct. 18, 1979),

appeal docketed, No. 80-4048 (9th Cir. Jan. 31,

| ERR RRA Ste Cea OE 2 REC a

Transamerica Computer Co. v. IBM Corp., 459

F. Bee. See tru. Ga. Sere?

United States v. Anderson, 584 F.2d 369 (10th

Re aati iestacctincieepccesararcirnonthiasleiaesscabietaionien

In re U.S. Financial Securities Litigation, 609 F.2d

Page

12

19

12

11, 12

11

12

BE Cy I Biekicissntiiocecbesenivciccadensiacindniditon passim

In re U.S. Financial Securities Litigation, 75

F.R.D. 702 (S.D. Cal. 1977), rev’d, 609 F.2d 411

ee ee SI ec Ge

Zenith Radio Corp. v. Matsushita Electric Indus-

trial Co., 478 F. Supp. 889 (E.D. Pa. 1979),

appeal pending, No. 79-2540 (3d Cir., argued

SG. Stas BIRT esuticbleniatesadiaceanatns

11

iv

TABLE OF AUTHORITIES—Continued

Page

Constitutional Provisions:

i a nc cera tierce 4,6, 16

og nee passim

Statutes and Federal Rules:

y Bie TR BS : Ghee eee mses . 412

i ee I a dircnteittincitenieciccetiiniasichainnnintiinath 4

Bk ee NS. | creme ones 2,3

RR eee neat 2, 3, 7

, Bil Tee B «hE ’ | ReReeeememnnos 2,3

te Rg |. IRE reser numeneenetc ener ss 4, 6,10

Miscellaneous Authorities :

P. Devlin, Note on the Suit at Common Law in

England at the Time of the Seventh Amendment

ol Te BERT AeA? 2S eA eee 17, 18

Moore’s Federal Practice (2d ed. 1975) ................... 2

C. Wright & A. Miller, Federal Practice and Pro-

SR IGE. sescecec cies ceca eanedaaeddnniennais 2

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Petitioner,

V.

GREYHOUND COMPUTER CORPORATION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

International Business Machines Corporation

(“IBM”) petitions for a writ of certiorari to review

the judgment of the United States Court of Appeals

for the Ninth Circuit.

OPINIONS BELOW

The order of the court of appeals (App. A) is not

reported. The memorandum, order and certification

of the district court (App. B) are not reported.

2

JURISDICTION

The order of the court of appeals denying IBM’s

petition for permission to appeal pursuant to 28

U.S.C. § 1292(b) on the ground that the issue of law

raised by the petition had been resolved by the Ninth

Circuit in In re U.S. Financial Securities Litigation,

609 F.2d 411 (9th Cir. Dee. 10, 1979), was entered

on February 1, 1980. This Court has jurisdiction to

issue the prayed-for writ under 28 U.S.C. § 1254(1)

or 28 U.S.C. § 1651 (a).”

QUESTION PRESENTED

Whether a federal district court has the authority

under the Constitution to strike a jury demand in a

case of such extraordinary complexity as to exceed

the practical abilities and limitations of a jury.

1The fact that the court of appeals has considered the

merits of the question presented in denying IBM’s petition

to appeal, see p. 8, infra, has “brought the case within

any reasonable purpose of the requirement [of 28 U.S.C.

§ 1254(1)] that it be in that court.” C. Wright & A. Miller,

Federal Practice and Procedure § 4036, at 13 (1978) (em-

phasis added). This Court, therefore, has jurisdiction under

Section 1254(1) to issue a writ of certiorari to the court

of appeals. See, e.g., Tidewater Oil Co. v. United States,

409 U.S. 151 (1972). In the event this Court decides that

this case was not “in” the court of appeals within the mean-

ing of Section 1254(1), IBM moves in the alternative to in-

voke this Court’s jurisdiction under 28 U.S.C. § 1651(a).

House v. Mayo, 324 U.S. 42 (1945); In re 620 Church St.

Bldg. Corp., 299 U.S. 24 (1936) ; 9 Moore’s Federal Practice

110.27, at 299 (2d ed. 1975). To that end, IBM has today

filed a petition for a writ of certiorari under Section 1651 (a)

with an accompanying motion for leave to file.

