Reuben J. Katz, on Behalf of Himself and All Others Similarly Situated v. Carte Blanche Corporation

KATZ, on behalf of himself Reuben J. similarly situated, and all others CORPORATION,

CARTE BLANCHE Appellant.

No. 72-1054. Appeals,

United States Court of

Third Circuit.

Argued Feb. 1973.

Reargued en banc Nov. 1973. 15, 1974.

Decided March April 9,

As Amended

See also 52 F.R.D. 510. granted pretrial court which plaintiff Katz his

motion un- maintained as a class action suit be Rules 23(b)(3) of the Federal der Rule no- directed that Procedure and Civil alleged tice sent to the members the class.

Carte Blanche is a national credit card pay company. Its members an annual gives .membership fee of $15.00 charging privilege them the items company’s establishments. associated purchases charge slips Carte Blanche from the establishments at associated discount, and for invoices the members Morgan, Cloyd Mellott, R. H. John Katz, inter- the face amount. vening who after Curtin, Doty, Eck- James S. Robert W. ert, previously was substituted for plaintiff, Stept, Seamans, Mellott, Pitts- & Cherin statutory named seeks burgh, Pa., appellant. for including damages suit, and costs Spec- Litman, Roslyn Howard A. M. attorneys fee, for Carte reasonable Brown, Litman, Litman, ter, David R. alleged pre- failure to make Blanche’s Pa., Pittsburgh, for Specter, Harris & and transaction transaction disclosures appellee. regarding computation of finance charges violation members Argued Feb. Lending (TILA), the Truth Act alleg- The three 1601-1681L U.S.C. §§ Judge, SEITZ, ALDI-' Before Chief edly improperly finance disclosed SERT, Judge FISHER, Dis- and Circuit charges are: Judge. trict membership (1) The annual $15 Reargued Nov. charge;1 SEITZ, Judge, Before Chief and VAN charge (2) assessed late DUSEN, ALDISERT, ADAMS, GIB- ;2 unpaid overdue balances and BONS, ROSENN, HUNTER, and WEIS charge (3) The on an ex- finance GARTH, Judges. Circuit purchase payment plan tended airline tickets. OF THE OPINION COURT provisions apply TILA’s disclosure Judge. GIBBONS, Circuit Thus credit. to extensions of consumer appeal pursuant using us to persons This before Blanche credit a Carte Interlocutory Appeals protected by Act of not card for business are 1292(b). appellant allegedly inadequate U.S.C. § the Act from the (Carte Corporation Carte Blanche be nonbusi- Katz claims to disclosures. Blanche) user, represent of an order of the seeks review other all card and ness interpretation interpretation 1. The Federal Reserve Board 2. The Federal Reserve Board payment, delinquen of TILA is the annual member- fee for TILA is “late that a ship plan charge cy, default, reinstatement, in a credit is not finance such other imposed qualification charge imposed charge because as a is not a finance membership plan unanticipated payment, delinquen and for issuance actual late card, cy, as an incident of or condi- default or occurrence.” other such any specific 226.4(c). tion of extension of credit. Katz § C.F.R. claims disputes charges charges § C.F.R. Feder- 226.407. Katz this late are in finance fact interpretation. required. al Reserve see Board But which disclosure is See 15 U.S.C. 1605(a) ; note 6 § 226.401. § C.F.R. infra. recovery pursuant tially He seeks such users. Carte excess of Blanche’s net 1640(a): worth. The record to 15 U.S.C.A. does establish many how would be included in a class provided in “Except otherwise restricted to members who had been as- any section, who fails in creditor this charges