Appendix — Eisen v. Carlisle & Jacquelin

Supreme Court brief1974

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APPENDIX

Supreme Court of the United States

October Term, 1973.

No. 73-203.

MORTON EISEN,

Petitioner,

CARLISLE & JACQUELIN, et al.

’

On Writ of Certiorari to the United States Court of Appeals

For the Second Circuit.

Petition for Certiorari Filed July 30, 1973.

Certiorari Granted October 15, 1973.

INDEX.

Page

District Court Docket Entries No. 66 Civ. 1265 ............ Al

United States Court of Appeals Docket Entries:

Pe I es rece sine eae ns Se eua ewes Al3

| AAS oS 1 4 Rr oe ee a ee ee ee Al7

ON POPE PPL tL eT EE EE eT ee eT EEE A21

Answer of Defendant Carlisle & Jacquelin ................. A27

Answer of Defendant DeCoppet & Doremus ............... A30

Answer of Defendant New. York Stock Exchange .......... A33

Affidavit of Dean Witter, Jr., Sworn to June 21, 1966 ....... A36

Affidavit of Bayard Dominick Sworn to June 23, 1966 ...... A4l

Affidavit of Joseph F. Neil, Jr., Sworn to July 1, 1966 ....... A44

Affidavit of Edward I. O’Brien Sworn to July 1, 1966 ...... A47

Affidavit of William D. Fleming Sworn to June 30, 1966 .... ASO

Affidavit of Matthew J. Smith Sworn to June 30, 1966 ...... A53

Affidavit of Edwin B. Peterson Sworn to July 1, 1966 ...... AS7

Affidavit of Daniel T. Bergin Sworn to July 6, 1966 ........ A60

Plaintiff's Answers to Defendants’ Interrogatories, Verified on

ee ee ee See eee A63

Opinion by Tyler, J., Dated September 27, 1966, Granting De-

fendants’ Motion to Extent That Action, as Class Action,

ee ES. Seer oe Eee Petr eee A93

Order Denying Certificate Under 28 U. S. C. § 1292(b) .... A103

Opinion of United States Court of Appeals for the Second

Circuit Dated December 19, 1966 (Waterman, Moore and

Kaufman, Circuit Judges) Denying Defendant’s Motion

i I eee ee nee ane ee sess A104

Order of United States Court of Appeals for the Second Circuit

Dated January 13, 1967, Denying Petition for Rehearing

a ee saci es Sheehan css's ss A108

Order of United States Court of Appeals for the Second Circuit

Dated January 13, 1967, Denying Petition for Rehearing A109

Opinion of United States Court of Appeals for the Second

Circuit Dated March 8, 1968 (Medina and Hays, Circuit

Judges) Reversing and Remanding and Dissenting Opin-

eae Oo oer eee ere A110

Judgment of United States Court of Appeals for the Second

Circuit Dated March 8, 1968, Reversing and Remanding A138

INDEX (Continued).

Transcript of Record of Proceedings Dated April 30, 1970 ...

COBGGRY occ nccvsccenescnsccccsscesseesvessesvacesis

Paul Robin Martin—

Direct Examination ..........cccccccccccccccces

Croes-Escamimation : ..... cc cccccccscccccccccccccs

Direct Examination ..........cccccccccccccccece

COMogy oo. ccccccccccccccccccccccccccccccccsecvecs

Opinion of Tyler, J., Dated October 8, 1970, Whereby Court

Is Unable at This Time to Decide Class Action Motion ..

Affidavit of Russell E. Brooks in Response to Opinion ......

Affidavit of Richard Allan in Response to Opinion ..........

Affidavit of Mordecai Rosenfeld in Response to Opinion ....

Affidavit of Arthur J. Galligan in Response to Opinion ......

Affidavit of Mordecai Rosenfeld in Response to Opinion ....

Stipulation Number 1 .............ee cece eee e eee eee eeeee

Stipulation Number 2 .............ceeeeeeececcceceecees

Portions of Plaintiff's Proposed Findings of Fact and Brief in

Opposition to Defendants’ Motion to Dismiss Pursuant

to Rule 23 F. R. C. P. Dated June 10, 1970 ...........

Opinion of Tyler, J., Dated April 7, 1971 Providing That

Action May Be Maintained as a Class Action ..........

Appendix C 2... ec cccccccccccccccessccscccsececcess te

Extract of Transcript of Record of Proceedings Dated May

17, 071 Chagee 3 00 8) onc ciascecccceccevscsesessnee

Transcript of Record of Proceedings Dated February 9, 1972

Opinion of Tyler, J., Dated April 4, 1972 Providing That De-

fendant Shall Bear 90% of Costs of Notice to Class .....

Notice of Motion to the United States Court of Appeals for

the Second Circuit Dated April 11, 1972, to Fix a Briefing

Schedule and Date for Oral Argument ................

Affidavit of William E. Jackson in Support of Motion ......

Notice of Motion to the United States Court of Appeals for

the Second Circuit Dated April 11, 1972, to Order Trans-

mniesion of the Record ....cccccccecsecesscsessecese

Affidavit of William E. Jackson in Support of Motion ......

INDEX (Continued).

Order of the United States Court of Appeals for the Second

Circuit Dated May 1, 1972, Denying Motion to Fix Brief-

ing and Date for Oral Argument Without Prejudice to

Renewal After Defendants Have Filed Their Brief and

Appendix ...... 22. cece cece ccc c erence cs ecsccccececs

Order of the United States Court of Appeals for the Second

Circuit Dated May 1, 1972, Granting Motion to Order

Transmission of the Record ..........-...+---e++ees:

Defendants’ Notice of Appeal From Orders Entered on April

7, 1971 amd April 4, 1972 2.2... ccccccccccccccccens

Motion of Plaintiff in the United States Court of Appeals for

the Second Circuit for Order Dismissing Appeal .......

Affidavit of Mordecai Rosenfeld, Dated May 16, 1972 in Sup-

port of Motion for Order Dismissing Appeal .........-.

Order of United States Court of Appeals for the Second

Circuit, Dated June 29, 1972, Denying Motion to Dismiss

the Append ..... 2... cccccccccccccsccccncncdoccccces

Motion of Defendants in the United States Court of Appeals

for the Second Circuit Dated July 26, 1972, to Set a Brief-

ing Schedule and Date for Oral Argument ...@......-

Affidavit of William E. Jackson in Support of Motion .......

Order of United States Court of Appeals for the Second Cir-

cuit Dated August 24, 1972, Setting a Briefing Schedule

Appendix to Supplemental Statement of Defendants-Appellees

in the United States Court of Appeals for the Second

Circuit, Dated December 22, 1972 ............-.-.+---

Opinion of United States Court of Appeals for the Second

Circuit Dated May 1, 1973, Reversing Class Action

Orders of the District Court, and Concurring Opinion. of

De ee ee ree er eT

Opinion of United States Court of Appeals for the Second

Circuit, Dated May 24, 1973 Denying Motion for Rehear-

ing in Banc, Concurring Opinion of Judge Mansfield,

Dissent of Judge Hays, and Dissenting Opinion of Judge

INDEX (Continued).

Itemized Bill of Costs Filed by Defendants-Appellees in the

United States Court of Appeals for the Second Circuit on

May 15, F908 iovcicsnsocccsenscosecennnes t50tes<ns09

pn ee, rr ee eer rere gy

ed re eee ere ere ee Tee

ie Sg ne eee eee er mre ree rT

Fete OY” ovcccnctccnsadesecssciscccvasesenscede

Order of United States Court of Appeals for the Second Cir-

cuit Dated May 24, 1973 Denying Petition for Rehearing

Order of United States Court of Appéals for the Second Cir-

cuit Dated May 24, 1973 Denying Petition for Rehearing

th TOME ok ck ons co sccokeswecsvsnriacecinngenesscaese’s

Order of United States Court of Appeals for the Second Cir-

cuit Dated June 18, 1973 Staying Issuance of the Mandate A400

DISTRICT COURT DOCKET ENTRIES

No. 66 Civ. 1265

5- 2-66 Filed complaint and issued summons.

5-10-66 Filed summons & return, served all defts. 5-4-66.

5-13-66 Filed stip. & order extending defts’ time to an-

swer to 6-24-66—McLean, J.

6- 8-66 Filed Pitff’s notice of taking deposition of Henry

I. Cobb, Jr.

6- 8-66 Filed Pitff’s notice of taking deposition of deft.

DeCoppet & Doremus by Reginald P. Rose.

6- 8-66 Filed Pitff’s notice of taking deposition of deft.

Carlisle & Jacquelin by Van R. Halsey.

6-15-66 Filed stip & order adjourning deposition of Car-

lisle & Jacquelin to 7-25-66, 7-27-66 & 8-30-66

as indicated—Tenney, J.

6-17-66 Filed Deft’s interrogs.

6-27-66 Filed Answer of deft. Carlisle & Jacquelin.

6-28-66 Filed Answer of DeCoppet & Doremus.

6-30-66 Filed Answer of deft. New York Stock Exchange.

6- 5-66 Filed Pitff’s answers to defts’ interrogs.

7- 6-66 Filed defts (Carlisle) affdt & notice of motion—

Re: action is not maintainable as a class ac-

tion—Ret. 7-12-66.

7- 6-66 Filed defts’ memorandum in support of motion.

7- 8-66 Filed pltff’s affdvt. in opposition to deft’s motion

by Robert Zicklin.

(Al)

one MIs ecnerecrmccsremeeenaeneacenmenanammammaamanmmmmnnaaamaammmnann

A2 District Court Docket Entries

7- 8-66 Filed pltff’s affdvt. of Morton Eisen in opposition

to defts’ motion.

7- 8-66 Filed pltff’s memorandum in opposition to defts’

motion.

5-19-66 Filed stip. & order adjourning depositions of deft.

by Van. R. Halsey, et al to 9-26-66; 9-28-66 &

9-30-66 respectively—Wyatt, J.

9-27-66 Filed stip. & order adjourning depositions of deft.

Carlisle & Jacquelin by Van R. Halsey, deft.

DeCoppet & Doremus by Reginald P. Rose &

Witness Henry I. Cobb, Jr. to 10-26-66, 10-28-

66 & 10-31-66 respectively—Tyler, J

7-12-66 Filed reply memorandum in support of motion

for order determining action to be a class ac-

tion (filed in court).

9-30-66 Filed Opinion #32,793—Defts’ motion is granted

to the extent that this action, as a class action,

is dismissed. This does not mean, however,

that the complaint viewed solely as a state-

ment of the individual claims of pltff. Eisen is

dismissed; moreover, nothing herein stated

should be construed as a ruling on the merits,

or lack thereof, of the claims pleaded on behalf

of pltff. individually—It is so ordered—Tyler,

J.—mailed notice.

10-10-66 Filed pltff’s affdvt. & notice of motion—Resettle

order—Ret. 10-25-66. ’

10-10-66 Filed memorandum of pltff in support of its

motion.

10-21-66 Filed defts’ memorandum in opposition to motion

for amendment & resettlement of order to in-

clude statement under 28 U.S.C.1292(b).

10-25-66

District Court Docket Entries A3

Filed stip & order adjourning depositions of deft

& Henry I. Cobb, Jr. to 1-24-67 & 1-26-67 & 1-

30-67—MacMahon, J.

Filed memo—endorsed on motion dated 10-10-66

—motion for resettlement is denied—so or-

dered—Tyler, J. mn

Filed pltff’s reply memorandum in support of its

motion.

Filed bond for security for costs—US Fidelity &

Guaranty Co.

Filed pltff’s notice of appeal—mailed copies to

Carter, Ledyard & Milburn, Kelley Drye,

Newhall M&W—& Milbank Tweed Hadley &

McCloy.

Filed stip & order extending pltffs time to docket

record on appeal to 11-16-67—Palmieri, J.

Filed stip & order adjourning.depositions of deft

Carlisle & Jacquelin et al to be held on dates

indicated—Mansfield, J.

Filed certification of record on appeal.

Filed stip & order adjourning depositions of

deft’s Carlisle & Jacquelin et al to be held on

dates indicated—Frankel, J.

Filed stip & order adjourning depositions of

defts’ Carlisle & Jacquelin et al to be held on

dates indicated—Ryan, J.

Filed stip and Order that pltffs. depositions of

deft. Carlisle & Jacquelin by Van R. Halsey, of

deft. DeCoppet & Doremus by Reginald P.

Rose and of witness Henry I. Cobb, Jr., which

4-10-68

6-28-68

8- 6-68

9- 9-68

9-25-68

9-27-68

9-26-68

District Court Docket Entries

were previously adj. to April 8, April 10, and

April 12, 1968 are further adj. to be held on

September 25, September 27, and September

30, 1968, same time and place—Tyler, J. so

ordered.

Filed Opinion and Order from USCA that the

order is reversed and that the action is re-

manded to said District Court for the proceed-

ings in accordance with the opinion of this

court with costs to the appellant. m/n

Filed transcript of record of proceedings of June

7, 1968.

Filed stip and order ext. time to Sept. 4-68 and

Oct. 15-68 to exchange of informal requests

for admissions. Tyler, J.

Filed deft’s affidavits and notice of motion to dis-

qualify pltffs’ attys ret. 9-17-68.

Filed deft’s memorandum in support of their

motion ret. 9-17-68.

Filed stip and order pltff’s depositions of deft’s

Carlisle & Jacquelin, DeCoppet & Doremus &

witness Henry I. Cobb, Jr., are further ad-

journed to 1-15-69, 1-17-69 and 1-20-69. So

ordered. Bryan, J.

Filed pltff’s affidavit by Robert Zicklin in connec-

tion with deft’s motion to disqualify pltff’s

attorneys.

Filed memo—endorsed on motion filed Sept. 9-68.

This motion is withdrawn in open court today

after Pomerantz, Levy, Haudek & Block and

Laventhall & Zicklin withdraw as counsel for

2-13-69

4-10-69

8-22-69

10-22-69

10-28-69

11-10-69

11-17-69

4-17-70

7-13-70

District Court Docket Entries A5

plaintiff in this action. It is so ordered. Ty-

ler, J.

Filed pltff ’s designation of trial counsel.

Filed pltff’s attorneys notice of appearance.

Filed transcript of record of proceedings before

Tyler, Jr., J. dated 9-26-68.

Filed pltff’s interrogs.

Filed stip that the time which the deft’s may

object to pltff’s interrogs is ext. to 11-6-69.

Filed stip & order that deft’s may object to pltff’s

interrogs is ext. until 11-21-69. So ordered.

Murphy, J.

Filed deft’s (The ‘‘Exchange’’) answers to in-

terrogs.

Filed affidvt of Wm E. Jackson, attys for deft

NY Stock Exchange in response to pltff’s mo-

tion pursuant to Rule 2.

Filed Memo Endorsed on affdvt of Wm E. Jack-

son, ‘‘Motion denied w/o prejudice to a new

motion for assignment under rule 2 to a judge

for all purposes after Judge Tyler resolves

the matter remanded by the Court of Appeals

and such resolution becomes final. It is so

ordered: Sugarman, Ch J.’’ m/n

Filed Pltff’s affdvt & Notice of motion for an

order assigning this action to Tyler, J. for all

purposes.— Endorsement entered this day

above.

Filed Transcript of record of proceedings, dated

March 16, 1970.

A6 District Court Docket Entries

8-19-70 Filed Transcript of record of proceedings, dated

June 19-70.

8-19-70 Filed Transcript of record of proceedings, dated

April 30, 1970.

10- 9-70 Filed Opinion #37118 by Tyler, J. ‘‘* * * This

Court is unable to decide upon the present rec-

ord the class action motion at this time, and

this memorandum should in no way be con-

strued as even a tentative view on the merits

of that question. Further information from

the parties will be required so that all pos-

sible aspects of the class action may be exam-

ined and determined. Accordingly counsel

are directed to appear at a conference in Room

2704 on 10-16-70 at 12 noon in order to discuss

the matters set forth above and any other

items they deem pertinent to the class action

determination. It is so ordered. Tyler, J.

(mailed notices)

1-13-71 Filed affdvt of Russell E. Brooks, atty for deft.

in response to the opinion and order of the

Court filed Oct. 9, 1970 ete.

1-12-71 Filed affdvt of Richard Allan, atty for deft De-

Coppet & Doremus.

1-13-71 Filed defts’ supplemental memorandum in sup-

port of motion to dismiss this action as a class

action.

4- 7-71 Filed Opinion #37524. Tyler, J. The defend-

ants motion to dismiss is denied; This case

may be maintained as a class action, and the

Court orders a further hearing to determine

5-25-71

District Court Docket Entries A7

who should pay for the Notice pur. to Rule 28.

(59 pages) (mailed notices)

Filed affdvt of Mordecai Rosenfeld atty for pltff.

Filed pltff’s reply memorandum.

Filed defts’ proposed findings and conclusions.

Filed defts DeCoppet & Doremus & New York

Stock Exchange in support of motion to dis-

miss this action as a classaction.

Filed pltff’s proposed findings of fact and brief

in opposition to defts’ motion to dismiss.

Filed deft Carlisle & Jacquelin post-hearing brief.

Filed pltff’s reply memorandum.

Filed pltff’s proposed findings of fact and brief

in opposition to defts motion to dismiss.

Filed deft Carlisle & Jacquelin post-hearing brief.

Filed defts’ proposed findings and conclusions.

Filed defts DeCoppet & Doremus and New York

Stock Exchange in support of motion to dis-

miss this action as a class action.

Filed defts’ supplemental memorandum in sup-

port of motion to dismiss this action as a class

action.

Filed pltffs supplemental memorandum.

Filed defts’ memorandum responding to ques-

tions of opinion filed Oct. 9, 1970.

Filed affdvt of Richard Allan atty for defts. De-

coppet & Doremus.

9-29-71

5-29-71

5-25-71

7-30-71

8-23-71

11-10-71

11-19-71

12-15-71

District Court Docket Entries

Filed affdvt of Russell E. Brooks atty for deft.

New York Stock Exchange.

Filed affdvt of Arthur J. Galligan atty for twenty

states, the Dist. of Columbia etc.

Filed affdvt of Mordecai Rosenfeld atty for the

pltff.

Filed stipulation Number 1, Defts Exhibit A.

Filed stipulation No. 2, Defts Exhibit B.

Filed Transcript of record of proceedings, dated

4-30-70.

Filed pltff’s notice to produce.

Filed pltff’s interrogs. .

Filed pltff’s interrogs.

Filed Transcript of record of proceedings, dated

5-17-71.

Filed Affdvt of Herbert E. Milstein.