3

STATUTORY AND CONSTITUTIONAL

PROVISIONS INVOLVED

28 U.S.C. §1254(1) (1976) provides:

_“Cases in the courts of appeals may be re-

viewed by the Supreme Court by the following

methods:

“(1) By writ of certiorari granted upon the

petition of any party to any civil or crimiual case,

before or after rendition of judgment or de-

Oma

28 U.S.C. § 1292(b) (1976) provides:

“When a district judge, in making in a

civil action an order not otherwise appealable

under this section, shall be of the opinion that

such order involves a controlling question of law

as to which there is substantial ground for dif-

ference of opinion and that an immediate appeal

from the order may materially advance the ulti-

mate termination of the litigation, he shall so

state in writing in such order. The Court of

Appeals may thereupon, in its discretion, permit

an appeal to be taken from such order, if appli-

cation is made to it within ten days after the

entry of the order: Provided, however, That ap-

plication for an appeal hereunder shall not stay

proceedings in the district court unless the dis-

trict judge or the Court of Appeals or a judge

thereof shall so order.”

28 U.S.C. §1651(a) (1976) provides:

“The Supreme Court and all courts estab-

lished by Act of Congress may issue all writs

necessary or appropriate in aid of their respec-

tive jurisdictions and agreeable to the usages and

principles of law.”

4

The Fifth Amendment to the United States Consti-

tution provides in relevant part:

“No person shall be .. . deprived of . . . property,

without due process of law... .”

The Seventh Amendment to the United States Con-

stitution provides in relevant part:

“In Suits at common law .. . the right of trial

by jury shall be preserved... .”

Rule 39(a) (2) of the Federal Rules of Civil Pro-

cedure provides in relevant part:

‘When trial by jury has been demanded as pro-

vided in Rule 38, the action shall be designated

upon the docket as a jury action. The trial of

all issues so demanded shall be by jury, unless

. 2. the court upon motion or of its own initiative

finds that a right of trial by jury of some or all

of those issues does not exist under the Consti-

tution or statutes of the United States.”

STATEMENT

This petition arises out of a ruling preceding the

second trial of an action commenced by Greyhound

Computer Corporation (“Greyhound”) against IBM

under Section 4 of the Clayton Act, 15 U.S.C. §15

(1976), alleging violations of Section 2 of the Sher-

man Act, 15 U.S.C. §2 (1976). Including the first

trial in this case, the upcoming trial will be the

seventh trial of a private Section 2 damage action

against IBM, all arising out of the same general time

period and all involving many similar claims, issues

and facts. Three of these cases—Memorex, Trans-

_ america and Forro—reached juries after lengthy

5

trials.’ In all three, the juries hung on the antitrust

issues.°

The first Greyhound trial was a protracted, com-

plex proceeding. At issue were a variety of claims

based on IBM’s products and pricing and involving

complicated concepts of accounting, finance, market

economics and computer technology. Plaintiff’s case

required 25 trial days. Two hundred sixty-nine ex-

hibits were introduced into evidence, and 20 witnesses

testified. The trial transcript ran to some 4,100

pages. At the close of plaintiff’s case, the trial judge

directed a verdict for IBM. [1972] Trade Cas.

| 74,205 (D. Ariz. 1972). The judgment for IBM

was subsequently reversed in part and remanded for

a new trial of most of the Section 2 claims. 559 F.2d

* Two of the actions, including the first Greyhound trial,

resulted in a directed verdict at the close of plaintiff’s case.

California Computer Products, Inc. v. IBM Corp., [1979-1]

Trade Cas. { 62,713 (9th Cir. June 21, 1979) (58 trial days)

(directed verdict affirmed). The one bench trial was Telex

Corp. v. IBM Corp., 367.F. Supp. 258 (N.D. Okla. 1973),

rev'd in part, 510 F.2d 894 (10th Cir.), cert. dismissed, 423

U.S. 802 (1975). The antitrust claims in Telex were tried

together with a trade secret counterclaim in 80 days. The

district court decided against IBM on the antitrust claim

and for IBM on the trade secret claim. The Tenth Circuit re-

versed the antitrust decision and directed the entry of judg-

ment for IBM;; it affirmed the judgment for IBM on the trade

secret claim.

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

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

Corp. v. IBM Corp., Nos. 78-8050, 78-8286 (9th Cir., docketed

Sept. 12 and Oct. 6, 1978) (“Memorex’’) (96 trial days) ;

Transamerica Computer Co. v. IBM Corp., [1979-2] Trade

Cas. | 62,689 (N.D. Cal. Oct. 18, 1979), appeal docketed, No.