sessed late since the effective any credit consumer connection with date of TILA. Nor does it establish the any person disclose to transaction to persons number of paid who have ex- any required under this information payment charges tended for airline tick- person part to that disclosed although ets, Katz estimates this number person in an amount liable to that 40,000. equal sum (1) amount of twice the The district first considered charge in connection with finance complaint whether Katz’ satisfied the except transaction, the lia- prerequisites 23(a). of Fed.R.Civ.P. bility paragraph shall readily The court concluded that greater nor than not be less $100 joinder class was too numerous for of all $1000; than members, questions there were class, or fact law common (2) in successful the case fairly adequately that Katz would foregoing action to enforce lia- represent the class. Thus three bility, action to- costs prerequisites of rule 23(a) were satis- gether attorney’s with a reasonable examining fied. In prerequi- the fourth fee the court.” as determined site, repre- “the claims ... of the Katz, any holder, in order or other card parties typical sentative of liability un- to establish Carte Blanche’s class,” claims ... of Fed.R. (1) 1640(a), that a der must show: § 23(a)(3), Civ.P. the court was aware charge charge given a finance with- was that each class member in order to re- TILA; (2) meaning that of cover would have to show that the trans- charge respect that disclosure with action on which he based his was claim applica- compliance not in with was a consumer and not a business transac- regulations; (3) that the ble TILA and concluding tion. But that Katz’ claims charge imposed connection a was (cid:127)were coincident and not in conflict with transaction, busi- not a consumer credit class, require- those of the it found this show- ness transaction. The first two ment was satisfied as well. district ings of on uniform conduct focus doubts, initially, court had it could showing fo- Carte Blanche. third findings required make the rule conduct, possi- separate and cuses 23(b)(3) questions of or law fact bly subjective intention, of each predominate common to the class over Carte Blanche member. In the district questions affecting only individual mem- Katz a court moved for determination superior bers and that a action is class proceed that the to other available methods for the fair represented consisting he a class adjudication and efficient of the contro- holders, of all Carte Blanche credit card versy. Corp., See Katz v. Carte Blanche charged all since such holders had been (W.D.Pa.1971). 52 F.R.D. 510 After fee, membership annual and such briefing $15 argument, however, further a class all had been would include who court, over Carte Blanche’s charge payment assessed an overdue or objection, strenuous overcame its doubts payment an extended airline ticket (1) granting and entered an order Katz’ charge. That class would include some- proceed motion that the action as a class 717,000 800,000 where between mem- behalf all authorized holders establishing If bers. Katz succeeded in of one of Carte cards Blanche’s credit liability every July 1, 1969, for the class member since the effective date recovery TILA, (2) directing minimum 1640 a notice of specified liability (a)(1) pendency substan- would be the action be sent 752 juris member, cost, its initial esti- action order acts outside class diction, each Corp., Katz. Armco 431 Shutte v. Steel |37,500, to borne

