IN RE: SUMITOMO COPPER LITIGATION PLAINTIFFS CLASS, PLAINTIFFS-APPELLEES, v. CREDIT LYONNAIS ROUSE, LTD., AND CREDIT LYONNAIS, S.A., DEFENDANTS-APPELLANTS, R. DAVID CAMPBELL, BIPIN SHAH, GLOBAL MINERALS AND METALS, INC., SUMITOMO CORPORATION, SUMITOMO CORPORATION OF AMERICA, MERRILL, LYNCH & CO., MERRILL LYNCH COMMODITY FINANCING, INC., MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED, MERRILL LYNCH PIERCE FENNER & SMITH (BROKERS & DEALERS) LIMITED, MORGAN STANLEY & CO., INC., J.P. MORGAN & CO., INC., AND MORGAN GUARANTY TRUST COMPANY OF NEW YORK, DEFENDANTS.
Docket No. 00-8028
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Submitted: September 19, 2000; Decided August 15, 2001
262 F.3d 134
We hold that a party seeking leave to appeal pursuant to
Petition and motion denied.[Copyrighted Material Omitted]
Christopher Lovell, Lovell & Stewart, Llp, New York, Ny, for plaintiffs-appellees.
Philip Allen Lacovara, Steven Wolowitz, Scott E. Mortman, Mayer, Brown & Platt, New York, Ny, for defendants-appellants.
Howard Schneider, Joel W. Sternman, James M. Rittinger, Rosenman & Colin Llp, New York, Ny, for amicus curiae Futures Industry, Inc.
Before: Walker, Chief Judge, Miner and Pooler, Circuit Judges.
John M. Walker, Jr., Chief Judge
1 This case presents the issue of the circumstances under which leave will be granted to permit an interlocutory appeal from a district court‘s decision on class certification pursuant to the recently enacted
2 Plaintiffs commenced a class action suit in 1996 against, inter alia, Sumitomo Corporation (“Sumitomo“), Morgan Stanley & Co. (“Morgan Stanley“), Merrill Lynch & Co. (“Merrill Lynch“), and Global Minerals and Metals Corporation (“Global“), alleging that the defendants conspired to manipulate the prices of copper futures contracts traded on the COMEX division of the New York Mercantile Exchange from June 24, 1994 through June 15, 1996, in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO“),
3 Defendants-petitioners Credit Lyonnais Rouse, Ltd. and Credit Lyonnais, S.A. (collectively the “CL defendants“) move (1) pursuant to
4 After plaintiffs filed a motion for class certification under
5 Global refused to settle and opposed class certification. Specifically, Global contended that (1) the class plaintiffs could not establish the predominance of common issues required by
6 In its order certifying the class under
7 Global thereafter entered into a settlement agreement with the class plaintiffs. The district court approved all the above- noted settlement agreements. See In re Sumitomo Copper Litigation, 189 F.R.D. 274, 284 (S.D.N.Y. 1999).
8 After the class was certified, but before these settlements were approved, the class plaintiffs filed an amended complaint adding the CL defendants. In addition to the claims previously asserted, the amended complaint added a common-law fraud claim and extended the class period to include copper futures contract purchases from June 24, 1993 to June 15, 1996. The CL defendants moved to dismiss the amended complaint on the grounds that (a) it failed to state a claim upon which relief could be granted under RICO, and (b) claims arising before April 25, 1995 were barred by the statute of limitations. In denying the motion, the district court held, inter alia, that plaintiffs were not foreclosed from proving at trial that the statute of limitations was equitably tolled due to defendants’ alleged fraudulent concealment. See In re Sumitomo Copper Litigation, 104 F. Supp. 2d 314, 323-24 (S.D.N.Y. 2000) (“Sumitomo II“).
9 On August 2, 2000, over the CL defendants’ opposition, the district court granted plaintiffs’ certification motion and certified the proposed class for the periods of June 24, 1993 to September 24, 1993, and June 24, 1994 to June 15, 1996. See In re Sumitomo Copper Litigation, 194 F.R.D. 480, 483 (S.D.N.Y. 2000) (“Sumitomo III“). The district court expressly noted that it would modify the class period if it proved too unwieldy. Id. A certification order was entered August 10, 2000. The CL defendants timely filed a petition for leave to appeal on August 24, 2000.1
A. Federal Rule of Civil Procedure 23(f)
10
11
12 Permission to appeal may be granted or denied on the basis of any consideration that the court of appeals finds persuasive. Permission is most likely to be granted when the certification decision turns on a novel or unsettled question of law, or when, as a practical matter, the decision on certification is likely dispositive of the litigation.