Filed Order—Adjourned to Review calendar for

May 16 1972. Edelstein Ch J. m/n

Filed Memorandum by Tyler, J—‘‘ Accordingly,

it is ruled that the office of Harold E. Kohn,

P.A. may participate in this ease as co-counsel

for pltff effective today.’’ (mailed notices)

Filed Defts’ reply memorandum in support of

request to deny application of Kohn firm to

participate in this action.

Filed Pitff’s memorandum in opposition to defts’

request that the Kohn firm be disqualified to

act as co-counsel for pltff.

————

12-15-71

12-28-71

4- 4-72

District Court Docket Entries AY

Filed Memorandum in support of application for

leave to appear pro-hac-vice.

Filed Letter dtd 11-24-71 from Carter, Ledyard &

Milburn to Tyler J.

Filed Letter dtd 11-19-71 from Milbank, Tweed,

Hadley to Tyler J.

Filed Letter dtd 12-9-71 from Mordecai Rosenfeld

to Tyler, J.

Filed Letter dtd 11-24-71 from Mordecai Rosen-

feld to Tyler, J.

Filed Affdvt of Herbert Milstein from office of

Harold Kohn.

Filed Transcript of record of proceedings, dated

10-1-1971.

Filed Opinion #38398 by Tyler, J.—Including

Findings of Fact & Conclusions of Law. ‘‘On

the basis of this opinion, it appears that pltff

and the class he represents are more than

likely to prevail at trial or upon a motion for

summary judgment. Rule 56 FRCP. I con-

clude, therefore, that defts should bear 90%

of the costs of R. 23 (c) (2), FRCP notice to

the class. Of defts’ share, one-half should be

borne by the Exchange and one-half by the

odd-lot defts. The remaining 10% which rep-

resents the ‘‘hazards of litigation’’, must be

put up by plitff. It is so ordered. Tyler J.’’

(mailed notices)

Filed Pitff’s brief on the allocation of the cost of

notice.

A10

4- 4-72

4-19-72

S- 2-72

5- 2-72

5- 9-72

District Court Docket Entries

Filed PItff’s brief on the allocation of the cost of

notice.

Filed Defts’ post-hearing memorandum.

Filed transcript of record of proceedings of Dec.

13, 1971.

Filed transcript of record of proceedings of Nov.

5, 1971.

Filed Memorandum by Tyler, J.—‘‘For the in-

formation of counsel in this case, there are

attached two letters dtd 4-8-72 from persons

expressing a desire to participate in this

suit.’’ (mailed notices)

Filed true copy of USCA order directing the

Clerk of the USDC for SD of NY to transmit

the record to the Court of Appeals.

Filed deft Jacquelin notice of appeal to U.S.C.A.

—mailed notices.

Filed Pltff’s Affdvt & motion for an order en-

forcing a settlement agreement, with Memo

Endorsed: ‘‘Motion denied for reasons dic-

tated to Court reporter at hearing therein this

afternoon. Pending developments in the next

few weeks, these papers will remain sealed in

the files of the undersigned. Tyler, J.’’

(mailed notices)

Filed Memorandum & Order.—‘‘I can conceive of

no useful or proper purpose to be achieved by

including these matters in the appellate record.

On the other hand, I see no reason to continue

the ‘‘sealing’’ thereof in my chambers. Hence,

the dispute is resolved as follows: (1) the

5- 9-72

5-16-72

District Court Docket Entries All

record of the motion and disposition thereof is

hereby unsealed with instructions to the Clerk

to docket same; and (2) Subject to final ap-

proval of the Court of Appeals, & without prej-

udice to any applications which the parties

may care to make to that court, pitff is directed

not to include the record of that motion in

the record on appeal. It is so ordered. Tyler

J. (mailed notice)

Filed Defts’ memorandum in opposition to mo-

tion for enforcement settlement agreement.

Filed Defts’ memorandum in support of cross-

motion for a protective order.

Filed Affdvt of Bud G. Holman, atty for deft

Decoppet & Doremus.

Filed Affdvt of Wm. E. Jackson, atty for NY

Stock Exchange Inc.

Filed Defts’ notice of cross-motion for a pro-

tective order ret. 10-1-71.

Filed Pitff’s reply memo in support of motion to

enforce settlement.

Filed Affdvt of Mordecai Rosenfeld, atty for

pltff.

Filed Pitff’s memo in opposition to defts’ motion

for protective order.

Filed Pltff’s memo in support of motion to en-

force settlement.

Filed Notice that the record on appeal has been

certified and transmitted to the U.S.C.A. for

the 2d Circuit on May 16 1972.

Al2 District Court Docket Entries

5-31-72 Filed Transcript of Record of Proceedings dated

2/9/72.

6-13-72 Filed Plaintiff’s Designation of Exhibits.

A True Copy.

Joun Livingston, Clerk

By B. Epwarps

Deputy Clerk

[sea]

11-15-66

11-18-66

12- 1-66

12- 2-66

12- 9-66

12-19-66

1- 3-67

1- 6-67

1-13-67

2-24-67

3- 3-67

Court of Appeals Docket Entries Al3

UNITED STATES COURT OF APPEALS

DOCKET ENTRIES

No. 30934

Filed motion to dismiss

Filed memorandum in support of motion to dis-

miss

Filed order adjourning motion to dismiss to

12-5-66

Filed order adjourning motion to dismiss to

12-12-66

Filed affidavit in opposition to motion to dismiss

Filed memorandum of appellant in opposition to

motion to dismiss

Filed reply memorandum in support of motion

_to dismiss

Motion to dismiss denied, Kaufman, CJ

Filed petition for rehearing and rehearing in

banc

Filed order extending time to file record to 2-27-

Petition for rehearing denied, Per Curiam

Filed order denying petition for rehearing

Petition for rehearing in banc denied, Per Curiam

Filed order denying petition for rehearing in

banc

Filed record (original papers of District Court)

Filed order extending time to file appellant’s

brief & appendix to 5-22-67

Al4

3-16-67

3-29-67

4-21-67

5-11-67

6-23-67

7-14-67

7-20-67

9-22-67

10- 2-67

10-27-67

11- 6-67

3- 8-68

Court of Appeals Docket Entries

Certified appendices & proceedings to Millbank,

Tweedy, Hadley & McCloy, Esqs. [sic]

Filed notice of filing of petition for writ of cer-

tiorari

Filed order extending time to file appellant’s

brief & appendix to 6-30-67

Filed certified copy of order of Supreme Court

denying petition for writ of certiorari

Filed order extending time to file appellant’s

brief & appendix to 7-14-67

Filed application and order granting leave to file

appellant’s brief not to exceed 62 pages

Filed appendix, appellant

Filed brief, appellant

Filed order extending time to file appellees brief

& appendix to 10-2-67

Filed application and order (endorsed) adjourn-

ing argument of appeal until a day from 11-6-

67 thru 11-9-67 as consisting with other docket

demands

Filed brief, appellees (Decoppet & Doremus and

N.Y. Stock Exchange)

Filed brief, appellee (Carlisle & Jacquelin)

Filed reply brief, appellant

Argument heard (by: Lumbard, ChJ., Medina &

Hays, CJJ)

Judgment Reversed & Action Remanded, Medina,

CJ & jurisdiction retained

Court of Appeals Docket Entries Al5

3- 8-68 Dissenting in separate opinion, Lumbard, CHJ.

3- 8-68 Filed judgment

4 9-68 Filed bill of costs

4 9-68 Issued Mandate (opinion, judgment & bill of

costs)

6-20-68 Original record returned to District Court

6-25-68 ’ Filed receipt of return of original record to Dis-

trict Court

5-24-71 Filed motion for an order fixing a briefing sched-

ule, date of oral argument, etc. with proof of

service

5-25-71 Filed affidavit in opposition to motion for an

order fixing briefing schedule, ete. with proof

of service

5-26-71 Filed motion to direct Clerk of Southern District

to transmit the record on appeal with proof

of service.

6-10-71 Filed order denying motion to set briefing sched-

ule and date for argument of appeal

6-10-71 Filed order denying motion to direct Clerk of

District Court to certify and transmit record

4-11-72 Filed motion to direct Clerk of district court to

certify and transmit record with proof of

service

4-11-72 Filed motion for an order fixing briefing schedule

and date for oral argument with proof of

service

4-19-72 Filed memorandum in opposition to motion for

briefing schedule and hearing with proof of

service

A16 Court of Appeals Docket Entries

4-24-72 Filed reply memorandum in support of motion

(appellees), with proof of service

5- 1-72 Filed order denying motion to set briefing sched-

ule, etc.

5- 1-72 Filed order granting motion to direct clerk of

USDC to certify and transmit record, etc.

A true copy,

A. Danret F'usaro

Clerk

[sau]

[Subsequent docket entries in No. 30934 are entered

jointly in No. 72-1521, infra]

5- 9-72

5-16-72

5-17-72

5-23-72

6- 8-72

6-13-72

6-16-72

6-21-72

Court of Appeals Docket Entries Al7

No. 72-1521

Filed copies of docket entries and notice of ap-

peal

Received record (original papers of district

court)

Filed motion to dismiss with proof of service

Filed record (original papers of district court)

Filed motion to supplement original record with

proof of service

Filed memorandum in, opposition to motion to

dismiss with proof of service

Filed memorandum in opposition to motion to

supplement the original record with proof of

service

Filed reply to memorandum in opposition to mo-

tion to supplemental original record with

proof of service

Filed order directing that motion to dismiss the

appeal be respectfully referred to the panel

of judges which heard the previous appeal

Filed order directing that motion for leave to

supplement the record on appeal is respect-

fully referred to the panel of judges which

heard the previous appeal

Filed appellee’s designation of items for inclu-

sion in appendix

Filed supplemental record. (original papers of

district court)

Al18

6-29-72

T- 3-72

7-26-72

8-24-72

8-25-72

9-29-72

10-13-72

Court of Appeals Docket Entries

Filed order denying motion for leave to supple-

ment the record on appeal

Filed order denying motion to dismiss

Filed order extending time to file appellants brief

and appendix to 7-26-72; appellee’s brief to

9-29-72

Filed motion setting a briefing schedule, date of

oral argument and for leave to file an oversize

brief with proof of service (& in 30934)

Filed order directing appellee’s brief to be filed

by 9-29-72; appellant’s reply brief to be filed

by 10-13-72, WHICH is not to exceed 56

printed pages; date of oral argument will not

be fixed until after all briefs are in (& in

30934)

Filed brief, defendants-appellees (Appellants)

with proof of service (& in 30934)

Filed appendix, defendants-appellees (appellants)

with proof of service (& in 30934)

Filed application and order granting leave to file

appellee’s brief not to exceed 52 pages (& in

30934)

Filed brief, appellee with proof of service (& in

30934)

Filed application and order granting leave to file

appellees reply brief not to exceed 27 pages (&

in 30934)

Filed reply brief, appellees with proof of service

(& in 30934)

Sars les Sh a ea

12-12-72

12-22-72

5- 1-73

5-14-73

5-15-73

5-24-73

Court of Appeals Docket Entries A19

Argument heard (by : Medina, Lumbard and Hays,

CJJ) (& in 30934)

Order granting leave to file Supplemental Briefs

with References to Remand Proceedings be-

fore Judge Tyler and 10 days for further

Briefing on the issues, but no Reply Briefs

will be permitted without leave of the Court

(& in 30934)

Filed supplemental statement of appellees with

proof of service (& in 30934)

Filed supplemental brief of plaintiff-appellee with

proof of service (& in 30934)

Judgment Revtrsed (& in 30934) Medina, CJ

Judgment Reversed (& in 30934) Medina, CJ

Filed judgment (& in 30934)

Filed petition for a rehearing with a suggestion

for a rehearing in banc, with p/s

Filed itemized and verified bill of costs, with p/s

Filed order denying petition for rehearing

Filed order denying petition for rehearing in banc

Petition for rehearing in banc denied, Kaufman,

CJ with whom Friendly, ChJ., Feinberg,

Mansfield, Mulligan, CJJ concur

Concurring in separate opinion, Mansfield, CJ

Dissenting in separate opinion, Hays, CJ

Dissenting in separate opinion, Oakes, CJ with

whom Timbers, CJ concurs

A20 Court of Appeals Docket Entries

5-30-73 Filed motion to stay the mandate, with p/s (& in

30934)

6- 1-73 Filed affidavit in opposition, with p/s (& in

30934)

6- 5-73 Filed motion to disallow costs, with p/s

6-18-73 Filed order granting motion to stay issuance of

mandate and entry of itemized and verified bill

of costs, ete. to 7-30-73; no bond will be re-

quired pending application to Supreme Court

for certiorari

6-18-73 Filed order denying motion to disallow certain

items of b/costs

8- 2-73 Filed notice of substitution of attorneys: Carter,

Ledyard & Milburn are substituted as counsel

DeCoppet & Doremus in place and stead of

Kelley, Drye, Warren, Clark, Carr & Ellis

8- 2-73 Filed notice of filing of petition for writ of certi-

orari (SC#73-203)

10-17-73 Filed certified copy of order of Supreme Court

granting petition for writ of certiorari (& in

30934)

A. Dante. F'usaro

Clerk

Complaint A21

COMPLAINT

UNITED STATES DISTRICT COURT

SoutTHERN Districr or New YorkK

[Same Trrie]

Plaintiff, by his attorneys, Laventhall & Zicklin, Esqs.,

complaining of defendants on behalf of himself and all

other purchasers and sellers of ‘‘odd-lots’’ on the defend-

ant New York Stock Exchange similarly situated, alleges

As a First Cause of Action Against Defendants

Carlisle & Jacquelin and DeCoppet & Doremus:

1. That this first cause of action arises under the Sher-

man Antitrust Act, §1, 15 U.S.C. §1.

2. That the jurisdiction of this Court is based upon the

Clayton Antitrust Act, §4, 15 U.S.C. $15.

3. That at all times herein mentioned defendant New

York Stock Exchange was and still is an unincorporated

association which constitutes, maintains and provides a

market place and facilities for bringing together purchasers

and sellers of securities and for otherwise performing with

respect to securities the functions commonly performed by

a stock exchange as that term is generally understood; said

defendant New York Stock Exchange is registered as a

national securities exchange pursuant to the Securities Ex-

change Act of 1934, §6, 15 U.S.C. §78f.

4. That plaintiff is an investor who, from time to time,

and since at least 1960, has bought and sold stock registered

on said defendant New York Stock Exchange in blocks of

less than the ordinary unit of trading, which unit of trading

A22 Complaint

is, in most cases, one hundred (100) shares; each such block

is referred to herein as an ‘‘odd-lot.”’

5. That plaintiff brings this action on behalf of himself

and representatively on behalf of all purchasers and sellers

of odd-lots on said defendant New York Stock Exchange.

Plaintiff’s claim and the claims of such persons involve

common questions of law and fact and common relief is

sought herein. Such persons are so numerous as to make

it impossible to bring them all before the Court. Plaintiff

will fairly insure the adequate representation of all such

persons.

6. That at all times herein mentioned defendants

Carlisle & Jacquelin and DeCoppet & Doremus were and

still are limited partnerships under New York Partnership

Law, Article 8, and member firms of said defendant New

York Stock Exchange; each of said defendants Carlisle & ~

Jacquelin and DeCoppet & Doremus is a registered odd-lot

dealer on said defendant New York Stock Exchange and,

as such, each buys and sells odd-lots for its own account.

7. That said defendants Carlisle & Jacquelin and De-

Coppet & Doremus together handle, and have in the past

handled, approximately ninety-nine (99%) percent of all

odd-lot transactions on said defendant New York Stock

Exchange.

8. That the odd-lot transactions of plaintiff and of

those on whose behalf plantiff brings this action have been

executed with said defendants Carlisle & Jacquelin and

DeCoppet & Doremus.

9. That at all times herein mentioned for the defend-

ants Carlisle & Jacquelin and DeCoppet & Doremus did and

each still does exact a charge known as a ‘‘differential,”’

which it causes to enter into the price of the stock purchased

Complatnt A23

by or sold to plaintiff and those on whose behalf plaintiff

brings this action.

10. That such differential is now twelve and one-half

(12%¢) cents per share on all stocks selling below forty

($40) dollars per share and twenty-five (25¢) cents per

share on all stocks selling at and above forty ($40) dollars

per share.

11. That such differential has been established, in-

creased and maintained by said defendants Carlisle & Jac-

quelin and DeCoppet & Doremus in conspiracy and com-

bination with each other and with principal regional stock

exchanges.

12. That said conspiracy and combination are in re-

straint of trade or commerce among the several states and,

as such, are illegal under the Sherman Antitrust Act, §1, 15

U.S.C. §1.

13. That as a result of said conspiracy and combina-

tion, such differential is and has been greater than it would

have been under free competitive conditions.

14. That as a result of such conspiracy and combina-

tion, the profits of said defendants Carlisle & Jacqnelin and

DeCoppet & Doremus have been excessive, and plaintiff and

those represented by plaintiff have been damaged by paying

more than they otherwise would have been paying for odd-

lot purchases and receiving less than they otherwise would

have received for odd-lot sales.

As a Second Cause of Action Against Defendants

Carlisle & Jacquelm and DeCoppet & Doremus:

15. That this second cause of action arises under the

Sherman Antitrust Act, §2, 15 U.S.C. §2.

A24 Complaint

16. Plaintiff repeats and re-alleges paragraphs num-

bered ‘‘2’’ through ‘‘14’’, both inclusive.

17. That said defendants Carlisle & Jacquelin and De-

Coppet & Doremus have monopolized, and have combined

and conspired to monopolize, dealings in odd-lot trans-

actions in stocks listed on the New York Stock Exchange

in violation of the Sherman Antitrust Act, §2, 15 U.S.C. §2.

18. That as a result of such monopolization, the afore-

said differential has been established, increased and main-

tained by said defendants Carlisle & Jacquelin and De-

Coppet & Doremus.

19. That as a result of such monopolization, the differ-

ential is and has been greater than it would have been

under free competitive conditions.

20. That as a result of such monopolization, the profits

of said defendants Carlisle & Jacquelin and DeCoppet &

Doremus have been excessive, and plaintiff and those whom

plaintiff represents have been damaged by paying more

than they otherwise would have had to pay for odd-lot pur-

chases and receiving less than otherwise they would have

received for odd-lot sales.

As a Third Cause of Action Against Defendant

New York Stock Exchange:

21. That this third cause of action arises under the

Securities Exchange Act of 1934, §§6(b), 6(d), and 19(a),

15 U.S.C. §§78f(b), 78f(d), and 78s(a).

22. That this jurisdiction of the Court is based upon

the Securities Exchange Act, §27, 15 U.S.C. §78aa.

23. Plaintiff repeats and re-alleges paragraphs num-

bered ‘‘1’’ through ‘‘15’’, both inclusive, and paragraphs

numbered ‘‘17’’ through ‘‘20’’, both inclusive.