mated 1970), denied, Corp., (3d F. 401 53 F.2d 22 Blanche Cir. cert. Katz Carte See v. 871, 910, 808 (W.D.Pa.1971). L.Ed.2d The form U.S. 91 27 S.Ct. R.D. 539 disregard (1971), appropriate reproduced at 53 F.R.D. notice is simultaneously procedural safeguards, certi- Swindell-Dressler The district court controlling Dumbauld, (3d Corp. 308 F.2d 267 order involves fied that the' 1962), there is Cir. the order be reviewable as which question of law if ground But the court has act a difference mandamus. substantial opinion appeal jurisdiction pursuant ed within an immediate and that materially safeguards appropriate procedural advance from the order nonarbitrary litiga- manner, of the in a mandamus termination ultimate permitted an panel will not Solomon v. Continental this court lie. A tion. Co., 472 F.2d appeal American Life Insurance taken. (3d 1043, 1973); Hackett v. 1046 Cir. 23(b)(3) Appealability Rule Orders Corp., supra, F.2d at General Host Weight 626; Philadelphia, Watchers met at the outset with We are Weight International, Inc. v. Inc., Watchers appeal dis- should be contention 770, (2d 1972) ; 455 F.2d Cir. appeal permission to missed because Interpace City Corp. Philadelphia, 1292(b) pursuant im- to 28 U.S.C. § (3d 1971). F.2d Cir. Thus appeal granted, providently in that an open route for the inter there appropriate to is not under that section locutory grant of the review ac favorable class review district court’s tion 23(b)(3) treatment under rule 23(a) rule action determination under circuit, only pursuant it is to 28 23(b)(3). That based and upon misapprehension contention is 1292(b). U.S.C. § of the intended Interlocutory Appeals purpose have, Dreyfus We Kauffman v. misunderstanding role Act and a Fund, Inc., F.2d granting judge in 1970), denied, cert. 401 U.S. denying proceed a ac- or leave to as class 1190, (1971), Ct. L.Ed.2d in an 28 323 23(b) (3). tion rule appeal pursuant 1292(b), reviewed § grant reversed the and of class action determination, A class treatment. also Wilcox v. Commerce See negative, is not in this affirmative or City, Bank of Kansas 474 F.2d 336 28 appealable under circuit a final order (10th 1973), Cir. Zahn v. International Host v. General U.S.C. 1291. Hackett § Co., Paper (2d 1972), F.2d 469 1033 Cir. Corp., Cir.), (3d de 455 F.2d 618 cert. aff’d, 505, 291, 414 L. 94 U.S. S.Ct. 38 925, 2460, nied, L. 407 32 U.S. 92 S.Ct. (1973), Ed.2d and 511 v. Johnson Geor (1972). Compare id. Ei Ed.2d 812 with gia Highway Inc., Express, 417 F.2d Jacquelin, v. 370 119 sen Carlisle & F.2d affirming (5th 1969), 1122 de Cir. (2d 1966), denied, Cir. 386 U.S. cert. ' nial of class action motions 1292 § 1035, 1487, 87 L.Ed.2d 598 S.Ct. 18 appeal. Obviously, then, ac some class If a district court denies class tion un determinations are reviewable treatment, discretionary action grounds, even on 1292(b). der § certifies, pursuant rule 54(b), dismissing Dreyfus Fund, Both Inc. the order Kauffman v. complaint against Paper Zahn mem International Co. the absent class v. arguably distinguishable judgment, case, bers is a final order from this such an 1 however, appealable. Hayes since both See involved nondiscre- Sealtest tionary rejecting Dairy Prod reasons class action Foods Division National 1968). plaintiff, Corp., (3d treatment. In ucts Cir. 396 F.2d 448 Kauffman being class, 54(b) provide rule means not member But does not a could reviewing grant representative. not be a class See 434 entering in F.2d at If the court 734. In Zahn the issue was treatment.