13
14 The Seventh Circuit, the first to consider the question, identified two categories of cases appropriate for review under
15 The second category of cases are those in which the class certification order implicates an unresolved legal issue concerning class actions. See id. at 835. Observing that “the more fundamental the [legal] question and the greater the likelihood that it will escape effective disposition at the end of the case, the more appropriate is an appeal under
16 The certification order at issue in Blair implicated an unresolved legal issue, namely whether the district court erred in certifying the class when, in a separate overlapping class action suit, the defendant had agreed to settle on the condition that further class action suits would be prohibited. See Blair, 181 F.3d at 836-38. Noting that there were no prior cases addressing the issue, the court concluded that it was one that had “evaded appellate resolution [and was] important enough to justify [immediate] review.” Id. at 838. The Seventh Circuit granted the petition, turned to the merits of the appeal, and affirmed the class certification order. See id. at 838-39.
18 In Prado-Steiman v. Bush, 221 F.3d 1266, 1275 (11th Cir. 2000), the Eleventh Circuit held that in a case where the class certification order effectively terminated the litigation, the “mere[] demonstrat[ion] that the district court‘s ruling is questionable... will be insufficient to support a
19 In line with our sister circuits, we hold that petitioners seeking leave to appeal pursuant to
20 Our determination of whether the district court‘s decision is sufficiently questionable to warrant interlocutory review will be tempered by our longstanding view that the district court is often in the best position to assess the propriety of the class and has the ability, pursuant to
21 We anticipate, therefore, that the standards of
22 Finally, we note that parties should not view
B. Application of Rule 23(f) Standard
23 The instant case does not meet any of the requirements of
1. Death Knell Review
24 We accept, for the purposes of this case, petitioners’ assertion that class certification will effectively terminate the litigation because it will force them to settle the case rather than risk trial. We nevertheless find that a death knell review is not warranted because petitioners have failed to make a substantial showing that the district court‘s decision to grant certification is questionable.
25 In their petition, the CL defendants contend that the certification order is questionable because: (1) the unprecedented length of the class period in the commodities market context makes it “inconceivable that common questions can predominate and that such claims can be tried in a manageable manner“; (2) the language used in the certification order indicates that the district court impermissibly relied on forced settlement as a basis for finding the class manageable; (3) the determination of whether each class plaintiff incurred an injury “requires highly individualized proof, necessarily focusing on a determination of the level of price artificiality (if any) at the moments each class member opened and closed a futures position“; (4) the class plaintiffs must prove that the CL defendants’ conduct at each of those moments was the cause of an artificial price level; (5) no predominating common issues exist because buying and selling class members have inherently conflicting interests; and (6) the district court failed to make specific findings about the predominating common issues and explain “how plaintiffs’ claims could be tried manageably to a verdict.”
26 The CL defendants have overstated their case. Taking the last point first, they suggest that the district court‘s decision is questionable because it failed sufficiently to justify the certification at issue. The district court, however, relied extensively on its earlier certification order in which it had already considered and rejected many of the arguments raised by the CL defendants in responding to Global‘s previous opposition to class certification. See Sumitomo III, 194 F.R.D. at 482-83 (citing Sumitomo I, 182 F.R.D. at 89-95). The district court identified three common issues that would predominate in the case: (a) “the existence vel non of the alleged conspiracy“; (b) whether “the conspiracy caused artificial prices to exist“; and (c) “the amount of artificiality.” Sumitomo I, 182 F.R.D. at 90, 93; see Sumitomo III, 194 F.R.D. at 483. In so holding, the district court rejected the argument that commonality was defeated by the possibility that the proof required to demonstrate “injury” might be highly individualized or that the plaintiffs class may have conflicts of interest with respect to damages. See Sumitomo I, 182 F.R.D. at 90-94 (citing Green v. Wolf, 406 F.2d 291, 299-301 (2d Cir. 1968)); Sumitomo III, 194 F.R.D. at 483; cf. Robidoux, 987 F.2d at 936 (”
27 Similarly, the district court had previously considered and rejected the argument that class plaintiffs had to demonstrate at the moment of certification that price artificiality could be proved at trial, reasoning that the ability to prove artificiality “is a matter to be ascertained by trial and not for a determination as to the appropriateness of class certification.” See Sumitomo I, 182 F.R.D. at 91; see also Caridad, 191 F.3d at 291-92 (concluding that the class plaintiffs’ difficulty in actually proving claims at trial does not defeat class commonality for certification purposes).