——

Lait, lead LAA ain naan) ak a ae

Complaint A25

24. That the conduct of said defendants Carlisle & Jac-

quelin and DeCoppet & Doremus as described above is and

has been conduct inconsistent with just and equitable prin-

ciples of trade.

25. That pursuant to the Securities Exchange Act of

1934, §§6(b), 6(d) and 19(a), 15 U.S.C. §§78f(b), 78f(d)

and 18s(a), said defendant New York Stock Exchange is

required to adopt and enforce rules prohibiting conduct

inconsistent with just and equitable principles of trade and

rules insuring fair dealing and the protection of investors.

26. That said Securities Exchange Act of 1934, §19(b),

15 U.S.C. §78s(b), recognizes the jurisdiction of national

securities exchanges over odd-lot differentials.

27. That notwithstanding the aforesaid statutory pro-

visions, said defendant New York Stock Exchange, aware

of the conduct of said defendants Carlisle & Jacquelin and

DeCoppet & Doremus, has failed and refused to take any

action preventing said defendants Carlisle & Jacquelin and

DeCoppet & Doremus from imposing the aforesaid differ-

ential on plaintiff and those represented by plaintiff.

28. That as a result of the failure and refusal of said

defendant New York Stock Exchange to take action, the

differential is and has been greater than it would have been

had said defendant New York Stock Exchange exercised its

regulatory authority to eliminate and prevent conduct in-

consistent with just and equitable principles of trade and

to insure fair dealings and the protection of investors.

29. That as a result of such failure and refusal, the

profits of said defendants Carlisle & Jacquelin and De-

Coppet & Doremus have been excessive, and plaintiff and

those represented by plaintiff have been damaged by pay-

ing more than they otherwise would have had to pay for

A26 Complaint

odd-lot purchases and receiving less than they otherwise

would have received for odd-lot sales.

Wuenerozg, plaintiff demands judgment:

A. Directing defendants Carlisle & Jacquelin and De-

Coppet & Doremus to pay treble damages to plaintiff and to

all members of the class represented by plaintiff in such

amount as may be established upon trial of this action.

B. Directing defendant New York Stock Exchange to

pay damages to plaintiff and to all members of the class

represented by plaintiff in such amount as may be estab-

lished upon trial of this action.

C. Directing defendants Carlisle & Jacquelin and De-

Coppet & Doremus to establish a fund in an amount equal

to treble that portion of the differential collected in the

past which has been excessive.

D. Enjoining defendants Carlisle & Jacquelin and De-

Coppet & Doremus from any further violations of the

Sherman Antitrust Act, §§1 and 2, and from collecting any

further excessive differentials.

E. Directing defendant New York Stock Exchange to

regulate and reduce the amount of the differential and to

take into account in such regulation the amount by which

the differential has been excessive in the past.

F. In favor of plaintiff for costs and expenses of this

action, including reasonable counsel and accounting fees.

G. For such other and further relief as may be just.

Laventhall & Zicklin

Attorneys for Plaintiff

¢#

Answer of Carlisle & Jacquelin A27

ANSWER OF DEFENDANT CARLISLE & JACQUELIN

UNITED STATES DISTRICT COURT

SoutHern District or New York

[Same Trriz]

_ Defendant, Carlisle & Jacquelin, by its attorneys, Car-

ter, Ledyard & Milburn, for its answer to the complaint—

With Respect to the Alleged

First Cause of Action

1. Denies the allegations of Paragraph 1, except admits

that the first alleged cause of action purportedly arises

under the Sherman Antitrust Act, Section 1, 15 U.S.C. §1.

2. Denies the allegations of Paragraph 2, except admits

that the jurisdiction of this Court is purportedly based upon

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

3. Admits the allegations of Paragraph 3.

4. Lacks knowledge or information sufficient to form

a belief as to the truth of the allegations of Paragraph 4,

except admits that the ordinary unit of trading in most

cases is 100 shares, and that blocks of less than 100 shares

are in most cases referred to as ‘‘odd-lots.”’

5. Denies the allegations of Paragraph 5 except admits

plaintiff brings this action on behalf of himself and purports

to bring this action representatively on behalf of all pur-

chasers and sellers of odd-lots on the New York Stock Ex-

change and admits that such persons are so numerous as

to make it impossible to bring them all before the court.

6. Admits the allegations of Paragraph 6.

A228 Answer of Carlisle & Jacquelin

7. Lacks knowledge or information sufficient to form a

belief with respect to the truth of the allegations of Para-

graph 7.

8. Lacks knowledge or information sufficient to form a

belief as to the truth of the allegations of Paragraph 8.

9. Denies the allegations of Paragraph 9.

10. Denies the allegations of Paragraph 10.

11. Denies the allegations of Paragraph 11.

12. Denies the allegations of Paragraph 12.

13. Denies the allegations of Paragraph 13.

14. Denies the allegations of Paragraph 14.

With Respect to the Second Alleged

Cause of Action

15. Denies the allegations of Paragraph 15 except ad-

mits that the second alleged cause of action purportedly

arises under the Sherman Antitrust Act, Section 2, 15

U.S.C. §2.

16. Repeats and realleges its answers to Paragraphs 2

through 14.

17. Denies the allegations of Paragraph 17.

18. Denies the allegations of Paragraph 18.

19. Denies the allegations of Paragraph 19.

20. Denies the allegations of Paragraph 20.

. For a First Defense to the First and Second

Alleged Causes of Action

21. The matters alleged fail to state a claim upon which

relief can be granted.

Answer of Carlisle & Jacquelin A29

a ee 6 1

For a Second Defense to the First and Second

Alleged Causes of Action

22. Alleges that the rights of action, if any, as set forth

in the first and second alleged causes of action are barred

by laches, estoppel, waiver and acquiescence.

For a Third Defense to the First and Second

Alleged Causes of Action

23. The first and second alleged causes of action did not

accrue within the time limited by 15 U.S.C., §15b.

Wuenerorg, defendant Carlisle & Jacquelin demands

judgment dismissing the complaint, together with the costs

and disbursements of this action.

Carter, Ledyard & Milburn

By Devereux Milburn

Attorneys for Defendant,

Carlisle & Jacquelin

A30 Answer of DeCoppet & Doremus

ANSWER OF DEFENDANT DeCOPPET & DOREMUS

UNITED STATES DISTRICT COURT

Soutuern District or New York

(Same Trriz]

Defendant DeCoppet & Doremus, by its attorneys Kelley

Drye Newhall Maginnes & Warren, as and for its answer

to the complaint, alleges :

Fimst: It denies each and every allegation contained in

paragraphs 1 and 2 of the complaint.

Szconp: It denies each and every allegation contained

in paragraph 3 of the complaint, except that it admits that

at all times mentioned in the complaint defendant New York

Stock Exchange was and still is an unincorporated associa-

tion which constitutes, maintains and provides a market — .

place and facilities for bringing together purchasers and~~

sellers of securities listed thereon and for otherwise per-

forming with respect to such securities the functions com-

monly performed by a stock exchange as that term is gen-

erally understood; and it further admits that defendant

New York Stock Exchange is registered as a national secu-

rities exchange pursuant to the Securities Exchange Act of

1934, §6, 15 U.S.C. §78f.

Tump: It denies knowledge or information sufficient to

form a belief as to each and every allegation contained in

paragraph 4 of the complaint.

Fovurtx: It denies each and every allegation contained

in paragraph 5 of the complaint, except that it admits that

all purchasers and sellers of odd-lots on the defendant New

. York Stock Exchange are so numerous as to make it im-

possible to bring them all before the Court.

’

Answer of DeCoppet & Doremus A31

Firrrx: It denies knowledge or information sufficient to

form a belief as to each and every allegation contained in

paragraphs 7 and 8 of the complaint.

Sma: It denies each and every allegation contained in

paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20 of

the complaint.

First Defense to the First and Second

Causes of Action:

Seventu: The first and second causes of action, if any,

alleged in the complaint fail to state a claim upon which

relief can be granted.

Second Defense to the First and Second

Causes of Action:

EicutTx: Plaintiff and those on whose behalf he pur-

ports to bring this action knew of and acquiesced in the

procedures and practices by which purchases and sales of

stock in odd-lots were made and effected and, accordingly,

are estopped and should not be heard now to complain

thereof.

Third Defense to the First and Second

Causes of Action:

NintH: Any claim against this defendant based on acts

occurring more than four years prior to the commence-

ment of this action is barred by the provisions of Section

4 B of the Clayton Act, 15 U.S.C. §15 b.

A32 Answer of DeCoppet € Doremus

Wuererore defendant DeCoppet & Doremus demands

judgment dismissing the complaint, together with the costs

and disbursements of this action.

Kelley Drye Newhall Maginnes & Warren

By: Bud G. Holman

A Member

Attorneys for defendant

DeCoppet & Doremus

Answer of N. Y. Stock Exchange A33 -

ANSWER OF DEFENDANT NEW YORK STOCK

EXCHANGE

UNITED STATES DISTRICT COURT

SoutHern District or New York

(Same Trriz]

Defendant New York Stock Exchange (hereinafter

sometimes called ‘‘the Exchange’’), by its attorneys, Mil-

bank, Tweed, Hadley & McCloy, for its answer to the com-

plaint :

1, Denies each and every allegation contained in para-

graphs 1 and 2, except admits that the first cause of action

purportedly arises under, and the jurisdiction of this Court

with respect thereto is purportedly based on, the statutory

provisions referred to.

2. Denies each and every allegation contained in para-

graph 3 except admits that at all times mentioned in the

complaint the Exchange was and is an unincorporated asso-

ciation which constitutes, maintains and provides a market

place and facilities for bringing together purchasers and

sellers of securities listed on the Exchange and for other-

wise performing with respect to such securities the func-

tions commonly performed by a stock exchange as that term

is generally understood; and, further, admits that the Ex-

change is registered as a national securities exchange pur-

Buant to the Securities Exchange Act of 1934, §6, 15 U.S.C.

§78f.

3. Denies that it has any knowledge or information suf-

ficient to form a belief as to the truth of each and every

allegation contained in paragraph 4, except admits that the

A34 Answer of N. Y. Stock Exchange

unit of trading in stocks on the Exchange is, in most cases,

100 shares.

4. Denies each and every allegation contained in para-

graph 5, except admits that plaintiff purports to bring the

action on behalf of himself and representatively on behalf

of all purchasers and sellers of odd-lots on the New York

Stock Exchange and that such persons are so numerous as

to make it impossible to bring them all before the Court.

5. Denies that it has any knowledge or information suf-

ficient to form a belief as to the truth of each and every

allegation contained in paragraphs 7 and 8.

6. Denies each and every allegation contained in para-

graphs 9, 10, 11, 12 and 13.

7. Denies each and every allegation contained in para-

graph 14, except denies that it has any knowledge or infor-

mation as to what, if anything, has been paid or received by

plaintiff or by those purportedly represented by plaintiff.

8. Denies each and every allegation contained in para-

graph 15, except admits that the second cause of action pur-

portedly arises under the statutory provision referred to.

9. Denies each and every allegation contained in para-

graphs 17, 18 and 19.

10. Denies each and every allegation contained in para-

graph 20, except denies that it has any knowledge or in-

formation as to what, if anything, has been paid or received

by plaintiff or by those purportedly represented by plain-

tiff.

11. Denies each and every allegation contained in para-

graphs 21 and 22, except admits that the third cause of

action purportedly arises under, and the jurisdiction of this

Court with respect thereto is purportedly based on, the

statutory provisions referred to.

at od ee

Answer of N. Y. Stock Exchange A35

12. Denies each and every allegation contained in para-

graph 24.

13. Denies each and every allegation contained in

paragraphs 25 and 26, except refers to the statutory provi-

sions referred to therein for the full and complete terms

thereof.

14. Denies each and every allegation contained in para-

graphs 27 and 28.

15. Denies each and every allegation contained in para-

graph 29, except denies that it has any knowledge or in-

formation as to what, if anything, has been paid or received

by plaintiff or by those purportedly represented by plain-

tiff.

For a First Defense Alleges:

16. The third alleged cause of action fails to state a

claim upon which relief can be granted.

And for a Second Defense Alleges:

17. Any claim against the Exchange under the third

alleged cause of action is barred by the Statute of Limita-

tions.

WueneroreE, defendant New York Stock Exchange de-

mands judgment dismissing the complaint, with costs.

Milbank, Tweed, Hadley & McCloy

By: s/ William E. Jackson

(A Member of the Firm)

A36 Affidavit of Dean Witter, Jr.

AFFIDAVIT OF DEAN WITTER, JE., SWORN TO

JUNE 21, 1966

UNITED STATES DISTRICT COURT

SoutHern District or New York

(Same Trriz]

State of New York )

County of New York ) ss.:

Dean Wrrtes, Jk., being sworn, says:

I am a general partner in Dean Witter & Co., members

of the New York Stock Exchange and other securities ex-

changes, am in charge of its Eastern Division, and a member

of its Executive Committee. The firm consists of more than

seventy general partners and approximately forty limited

partners. It is divided into four Divisions: the Pacific

Northern Division (headquarters in San Francisco and

branches in California, Honolulu, Oregon, Utah and Wash-

ington), the Pacific Southern Division (headquarters in

Los Angeles and branches in California and Arizona), the

Eastern Division (headquarters in New York and branches

in Boston and Philadelphia) and the Midwest Division

(headquarters in Chicago and branches in Iowa, Indiana,

Missonri, Illinois and Nebraska). We have over fifty offices

throughout the United States and Hawaii. Each month

the firm sends out approximately 70-80,000 customers state-

ments to customers throughout the United States. We also

do a considerable volume of business with banks and insti-

tutions in Europe, representing many individual investors

there. In addition, we do a large business with institutions

in Canada.

Odd-lot transactions may be executed for an overwhelm-

ingly large proportion of our customers, at one time or

Be yea a

Whit tthe te Ba abd) Keer wah Sar AY 6

aon

Affidavit of Dean Witter, Jr. A37/

another. While institutions and large investors transac-

tions are predominantly in round-lots (i.e., 100-share units),

almost any account can require odd-lot transactions as a

result of stock splits, dividends, ete., which put odd lots

of stock into their accounts. For example, each customer

who, three months ago held 100 shares of IBM stock, now

has 150 shares, a round-lot and an odd-lot. In order to

bring their holdings to an even multiple of 100, many of

them will either buy or sell 50 shares on the odd-lot market.

Thus there is no ready way to separate odd-lot custom-

ers from ronnd-lot customers. To determine which custom-

ers had odd-lot transactions recently would require sorting

of some (approximately) 3,400,000 names of customers,

which would include defunct accounts, persons who have

moved from their previous address, persons who had odd-lot

transactions only in certain months, customers who may have

only executed a single transaction through us, and the like.

Under present conditions we are executing over 1200 odd-

lot transactions on the New York Stock Exchange daily.

Our customers themselves are of many types. As well

as for individual trading for their own accounts, we act as

brokers for banks, fiduciaries, investment funds, mutual

funds, trust funds, investment counsellors (acting under

powers of attorney), business corporations, insurance com-

panies, pension funds, trusts, investment clubs, and many

others. The investment aims, degrees of market sophis-

tication and knowledge, frequency of transactions, types of

securities negotiated, and prices at which the transactions

are executed (whether above or below the odd-lot differen-

tial) take almost as many different forms as there are dif-

ferent customers.

Probably the bulk (median) of the business comes from

individuals earning approximately $15,000 per year, and

these accounts are very apt to be buying odd-lots, partic-

A38 Affidavit of Dean Witter, Jr.

ularly if they are saving or building an investment program

out of income. Odd-lot buyers may purchase new issues

as well as market issues; and they may buy as traders

looking to rapid turnover of securities with a relatively

higher degree of speculation (and a predominant interest

in price fluctuation), or as investors (looking to the long-

term trend of stock values over the years rather than the

mechanical costs of purchase or sale). The in-and-out

trader must weigh the cost of commissions, odd-lot differen-

tial and taxes more carefully than an investor, upon whom

the effect of these less frequently incurred costs is hardly .

noticed.

Thus different classes of customers have interests which

are affected differently (and in some cases, only negligibly)

by the odd-lot differential. Those engaged in arbitrage—

as in the case of those who buy the stock of one of two

companies about to merge while selling the stock of the

other company short—stand on a different footing from

other odd-lot customers. If their short sales are made in

the odd-lot market, it is for the purpose of obtaining ready

buyers (the odd-lot dealers) on sales triggered by round-

lot purchases. These are artificial transactions designed

for arbitrage, and quite different from other customers.

The types of orders entered for odd-lots also vary

across a wide range. The order may be entered as agent

or as principal; it may be long or short; it may require

immediate execution at the market price; it may be a

‘‘limit’’ order (i.e., at a prescribed price); it may be a

‘*day’’ order (which expires if not filled on the day entered)

or may be good for a week, or good until cancelled (an

‘‘open’’ order) ; it may be a ‘‘stop loss’’ order, which be-

comes a market order when a specified price is reached; or

it may require a purchase or sale upon the closing bid or

offer (which is used where volume in the stock is negligible

AMIN DENG Mei aden a abet.

WN NE lean wh? WT len de

Affidavit of Dean Witter, Jr. A39

and a sale or purchase imperative). It is apparent that

various of these types of orders require more attention to

be devoted to them by the broker and by the odd-lot dealer

than others do. A short sale requires more policing to be

sure that it complies with New York Stock Exchange rules

and with the securities laws. An order good till cancelled,

or good for a specified time, is held open upon the books

of the dealer and must be watched. The more complicated

and sophisticated orders thus demand a great deal more

handling, are much more expensive to execute, and increase

the possibilities of error over the simpler forms of order.

Thus considerably more or less service may be required for

various types of orders, although the same commission and

the same odd-lot differential is charged for each.

With respect to limit orders, in the majority of cases

the customer sustains no impact whatever of the odd-lot

differential. The limit order directs that the stock be sold

(or bought) to yield a specified price (or cost) to the cus-

tomer. If the order is to sell at 20, for example, the transac-

tion will be executed at 20%. While the odd-lot dealer

obtains a trading advantage of \% of a point, the customer

receives the 20 price he stipulated.

A customer who has a margin account or who deposits

his securities with our firm has little interest in prompt

delivery following execution of his transaction, while a cus-

tomer who holds his securities himself (and may require

them for use in another transaction) has a high interest in

prompt delivery. Promptness of delivery is supplied by

the odd-lot dealers at considerable cost to them, including

the borrowing of stock where necessary to effect it.

Despite the large number and variety of odd-lot cus-

tomers transactions which we have handled over the years,

I am aware of no specific complaint made by a customer

regarding the amount of the odd-lot differential. For the

A40 Affidavit of Dean Witter, Jr.

reasons stated above, it is most unlikely that there could

be any unanimity in the nature of any complaint, for the

impact of the differential differs so widely between different

types of customers and different types of orders.