753 involving had members court order whether each trict some exercise jurisdictional re- to meet amount discretion reviewed in a § bring 1292(b) appeal quirement claim his within is to misread that stat- jurisdic-' subject disregard legislative district court’s matter ute and its histo- against ry. appealabil- tion. The contention ity the dis- in this case is because 1292(b) dis Section result of allowing case to trict court’s decision prolongation with lit satisfaction proceed contrast as a class action in igation litigants un with harm Zahn involved the Kauffman appeal judg correctable on from a final discretion, appeal under exercise of an § ment which resulted’ from sometimes 1292(b) lie. circuit should Two * application final strict of the federal 1292(b) appeals in re- courts have § judgment rule. In federal courts aspects viewed those of a district court’s prior interlocutory appeals to 1891 no action determination involve possible. year Congress were In that ; some exercise discretion. Wilcox v. interlocutory appeals authorized supra; City, Commerce Bank of Kansas granting continuing injunc orders Georgia Highway Express, Johnson v. 3, 1891, 517, tions. Act of March ch. § Inc., supra. Wilcox, In fact without 7, 26 Stat. In 828. 1895 authorized discussing appropriateness of its re- interlocutory appeals from the denial of view, Eighth Circuit examined one injunctive 1895, 18, relief. Act of Feb. us, superiority before issues 96, (repealed, ch. 28 Stat. 666 Act 23(b) (3) adju- of a rule class action 6, 1900, 803, 660; June 31 Stat. ch. dication of TILA claim. It found that reenacted, 3, 1911, 129, Act of March § the district court acted within sound (cid:127) 1134). In it included or Stat. denying discretion in the motion. receivership Act of ders cases. June 6, 1900, source 803, contention that dis- ch. 31 Stat. 660. In 1928 it cretionary aspects determining liability a rule determi- included orders 1292(b) nation admiralty are not prior reviewable cases assessment § appeal may language damages. April 1926, be traced to 3, cas- Act of ch. Packing es such 102, as Standard Stoll In it included Stat. Corp., (3d 1963), adjudging patent 315 F.2d 626 hold- infringement Cir. orders ing grant grant accounting. that a of or refusal to Act of cases before Feb. change 1927, of venue authorized U.S.C. ch. These 1261.3 Stat. 1404(a) exceptions § will not be reviewed under four final to the § 1292(b). 1292(a). See A. Olinick Sons v. & rule are included in All four Dempster Bros., Inc., 365 F.2d 443 were in effect when the Judicial Confer 1966); began Akers v. Norfolk & ence of the United its con States cf. Railway, (4th Western availability 378 broadening F.2d of the sideration 1967). commentators, relying Some interlocutory appellate of review. That change on authorities, the of began suggestion venue have consideration a suggested by Judge that matters entrusted to the to the Jerome Frank meeting discretion of the district are not court of the Judicial Conference of properly 1292(b) ap- reviewable in a States, the referred the United § peal. See, g., e. Judge Moore’s Federal Prac- matter to a committee chaired 110.22[2], (2d tice 1973); Although at Judge ed. John J. Parker. If Wright, C. Law of particular Federal proposal rejected, Courts Frank’s was § at 1970). extrapolate investigation ed. But to extensive the after com change from the cases, of reported venue or even mittee of a draft stat favor from the 1292(b) commentators’ discussion of ute in form of and the Ju § general cases, those rule approved report that no dis- dicial Conference at Interlocutory appeals 3. Bankruptcy 11., separately under the Act of are treated in title See 11 § U.S.C. 47. meeting. examples was The draft statute draftsmen borne out its 1953 given support Representa pro- of of the bill its the House to transmitted Cong. ponents. They specifically & referred to 3 U.S.Code tives in 1957. See Admin.News, Sess., pp. Cong., long eases in which a 2d trial" results from 85th pretrial erroneously Judge overruling order Parker 5258-5263 Judge going right defense to the to maintain testified Albert B. Maris action, involving prolonged to Hearings cases damages support. Before Subcom See on assessment of after determina- the House Committee No. 3 of mittee Cong., liability, tion to H.R.6238', of cases where the dis- Judiciary 85th position impleader might (hereinafter of (1958) motions Sess., ser. 11 2d voluntary settlement, induce en nonsuit Hearings). the bill was House Since and to cases exactly submitted, where venue claimed to the Judicial as acted proper have been Report transferred without Committee Conference authority. Hearings House at testimony representatives of of the Judi Congress before cial Conference imposes The statute three cri they attempting accom were what teria for the district court’s exercise of legis plish the best indication grant discretion 1292(b) certifi § intention. lative (1) cate. The order must involve a “controlling question law,” (2) offer assessing of In of both text § ground “substantial opinion” legislative history, of 1292(b) difference and its correctness, (3) as to its kept must in mind that the draftsmen appealed immediately “materially writing ad Con- were not slate. blank vance the ultimate gress termination of the already, exceptions four had the 1292(a), litigation.” Significantly, while the expressed dis now embodied in § judge certify trict judgments must the order when certain value criteria, satisfies the departure three the