80-4048 (9th Cir. Jan. 81, 1980) (128 days); Forro Pre-

cision, Inc. v. IBM Corp., Civ. No. 74-1658 (N.D. Cal. 1977),

appeal pending, Nos. 78-1455, 78-1755 (9th Cir., docketed Mar.

land Apr. 7, 1978) (22 trial days).

6

488 (9th Cir. 1977), cert. denied, 434 U.S. 1040

(1978). The second trial is now scheduled to begin

on May 1, 1980.

The second Greyhound trial will almost certainly

involve even more complex issues than the first. All

but two of the issues presented in the first trial are

again to be contested. In addition, Greyhound is

pressing new claims based oi. IBM’s products and

pricing since 1972 and now alleges anticompetitive

conduct in dozens of markets and submarkets—not

just the two or three at issue in the first trial. The

case also now covers an additional seven years of

allegedly anticompetitive conduct.* The district court

judge has concluded that this is a “complex case by

any definition.” App. B. He has estimated con-

servatively that it will take as long as four months

to try Greyhound’s claims to a jury. Id.

Because a jury cannot reasonably be expected to

understand and fairly decide so protracted and com-

plex a case—as the Memorex, Transamerica and

Forro cases have vividly demonstrated—IBM moved,

pursuant to Fed. R. Civ. P. 39(a), to strike Grey-

hound’s jury trial demand. IBM argued, first, that

the Seventh Amendment does not preserve a right to

a jury trial in cases too complicated to be understood

by a jury and, second, that the Due Process Clause

does not permit the use in the federal courts of an

4The greatly expanded scope and complexity of the second

trial is reflected in the extensiveness of Greyhound’s pre-trial

discovery. Greyhound has deposed 73 IBM employees—over

5 times the number of IBM employee depositions taken in

preparation for the first trial. And IBM has this time pro-

duced well over 10 times the approximately 150,000 pages

of documents discovered by Greyhound for the first trial.

7

adjudicatory procedure incapable of yielding a rea-

soned result.

The district court agreed that the Greyhound case

“Involves sophisticated, highly technical and difficult

questions of economics, technology and law” and

acknowledged “the real danger of a hung jury.” App.

B. Nevertheless, the district court concluded that

under its view of the “current status of the law.”

id., it lacked the authority to grant IBM’s motion to

strike. At the same time, the court acknowledged

that the lower courts are “not unanimous” on the

issue raised by IBM’s motion, and it therefore certi-

fied the question of jury trials in complex cases to

- Ninth Circuit pursuant to 28 U.S.C. § 1292(b).

While IBM’s petition for permission to appeal was

pending, the Ninth Circuit announced its decision in

In re U.S. Financial Securities Litigation, 609 F.2d

411 (9th Cir. Dec. 10, 1979). That case involved

an appeal from an order entered by the trial judge

striking a plaintiff’s jury trial demand on the ground

that the case was too complex to be understood

by the jury. In reversing the trial judge, the Ninth

Circuit, one judge dissenting, held there “is no

“ ‘complexity’ exception to the Seventh Amendment

right to a jury trial in civil cases.” Id. at 413. The

majority reasoned that the Seventh Amendment pre-

serves a right to a jury in a damage action asserting

traditional common law claims, regardless of the

complexity of the issues involved or their suitability

for resolution through the jury procedure. The ma-

jority also rejected a due process chalienge to the use

of juries in complex cases, basing its decision on its

8

belief that complexity can be minimized through

various pre-trial and trial procedures and that, re-

gardless of the ultimate complexity of the issues, a

jury is a competent fact finder in complex cases.

Id. at 427 (emphasis in original).

In reaching this result, the U.S. Financial ma-

jority made clear that its decision did not turn on

the degree of complexity involved in the U.S. Fiman-

cial trial. Indeed, the majority opinion declared that

“differing degrees of difficulty and complexity would

not alter [its] ultimate decision.” Jd. at 416. In

dissent, Judge Kilkenny observed that a jury trial of

the complicated issues involved in the U.S. Financial

case “would result in nothing short of judicial

chaos” and that the opinion of Judge Turrentine, the

trial judge, “ ‘covers the waterfront’ and adequately

responds to every proposal of the majority. In re

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

(1977).” Id. at 482.