Dean Witter, Jr.

(Sworn to June 21, 1966.)

}

ses

Ee NA Aaah ah lk PM Ne Ls a ak mI Aah iil ace de

Affidavit of Bayard Dominick A41

AFFIDAVIT OF BAYARD DOMINICK

SWORN TO JUNE 23, 1966

UNITED STATES DISTRICT COURT

SoutHern Disrricr or New York

(Same Trriz]

State of New York )

County of New York )ss.:

Bayarp Dominick, being sworn, says:

I am an Executive Vice President of Dominick & Dom-

inick, Incorporated, members of the New York Stock Ex-

change and of the American, Midwest, Pacific and Toronto

Stock Exchanges. Our head office is at 14 Wall Street,

New York City; we have branch offices not only in New

York City but also in Buffalo, Chicago, Los Angeles, Port-

land, San Francisco and Seattle. We will soon open a

branch office in Houston, and our affiliate Dominick Corpo-

ration of Canada (with offices in Montreal and Toronto)

will soon open an office in Vancouver. Dominick & Dom-

inick, Ltd. in London, England is another affiliate, as well

as Dominick & Dominick, Underwriting Ltd. and we have

a transmittal office in Basle, Switzerland.

Our active customers number about 7,000, and we have

another approximately 13,000 occasional customers. Ours

is one of the biggest correspondent firms on the New York

Stock Exchange (a ‘‘correspondent firm’’ executes and

clears transactions for out-of-town member firms). As an

approximation, I would estimate that perhaps 60% of the

volume of shares bought and sold by Dominick & Dominick

Incorporated as brokers on the New York Stock Exchange

is executed on behalf of our out-of-town correspondents.

~ A49 Affidavit of Bayard Dominick

The proportion of odd-lot transactions executed for corre-

spondents is probably higher, than is done by Dominick &

Dominick. During the week (five trading days) of June

6-10, 1966, our office records show that we executed 1,608

odd-lot transactions. The number of Dominick & Dominick

customers having odd-lot transactions in that week was 381.

Transactions executed on behalf of correspondents num-

bered 1,227. The total volume of odd-lot shares bought and

sold through our firm in that week was 43,809 shares. We

acted on behalf of 14 correspondents, all of whom are lo-

cated out of town, and 13 of whom are located in other

states. We cannot identify the individual customers for

whom the correspondents execute orders through Dominick

& Dominick. Dominick & Dominick’s customers extend

throughout the United States and many other parts of the

world.

Probably every customer has, at one time or another,

some odd lots of stock in his portfolio as a result of stock

splits and stock dividends, and thus may engage in odd-lot

transactions to round out his holding, if for no other pur-

pose. As a matter of fact, more and more people holding

investment accounts acquire and sell odd lots of stock, for

they tend to invest im even units of dollars rather than in

even units of stock.

The majority of our clients are investors; we have very

few speculative accounts. Our customers include among

others individual corporations, pension funds, mutual funds,

closed-end investment funds, banks (domestic and Euro-

pean), and every category of individual ( mostly in high-

grade investment accounts of $100,000 or more). Our indi-

vidual customers include presidents and executives of cor-

porations, professionals such as lawyers and doctors, re-

tired business men, shop owners, individual bankers, for-

eigners and United States nationals, children ( through

trusts), estates, and many others.

hte Wiha dota,

BON AD ath Dia 0 Pile I Males Ne aR Wad A WR od Dare desl ea hh

DAA tial bet dared sins

: Affidavit of Bayard Dominick A43

I have practically never heard a complaint respecting

the odd-lot differential. Most of Dominick & Dominick’s

customers simply do not care about the differential. It

does not make much difference from an investment point of

view whether the price of the stock is above or below the

break-point. An active trader (as opposed to an investor)

is affected by the odd-lot differential, for he is working for

every eighth and quarter-point, usually on margin to the

greatest extent possible, so every cost of interest, commis-

sion, taxes and differential does affect him. That is not

true of the purchaser who buys for investment, for the

costs of executing any particular investment are small in

relation to the money involved, and his interest lies in

capital gains and dividends.

The prompt deliveries of stock which we receive from

the odd-lot dealers is an important matter to those of our

customers who require delivery of their stocks to them

(the majority of our accounts leave it on deposit with us

and we hold, as a rough guess, over $750,000,000 of cus-

tomers’ securities). Our ‘‘Failures to Receive and Deliver’’

approximate $20,000,000. If a customer wants his stock

it must be delivered to him; these customers get the benefit

of the prompt service of the odd-lot dealer.

There is no question that stop-loss orders, short sales,

and limited orders (such as ‘‘good till cancelled’’) take

more time to handle than straight market orders. We have

to set up safeguards to see that they are properly handled,

and so must the odd-lot dealers. Regardless of the type of

order, the odd-lot differential remains the same.

—~ -

Bayarp Dominick

(Sworn to June 23, 1966.)

A44 Affidavit of J. F. Neil, Sr.

AFFIDAVIT OF JOSEPH F. NEIL, JR.,

SWORN TO JULY 1, 1966

Souruern District or New York

(Same Trriz]

State of New York )

County of New York ) ss.:

Joserx F’. Nen, Jr., being duly sworn, deposes and says:

1. I am a Partner of Goodbody & Co. (hereinafter

together with any predecessor firms sometimes called ‘‘my

Firm’’), have been associated with my Firm or its prede-

cessors for upwards of twelve (12) years and am familiar

with the facts and circumstances hereinafter set forth.

2. My Firm for many years past has been and still is a

member organization of New York Stock Exchange and has

been, and still is engaged in the business of buying and

selling for its customers shares of stock of corporations

whose stocks are listed on the New York Stock Exchange.

Our main office is located at 2 Broadway, New York, New

York and we have eighty-three (83) branch offices located

in all parts of the continental United States.

3. My Firm has in excess of One Hundred Fifty Thon-

sand (150,000) customers located throughout the United

States, and in many foreign countries. These customers in-

clude individuals and such diverse entities as savings banks,

educational institutions, foundations, religious groups, non-

profit organizations, life and other insurance companies,

investment clubs, mutual funds and closed-end investment

companies, non-financial corporations, business corpora-

tions, partnerships, personal holding companies, and non-

TE ee ee ee, TT ee Te

was

Affidavit of J. F. Neil, Sr. A45

bank-administered estates, guardianships, pension funds,

personal trusts, and profit-sharing plans, as well as govern-

-mental bodies. While many of my Firm’s customers are

investors, a number are traders who buy and sell securities

with a great deal of frequency.

4. The activities of my Firm as broker in buying or

selling stock for the account of its customers involve either

the purchase or sale of stock in the standard unit of trading

on the New York Stock Exchange which, except with respect

to certain inactive stocks, is one hundred shares or multi-

ples thereof (a ‘‘round-lot’’ transaction) or in units of less

than the standard unit of trading—one to ninety-nine

shares (an ‘‘odd-lot’’ transaction). Many of our customers

have my Firm execute for them both round-lot and odd-lot

transactions. A very substantial part of my Firm’s busi-

ness for these customers involves odd-lot transactions. I

have been informed and believe that in the four year period

from May 1, 1962 through April 30, 1966, my Firm arranged

for its customers Eight Hundred Sixty-nine Thousand Four

Hundred Eighty-three (869,483) separate odd-lot purchases

or sales. The financial resources of odd-lot customers

range from those of individuals of modest means to multi-

million dollar corporations.

5. My Firm’s customers engage in many types of odd-

lot transactions. Thus, my Firm has handled Market Or-

ders (orders to buy or sell at the market), Limited Orders

and Stop Loss Orders (orders to buy or sell at a prescribed

price), Day Orders (orders which remain in force only

through the day in which it was entered), Open Orders

(orders kept in force beyond day of entry), Good Until

Cancelled (G.T.C.) Orders (orders kept in force until can-

celled), Stop Limited Orders (orders to buy or sell at a

certain price with a specified limit), Orders to Buy on Offer-

A46 Affidavit of J. F. Neil, Sr.

Sell on Bid (orders that do not require a triggering round-

lot transaction), Orders to Buy or Sell on Close (orders

to buy or sell at the closing round-lot bid or offer price),

Basis Price Orders (orders to buy or sell on prices estab-

lished by the odd-lot dealers where there is no round-lot

transaction), Alternative Orders (a group of orders entered

at the same time, where the execution of one order auto-

matically cancels the other or others), Contingent Orders

(a combination of orders the execution of one being con-

tingent upon the execution of the other) and Scale Orders

(orders to buy or sell two or more lots of the same stock at

designated price variations). Some of our customers sold

‘*short’’ (sold stock that they did not then own) or main-

tained ‘‘long”’ positions in particular stocks. Many of our

customers purchase stocks through the Monthly Investment

Plan. Some of our customers trade for cash and some on

margin. The dealings of our odd-lot customers are ex-

tremely varied and take many forms and are made for many

different objectives and purposes.

6. The stocks in which my Firm’s odd-lot customers

deal embrace nearly all of the approximately One Thousand

Four Hundred Thirty (1,430) active issues, as well as the

approximately Two Hundred Ten (210) inactive issues

listed on the New York Stock Exchange. These stocks

vary widely in price. As can be seen from an examination

of the financial pages of most daily newspapers, the New

York Stock Exchange listed stocks selling for as little as

two dollars a share and as high as several hundred dollars

a share.

JosePxH F’. Nem, Jr.

(Sworn to July 1, 1966.)

De ll lta a

A a> ot ales

Me Ae Nats Vy Tatts oat hen 0 Race BON wah een eee ne eee

Affidavit of E. I. O’Brien A47

AFFIDAVIT OF EDWARD I. O’BRIEN

SWORN TO JULY 1, 1966

UNITED STATES DISTRIQT COURT

Soutuern District or New York

{Same Trriz]

State of New York )

County of New York ) ss.:

Epwanp I. O’Brien, being duly sworn, deposes and says:

1, I am a Vice President of Bache & Co. Incorporated

(hereinafter together with any predecessor firms some-

times called ‘‘my Firm’’), have been associated with my

Firm or its predecessors for upwards of ten (10) years and

am familiar with the facts and circumstances hereinafter

set forth.

2.\My Firm for many years past has been and still is

a member organization of New York Stock Exchange and

has been, and still is, engaged in the business of buying

and selling for its customers shares of stock of corpora-

tions whose stocks are listed on the New York Stock

Exchange.

3. My Firm has in excess of 100,000 customers located

throughout the United States, and in many foreign coun-

tries. These customers include individuals and such di-

verse entities as savings banks, educational institutions,

foundations, religious groups, non-profit organizations, life

and other insurance companies, investment clubs, mutual

funds and closed-end investment companies, non-financial

corporations, business corporations, partnerships, personal

A48 Affidavit of E. I. O’Brien

holding companies, and non-bank-administered estates,

guardianships, pension funds, personal trusts, and profit-

sharing plans, as well as governmental bodies. While

many of my Firm’s customers are investors, a number are

traders who buy and sell securities with a great deal of

frequency.

4. The activities of my Firm as broker in buying or

selling stock for the account of its customers involve either

the purchase or sale of stock in the standard unit of trad-

ing on the New York Stock Exchange which, except with

respect to certain inactive stocks, is one hundred shares

of multiples thereof (a ‘‘round-lot’’ transaction) or in

units of less than the standard unit of trading—one to

ninety-nine shares (an ‘‘odd-lot’’ transaction). Many of

our customers have my Firm execute for them both round-

lot and odd-lot transactions. A very substantial part of

my Firm’s business for these customers involves odd-lot

transactions. I have been informed and believe that in

the four year period from May 1, 1962 through April 30,

1966, my Firm arranged for its customers 1,429,845 sepa-

rate odd-lot purchases or sales. The financial resources

of odd-lot customers range from those individuals of mod-

est means to multi-million dollar corporations.

5. My Firm’s customers engage in many types of odd-

lot transactions. Thus, my Firm, has handled Market

Orders (order to buy or sell at the market), Limited Or-

ders and Stop Loss Orders (order to buy or sell at a pre-

scribed price), Day Orders (order which remains in force

only through the day in which it was entered), Open Orders

(order kept in force beyond the day of entry), Good Until

Cancelled (G.T.C.) Orders (orders kept in force until can-

celled), Stop Limited Orders (orders to buy or sell at a

certain price with a specified limit) Order to Buy on Offer

Sb tine tn figs

eI he am) bn cil tl

Affidavit of E. 1. O’Brien A49

—Sell on Bid (orders that do not require a triggering

round-lot transaction), Orders to Buy or Sell on Close

(order to buy or sell at the closing round-lot bid or offer

price), Basis Price Orders (order to buy or sell on prices

established by the odd-lot dealers where there is no round-

lot transaction), Alternative Orders (a group of orders

entered at the same time, where the execution of one order

automatically cancels the other or others), Contingent

Orders (a combination of orders the execution of one being

contingent upon the execution of the other) and Scale

Orders (orders to buy or sell two or more lots of the same

stock at designated price variations). Some of our cus-

tomers sold ‘‘short’’ (sold stock that they did not then

own) or maintained ‘‘long’’ positions in particular stocks.

Many of our customers purchase stocks through the

Monthly Investment Plan. Some of our customers trade

for cash and some on margin. The dealings of our odd-lot

customers are extremely varied and take many forms and

are made for many different objectives and purposes.

6. The stocks in which my Firm’s odd-lot customers

deal embrace nearly all of the approximately 1430 active

issues as well as the approximately 210 inactive issues

listed on the New York Stock Exchange. These stocks

vary widely in price. As can be seen from an examination

of the financial pages of most daily newspapers, the New

York Stock Exchange listed stocks selling for as little as

two dollars a share and as high as several hundred dollars

a shate.

} Epwarp I. O’Brien

ra (Sworn to July 1, 1966.)

A50 Affidavit of W. D. Fleming

AFFIDAVIT OF WILLIAM D. FLEMING

SWORN TO JUNE 30, 1966

UNITED STATES DISTRICT COURT

SoutHesrn District or New York

[Same Trriz]

State of New York )

County of New York ) ss.:

Wuuum D. Fremine, being duly sworn, deposes and

says:

1. I am the President of Walston & Co., Inc. a Delaware

Corporation (hereinafter together with any predecessor

firms sometimes called ‘‘my Firm’’), havee beene associated

with my Firm or its predecessors for upwards of twenty

(20) years and am familiar with the facts and circumstances

hereinafter set forth.

2. My Firm for many years past has been, and still is,

a member organization of New York Stock Exchange and

has been, and still is, engaged in the business of buying and

selling for its cusotmers shares of stock of corporations

whose stock is listed on the New York Stock Exchange.

While my Firm’s main office is in New York City, we have

ninety other offices. These are scattered throughout the

continental United States, with thirty-two on the West

Coast, twenty-five on the East Coast, seventeen in the

Midwest and thirteen in Florida. In addition we have two

offices in Hawaii and one in Switzerland.

3. My Firm has in excess of Three Hundred Thousand

(300,000) customers located throughout the United States,

and in many foreign countries. Of these about One Hun-

Affidavit of W. D. Fleming A51

dred Thousand (100,000) are active customers while the rest

have only occasional transactions. These customers include

individuals and such diverse entities as savings banks,

educational institutions, foundations, religious groups, non-

profit organizations, life and other insurance companies,

investment clubs, mutual funds and closed-end investment

companies, non-financial corporations, business corpora-

tions, partnerships, personal holding companies, and non-

bank-administered estates, guardianships, pension funds,

personal trusts, and profit-sharing plans, as well as govern-

mental bodies. While many of my Firm’s customers are

investors, a number are traders who buy and sell securities

with a great deal of frequency.

4. The activities of my Firm as broker in buying or

selling stock for the account of its customers involve either

the purchase or sale of stock in the standard unit of trading

on the New York Stock Exchange, which, except with respect

to certain inactive stocks, is one hundred shares or multiples

thereof (‘‘round-lot’’ transaction) or in units of less than

-the standard unit of trading—one to ninety-nine shares (an

‘*odd-lot’’ transaction). Many of our customers have my

Firm execute for them both round-lot and odd-lot trans-

actions. A very substantial part of my Firm’s business for

these customers involves odd-lot transactions. I have been

informed and believe that in the four year period from

May 1, 1962 through April 30, 1966, my Firm arrangd for

its customers Eight Hundred One Thousand Eight Hun-

dred Eighty-Five (801,885) separate odd-lot purchases or

sales. The financial resources of odd-lot customers range

from those of individuals of modest means to multi-million

dollar corporations.

5. My Firm handled for our customers many different

types of odd-lot transactions. Among these were Market

Orders (order to buy or sell at the market), Limited Orders

A52 Affidavit of W. D. Fleming

and Stop Loss Orders (order to buy or sell at a prescribed

price), Day Orders (orders which remain in force only

through the day in which they were entered), Open Orders

(orders kept in force beyond day of entry), Good Until

Canclled (GTC) Orders (orders kept in force until can-

celled), Stop Limited Orders (orders to buy or sell at a

certain price with a specified limit), Orders to Buy on Offer

—Sell on Bid (orders that do not require a triggering

round-lot transaction), orders to Buy or Sell on Close

(orders to buy or sell at the closing round-lot price), Basis

Price Orders (orders to buy or sell on prices established

by the odd-lot dealers where there is no round-lot trans-

action), and Scale Orders (orders to buy or sell two or

more lots of the same stock at designated price variations).

Some of our customers sold ‘‘short’’ (sold stock that they

did not then own) or maintained ‘‘long’’ positions in par-

ticular stocks. Some of our customers trade for cash and

some on margin. Many of our customers purchase stocks

through the Monthly Investment Plan. The dealings of

our odd-lot customers are extremely varied and take many

forms and are made for many different objectives and

purposes.

6. The stock in which my Firm’s odd-lot customers deal

embrace nearly all of the approximately One Thousand

Four Hundred Thirty (1,430) active issues as well as many

of the approximately Two Hundred Ten (210) inactive

stocks listed on the New York Stock Exchange. These

stocks vary widely in price. As can be seen from an exam-

ination of the financial pages of most daily newspapers,

the New York Stock Exchange listed stock selling for as

little as two dollars a share and as high as several hundred

dollars a share.

William D. Fleming

(Sworn to June 30, 1966.)

;

Affidavit of M. J. Smith A53

AFFIDAVIT OF MATTHEW J. SMITH

SWORN TO JUNE 30, 1966

UNITED STATES DISTRICT COURT

SourHern Disrricr or New York

[Same Trriz]

State of New York )

County of New York ) ss.:

Martruew J. Surru, being duly sworn, deposes and says:

1. I am a vice-president of Merrill Lynch, Pierce, Fen-

ner & Smith Incorporated (hereinafter together with any

predecessor firms sometimes called ‘‘my Firm’’), and Di-

rector of its Administrative Division, and I have been asso-

ciated with my Firm or its predecessors for upwards of 17

years and am familiar with the facts and circumstances

hereinafter set forth.