discre from the fi- there should be a grant appeal tion to leave the cir judgment rule. of nal In by any specific cuit level is grants injunctive not limited relief or or denials Judge Maris, testifying grants criteria. support applications for the or denials analogized bill, appel receivers, appointment it had focused late court’s problem discretion to that upon Su to the serious harm preme litigant Court on certiorari. Hear pendente House lite from erroneous ings ap admiralty permission at 21. interlocutory Denial order. In the peal may upon exceptions patent based a different as it had focused and upon avoiding sessment than that of the district court effort of a wasted litigation as to possibly protracted dam- three But criteria. over appeal might liability.4 leave ages be denied entire where there ly unrelated reasons such as the Thus what consider- state the draftsmen knew Congress appellate historically docket or the desire to had moved ations considering have a full record before final toward relaxation disputed legal categories ob- issue. -And once leave to rule. Those historical appeal granted appeals viously interpretation bear ques not restricted to a probably decision 1292(b). in- section judge’s tion of law which having tended to include orders potential similar controlling. pen- view was All litigant Johnson for harm to the v. dredge, 1973). 488 F.2d 820 potential dente lite for caus- or similar ing protracted could a trial if it wasted difficulty There can be little over the early might be be determined that there opinion criterion of difference of liability. latter That at least of the order. The likelihood correctness judge potential major is remote district would of the that a concern was security po- having post admiralty exception order to ob- also involves pendente tain release of vessel. libelant harm lite to the tential frivolously such certification litigation, make serious to the conduct of the respect practically with to his own order. Certain- legally. either Hearings House ly 21; instant an order Note, Discretionary case involves see opinion Appeals over which a difference of Interlocutory of District Court might took through exist since two A Orders: 1292(b) Guided Tour Section opinions to arrive at a decision. Code, court of the Judicial Yale L. difficulty practi- can over Nor there be much J. And on the requirement saving level, mate- the rially advancing a likelihood of cal of time expense litigants the ultimate termina- court and of was litigation. sponsors highly tion of The district deemed to be a opinion possibil- S.Rep.No.2434, court’s about settlement relevant factor. See ities, potential length pos- Cong., (1958) (reprinted about the of a 85th 2d Sess. 2 sibly trial, Cong. Admin.News, p. avoidable and similar mat- in 3 U.S.Code & ters, including cases,' (1958)). will in most this case, as informed of a be at least as that The clear a control “controlling panel of court. The ling question of law—one which would question requirement of law” judgment result a reversal of a after difficulty may arise source whatever hearing final to focus —serves interlocutory propriety as to of an ' precedential limited value of statements appeal. appear the exercise about ing of discretion controlling question 1292(b) A of law dealing cases § with or every encompass very granting change must at the least ders of venue. .If an erroneous, which, changes order would re place be order venue to a where appeal. on versible error jurisdiction, final If there would be no no dis interpreted statute were to exclude cretion is involved and certain rever interpretation judgment jurisdictional such order that would be sal of the on grounds inconsistent the clear intention with after trial should be avoided. sponsors to avoid a wasted trial. 1404(a); See 28 U.S.C. Swindell- § cf. Corp. Nor need the order any plaintiff’s determinative of Dumbauld, supra. Dressler If merits, claim the districts, on since there are two either of which jurisdiction jurisdiction, a dismissal for want of would have but one of 1292(b). opinion within Zahn International which is in the of the district Paper Co., supra; S.Rep.No.2434, superior, extremely unlikely 85th court it is Cong., (reprinted (1958) change 2d in 3 Sess. that a of venue would result in a Cong. Admin.News, p. U.S.Code judgment. & 5256 reversal after final As to (1958)). Nor need or a reversal of the most such orders it matters wheth little litigation, der says terminate the they since er one do not decide a impleader orders, controlling and transfer venue question of law or their sponsors’ examples,5 two of the materially law review litigation. will advance the regardless they suit could in continue are decided However terlocutory although litigation go determination will forward and a re might sulting erroneous not, decision cause rever final will on the appeal order, ap sal on from a final order. What basis disturbed on question peal. remains is the whether in order But a district could abuse so- “controlling” must the discretion vested in it 28 U.S.C. § erroneously 1404(a) it be one which if decided as to commit error reversible appeal? judgment. could, would lead to a on reversal after final It for ex Certainly Judge testifying credibility Maris, ample, fa in a ease in vor of the crucial, bill behalf Judicial witnesses transfer to a ven was Conference, did not so. testi ue in think His which the one critical witness suggests mony “controlling” beyond subpoena means of a side reach Hearings