By an order entered on February 1, 1980, the

Ninth Circuit, per Judges Hug and Pregerson, re-

jected IBM’s petition for permission to appeal. In SO

doing, the court made clear that it had considered

the merits of the IBM petition and had found the

certified question to be controlled by its recent pro-

nouncements in U.S. Financial. The court ruled:

“The issue of law raised by the petition has been de-

finitively resolved in this circuit, In re United States

Financial Securities Litigation ....” App. A.°

5A petition for a writ of certiorari to review the In re

U.S. Financial Securities Litigation decision has been filed

with the Court and is captioned Gant v. Union Bank. IBM

has moved for leave to file a brief as amicus curiae in support

of petitioner Gant.

9

REASONS FOR GRANTING THE WRIT

This case raises an issue of unusual importance

for the administration of justice in the federal courts.

The question presented is whether the Constitution

denies a federal district court judge the power to

withhold a civil case from a jury and decide it himself

when the judge is convinced that a jury cannot rea-

sonably be expected to understand and accurately

decide the extraordinarily complex issues involved.

Relying on its recent decision in U.S. Financial, the

Ninth Circuit has ruled that the extraordinary com-

plexity of the upcoming second Greyhound trial can-

not serve as a basis for striking plaintiff Greyhound’s

jury trial demand. The Ninth Circuit’s decisions in

both the instant case and in U.S. Financial are

wrong, inconsistent with the teachings of this Court,

and in conflict with the decisions of other federal

courts concerning the standards to be applied in re-

solving Seventh Amendment jury trial questions. Un-

less reversed, the Ninth Circuit’s ruling will perpet-

uate the increasing abuse of jury trial procedures

that has resulted in avoidable burdens on the federal

courts and in litigants being deprived of fair and

reasoned adjudications of complex disputes.

I. This Petition Raises an Issue of Unusual Importance

That Has Produced a Widespread Conflict of Views in

the Lower Federal Courts.

There can be no serious question about the impor-

tance of the issue raised by this petition. At issue

here is the adequacy of the jury trial procedure to

reach fair and reasoned results in extraordinarily

complex cases. Whether jury trial is a constitutional-

ly mandated procedure in cases of such extraordinary

10

complexity as to exceed the practical abilities and

limitations of juries is, as the Ninth Circuit so aptly

observed, a question that “strikes at the heart of

this country’s system of jurisprudence.” 609 F.2d

at 413.

The Ninth Circuit’s rulings in Greyhound and U.S.

Financial have heightened the already widespread

conflict among the federal courts concerning the

standards to be applied in resolving Seventh Amend-

ment jury trial questions. The Ninth Circuit is, to

be sure, the first court of appeals to decide squarely

whether the complexity of a lawsuit is of itself a

constitutionally sufficient basis to strike a jury de-

mand. The Ninth Circuit’s rulings are, however, in

direct conflict with at least four district court opin-

ions. And the Ninth Circuit’s refusal to allow trial

courts to consider the complexity of a case, in ruling

on a motion under Fed. R. Civ. P. 39(a) (2) to strike

a jury demand, is directly contrary to the approach

to Seventh Amendment questions that has been

adopted by six other courts of appeals.

In concluding that the ability of a jury to com-

prehend a case of extraordinary complexity is not

relevant to Seventh Amendment analysis, the Ninth

Circuit refused to follow the test set forth in Ross v.

Bernhard, 396 U.S. 531, 538 (1970). In Ross, this

Court identified three factors to be used in determi-

ning whether the Seventh Amendment preserves a

right to jury trial of a particular claim: “As our

cases indicate, the ‘legal’ nature of an issue is de-

termined by considering first, the pre-merger custom

with reference to such questions; second, the remedy

sought; and third, the practical abilities and limita-

tions of juries.” Id. at 588 n.10 (emphasis added).

11

Reasoning that the third factor of the Ross test is a

“radical departure” that does not state “a rule of

constitutional dimensions,” the Ninth Circuit declined

the “invitation” to engage in tte inquiry called for

by Ross. 609 F.2d at 425.

The Ninth Circuit’s decision cannot be reconciled

with four district court opinions that have found

the third factor of the Ross test dispositive of the

question of the right to jury trial in extraordinarily

complex cases. Rosen v. Dick, 83 F.R.D. 540 (S.D.