2. My Firm for many years past has been, and still is,

a member of New York Stock Exchange and has been, and

still is, engaged in the business of buying and selling for

its customers shares of stock of corporations whose stocks

ar listed on the‘New York Stock Exchange.

3. My Firm has in excess of 700,000 customers located

throughout the United States, and in many foreign coun-

tries, serviced by 145 offices in the United States and Can-

ada, and 13 offices throughout the rest of the world. These

customers include such diverse entities as individuals, insti-

tutions, including savings banks, educational institutions,

foundations, religious groups, fraternal and other non-profit

organizations, life and other insurance companies, labor

unions, investment clubs, credit unions, mutual funds and

A54 Affidavit of M. J. Smith

closed-end investment companies, non-financial corpora-

tions, business corporations, partnerships, trustees in bank-

ruptcy, personal holding companies, estates, guardianships,

pension funds, employee stock purchase plans, personal

trusts, conservatorships, custodians and profit-sharing

plans, as well as governmental bodies. While many of my

Firm’s customers are investors, a number are traders who

buy and sell securities with a great deal of frequency.

4. The activities of my Firm as broker in buying or

selling stock for the account of its customers involve either

the purchase or sale of stock in the standard unit of trading

on the New York Stock Exchange, i.e., one hundred shares

or multiples thereof (a ‘‘round-lot’’ transaction) or in units

of less than the standard unit of trading—one to ninety-nine

shares (an ‘‘odd-lot’’ transaction). For the past several

years my Firm has handled approximately 20% of the odd-

lot business on the New York Stock Exchange. Many of our

customers have my Firm execute for them both round-lot

and odd-lot transactions. A very substantial part of my

Firm’s activities for these customers involves odd-lot trans-

actions. I have been informed and believe that in the four

year period from January 1, 1962 through December 31,

1965, my Firm arranged for its customers approximately

5,500,000 separate odd-lot purchases or sales (not includ-

ing transactions in Monthly Investment Plan (hereafter

‘*MIP”’) accounts). The financial resources of odd-lot cus-

tomers range from those of individuals of modest means to

multi-million dollar corporations.

5. The dealings of our odd-lot customers are extremely

varied and take many forms and are made for many differ-

ent objectives and purposes. My Firm handled Market

Orders (orders to buy or sell at them arket), Limited Or-

ders and Stop Loss Orders (orders to buy or sell at a pre-

Le a ee eM

‘Lee te ag Pee eo ge te Pee eye

Affidavit of M. J. Smith A55

scribed price), Day Orders (orders which remain in force

only through the day in which it was entered), Open Orders

(orders kept in force beyond day of entry), Good Until

Cancelled (G.T.C.) Orders (orders kept in force until can-

celled), Stop Limited Orders (orders to buy or sell at a cer-

tain price with a specified limit), Orders to Buy on Offer—

Sell on Bid (orders that do not require a triggering round-

lot transaction), Orders to Buy or Sell on Close (orders

to buy or sell at the closing round-lot offer or bid), Basis

Price Orders (orders to buy or sell on prices established

by the odd-lot dealers where there is no round-lot transac-

tion), Alternative Orders (a group of orders entered at

the same time, where the execution of one order automati-

eally cancels the other or others), Contingent Orders (a

combination of orders the execution of one being contingent

upon the execution of the other) and Scale Orders (orders

to buy or sell two or more lots of the same stock at desig-

nated price variations). Some of our customers sold

‘*short”’ (sold stock that they did not then own) or main-

tained ‘‘long’’ positions in particular stocks. Some of our

customers trade for cash and some on margin.

6. Some of our odd-lot customers are individual in-

vestors with limited funds who purchase only odd lots of

their favorite stocks. Some customers purchase odd lots as

they enter the market for the first time, and then purchase

round lots as they gain experience and confidence. Other

customers who may generally buy and sell round lots may

find it necessary on occasion to buy and sell odd lots. Thus,

for example, the holder of Standard Oil of Indiana who

receives a stock dividend in the form of shares of Standard

Oil of New Jersey may sell the Standard Oil of New Jersey

stock because he doesn’t want to bother holding odd lots.

Or the executor of an estate who must raise funds to pay

debts, taxes or legacies may sell odd lots to raise only 80

A56 Affidavit of M. J. Smith

much cash as he actually needs, and thereby preserve the

balance of the stock holdings for distribution to the legatees.

Along the same lines, an executor may buy or sell odd lots

in order to have holdings available for equal distribution

among the legatees (e.g., an executor with 100 shares of

XYZ stock to distribute to 3 legatees might either buy 2

shares or sell 1 share so that each legatee receives the same

number of shares).

My Firm has more than half of the approximately 180,-

000 New York Stock Exchange MIP accounts. By their

_ Nature these accounts involve odd lot transactions. Many

of our MIP customers also have regular accounts with us,

in which some of them often buy and sell in round lots.

A booklet, recently published by the New York Stock

Exchange, entitled ‘‘New Investors’’, indicates that the

number of minor shareholders has increased from 450,000

in 1962 to 1,280,000 in 1965 (page 6). Many of these minors

have acquired their holdings through the various Gifts to

Minors statutes, whose use is becoming increasingly popu-

lar. Many gifts under the Gifts to Minors acts are small

gifts of a few shares to commemorate a birth, baptismal,

graduation, confirmation or similar event. It is not likely

that the persons making these gifts are concerned with the

odd lot differential.

Matraew J. Smrru

(Sworn to June 30, 1966.)

Affidavit of E. B. Peterson A57

AFFIDAVIT OF EDWIN B. PETERSON

SWORN TO JULY 1, 1966

UNITED STATES DISTRICT COURT

Soutuern District or New York

[Same Trriz]

State of New York )

County of New York ) ss.:

Epwrin B. Pererson, being sworn, says:

I am a general partner in Francis I. duPont & Co.,

members of the New York Stock Exchange and other

securities exchanges. The firm consists of thirty-eight gen-

eral partners and approximately fifteen limited partners.

Although there are partners in charge of various offices

throughout the country, the firm is centrally controlled

from the main office at No. One Wall Street, New York

City. Our firm maintains 104 offices, included in which

are offices in London, Amsterdam, Frankfurt, Lausanne,

Beirut, and two in Canada.

I caused a check of our records to be made for the

period from January 1, 1966 through May 31, 1966 and

found that we mailed statements to an average of 141,307

customers each month. This number does not represent

anything like our entire clientele but merely those cus-

tomers for whom the firm is carrying a position at the time

of the mailing—in other words, ‘‘open accounts’’. ‘The

total number of the firm’s clients would be vastly in excess

of this mailing list; I would estimate somewhere between

500,000 and 1,000,000.

For various reasons, including the prevalence of stock

splits, stock dividends, etc., a great majority of our cus-

A58 Affidavit of E. B. Peterson

tomers are involved in odd-lot transactions, but there is no

way of obtaining exact information in this connection with-

out analyzing the history of each account for the period

of time involved. In view of the enormous numbers, this

task would be virtually impossible.

During the five months covered by my investigation, the

firm averaged 1,932 odd-lot transactions per day on the New

York Stock Exchange alone. Almost every conceivable type

of customer was involved, as for instance, individuals,

banks, fiduciaries (including executors and trustees), cus-

todians under the Gifts to Minors Act, mutual funds, trust

funds, investment counsellors (acting under powers of at-

torney), business partnerships, business corporations, in-

surance companies, pension funds, trusts, investment clubs,

and many others too numerous to list.

There are many different types of orders involved in

odd-lot transactions, as for instance, market order, limit

order, day order, good for a week, good until cancelled,

open door, stop loss order, basis order, money order, etc.,

etc. My firm handles all of them at one time or another,

and each different type of order requires a different type

of handling. A money order, for example, involves a cus-

tomer who calls up and states that he has a definite amount

of money and would like to buy as many shares as possible

of a certain stock. My firm must ascertain the price of

the stock, the brokerage commission, compute the probable

differential, and arrange for the disposition of the excess

of the money available over the cost of the order.

It is absolutely essential that the odd-lot houses provide

for the prompt delivery of stock. A small investor wants

to receive his securities as soon as he has put up his money

and our firm is equally desirous that he should receive them

at once. We feel that it is a good policy for a small investor

to receive all the literature, such as proxy statements and

Affidavit of E. B. Peterson A59

annual statements, which goes out periodically to stockhold-

ers and, in addition, it saves the firm the trouble and expense

of holding and servicing an inordinate number of small

accounts.

The odd-lot differential is accepted by the investor

without comment. I do not remember any specific com-

plaints on this subject.

Epwin B. Pererson

(Sworn to July 1, 1966.)

A60 Affidavit of D. T. Bergin

AFFIDAVIT OF DANIEL T. BERGIN

SWORN TO JULY 6, 1966

UNITED STATES DISTRICT COURT

Soutruern Disrrict or New York

(Same Trriuz]

State of New York )

County of New York ) ss.:

Dantet T. Bercry, being duly sworn, deposes and says:

1. I am a General Partner of Hornblower & Weeks-

Hemphill, Noyes (hereinafter together with any predeces-

sor firms sometimes called ‘‘my Firm’’), having been asso-

ciated wtih my Firm for upwards of 40 years and am

familiar with the facts and circumstances hereinafter set

forth.

2. My Firm for many years past has been and still is,

a member organization of New York Stock Exchange and

has been, and still is, engaged in the business of buying

and selling for its eustomers shares of stock of corpora-

tions whose stocks are listed on the New York Stock Ex-

change.

3. My Firm has in excess of 100,000 customers, located

throughout the United States and in some foreign countries.

These customers include individuals and such diverse enti-

ties as savings banks, educational institutions, foundations,

religious groups, non-profit organizations, life and other

insurance companies, investment clubs, mutual funds and

closed-end investment companies, non-financial corpora-

tions, businesss corporations, partnerships, personal holding

companies, and non-bank-administered estates, guardian-

Affidavit of D. T. Bergin A61

ships, pension funds, personal trusts, and profit-sharing

plans, as well as governmental bodies. While many of my

Firm’s customers are investors, a number are traders who

buy and sell securities with a great deal of frequency.

4. The activities of my Firm as broker in buying or

selling stock for the account of its customers involve either

the purchase or sale of stock in the standard unit of trading

on the New York Stock Exchange which, except with respect

to certain inactive stocks, is one hundred shares (a ‘‘round-

lot’’ transaction) or multiples thereof or in units of less

than the standard unit of trading, namely, one to ninety-

nine shares (an ‘‘odd-lot’’ transaction). Many of our cus-

tomers give my Firm orders to buy or sell both round-lots

and odd-lots of stock. A very substantial part of my Firm’s

business for these customers involves odd-lot transactions.

I have been informed and believe that in the four-year

period from May 1, 1962 through April 30, 1966, my Firm

arranged for its customers in excess of 600,000 separate

odd-lot purchases or sales. The financial resources of odd-

lot customers range from those of individuals of modest

means to multi-million dollar corporations.

5. My Firm has handled for customers many different

types of odd-lot transactions. Among these were Market

Orders (orders to buy or sell at the market), Limited

Orders and Stop Loss Orders (orders to buy or sell at a

prescribed price), Day Orders (orders which remain in

force only through the day on which it was entered), Open

Orders (orders kept in force beyond day of entry), Good

Until Cancelled (G.T.C.) Orders (orders kept in force until

cancelled), Stop Limit Orders (orders to buy or sell at a

certain price with a specified limit), Orders to Buy on Offer

—Sell on Bid (orders that do not require a triggering

round-lot transaction), Orders to Buy or Sell on Close

A62 Affidavit of D. T. Bergin

(orders to buy or sell at the closing round-lot bid or offer

price), Basis Price Orders (orders to buy or sell on prices

established by the odd-lot dealers where there is no round-

lot transaction), Alternative Orders (a group of orders

entered at the same time, where the execution of one order

automatically cancels the other or others), Contingent

Orders (a combination of orders the execution of one being

contingent upon the execution of the other) and Scale

Orders (orders to buy or sell two or more lots of the same

stock at designated price variations). Some of our custom-

ers sold ‘‘short’’ (sold stock that they did not then own) or

maintained ‘‘long’’ positions in particular stocks. Some of

our customers purchase stock through the Monthly Invest-

ment Plan. Some of our customers trade for cash and some

on margin. The dealings of our odd-lot customers are ex-

tremely varied and take many forms and are made for many

different objectives and purposes.

6. The stocks in which my Firm’s odd-lot customers

deal embrace nearly all of the approximately 1430 active

issues, and the approximately 210 inactive issues, listed on

the New York Stock Exchange. These stocks vary widely

in price. “As can be seen from an examination of the finan-

cial pages of most daily newspapers, the New York Stock

Exchange listed stocks sell for as little as two dollars a

share and as high as several hundred dollars a share.

DanteEt T. Bercrn

(Sworn to July 6, 1966.).

le MAD Na bo wins

WAAR EDN i nisl ria A ARR AI oie. oe ac

Plaintiff’s Answers to Interrogatories A63

PLAINTIFF’S ANSWERS TO

DEFENDANTS’ INTERROGATORIES, VERIFIED ON

JUNE 28, 1966

(Record pp. 53-63)

Unrrep Srates District Court

SoutHern District or New York

(Same Trriz]

Answers of plaintiff Morton Eisen to interrogatories

served upon him by defendants on June 17, 1966.

1: My residence address is 15-86 Bell Boulevard, Bay-

side, Queens, New. York.

2: I ama wholesale shoe sales representative. My busi-

ness address is 130 West Broadway, New York, New York.

3: The following are the transactions, numbered (i)

through (xlvii), in which I engaged during the six years

next preceding the filing of the complaint in this action,

involving the purchase or sale of an odd-lot of stock on the

New York Stock Exchange and the information requested

in ‘‘(a)’’ through ‘‘(k)’’ of Interrogatory ‘‘3’’ for each

such transaction:

(i) (a)

Raytheon Mfg.

(b)

purchase

(c)

47%

(d)

50 shares

A64 Plaintiff’s Answers to Interrogatories

(e)

May 19, 1960

(h)

To the best of my recollection, with respect to this

and all of my other odd-lot transactions, listed below,

each such transaction was long and the order under

which each was effected (54) was either market or limit,

which, in turn, was either a day order, open order or

good until cancelled order. However, with respect to

each such transaction, I cannot recall whether it was

market or limit or any further particulars as to the type

of order under which it was effected. Therefore, the

foregoing is my answer to interrogatory ‘‘3(h)’’ for all

of my transactions listed herein.

(i)

Ira Haupt & Co.

(3)

defendant DeCoppet & Doremus

(k)

own account.

(ii) (a)

Universal Cyclops Steel

(b)

purchase

(c)

31%

Cy errr rr or ren rer we ue °

Plaintiff’s Answers to Interrogatories A65

(d)

5 shares

(e)

October 3, 1960

(f)

$6.00

(g)

.625 cents

(i)

Ira Haupt & Co.

(3)

Defendant DeCoppet & Doremus

(k)

Account of Morton Eisen, Custodian for Michael L.

Rubinstein, whose address is 2785 Broadway, New

York. Michael L. Rubinstein is my stepson.

(ili) (a)

Diners Club

(b)

purchase

(c)

1854

(d)

10 shares

(e)

October 3, 1960

(f)

$6.00

A66 Plawntiff’s Answers to Interrogatories

(g)

$1.25

(i)

Ira Haupt & Co.

(j)

defendant DeCoppet & Doremus

(k)

account of Morton Eisen, Custodian for Michael L.

Rubinstein.

(iv) (a)

Pure Oil Co.

(b)

purchase

(c)

3256

(d)

5 shares

(e)

October 3, 1960

(f)

$6.00

(g)

.625 cents

(i)

Ira Haupt & Co.

(j)

defendant DeCoppet & Doremus

(k)

account of Morton Eisen, Custodian for Michael L.

Rubinstein.

Plaintiff’s Answers to Interrogatories A67

(v) (a)

American Motors Corp.

(d)

65 shares

(e)

April 5, 1961

(f)

$18.33

(g)

$8.125

(i)

Cohen, Simonson & Co.

(55) (j)

To my best knowledge, with respect to all odd-lot

business, Cohen, Simonson & Co., at the time of this

transaction and to this date, dealt and now deals with

defendant DeCoppet & Doremus exclusively for six

months of each year and with defendant Carlisle &

Jacquelin exclusively for the other six monthss of each

4 year (not necessarily consecutive calendar months).

4 However, I do not know which of said two defendants

E effected this particular transaction.

(k)

own account.

(vi) (a) |

International Telephone & Telegraph

A68

Plaintiff’s Answers to Interrogatories

(d)

50 shares

(e)

April 19, 1961

Cohen, Simonson & Co.

(3)

My answer is the same as in (v) (j), above

(x) =

own account

(vii) (a)

Olin Mathieson Chemical

Plaintiff’s Answers to Interrogatories A69

Edwards & Hanly was my broker for this and all

of my transactions listed in (viii) through (xlvii),

below.

(3)

The only information which I have with respect to

this interrogatory, is that I have been advised by the

account executive in charge of my accounts at Edwards

& Hanly that at the time of this transaction and to this

date, with respect to all odd-lot business, Edwards &

Hanly dealt and now deals with defendant Carlisle &

Jacquelin, exclusively. Therefore, the foregoing is my

answer to Interrogatory ‘‘3(j)’’ for this and all of my

transactions listed in (viii) through (xlvii), below.

(k)

own account.

(viii) (a)

Raytheon Company

Plaintiff’s Answers to Interrogatories

(f)

$23.93

(g)

$6.375

(k)

own account

(ix) (a)

Standard Kollsman

(g)

75 cents

(k)

own account

(56) (x) (a)

Standard Oil Co. (Ohio)

Plaintiff(’s Answers to Interrogatories A71

(d)

2 shares

(e)

October 24, 1961

(f)

$6.00

(g)

50 cents

(k)

' Account of Morton Eisen, Custodian for Mark J.

Eisen, whose address is 15-16 Bell Boulevard, Bayside,

Queens, New York. Mark J. Eisen is my son.

(xi) (a)

Standard Oil Co. (Ohio)

(d)

2 shares

(e)

October 24, 1961

(k)

Account of Morton Eisen, Custodian for Michael

L. Rubinstein.

A72

Plaintiff’s Answers to Interrogatories

(xii) (a)

Standard Oil Co. (Ohio)

(d)

2 shares

(e)

October 24, 1961

$6.00

(g)

50 cents

(k) :

Account of Morton Eisen, Custodian for Eric A.