28 Also lacking in merit is the CL defendants’ contention that the district court‘s decision is questionable because it impermissibly relied on forced settlement as a basis for finding the class manageable. The CL defendants base their argument on the district court‘s statement in its August 10, 2000 certification order that
[t]his Court has considered all of the objections of the CL defendants regarding the manageability of maintaining this action as a class action. The Court reduces the class proposed by plaintiffs by nine months in length, and finds the Class defined in paragraph 1 of this Order to be manageable. In re Sumitomo Copper Litigation, supra, 182 F.R.D. at 97 (this Court earlier certified a two year class which was thereafter extensively prosecuted, settled, notice was sent to the class, and final judgment was entered without any management difficulties).
2. Compelling Question of Law
31 The CL defendants also argue that leave to appeal from the certification order should be granted because there are questions of law about which there is a compelling need for immediate resolution. Specifically, they claim that the district court erred in certifying the class because: (1) the “presumption of reliance under the fraud-on-the- market theory” cannot be maintained with respect to the common-law fraud claims in light of Securities Investor Protection Corp. v. BDO Seidman, LLP, 222 F.3d 63, 71-73 (2d Cir. 2000) (declining to apply the theory of “fraud on the regulatory process” to New York common-law fraud claim); and (2) the claims that occurred prior to April 29, 1995 are time- barred. For several reasons, we are not persuaded that either issue warrants interlocutory review. First of all, the CL defendants have failed to demonstrate why these two legal questions cannot be fully reviewed on appeal from the final judgment -- a circumstance that, alone, establishes an adequate basis to deny the petition.
32 The CL defendants’ assertion that the theory of “fraud on the market” cannot be used to satisfy the reliance requirement of a common- law fraud claim under New York law appears to present an open question. Our research indicates that the New York Court of Appeals has never addressed the issue while New York‘s lower courts have come to different conclusions. Compare Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179, 191-92 (App. Div. 1st Dep‘t 1998) (applying presumption of reliance in negligent misrepresentation case involving material omissions); Weinberg v. Hertz Corp., 499 N.Y.S.2d 693, 696 (App. Div. 1st Dep‘t 1986) (holding in consumer fraud case that “once it has been determined that the representations alleged are material and actionable, thus warranting certification, the issue of reliance may be presumed, subject to such proof as is required on the trial“), aff‘d, 69 N.Y.2d 979 (1987); Stellema v. Vantage Press, Inc., 492 N.Y.S.2d 390, 393 (App. Div. 1st Dep‘t 1985) (same); Brandon v. Chefetz, 485 N.Y.S.2d 55, 59 (App. Div. 1st Dep‘t 1985) (same) with Strauss v. Long Island Sports, Inc., 401 N.Y.S.2d 233, 237 (App. Div. 2d Dep‘t 1978) (noting that although presumption of reliance is applicable to affirmative misrepresentations in federal 10b-5 securities cases, “10b-5 cases are very much distinguishable from common-law fraud cases“).2
33 While the uncertainty of this issue tips in favor of a grant of interlocutory review, we decline to do so because the issue is insufficiently connected to the district court‘s certification order. See Carter v. West Publ‘g Co., 225 F.3d 1258, 1262 (11th Cir. 2000) (”
CONCLUSION
35 Upon consideration of the present petition, we conclude that the CL defendants have failed either to make a substantial showing that the district court‘s certification order is questionable to warrant a death knell review or to demonstrate that the decision implicates a legal question about which there is a compelling need for immediate resolution, and have otherwise failed to persuade us that an immediate appeal is necessary. Accordingly, we deny the petition for leave to appeal and deny as moot the motion for a stay.