N.Y. 1979), interlocutory appeal docketed, Nc. 79-

7844 (2d Cir. Nov. 27, 1979) ; Bernstein v. Universal

Pictures. ‘nc., 79 F.R.D. 59 (S.D.N.Y. 1978); ILC

Peripherals Leasing Corp. v. IBM Corp., supra; In

re Boise Cascade Securities Litigation, 420 F. Supp.

99 (W.D. Wash. 1976).° .

Nor can the Ninth Circuit’s holding that the

Seventh Amendment does not require an inquiry into

“the practical abilities and limitations of a jury”

be reconciled with the approach to Seventh Amend-

‘ment questions that has been adopted by other courts

of appeals. In Rogers v. Loether, 476 F.2d 1110 (7th

Cir. 1972), affd sub nom. Curtis v. Loether, 415

U.S. 189 (1974), for example, the court, speaking

through then Circuit Judge Stevens, described the

Ross opinion as follows:

“(T]he Court identified history as only one of

three criteria that should be considered in de-

® Two district court opinions support the Ninth Circuit’s

result. Zenith Radio Corp. v. Matsushita Elec. Indus. Co.,

478 F. Supp. 889 (E.D. Pa. 1979), appeal pending, No. 79-

2540 (3d Cir., argued Feb. 14, 1980) ; Transamerica Computer

Co. v. IBM Corp., 459 F. Supp. 626, 629 (N.D. Cal. 1978).

12

termining the ‘legal’ nature of an issue. The

other two were: ‘second, the remedy sought; and,

third, the practical abilities and limitations of

juries.’ Indeed, not only did the Court identify

these two additional criteria; it also implied,

without expressly stating, that history may be a

less reliable guide than the other two.” Jd. at

1118 (footnotes omitted).

A similar view of the Ross test has been adopted by

other courts of appeals that have conducted a “com-

plexity” inquiry into relatively non-complex lawsuits

in the course of upholding (or, in one case,’ in deny-

ing) a jury trial. Cox v. C.H. Masland & Sons, Inc.,

607 F.2d 138, 143 (5th Cir. 1979); United States v.

Anderson, 584 F.2d 369, 373 (10th Cir. 1978); Pons

v. Lorillard, 549 F.2d 950, 953 (4th Cir. 1977), aff'd

on other grounds, 434 U.S. 575 (1978); Minnis v.

International Union, UAW, 531 F.2d 850, 852 (8th

Cir. 1975). But see Tights, Inc. v. Stanley, 441 F.2d

336 (4th Cir.), cert. denied, 404 U.S. 852 (1971).

The conflict created by the Ninth Circuit’s rulings

constitutes a sufficient basis for granting review. In

Curtis v. Loether, 415 U.S. 189 (1974), this Court

granted certiorari to review a Seventh Amendment

issue that arose in the context of a remarkably simi-

lar split of authority. At issue in Curtis was whether

the Seventh Amendment entitles a party to demand a

jury trial to redress violations of Title VIII of the

Civil Rights Act. The Court granted certiorari

* Hyde Properties v. McCoy, 507 F.2d 301, 306 (6th Ci

% , ° 7 ar 6

1974). See also Hildebrand v. Board of Trustees, 607 F.2d

705, 708 n.3 (6th Cir. 1979).

13

“ijn view of the importance of the jury trial issue

in the administration and enforcement of Title VIII

and the diversity of views in the lower courts on the

question.” Jd. at 191. That “diversity of views,” the

Court went on to explain, consisted of the court of

appeals opinion and a split of authority among the

four district courts (including the district court in

Curtis) that had addressed the issue: “The Seventh

Circuit here was the first court of appeals to consider

the issue, but the reported decisions of the district

courts are evenly divided on the question.” Jd. at

191 n.2. The instant petition involves a jury trial

question of at least equal importance and arises in

the context of an even more widespread conflict

among the courts.

II. The Question of Jury Trials in Complex Cases Should

Be Considered by this Court with both the U.S.

Financial Case and the Instant Case Before It.

While the Ninth Circuit applied the same mis-

conceived constitutional: analysis to the jury trial

question in both Greyhound and U.S. Financial, the

two cases present instructively different variations

on the theme of extraordinary complexity. The com-

plexity of U.S. Financial is, at least to some degree,

a by-product of the joinder of many parties and the

consolidation of many claims into one proceeding.