Eisen, whose address is 15-86 Bell Boulevard, Bayside,

Queens, New York. Eric A. Hisen is my son.

(xiii) (a)

American Viscose

(d)

50 shares

(e)

November 17, 1961

(f)

$31.16

Plaintiff’s Answers to Interrogatories

(g)

$12.50

(k)

own account

(xiv) (a)

American Viscose

(d)

15 shares

(e)

December 6, 1961

(f)

$13.18

(g)

$3.75

(k)

own account

(xv) (a)

' Aveo Corporation

(b)

purchase

(c)

‘|

(d)

5 shares

A73

A74 Plaintiff’s Answers to Interrogatories

(e)

June 28, 1962

(k)

Account of Morton Eisen, Custodian for Eric A.

Eisen.

(57) (xvi) (a)

American Viscose

Plaintiff’s Answers to Interrogatories A75

(k)

Account of Morton Eisen, Custodian for Eric A. —

Eisen.

(xviii) (a)

Aveo Corporation

sale

(g)

.625 cents

(k)

Account of Morton Eisen, Custodian for Eric A.

Eisen. .

A76

Plaintiff’s Answers to Interrogatories

(xix) (a)

Magnavox Co.

(e)

(k)

oun account.

(xx) (a)

Control Data

Plaintiff’s Answers to Interrogatories ATT ©

(g)

$2.00

(k)

Account of Morton Eisen, Custodian for Michael L.

Rubinstein.

(xxi) (a)

Pure Oil Co.

(b)

sale

(c)

40%

(d)

5 shares

(e)

April 30, 1963

(f)

$6.00

(g)

$1.25

(k)

Account of Morton Eisen, Custodian for Michael L.

Rubinstein.

(58) (xxii) (a)

Universal Cyclops Steel

A78

Plaintiff’s Answers to Interrogatories

(d)

5 shares

(e)

April 30, 1963

( f) a

$6.00

(g)

.625 cents

(k)

Account of Morton Eisen, Custodian for Michael

L. Rubinstein.

(xxiii) (a)

Magnavox Co.

(b)

sale

(c)

41%

(d)

55 shares

(e)

May 6, 1963

(f)

$27.76

(g)

$13.75

(k)

own account.

(xxiv) (a)

Metro-Goldwyn Mayer

Plaintiff’s Answers to Interrogatories

(d)

15 shares

(e)

June 21, 1963

(f)

$10.03

(g)

$1.875

A79

A80 Plaintiff’s Answers to Interrogatories

(xxvi) (a)

International Rectifier

(d)

50 shares

(e)

July 25, 1963

(f)

$9.38

(g)

$6.25

(k)

own account.

(xxvii) (a)

International Rectifier

Plaintiff’s Answers to Interrogatories A81

(k)

own account.

(59) (xxviii) (a)

Diners Club

(b)

sale

(c)

22%

(d)

10 shares

(e)

October 24, 1963

(f)

$6.00

(g)

$1.25

(k)

Account of Morton Eisen, Custodian for Michael L.

Rubinstein.

(xxix) (a)

Avco Corporation

A82 Plaintiff’s Answers to Interrogatories

(f)

$6.00

(g)

$1.25

(k)

Account of Morton Eisen, Custodian for Michael L.

Rubinstein.

(xxx) (a)

Greyhound Corp.

purchase

(c)

41,

(d)

20 shares

(e)

November 22, 1963

(f)

$14.45

(g)

$5.00

(k)

own account.

(xxxi) (a)

Greyhound Corp.

Plaintif’’s Answers to Interrogatories A83

(d)

20 shares

(e)

November 22, 1963

(f)

$14.20

(g)

$5.00 .

(k)

own account.

(xxxii) (a)

Control Data

(e)

(k)

Account of Morton Eisen, Custodian for Mark J.

Eisen.

(xxxiii) (a)

Control Data

A84

Plaintiff’s Answers to Interrogatories

(d)

15 shares

(e)

November 26, 1963

(f)

$19.66

(g)

$3.75

(k)

Account of Morton Eisen, Custodian for Eric A.

Eisen.

(60) (xxxiv) (a)

Control Data

(d)

10 shares

(e)

November 26, 1963

(f)

$14.78

(g)

$2.50

Plaintiff’s Answers to Interrogatories A85

(k)

Account of Morton Eisen, Custodian for Michael L.

‘Rubinstein.

(xxxv) (a)

Greyhound Corp.

(b)

purchase

_(c)

46% for 20 shares, 465% for 100 shares

(d)

120 shares

(e)

December 5, 1963

(f)

$14.38 for 20 shares, $42.31 for 100 shares

(g)

$5.00

(k)

own account.

(xxxvi) (a) —

Control Data

A86 Plaintiff’s Answers to Interrogatories

(g)

$17.50

(k)

own account.

(xxxvii) (a)

Control Data

Plaintiff’s Answers to Interrogatories

(e)

February 27, 1964

Greyhound Corp. with due bill

sale

554% for 50 shares, 55% for 100 shares

(d)

150 shares

(e) ’

June 18, 1964

(f)

$30.78 for 50 shares, $44.54 for 100 shares

(k)

own account.

(61) (xl) (a)

Chrysler Corp.

(b)

purchase

A88

Plaintiff’s Answers to Interrogatories

(c)

50% for 50 shares, 50 for 100 shares

(d)

150 shares

(e)

June 18, 1964

(f)

$29.56 for 50 shares, $44.00 for 100 shares

(g)

$12.50

(k)

own account.

(xli) (a)

Chrysler Corp.

(b)

purchase

(d)

10 shares

(e)

June 18, 1964

(f)

$10.00

(g)

$2.50

_ (x)

own account.

(xlii) (a)

Chrysler Corp.

Plaintiff’s Answers to Interrogatories

(b)

sale

(c)

6614 for 60 shares, 66% for 100 shares

(d)

160 shares

(e)

September 15, 1964

(f)

$36.88 for 60 shares, $45.65 for 100 shares

(g)

$15.00

(k)

own account.

(xliii) (a)

Spiegel Inc.

(d)

45 shares

(e)

August 2, 1965

(f)

$22.38

(g)

$5.625

A89

A90 Plaintiff’s Answers to Interrogatories

(k)

‘\, own account.

(xliv) (a) /

Spiegel Inc. i

a «fe i

sale i

(c.) |

(d) j

55 shares

(e) :

August 25, 1965 i

(f) j

$26.66 4

(g) j

$6.875 2

(k) i

own account. ;

(xlv) (a)

Wolverine Shoe 4

(b) ;

purchase i

30% ;

5 shares 3

(e) :

Netober 21, 1965 5

(f) :

$6.00 ;

OR 3

Plaintiff’s Answers to Interrogatories A91

(g)

.625 cents

(k)

Account of Morton Eisen, Custodian for Mark J.

Eisen.

(xlvi) (a)

Douglas Aircraft

(b)

sale

(c)

647%

(d)

8 shares

(e)

November 10, 1965

(f)

$10.19

(g)

$2.00

(k)

own account.

(62) (xlvii) (a)

Morse Shoe, Inc.

(b)

sale

A92 Plaintiff’s Answers to Interrogatories

(e)

February 3, 1966

(f)

$17.06

(g)

$6.25

(k)

own account.

4: Except for communications with my attorneys, the

only communications relating to the subject-matter of this

action which I have at any time during the six years next

preceding the filing of the complaint in this action had with

others was oral and, to the best of my knowledge and recol-

lection, consisted of my general complaint concerning the

injustice of the existing odd-lot differential. I have no

recollection as to the identity of the.persons to whom I

directed such comments nor do I know whether any such

persons were purchasers or sellers of odd-lots on the New

York Stock Exchange.

5: Except for communications with my attorneys, the

only communicationss relating to the subject-matter of this

action which I have at any time since the commencement of

this action had with others consisted of oral comments of

congratulations and good wishes for the successful prose-

cution of this action from friends and acquaintances and

certain persons who called me on the telephone. I have no

knowledge as to whether such friends and acquaintances of

mine are or ever were purchasers or sellers of odd-lots on

the New York Stock Exchange nor do I know the names or

have any other information concerning the said persons who

called me on the telephone.

(Verified by plaintiff, June 28, 1966.)

ao bt SPT WO IS IERN B if “Saat “ ae

PET TT Oe eT ORY

District Court Opinion (9/27/66) A93

OPINION BY TYLER, J.. DATED SEPTEMBER 27, 1966,

GRANTING DEFENDANTS’ MOTION TO EXTENT

THAT ACTION, AS CLASS ACTION, IS DISMISSED

UNITED STATES DISTRICT COURT

SouTHERN District or New York

[Same Trr.e]

Tyrer, District Judge:

This is an action brought by a New York resident,

Morton Eisen, charging the two major ‘‘odd-lot’’ dealers on

the New York Stock Exchange—defendantss Carlisle & Jac-

quelin and DeCoppet & Doremus—with conspiring and

combining to*monopolize odd-lot trading and with charging

excessive fees in violation of the Sherman Act. 15 U.S.C.

1 and 2. The complaint also pleads a third claim or cause

of action against the New York Stock Exchange (‘‘Ex-

change’’) upon the theory that the Exchange breached its

duties prescribed by the Securities Exchange Act of 1934

for suspension of odd-lot trading. 15 U.S.C. 78f(b), 78f(d)

and 78s(a). Eisen, who describes himself as an investor,

asserts that he sues for himself and on behalf of all odd-lot

purchasers and sellers on the Exchange.

The taproot of Eisen’s three claims is the so called

‘“‘odd-lot differential’? charged by the broker defendants

and other odd-lot dealers for transactions in other than

100 share lots of securities. As is well known, the normal

trading units on the stock exchanges are in multiples of 100

shares, sometimes called ‘‘round-lots.’’ Odd-lots, thus, are

units of stock less than 100, the established unit of trading.

For odd-lot transactions, in addition to the normal broker-

age commission, an additional fee known as the ‘‘odd-lot

a ve

A94 District Court Opinion (9/27/66)

differential’’ is charged. At the time this suit was com-

menced, the differential was % point (12% cents) per share

when the price per share was 39% or below and %4 point

(25 cents) when the price was 40 or above. Effective July 1,

1966, however, this ‘‘break point’’ of $40 was increased to

$55 under specific approval of the Securities and Exchange

Commission. The execution price of an odd-lot includes the

differential. On a customer’s order to buy an odd-lot, the

differential is added to the price of the effective offer or

sale; on a customer’s order to sell, the differential is sub-

tracted from the price of the effective sale or bid. It is

Eisen’s theory in this case that the two broker-dealer de-

fendants, with the benign indulgence of the Exchange, have

‘‘established, increased and maintained’’ the differential.

The defendants have moved pursuant to amended Rule

23(c)(1), F.R.Civ.P., effective July 1, 1966, seeking to ob-

tain an adjudication that the present action is not main-

tainable as a class action. Plaintiff, of course, relies on

new Rule 23 to support his suit as a class action. <

Amended Rule 23(a) sets forth four specific prerequi-

sites to a class action:

(1) The class ‘‘is so numerous that joinder of all mem-

bers would be impracticable”’;

(2) questions of law or fact common to the class exist;

(3) claims or defenses of the representative parties are

typical of those of the class; and

(4) the representative parties will adequately protect

the interests of the class.

Amended Rule 23(b) specifically states that for a suit to

be maintained as a class action, the specific prerequisites

just listed must be satisfied and, in addition, at least oné

of three following requirements or conditions must be

shown:

ralbee tt 0 beau

" De ee ee ee

District Court Opinion (9/27/66) A95

1. Prosecution of separate actions by or against sep-

arate members of the class would create a risk of incon-

sistent or varying adjudications, or adjudications which

would practically dispose of or impair the interests of class

members not parties thereto;

2. the party opposing the class has acted or failed to

act, thereby rendering appropriate injunctive or declara-

tory relief respecting the entire class; or

3. the court finds that questions of law or fact common

to the class predominate over such questions affecting only

individual members and, in addition, that the class action

is superior to other available methods or procedures for

fair and efficient adjudication of the controversy. See

Notes of Advisory Committee on Amendments to Rules

of Civil Procedure (hereinafter ‘‘ Advisory Com. Notes’’),

39 F.R.D. 98-100.

As will be suggested by the discussion hasenatter! plain-

tiff’s suit could only fit in theory the last-mentioned cat-

egory or requirement set forth in amended Rule 23(b)—

i.e. that plaintiff’s suit, if to be maintained as a class action,

must be shown to present questions of fact or law common

to the class which predominate over such questions effecting

only individual members. Suffice it to say here that, despite

belated unconvincing suggestions to the contrary in their

reply brief, plaintiff’s counsel originally intended and

argued that their client’s suit meets this requirement. Thus,

plaintiff in effect attempts to show that his action is what

was characterized under former Rule 23 as a spurious class

action, and it may be at least generally helpful to consider

some of the judge-made requirements and prerequisites for

maintaining a spurious class action under the old Rule in

order to determine if Eisen has successfully met those

specifically set forth in subparagraphs (a) and (b)(3) of

the amended Rule. See discussion at 39 F.R.D. 98-103.

A96 District Court Opinion (9/27/66)

The spurious class action under the former Rule was

considered merely a permissive joinder device, and prior

to the July 1, 1966 amendment, the judgment in such cases

bound only the original parties of record and those who

intervened and became parties to the action. See Lipsett

v. United States, 359 F.2d 956, 959 (2d Cir. 1966); All

American Airways, Inc. v. Elderd, 209 F.2d 247 (2d Cir.

1954) ; Kainz v. Anheuser-Busch, Inc., 194 F.2d 737 (7th Cir.

1952) ; Schatte v. International Alliance of Theatrical Stage

Employees, etc., 183 F.2d 685 (9th Cir. 1950); California

Apparel Creators v. Wieder of California, 162 F.2d 893

(2d Cir. 1947) ; Cutler v. American Federation of Musicians,

etc., 211 F. Supp. 433 (S.D.N.Y. 1962). The principal

requirements for its use were that the character of the

right sought to be enforced for or against the class be sev-

eral, that there be a common question of law or fact affect-

ing the several rights and that common relief be prayed for.

Nevertheless, as I read the above cited pre-July 1, 1966,

cases and others similar to them, substantially all of the

specifically stated prerequisites and requirements now

found in amended Rule 23(a) and (b) were deemed essential

for maintaining a spurious class action under old Rule 23,

even though they were not all spelled out therein. The

prerequisite, for example, that the plaintiff bringing the

action must be one who will fairly protect the interests of

the class was one which, though recognized, did not always

cause the courts undue concern, largely because only the

original plaintiff and intervenors were bound by the judg-

ment. The Court of Appeals for this Circuit, for example,

having long recognized that a spurious class suit under

former Rule 23 in reality was no more than a permissive

joinder device, stated years ago that, in such suits, ‘‘there

is no need for a searching inquiry concerning the adequacy

of [plaintiff’s] representation of others in the class.’’

District Court Opinion (9/27/66) A97

York v. Guaranty Trust Co. of New York, 143 F.2d 503 (2d

Cir. 1944), reversed on other grounds, 326 U.S. 99 (1945).

Notwithstanding that comparatively extreme statement, the

courts in this circuit, as in others, did not permit use of

the class action device under former Rule 23 where it ap-

peared plainly that plaintiff could not properly protect the

interests of the class. See Austin v. Warner Bros. Pictures,

19 F.R.D. 93 (S.D.N.Y. 1953).

Now that amended Rule 23 purports to obliterate the

old distinctions between ‘‘true,’’ ‘‘hybrid’’ and ‘‘spurious’”’

class actions, however, the requirement that plaintiff be

able to fairly insure the adequate representation of all be-

comes considerably more significant since all members of

the class are bound by the judgment unless they expressly

ask to be excluded from the class. See amended Rule 23(c)

(3), F.R.C.P.; Lipsett v. United States, supra.

Assuming arguendo that plaintiff has adequately set

forth and shown compliance with other prerequisites of

paragraph (a) of the new rule, he has not established that

he ‘‘* * * will fairly and adequately protect the interests of

the class.’’ This alone is enough for this court to make a

determination that this action cannot be maintained as a

class action. See Advisory Com. Notes, 39 F.R.D. 100

(1966).

Plaintiff in his papers gives no compelling reasons and

alleges no facts to support the proposition that he can

adequately protect theinterests of possibly hundreds of

thousands of members of the alleged class except to assert

that both of his lawyers are well-qualified antitrust special-

ists. In disposing of a similar contention made in Austin

Theatre v. Warner Bros. Pictures, supra at 96, Judge

McGohey of this court said, ‘‘However, here there is re-

quired no more than a superficial inquiry to determine that

the plaintiff has failed to allege any facts to show that it

A98 District Court Opinion (9/27/66)

will, as claimed, adequately represent the class.’’ Such

reasoning applies a fortiori under the new concept that all

. members of a class are bound by any judgment to be en-

tered.

Eisen does not even attempt to estimate the extent of

damages which he allegedly suffered as a result of the odd-

lot differential, nor does he specify the nature or number

of the transactions in which he engaged and wherein he was

charged a ‘‘differential.’’ A class action is premised in

part upon the theory that members of the class who are not

before the court can justly be bound because the self-inter-

est of their representatives will assure adequate litigation

of the common issues. See Aalco Laundry & Cleaning Co. v.

Laundry Linen & Towel Chauffeurs & Helpers Union, 115

S.W.2d 89 (Mo. App. 1938). From the facts as presented,

it is impossible to determine and rule that Eisen can

adequately protect the interests of the absent members of

his asserted class. Concededly, he alleges that he has been

an active investor in securities since 1960. We are not told,

however, in what he invested. Even assuming, as Eisen

would have us do, that he bought and sold securities in odd-

lots—i.e. in less than 100 share blocks, we do not know which

of the more than 1,600 available listed stocks he purchased

or sold, the price ranges of the stocks or the considerations

that motivated his transactions. That these are relevant

facts is beyond serious question. In the six years during

which Eisen claims to have been an investor, over 1,147-

000,000 shares of stock were traded in odd-lot transactions.

Some of the participants in these dealings were investors

like Eisen, but just as certainly others were dealers, traders,

arbitrageurs and speculators. The prices of the shares in-

volved ranged from several dollars to several hundred dol-

lars. The nature of the myriad odd lot transactions was

certainly varied; orders were limited or contingent, on

wa C

District Court Opinion (9/27/66) A99

margin or for cash, long or short, and for a fixed amount or

on a long term investment plan.’ In short, even if Eisen

were given leave to serve an amended pleading setting forth

with particularity the nature and amount of his own invest-

ment transactions, the diverse rights and interests of other

members of the claimed class plainly could not be reason-

ably protected by plaintiff in this litigation.

Eisen’s inadequacy as a representative of the asserted

class is further underscored by the obvious fact that his

interest, as sole plaintiff, is miniscule compared to the in-

terests of the class as a whole. The number of plaintiffs

bringing a class action in relation to the numerical size of

the class, of course, should not be the sole basis for deter-

mining the existence or non-existence of a class action;

however, it can be a valid and important factor in assessing

plaintiff’s ability to adequately represent the class. Weeks

v. Bareco Ou Co., 125 F.2d 84 (7th Cir. 1941); Pelelas v.

Caterpillar Tractor Co., 113 F.2d 629 (7th Cir. 1940);

McArthur v. Scott, 113 U.S. 340 (1884). In Pelelas, supra

at 632, the court held, ‘‘* * * under it [Rule 23] the court is

at liberty to consider the number appearing on the record

as contrasted with the number in the class. * * * There must

be a sufficient number of persons to insure a fair representa-

tion of the class.’’ Eisen himself estimates—perhaps too

conservatively—that the class numbers in the hundreds of

thousands.” Thus it is impossible to assume that he alone

with a comparatively miniscule and limited interest in odd-

lot transactions can represent that large a class, many of

whose members necessarily have larger and different inter-

ests,

1. See Rule 124 of the New York Stock Exchange.

2. See defendant’s affidavit by Sander Landfield wherein it is

projected that there may have been as many as 3,750,000 odd-lot cus-

tomers within the past four to six years.

A100 District Court Opinion (9/27/66)

By far the most serious difficulty with plaintiff’s claim

to be able to properly protect the interests of the class, in

my judgment, is that stemming from subparagraphs (2) and

(3) of amended Rule 23(c). In substance, these provide,

inter alia, that in a class action the best notice practicable

must be furnished to the class members and that the notice

must specifically warn such persons that they will be bound

by any judgment in the action unless they appear and

request exclusion therefrom. Further, of course, it is

provided in subparagraph (c)(3) that the judgment,

whether favorable or unfavorable to the class, shall include

all members of se class as found by the court and who do

not appear and obtain specific exclusion.

As already suggested, this provision represents a most

important substantive change from Rule 23 as it read prior

to July 1, 1966. Lipsett v. United States, supra. Presum-

ably aware of this change, Eisen claims to be the sole

representative of hundreds of thousands of other persons

who paid the odd-lot differential and who necessarily will

be bound under Rule 23(c)(3) by any judgment in this

action unless they specifically ask to be excluded after re-

ceiving appropriate notice. Yet he does not claim that one

other person or entity has expressed the slightest interest

in the prosecution of. this action. See Weeks v. Bareco Oil

Co., supra at 94. More important, Eisen and his counsel

have taken the curious position in their papers and upon

oral argument that press advertisements plus notices to

stock exchange firms will constitute all the notice necessary

in this case. To this, I am constrained to make two obser-

vations. First, in the light of the new concept under the

amended Rule that members of a class are specifically bound

by any judgment, favorable or unfavorable, unless they

affirmatively ‘‘opt out’’, it is virtually certain that far bet-

ter notice than plaintiff apparently contemplates would be

necessary here to comply with amended Rule 23(c)(2) and,

District Court Opinion (9/27/66) A101

even more importantly, with due process standards. See

Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

306, 315-320 (1950). In other words, as defense counsel

have incisively argued, both the Rule and concepts of due

process require individual notice for the class members who

can be identified and notice amounting to more than a

‘‘mere gesture’’ for those who cannot be identified. Because

of obvious practical financial limitations inherent in the

circumstances here presented, proper notice as required

almost certainly cannot be given—and plaintiff is short of

the mark in his arguments to the contrary. Second, plain-

tiff’s erroneous notion that individual notice to members

of the class is not required by amended Rule 23 but that

publication, either by ‘‘free publicity’’ or by paid advertise-

ment in newspapers of national distribution, or by both, is

sufficient, raises the suspicion, which may or may not be

justified, that he is more interested in notice for the sake

of undesirable solicitation of claims than for proper protec-

tion of the interests of the other members of the class. See

Advisory Com. Notes, 39 F.R.D. 107; Cherner v. Transition

Electronic Corp., 201 F. Supp. 934 (DC. Mass. 1962).

For reasons similar to those leading me to conclude that

Eisen cannot fairly and properly represent the other mem-

bers of the class, I am not satisfied that the questions

common to the class predominate over questions affecting

individual members. Rule 23(b)(3); see Advisory Com.

Notes, 39 F.R.D. 103. Mention has already been made of

the tremendous size of the asserted class, the fact that

there is no evidence that any other member has the slightest

interest in this litigation and the necessarily varied nature

and quantum of the interest of other odd-lot purchasers

and sellers. In my view, these circumsatnces create a

powerful presumption that questions affecting individual

members predominate over questions common to the class,

A102 District Court Opinion (9/27/66)

and plaintiff has offered little or nothing to rebut this pre-

sumption. Moreover, these factors plus the previously dis-

cussed difficulties of providing adequate notice to the huge

class as required by the amended Rule and by concepts of

due process suggest almost insuperable difficulties in fair

and proper management of this suit at a class action.

The motion of defendants is granted to the extent that

this action, as a class action, is dismissed. This does not

mean, however, that the complaint viewed solely as a state-

ment of the individual claims of plaintiff Eisen is dis-

missed; moreover, nothing herein stated should be con-

strued as a ruling on the merits, or lack thereof, of the

claims pleaded on behalf-of plaintiff individually.

It is so ordered.

Dated: New York, N. Y.

September 27, 1966.

H. R. Tyler, Jr.

U.S.D.J.

Order Denying Certificate A103

ORDER DENYING CERTIFICATE UNDER

28 U. 8. C. § 1292(b)

UNITED STATES DISTRICT COURT

SoutHern District or New York

[Same Trriz]

October 25, 1966

This motion is denied. An intermediate appeal

from the opinion and order filed on September 30, 1966

will not materially advance the ultimate resolution of

this litigation. No controlling question of law is in-

volved. Nothing has been done to prevent plaintiff from

litigating his claims. See Gottesman v. General Motors

Corporation, 268 F. 2d 194 (2d Cir., 1959) ; Kroch v. Texas

Company, 167 F. Supp. 947, at 949 (S. D. N. Y., 1958).

It is so ordered.

H. R. Tyzer, Jr.

U.S. D. J.

A104 Court of Appeals Opinion (12/19/66)

OPINION OF UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT DATED DECEMBER 19,

1966 (WATERMAN, MOORE AND KAUFMAN, CIRCUIT

JUDGES) DENYING DEFENDANT’S MOTION TO

DISMISS APPEAL

UNITED STATES COURT OF APPEALS

For THE Seconp Circurr

September Term, 1966

(Argued December 12, 1966 Decided December 19, 1966)

Docket No. 30934

[Same Trriz]

Kaurmany, Circuit Judge: .

The sole question presented by this motion is whether

appellant may take an appeal from an order of the district

court dismissing his class action, but permitting him to

litigate his individual claims.

Morton Eisen brought an action in the district court

alleging that two major ‘‘odd-lot’’ dealers on the New York

Stock Exchange—Carlisle & Jacquelin and DeCoppet &

Doremus—had conspired and combined to monopolize odd-

lot trading, and had charged excessive fees, in violation of

the Sherman Act. 15 U.S.C. §§1, 2. Specifically, he chal-

lenged the so-called ‘‘odd-lot differentials’’ charged by the

appellee and other odd-lot dealers for transactions involv-

ing other than 100 share lots of securities. The complaint

also charged the New York Stock Exchange with having

breached its duties, allegedly proscribed by the Securities

Exchange Act of 1934, concerning suspension of odd-lot

trading. 15 U.S.C. §§78f(b), 78f(d), 78s(a).

Court of Appeals Opinion (12/19/66) A105

Eisen sued both for himself and on behalf of all odd-

lot purchasers and sellers on the Exchange. Appellees

moved to dismiss the class action, alleging that it was not

maintainable under amended Rule 23(c)(1) of the Federal

Rules of Civil Procedure. Judge Tyler granted the motion

and dismissed the class action, but did not dismiss Eisen’s

individual claims or pass on their merits.

It is too clear for discussion that all orders are not ap-

pealable. 28 U.S.C. §1291 provides that the courts of ap-

peals have jurisdiction of appeals from all ‘‘final’’ decisions

of the district courts, while 28 U.S.C. §1292 permits appeals

from a narrowly limited class of interlocutory orders. But

as the Supreme Court has commented, ‘‘[A] decision ‘final’

within the meaning of §1291 does not necessarily mean the

last order possible to be made in a case.’’ Gillespie v.

United States Steel Corp., 379 U.S. 148, 152 (1964). The

question presented to us, therefore, is whether Judge

Tyler’s order dismissing the class action falls within ‘‘that

small class which finally determine claims of right separable

from, and collateral to, rights asserted in the action, too im-

portant to be denied review and too independent of the

cause itself to require that appellate consideration be

deferred until the whole case is adjudicated.’’ Cohen v.

Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949).

In making this determination, Justice Douglas’ language

in the Gillespie case is instructive :

[I]t is impossible to devise a formula to resolve all

marginal cases coming within what might well be

called the ‘‘twilight zone’’ of finality. Because of

this difficulty this Court has held that the require-

ment of finality be given a ‘‘ practical rather than a

technical construction.’’ * * *

{I]n deciding the question of finality the most im-

portant competing considerations are ‘‘the incon-

A106 Court of Appeals Opinion (12/19/66)

venience and costs of piecemeal review on the one

hand and the danger of denying justice by delay on

the other.’’ 379 U.S. at 152-53 (emphasis sup-

plied).

In the present case, these considerations, rather than

being ‘‘competitive,’’ lead to a single conclusion—that the

order dismissing this class action is appealable. The alter-

natives are to appeal now or to end the lawsuit for all prac-

tical purposes. Judge Tyler’s order ‘‘if unreviewed, will

put an end to the action.’’ Chabot v. National Securities

and Research Corp., 290 F. 2d 657, 659 (2d Cir. 1961). We

can safely assume that no lawyer of competence is going

to undertake this complex and costly case to recover $70

for Mr. Eisen. See Escott v. Barchris Constr. Corp., 340

F. 2d 731, 733 (2d Cir.), cert. dented sub nom. Drexel & Co.

v. Hall, 382 U.S. 816 (1965). If the appeal is dismissed, not

only will Eisen’s claims never be adjudicated, but no appel-

late court will be given the chance to decide if this class

action was proper under the newly amended Rule 23.

There are, therefore, most compelling reasons to deny

this motion to dismiss the appeal; and permitting Eisen

to proceed in no way conflicts with any precedents of this

Court. Appellees rely on Oppenheimer v. F. J. Young & Co.,

144 F. 2d 387 (2d Cir. 1944), but that decision was reached

before the Supreme Court spoke in Cohen, supra. While it

is true that in Lipsett v. United States, 359 F. 2d 956 (2d

Cir. 1966), we did not permit an appeal from the dismissal

of a class action, we reached that conclusion because the

facts did not come within the framework of the Cohen

doctrine ; the plaintiffs lacked standing, and dismissal of the

class action allegations, we said, merely ‘‘prettified’’ the

pleadings since the action could still continue.

Dismissal of the class action in the present case, how-

ever, will irreparably harm Eisen and all others similarly

Court.of Appeals Opinion (12/19/66) A107

situated, for, as we have already noted, it will, for all prac-

tical purposes terminate the litigation. Where the effect of

a district court’s order, if not reviewed, is the death knell

of the action, review should be allowed. See Roberts v.

U.S. District Court, 339 U.S. 844 (1950) ; Chabot v. National

Securities and Research Corp., supra.

Motion denied.

A108 Court of Appeals Order (1/13/67)

ORDER OF UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT DATED JANUARY 13,

1967, DENYING PETITION FOR REHEARING

IN BANC

UNITED STATES COURT OF APPEALS

For THE Seconp Ciacurr

September term 1966

Docket No. 30934

[Same Trriz]

Carter Ledyard & Milburn, New

York, N. Y., for Carlisle & Jac-

quelin, appellee.

Kelley Drye Newhall Maginnes &

Warren, New York, N. Y., for

DeCoppet & Doremus, appellee.

Milbank, Tweed, Hadley & McCloy,

New York, N. Y., for New York

Stock Exchange appellee.

No active circuit judge having requested that a vote be

taken on the suggestion that the case be reheard in banc,

the same stands denied.

s/ J. Epwarp Livmsarp

Chief Judge

13 January 1967

January 13, 1967

Court of Appeals Order (1/13/67) A109

ORDER OF UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT DATED JANUARY 13,

1967, DENYING PETITION FOR REHEARING

UNITED STATES COURT OF APPEALS

For tHe Seconp Circurr

September Term 1966

Docket No. 30934

(Same Trriz]

Carter Ledyard & Milburn, New

York, N. Y., for Carlisle & Jac-

quelin, appellee.

Kelley Drye Newhall Maginnes &

Warren, New York, N. Y., for

DeCoppet & Doremus, appellee.

Milbank, Tweed, Hadley & McCloy,

New York, N. Y., for New York

Stock Exchange, appellee.

“

Motion denied.

A110 Court of Appeals Opinion (3/8/68)

OPINION OF UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT DATED MARCH 8, 1968

(MEDINA AND HAYS, CIRCUIT JUDGES) REVERSING

AND REMANDING AND DISSENTING

OPINION OF CHIEF JUDGE LUMBARD

UNITED STATES COURT OF APEALS

For THE Seconp Circuit

No. 78—September Term, 1967.

(Argued November 6, 1967 Decided March 8, 1968.)

Docket No. 30934

[Same Trriz]

Meprina, Circuit Judge:

On this appeal we are presented with significant ques-

tions involving the interpretation of recently amended

Rule 23 of the Federal Rules of Civil Procedure. Morton

Eisen instituted this action seeking damages and injunctive

relief on behalf of himself and all other purchasers and

sellers of ‘‘odd-lots’’ on the New York Stock Exchange

against Carlisle & Jacquelin and DeCoppet & Doremus, al-

leging that the two brokerage firms had combined and con-

spired to monopolize odd-lot trading, and had fixed the

odd-lot differential at an excessive amount in violation of

the Sherman Act. 15 U.S.C. Sections 1, 2. A third count

alleged that the defendant New York Stock Exchange had

failed to discharge its duties under the Securities Exchange

Act of 1934 by neglecting to adopt rules protecting inves-

tors in odd-lots. 15 U.S.C. Sections 78f(b), 78f(d), 78s(a).

Following a motion by defendants for a determination

pursuant to Rule 23(c)(1) of the Federal Rules of Civil

Procedure, Judge Tyler held that the suit could not be

ee ee ee ee eae Pe i 2S

Court of Appeals Opinion (3/8/68) Alll

brought as a class action. Eisen v. Carlisle & Jacquelin, 41

F.R.D. 147 (S.D.N.Y. 1966). A motion to dismiss the pres-

ent appeal because the decision below constituted a non-

final order has previously been denied by this Court.

Eisen v. Carlisle & Jacquelin, 370 F. 2d 119 (2d Cir. 1966),

cert. demied 386 U.S. 1035 (1967). In dismissing the class

action the District Court found that plaintiff failed to

demonstrate that he would be able fairly and adequately

to protect’ the interests of the class, Fed. R. Civ. P. 23(a)

(4); that the notice required by due process and the rule,

Fed. R. Civ. P. 23(c)(2), could not be given and that ques-

tions common to the class did not predominate over ques-

tions affecting individual members. Fed. R. Civ. P. 23

(b) (3).

At the outset, it is necessary briefly to describe the

mechanics of odd-lot trading on the New York Stock Ex-

change. The regular unit of trading on the Exchange is the

‘‘round lot’’ of 100 shares. An ‘‘odd-lot’’ is the term used

to designate transactions involving less than 100 shares.

Odd-lot orders do not form part of the ‘‘regular auction

market’’ but are exclusively handled by special odd-lot

dealers who buy and sell for their own account as principals.

In order to purchase or sell an odd-lot an individual first

contacts a brokerage firm which then places an order with

the odd-lot dealer. The cost to the customer includes both

a standard commission payable to the brokerage firm and

the odd-lot differential which is received by the odd-lot

dealer. The differential is a figure amounting to a fraction

of a point for each share traded, which is added to the cus-

tomer’s purchase price and deducted from the sale price.

During the period of time in which plaintiff had alleged he

was involved in the odd-lot market, covering the years 1960-

1966, the differential was 4th of a point (121% cents) per

share on stock selling below $40 per share and 4 of a point

(25 cents) per share on stock selling at $40 or above per

A112 Court of Appeals Opinion (3/8/68)

share.’ Over the years odd-lot trading has accounted for

a fairly steady percentage of the total volume on the Stock

Exchange, ranging from a high of 12.9% in 1937 to a low

of 7.9% in 1950 and 1958. For example, recent figures in-

dicate that in 1961 the volume of odd-lot transactions

totaled 214,018,834 shares. SEC, Report of Special Study

of Securities Markets, H. R. Doc. No. 95, Pt. 2, 88th Cong.

1st Sess, 171-202, 393 (1963), hereinafter cited as SEC

Special Study. ‘Defendants Carlisle & Jacquelin and De-

Coppet & Doremus are engaged exclusively in odd-lots and

collectively they handled 99% of the volume in odd-lot trans-

actions. SEC Special Study at 172. Various alleged abuses

in odd-lot trading disclosed by the SEC in 1963, form, in

large part, the basis of the present action. See SEC Special

Study at 171-202.

Class actions serve an important function in our judicial

system. By establishing a technique whereby the claims of

many individuals can be resolved at the same time, the

class suit both liminates the possibility of repetitious lit-

igation and provides small claimants with a method of ob-

taining redress for claims which would otherwise be too

small to warrant individual litigation. Nevertheless, Rule

23 of the Federal Rules of Civil Procedure, as it was orig-

inally enacted, did not effectively achieve either of the above

two objectives. Class actions were divided into various cat-

egories reflecting the ‘‘jural relationships of the members

of the class.’’ See 3 Moore, Federal Practice par. 23.08 at

3434 (2d ed. 1953). Only after a determination of the nature

1. The above figures do not reflect the change made in the differ-

ential which was effective as of July 1, 1966. Subsequent to that

time the so-called “breakpoint” was raised to $55, with the d:fferen-

tial amounting to %th of a point on stock sold below that figure and

¥%, of a point on stock sold above it.

Court of Appeals Opinion (3/8/68) A113

of the rights: ‘‘joint, common or secondary”’ in the true

class action, ‘‘several related to specific property’’ in the

hybrid class action, and ‘‘several affected by a common

question and related to common relief’’ in the spurious class

action, was a court able to proceed. Advisory Committee’s

Note, Proposed Rules of Civil Procedure, 39 F.R.D. 98

(1965), hereinafter cited as Advisory Committee’s Note.