Greyhound, in contrast, is basically a single dispute

between two parties. The complicated nature of the

suit arises solely out of the extraordinary complexity

of the factual and legal issues involved. As the dis-

trict court found, based on the record made in the

pretrial proceedings and in the first trial, Greyhound

presents “sophisticated, highly technical and difficult

questions of economics, technology and law.” App. B.

14

The district court’s conclusion as to the substantive

complexity of Greyhound is buttressed by IBM’s ex-

perience in other Section 2 cases brought against it.

The Memorex case, for example, raised Section 2 claims

of marked similarity to those here involved. The trial

lasted 96 days and involved 83 witnesses, including

17 experts, and 2,300 exhibits. After 19 fruitless

days of jury deliberations, following instructions

from the judge running to 83 pages, the Memorex

foreman confessed the jury’s inadequacy to the task

they had been assigned, stating:

“Tf you could find a jury that’s both a computer

technician, a lawyer, an economist, knows all

that stuff, yes, I think you could have a qualified

jury, but we don’t know anything about that.” ®

The jury that heard the Memorex case, though “con-

scientious and diligent,” 458 F. Supp. at 447, ob-

viously did not understand the issues, as the trial

judge found.® Jd. at 448.

This Court should have before it the different kinds

of complexity presented by Greyhound and U.S.

Financial when it considers the applicability of the

Seventh Amendment to extraordinarily complex liti-

gation. The variations presented by the two cases

will assist the Court in analyzing the constitutional

8 Memorex, 104 Tr. 19,547-48.

° A more extended account of the Memorex jury’s fai

jury’s failure

to understand that case is contained in Appendix A to IBM’s

amicus brief in support of the petition for certiorari i

; , o

the U.S. Financial case. See note 5 supra. rari filed in

Te ee ee nnn

15

issues in the concrete factual context of two major

pieces of litigation under the antitrust and securities

laws. Moreover, should the Court wish to enunciate

standards to guide trial courts in the exercise of their

authority to withhold extraordinarily complex cases

from juries, cf. Barker v. Wingo, 407 U.S. 514

(1972), having both Greyhound and U.S. Financial

before it would aid the Court in formulating gener-

ally applicable standards. Such standards should, of

course, be based upon the principal factors that cause

certain kinds of cases to exceed the practical abilities

and limitations of juries. Taken together, the Grey-

hound and U.S. Financial proceedings provide a

broader basis for identifying those factors than U.S.

Financial does by itself.

III. The Ninth Circuit’s View That the Complexity of a

Case Is Irrelevant to Whether It Is Triable as of Right

to a Jury Is Historically Wrong and Is Contrary to

Established Constitutional Principles.

In U.S. Financial, the Ninth Circuit concluded that

‘the extraordinary complexity of a case can never

serve as a basis for striking a jury trial demand. In

so concluding, the court has effectively deprived many

litigants in the Ninth Circuit of their right to a fair

and reasoned adjudication of disputes in extraordi-

narily complex cases. The court offered three justifi-

cations in support of this far-reaching determination.

Each, we submit, is without foundation.

(1) The Ninth Circuit concluded that the trial of

extraordinarily complex issues to a jury does not vio-

late the right to due process under the Fifth Amend-

ment. In reaching this decision, the court did not—

16

and indeed could not—dispute the contention that a

litigant has a due process right to a decisionmaking

procedure that will promote accurate decisions. Just

last term, in Greenholtz v. Inmates of the Nebraska

Penal and Correctional Complex, 442 U.S. 1 (1979),

this Court reaffirmed the principle that the Due Proc-

ess Clause requires, inter alia, consideration of “the

risk of an erroneous deprivation of [a private] .. .

interest through the procedures used.” Mathews v.

Eldridge, 424 U.S. 319, 385 (1976). The accuracy

that due process is intended to promote can be re-

liably achieved in an adjudicatory proceeding only if

decisions are based on an understanding of the evi-

dence and applicable law. A jury that is not capable

of understanding the issues involved in a lawsuit is

manifestly unsuited to perform such a decisionmak-

ing role.