There were significant differences in the res judicata effects

accorded to the various class actions. Thus while a judg-

ment in a true class action was binding on the entire class,

the spurious class action only concluded the rights of

parties. 3 Moore, Federal Practice par. 23.11 at 3472 (2d

ed, 1953). Since the great majority of cases fell into this

iatter category, the objective of determining all questions

in one suit was effectively frustrated. In essence, the

spurious class action was interpreted as merely a per-

missive joinder device.* See Carroll v. American Federa-

tion of Musicians, 372 F. 2d 155 (2d Cir. 1967); Foz v.

Glickman Corp., 355 F.'2d 161 (2d Cir, 1965), cert. denied

384 U.S. 960 (1966) ; Nagler v. Admiral Corp., 248 F. 2d 319

(2d Cir. 1957) ; Oppenheimer v. F. J. Young & Co., 144 F. 2d

387 (2d Cir. 1944). But see Weeks v. Bareco Oil Co., 125 F.

2d 84 (7th Cir. 1941) (dictum).

To avoid the problems associated with the original rule

the Advisory Committee on the Rules of Civil Procedure

has completley redrafted Rule 23 in order to provide a

thoroughly flexible remedy. Throughout the course of a

proceeding courts are given complete control to give assur-

ance that the procedures adopted are fair, reasonable and

2. There was a serious split in court decisions on the subject of

the permissibility of “one-way intervention.” Under this procedure,

absent class members in a spurious action were permitted to inter-

vene after a favorable ju t, while at the same time they were

not bound by an unfavorable decision. Advisory Committee’s Note

at 105.

All4 Court of Appeals Opinion (3/8/68)

effective. All actions will result in judgments binding on

the entire group of individuals found by the court to be

members of the class. Fed. Rule C. P. 23(c)(3). While the

new concepts incorporated in the rule have not as yet been

passed upon by any federal’ Court of Appeals,* they have

received somewhat less than an enthusiastic reception in

the District Courts. Compare School District of Philadel-

phia v. Harper & Row Publishers, Inc., 267 F. Supp. 1001

(E.D. Pa. 1967), expressing grave doubts about the propri-

ety of a rule which binds absent but described class mem-

bers, with Siegel v. Chicken Delight Inc., 271 F. Supp. 722

(N.D. Cal. 1967) which upholds a class action brought by

5 franchise dealers on behalf of a class of over 700 dealers,

alleging anti-trust violations. Nevertheless, the majority of

courts have upheld the validity of representative actions

brought under the new rule. See, eg., Van Gemert v.

Boewg Co., 259 F. Supp. 125 (S.D.N.Y. 1966); Fischer v.

Kletz, 41 F.R.D. 377 (S.D.N.Y. 1966) ; Kronenberg v. Hotel

Governor Clinton, Inc., 41 F.R.D. 42 (S.D.N.Y. 1966);

Brennan v. Midwestern United Life Insurance Co., 259

F. Supp. 673 (N.D. Indiana 1966); Booth v. General

Dynamics Corp., 264 F. Supp. 465 (N.D. Ill. 1967). But

see Richland v. Cheatham, 272 F. Supp. 148 (S.D.N.Y.

1967) ; Hohmann v. Packard Instrument Co., 43 F.R.D. 192

(N.D. Ill. 1967) ; Jacobs v. Paul Hardeman, Inc., 42 F.R.D.

595 (S.D.N.Y. 1967); Berger v. Purolator Products, Inc., 41

3. The Fifth Circuit has on two occasions been presented with

issues under the new rule. However, each of these cases involved

s of class actions which are similarly handled under both the

original and the amended rule 23. In one case the Sth Circut held

that claims could not be aggregated under the new rule to meet the

jurisdictional amount in a suit which formerly would have been classi-

fied as a spurious action. Alvarez v. Pan American Life Ins. Co.,

375 F. 2d 992 (Sth Cir. 1967). The other case involved a routine

denial of a class action because the representative and the class mem-

bers had conflicting interests in the subject matter of the suit. Ander-

son v. Moorer, 372 F. 2d 747 (Sth Cir. 1967).

Court of Appeals Opinion (3/8/68) A115

F.R.D. 542 (S.D.N.Y. 1966). Although representing a to-

tally different approach to class actions, the new rule does

retain two standards which were embodied in the old rule,

namely, the class must be so numerous as to make it im-

practicable to bring every member before the court, and the

representative party must be able fairly and adequately to

protect the interests of the entire class. Necessarily the

old case law will furnish some guidance in defining these

concepts.

To be maintainable as a class action a suit must meet

all the requirements set forth in Section 23(a)* and also

fall within one of the subsections of 23(b).5

4. “Rule 23. Class Actions

(a) Prerequisites to a Class Action. One or more members

of a class may sue or be sued as representative parties on behalf

of all only if (1) the class is so numerous that joinder of all mem-

bers is impracticable, (2) there are questions of law or fact

common to the class, (3) the claims or defenses of the represent-

ative parties are typical of the claims or defenses of the class,

and (4) the representative parties will fairly and adequately

protect the interests of the class.”

5. “(b) Class Actions Maintainable. An action may be main-

tained as a class action if the prerequisites of subdivision (a) are

satisfied, and in addition:

(1) the prosecution of separate actions by or against individ-

ual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect

to individual members of the class which would establish in-

compatable standards of conduct for the party opposing the

class, or

(B) adjudications with respect to individual members

of the class which would as a practical matter be dispositive

of the interests of the other members not parties to the ad-

judication or substantially impair or impede their ability to

protect their interests; or

(2) the party opposing the class has acted or refused to act

on grounds generally applicable to the class, thereby making ap-

propriate final injunctive relief or corresponding declaratory relief

with respect to the class as a whole; or

A116 Court of Appeals Opinion (3/8/68)

Plaintiff has alleged that he was engaged in odd-lot

trading during the years 1960-1966. Though estimates of

the number of class members similarly engaged in this

activity during those years have varied, all the litigants

concede ‘‘the class is so numerous that joinder of all mem-

bers is impracticable.’’ Fed. R. Civ. P. 23(a)(1). _Defend-

ants’ ‘‘rough’’ approximation, not disputed by plaintiff,

would place 3,750,000 individual and corporate buyers and

sellers of odd-lots in the class. Similarly, the allegation

that a conspiracy, whose object was to charge excessive

rates on odd-lot transactions existed between the two

brokerage firms, satisfies the requirement that there be

‘‘questions of law or fact common to the class.’’ Fed. R.

Civ. P. 23(a)(2). Furthermore, plaintiff’s claim is ‘‘ typical

of the claims * * * of the class.’’ Fed. R. Civ. P. 23(a) (3).

Although there are varying fact patterns underlying each

individual odd-lot transaction, the same allegedly unlawful

differential is charged to all buyers and sellers. However,

defendants have argued that different members of the class

will have varying theories as to what constitutes the ‘‘ex-

cessive price,’’ and other class members may be satisfied

with the present price policy.* Nonetheless, all members

5. (Cont’d.)

(3) the court finds that the questions of law or fact common

to the members of the class predominate over any questions affect-

ing only individual members, and that a class action is superior

to other available methods for the fair and efficient adjudication

of the controversy. The matters pertinent to the findings in-

clude: (A) the interest of members of the class in individually

controlling the prosecution or defense of separate actions; (B)

the extent and nature of any litigation concerning the controversy

already commenced by or against members of the class; (C) the

desirability or undesirability of concentrating the etempon of the

claims in the particular forum; (D) the difficulties likely to be

encountered in the management of a class action.”

6. For example, defendants maintain that a purchaser of an

odd-lot at a cost below the “breakpoint” figure might urge that the

differential be revised for the benefit of his class (stock selling at $40

or above) at the expense of the other class (stock selling below $40).

ak sata ken isolsc OMe aed

Court of Appeals Opinion (3/8/68) A117

of the class, including those who would otherwise prefer to

abide by the status quo, will be helped if the rates are found

to be excessive.

Inability on the part of the plaintiff to ‘‘fairly and

adequately protect the interests of the class,’’ FedR. Civ.

P. 23(a) (4), was considered by the District Court to be one

of the primary reasons for dismissing the class action. We

believe the court employed incorrect standards in reaching

this result. .

Since Eisen had not alleged with specificity the nature

of his various odd-lot transactions, the court below felt it

lacked sufficient information properly to assess his qualifi-

cations as a representative, and, even if such information

were alleged, ‘‘the diverse rights and interests of other

members of the claimed class plainly could not be reason-

ably protected by plaintiff in this litigation.’’ Eisen v.

Carlisle & Jacquelm, 41 F. R. D. 147, 150 (S. D. N. Y.

1966). The District Judge also felt it was impossible to

assume that plaintiff ‘‘alone with a comparatively minus-

cule and limited interest in odd-lot transactions’’ could rep-

resent a class numbering at least in the hundreds of thou-

sands, which encompassed individuals with much larger

and different interests. Eisen v. Carlisle & Jacquelin, 41

F. R. D. 147, 151 (S. D. N. Y. 1966).

Traditionally, courts have expressed particular concern

for the adequacy of representation in a class suit because

the judgment conclusively determines the rights of absent

class members. See Hansberry v. Lee, 311 U.S. 32 (1940).

6. (Cont’d.)

However, plaintiff, as demonstrated by his answers to interrogatories,

has purchased stock at prices both above and below the prevailing

breakpoint. It seems farfetched to argue that plaintiff will adopt

a position detrimental to his own interest. If plaintiff does pursue a

self-defeating course of conduct, the class action may then be dis-

missed on the ground that he has failed adequately to represent the

entire class. The court is also empowered to divide the present class

into appropriate sub-classes. Fed. R. Civ. P. 23(c) (4).

A118 Court of Appeals Opinion (3/8/68)

Of course, understandably, the standards for representa-

tion under the old spurious class action were not as rigor-

ously enforced, due to the minimal res judicata effects given

to the judgments in these suits. See Oppenheimer v. F. J.

Young & Co., 144 F. 2d 387 (2d Cir. 1944). However, as a

result of the sweeping changes in Rule 23, a court must

now carefully scrutinize the adequacy of representation in

all class actions.

What are the ingredients that enable one to be termed

‘‘an cdequate representative of the class?’’ To be sure, an

essential concomitant of adequate representation is that

the party’s attorney be qualified, experienced and generally :

able to conduct the proposed litigation. Additionally, it is

necessary to eliminate so far as possible the likelihood

that the litigants are involved in a collusive suit or that

plaintiff has interests antagonistic to those of the remainder

of the class. See Hamsberry v. Lee, 311 U. S. 32 (1940).

Courts, on occasion, have also required that the interest

of the representative party be co-extensive with the in-

terest of the entire class, but this amounts to little more

than an alternative way of stating that the plaintiff’s claim

must be typical of those of the entire class, an element

we have already discussed. See Richard v. Cheatham,

272 F. Supp. 148 (S. D. N. Y. 1967). However, we be-

lieve that reliance on quantitative elements to determine

adequacy of representation, as was done by the District

Court, is unwarranted. Language to the effect that a small

number of claimants cannot adequately represent an entire

class has frequently been cited, see, e.g., Pelelas v. Cater-

pular Tractor Co., 113 F. 2d 629 (7th Cir.), cert. dented 311

U. S. 700 (1940), but we fail to understand the utility of

this approach. If class suits could only be maintained in

instances where all or a majority of the class appeared,

the usefulness of the procedure would be severely curtailed.

Court of Appeals Opinion (3/8/68) A119

As has previously been stated, one of the primary functions

of the class suit is to provide ‘‘a device for vindicating

claims which, taken individually, are too small to justify

legal action but which are of significant size if taken as a

group.’’ Escott v. Barchris Construction Corp., 340 F. 2d

731, 733 (2d Cir. 1965), cert. dented 382 U. S. 816 (1966).

Individual claimants who may initially be reluctant to com-

mence legal proceedings may later join in a class suit,

once they are assured that a forum has been provided for

the litigation of their claims. See Stegel v. Chicken Delight

Inc., 271 F. Supp. 722 (N. D. Cal. 1967). But to dismiss a

class suit in its incipiency before claimants have been given

an effective opportunity to join would be a disservice to the

class action as envisioned in the new rule. Indeed, we hold

that the new rule should be given a liberal rather than a

restrictive interpretation, Escott v. Barchris Construction

Corp., 340 F. 2d 731, 733 (2d Cir. 1965), cert. dented 382

U. S. 816 (1966), and that the dismissal m limime of a par-

ticular proceeding as not a proper class action is justified

only by a clear showing to that effect and after a proper

appraisal of all the factors enumerated on the face of the

rule itself.

We are not persuaded that it is essential that any other

members of the class seek to intervene. Absent class mem-

bers will be able to share in the recovery resulting in the

event of a favorable judgment, and, if they wish to avoid

the binding effect of an adverse judgment they may in vari-

ous ways and at various times that we need not now at-

tempt to particularize, attack the adequacy of representa-

tion in the initial action or disassociate themselves from

the case. Hansberry v. Lee, 311 U. S. 32 (1940) ; see Wein-

stein, Revision of Procedure: Some Problems in Class

Actions, 9 Buffalo L. Rev. 433, 436 (1960). If we have to

rely on one litigant to assert the rights of a large class then

rely we must. The dismissal of the suit out of hand for lack

A120 Court of Appeals Opinion (3/8/68)

of proper representation in a case such as this is too sum-

mary a procedure and cannot be reconciled with the letter

and spirit of the new rule.

Necessarily, a different situation is presented where ab-

sent class members inform the court of their displeasure

with plaintiff’s representation, see Hess v. Anderson, Clay-

ton & Co., 20 F. R. D. 466 (S. D. Cal. 1957), but the repre-

sentative party cannot be said to have an affirmative duty

to demonstrate that the whole or a majority of the class

considers his representation adequate. Nor can silence be

taken as a sign of disapproval.”

It is also worthy of note that the rule contains provisions

which, by themselves, are designed to insure proper repre-

sentation. For example, 23(e) requires court approval of

a settlement, thus minimizing the danger that the rights

of the class will be unfairly compromised. Accordingly, we

decide that the District Court should reconsider the ade-

quateness of plaintiff’s representation in the light of the

standards which we have set forth in this opinion.®

In addition to complying with the requirements of Sec-

tion (a) of Rule 23, a potential class action must also

7. At various points in its commentary the Advisory Committee

has referred to an article written by former Professor (now Judge)

Jack B. Weinstein. In speaking of the adequacy of representation

question Weinstein has said: “A class action should not be denied

merely because every member of the class might not be enthusiastic

about enforcing his right. * * * The court need concern itself only

with whether those members who are parties are interested enough

to be forceful advocates and with whether there is reason to believe

that a substantial portion of the class would agree with their repre-

sentatives were they given a choice.” Weinstein, Revision of Pro-

cedure: Some Problems in Class Actions, 9 Buffalo L. Rev. 433,

460 (1960).

8. Inadvertently the court below did not notice that plaintiff, in

answer to interrogatories, specifically listed his transactions in odd-lots.

His damages were estimated at $70.

Court of Appeals Opinion (3/8/68) A121

satisfy the requirements of one of the three subsections

of 23(b).® Plaintiff has argued that the present action is

maintainable under all three subsections of 23(b). How-

ever, we believe both 23(b)(1)(A)*° and 23(b)(2) are not

applicable to the present factual situation. Subsection

(b)(1)(A) authorizes a class action if ‘‘the prosecution of

separate actions by or against individual members would

create a risk of * * * inconsistent or varying adjudications

with respect to individual members of the class which

would establish incompatible standards of conduct for the

party opposing the class.’’ Plaintiff has effectively re-

butted his own argument because he admits that individual

actions could not be brought as the small claimants who

constitute the entire class could not, on an individual basis,

afford the expense of lengthy anti-trust litigation. Under

these circumstances there is little danger that individual

suits will establish ‘‘incompatible standards of conduct’’

for the defendants. Subsection (b)(2) was never intended

to cover cases like the instant one where the primary claim

is for damages, but is only applicable where the relief sought

is exclusively or predominantly injunctive or declaratory.

Advisory Committee’s Note at 102.

We must also note that plaintiff’s effort to qualify the

action under 23(b)(1) and 23(b)(2) was induced by his

erroneous theory that notice is not ‘‘mandatory’’ under

these sections. This theory is based on the assumption that

23(c) (2)! provides the only ‘‘mandatory’’ notice required

9. See footnote 5, supra.

10. Plaintiff does not now claim that 23(b) (1) (B) is applicable.

11. Rule 23(c) (2):

“In any class action maintained under subdivision (b) (3),

the court shall direct to the members of the class the best notice

practicable under the circumstances.including individual notice

to all members who can be identified through reasonable effort.

The notice shall advise each member that (A) the court will

exclude him from the class if he so requests by a specified date;

A122 Court of Appeals Opinion (3/8/68)

by the new rule, Since this particular section refers ex-

clusively to actions brought under 23(b)(3), other suits

cognizable under either 23(b)(1) or 23(b)(2) would only

be subject to ‘‘discretionary’’ notice under 23(d)(2).¥

Nevertheless, we hold that notice is required as a mat-

ter of due process in all representative actions, and

23(c)(2) merely requires a particularized form of notice

in 23(b)(3) actions. Mullane v. Central Hanover Bank &

Trust Co., 339 U. S. 306 (1950). Advisory Committee’s Note

at 107.

Ultimately plaintiff must fall back on subsection (b) (3),

which in effect corresponds to the old spurious class action.

Presumably influenced by the same thinking which rele-

gated the old spurious class action to the position where it

was used primarily as a device for permissive joinder, the

Advisory Committee has commented that ‘‘class action

treatment is not as clearly called for [in (b) (3) situations]

but it may nevertheless be convenient and desirable depend-

ing upon the particular facts.’’ Advisory Committee’s Note

at 102. A court, under this subsection, is thus required to

find that the questions of law or fact common to the class

predominate over questions affecting individual members

11. (Cont’d.)

(B) the judgment, whether favorable or not, will include all

members who do not request exclusion; and (C) any member

who does not request exclusion may, if he desires, enter an ap-

pearance through his counsel.”

12. Rule 23(d):

“(d) Orders in Conduct of Actions. In the conduct of ac-

tions to which this rule applies, the court may make appropriate

orders: *** (2) requiring, for the protection of the members

of the class or otherwise for the fair conduct of the action, that

notice be given in such manner as the court may direct to some

or all of the members of any step in the action, or of the proposed

extent of the judgment, or of the opportunity of members to

signify whether they consider the representation fair and ade-

quate, to intervene and present claims or defenses, or otherwise

to come into the action ; * * *.”

Babine ae aca bemene Gere

SY MI RRM ES SRL REFER pete SAE TRS NST URNA ORR SARNI

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