The Ninth Circuit based its due process ruling on a

generalized, unsubstantiated assumption that juries

are capable of comprehending and fairly resolving all

cases, however complex the issues or protracted the

trial. Without analysis, the court declared that “ex-

perience demonstrates that juries are capable of sort-

ing out complex factual issues and applying the law

to them.” 609 F.2d at 431. That unsupported con-

clusion is belied by IBM’s experience in litigat-

ing, in the Ninth Circuit, complex issues such as

those involved in Greyhound and does not constitute

an adequate inquiry into the due process questions

raised by use of the jury trial procedure in this case.

(2) The Ninth Circuit reasoned that the appro-

priate ‘mode of Seventh Amendment analysis is the

i7

“historical test’”—a mode of analysis, traditionally

applied by the federal courts, that examines the

scope of common law jurisdiction at the time of the

adoption of the Seventh Amendment in 1791. The

court concluded that a case, however complex, must

be deemed to be “a suit at common law’—and hence

covered by the Seventh Amendment—if the claim 1s

based on common law principles and damages are

being sought. 609 F.2d at 421. That historical

analysis is simply incorrect.

Historically, issues as complex as those involved

in the Greyhound case would have been tried in equity

to a court, not “at law” to a jury. A research Note

prepared at the request of IBM’s counsel by the

Right Honorable Lord Devlin, a Lord of Appeal of

England and a leading authority on the role of the

jury in English law, decisively refutes the Ninth

Circuit’s conclusion that equity would not assume

jurisdiction over a complex claim for damages

founded on common law principles.

Equity took jurisdiction of a case, even a case

pending in a law court, whenever the procedures of

the law court were deemed to be inadequate and the

law court was being made an instrument of injustice.

As Lord Devlin shows, one reason that a law court

might be procedurally inadequate, and thus fail to do

justice, was its reliance on the jury to decide dis-

puted questions of fact. The Chancellor, desiring to

avoid injustice, did not permit litigants to submit

to the common law courts complex cases unsuited to

jury trial procedures. After tracing the various ways

in which the Chancellor controlled the disposition of

complex cases or issues, Lord Devlin concludes:

18

“The cases, read as a whole, show that the

Chancellors of the period had formed a very clear

idea of what the juries of the period could and

could not do adequately; and that they would not

have allowed to proceed at common law any case

which they considered to be above the level of the

jury of the time.” ”

(3) The Ninth Circuit committed a fundamental

error in concluding that this Court’s reference in

Ross to the “practical abilities and limitations of

juries” was “a radical departure” from established

Seventh Amendment doctrine. 609 F.2d at 425.

Rather, that reference was merely a reformulation

of a well established equitable doctrine that has been

incorporated by this Court into Seventh Amendment

analysis—equity must act when legal remedies or

procedures are inadequate.

In a line of cases, beginning with Beacon Theatres,

Inc. v. Westover, 359 U.S. 500 (1959), this Court

has increasingly defined the scope of the Seventh

Amendment by making adequacy of legal remedy—

specifically adequacy of jury trial procedures—the

dividing line between what must be tried “at law” to

a jury and what may be tried in equity to the court.

See also Katchen v. Landy, 382 U.S; 323 (1966) ;

Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962). By

considering the adequacy or practicality of trying

the claim or issue “at law” to a jury, this Court has

bern able to apply the Amendment functionally to

10P. Devlin, Note on the Suit at Common Law in England

at the Time of the Seventh Amendment (1791 ) 4105 (Dec.

1979). Lord Devlin’s Note, currently available as a privately

published monograph, has been accepted for publication in a

forthcoming issue of the Columbia Law Review.

ial a a a

19

preserve the jury trial right in cases where that mode

of trial is feasible and, at the same time, to remove

from jury resolution those cases or issues in which a

jury trial would not contribute to “a fair and orderly

adjudication of the controversy.” Beacon Theatres,

Inc. v. Westover, 359 U.S. at 507."

This mode of Seventh Amendment analysis was

merely given its most explicit statement in Ross v.

Bernhard, and the reference in Ross to “the practical

abilities and limitations of juries” simply reflects

what prior Seventh Amendment decisions and his-

torical English practice make clear: The capacity

of a jury to decide a case is a factor that must be

considered by a trial court, and may in some cases

prove determinative, in deciding whether the case is

triable as of right to a jury.

11 See Atlas Roofing Co. v. Occupational Safety & Health

Review Commission, 480 U.S. 442 (1977), where this- Court

held that Congress could commit enforcement of statutory

penal damage provisions to an administrative agency “in

which facts are not found by juries,” id. at 460, when Con-

gress concluded that the “remedies available in courts of law

were inadequate,” id., because a jury would be inconsistent

with “speedy and expert resolutions of the issues involved.”

Id. at 461. See also Parklane Hosiery Co. v. Shore, 439 U.S.

822 (1979) (judicial economy promoted by discerning use

of non-mutual offensive collateral estoppel to avoid need for

jury retrial of issues previously litigated in non-jury pro-

ceeding). —

20

CONCLUSION

This case raises an issue of unusual importance

for the administration of justice in the federal courts.

The petition for a writ of certiorari should be

granted.

Respectfully submitied,

THOMAS D. BARR

CRAVATH, SWAINE & MOORE

One Chase Manhattan Plaza

New York, New York 10005

Of Counsel: JAMES S. CAMPBELL

NICHOLAS DEB. KATZENBACH pret s ge liccrgr

International Business WILMER ‘A ae vod

Machines Corporation KERING

1666 K Street, N.W.

Armonk, New York 10504 Washington, D.C. 20006

BROWN & BAIN

Counsel for Petitioner

222 N. Central Avenue ‘ ,

Phoenix, Arizona 85004 International Business

: Machines Corporation

March 10, 1980

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 79-8301

D.C. No. Civ. 72-242 WPC Arizona (Phoenix)

GREYHOUND COMPUTER CORPORATION,

Plaintiff /Respondent,

v.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Defendant/Petitioner.

ORDER

Before: HuG and PREGERSON, Circuit Judges

Upon due consideration, the court issues the fol-

lowing order:

(a) Pillsbury, Madison & Sutro’s motion for leave

to file an amicus curiae brief is granted ;

(b) respondent’s motion for reassignment of panel

is denied; and

(c) the petition for permission to appeal pursuant

to 28 U.S.C. § 1292(b) is denied.

The issue of law raised by the petition has been de-

finitively resolved in this circuit, In re United States

Financial Securities Litigation, slip op. at 1186 (9th

Cir. December 10, 1979).

Filed Feb. 1, 1980

RICHARD H. DEANE

Clerk,

U.S. Court of Appeals

2a

APPENDIX B

IN THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

No. Civ. 72-242 Phx. WPC

GREYHOUND COMPUTER CORPORATION,

Plaintiff,

VS.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Defendant.

MEMORANDUM AND ORDER AND

CERTIFICATE

This complex case is set February 5, 1980 [now

May 1, 1980], for retrial which the Court estimates

will take a minimum of three months and probably

more like four if tried to a jury as demanded by

plaintiff. Defendant has moved to strike the jury

demand so that the case may be tried to the Court.

Plaintiff opposes.

This is an antitrust case involving sophisticated,

highly technical and difficult questions of economics,

technology and law. It is a complex case by any

definition. Trial to the Court would substantially

shorten the trial! and avoid the very real danger of a

hung jury and a third trial or more.

While the Court believes the current status of the

law requires this Court to deny the motion to strike

the jury, this view is not unanimous. See Zenith

ae A EL

8a

Radio Corp. v. Matsushita Electric Ind. Co., Ltd.,

[1979-2] Trade Cases (CCH), { 62,753 (E.D. Pa.

June 6, 1979), and § 62,893 (E.D. Pa. August 21,

1979). The Court is informed that the question is

currently before the Ninth Circuit. See In re U.S.

Financial Securities Litigation M.D.L. No. 161 (9th

Cir. petition for review granted August 29, 1977),

appealing 76 F.R.D. 702 (S.D. Cal. 1977).

IT IS ORDERED:

The motion to strike the jury demand is denied for

lack of authority to grant said motion. .

CERTIFICATE

Pursuant to 28 U.S.C. § 1292(b), this Court certi-

fies that the question as to whether this Court has the

authority to strike the jury demand in a case such as

this involves a controlling question of law as to which

there is substantial ground for difference of opinion

-with respect to that question and immediate appeal

may materially advance the ultimate termination of

the litigation. See Judge Becker’s opinion in Zenith

Radio Corp. v. Matsushita Electric Ind. Co., Ltd.,

[1979-2] Trade Cases (CCH), {] 62,893 (E.D. Pa.),

dated August 21, 1979.

DATED November 6, 1979.

/s/ Wm. P. Copple

United States District Judge