5. House testimony only by dep- and multi-faceted determination is chal lenged available appeal. of That be an exercise The district court osition. would ground might prerequisites It also be must determine if the discretion. four grant 23(a) final after a new trial for a for the of listed in rule hearing. Obviously mandatory a result should have such been met. These are 1292(b) appeal preventable by requirements, if our and decides review a'§ prob- judge the anticipating, the district whether the have been met. mandates change Fund, E.g., Dreyfus Inc., of venue order lem the certified Kauffman key interlocutory appeal. Paper supra; The con- Zahn International cf. in- order Co., supra. not whether the sideration is must also The district court discretion, but of volves the exercise determine the action is whether policies implicates truly (2) 23(b)(1) it whether or rule maintainable under favoring interlocutory appeal. de- The proceed notice it without so that properly are of what orders termination or identification of the class members. 1292(b) must be under reviewable § determine whether Our review will application by practical of those made properly type of class -court classified application policies, a mechanical reaching to class action in its decision as “discretionary” or as of labels such “nondiscretionary.” E.g., Yaffe v. Pow action treatment. ers, policies, both Those 1972). (1st 454 F.2d of enactment and since the before only If the action is maintainable of 1292(b) the avoidance included have 23(b)(3) court rule party pendente lite from harm to a (1) findings: must make two additional interlocutory order possibly erroneous questions common of law or fact possibly of wasted and avoidance predominate to the members of the class expense. litigation In trial and time affecting questions over indi case, subsequent will discussion this disclose, (2) members, vidual ac and that a class or- there exists virtue superior tion is other meth available possibility of appealed der from both adjudica ods for the fair and efficient pendente and party lite prejudice to a findings controversy. tion of Both avoidable possibility considerable require an informed exercise litigation expense. trial time and wasted judgment application of de as to the legal fined standards. the rule 23 Commentators ap support finding view re predominance amendments 1292(b) pursuant are peals to § certified quires the identification at a minimum testing suitabil appropriate issues, whether common legal factual of the and been ity has treatment of class action diverse, an identification Kaplan, Con correctly determined. See relate. those to which class members tinuing Civil Committee: Work district whether must determine We Federal Rules Amendments the factual properly identified has court (I), Harv.L.Rev. Civil Procedure issues, properly identi legal has (1967); Report n.131 If common. fied which those Special Com Bar Association American properly identified has district court Procedure, Rules mittee on Federal un diverse, would we common and issues theAs 38 foregoing 104-105 F.R.D. its doubtedly instances most defer agree indicates, we discussion predominance, since conclusion as appealed order with that view. conservation requirement relates to properly us. from is before effort, court’s litigation the trial good as probably will be Scope Review applied has If the ours. to the facts criteria the correct There remains say will case, then, we it fair scope of rule 23 class of review dis ordinarily exercise defer depend to That will determinations. properly iden- has But cretion. facet of extent some issues, case; properly tified the eval- and and it to do fails so its deter- common, subject is uated which order mination appellate are to reversal not entitled prop- to such deference. court when the issue is erly before the latter court. On finding superiority re hand, other where the trial court does quires (1) an informed a minimum apply the Rule’s the facts criteria to consideration of available alternative of the case, the trial court has broad issue, adjudication methods of each determining discretion in whether (2) comparison to of the fairness all may be maintained as a class whose involved interests be between action and its determination should such alternative methods and a class ac given great reviewing respect by a tion, comparison (3) effi court.” 3B Federal Practice Moore’s ciency adjudication of each method. (2d 1969). 23.50 at 1104-05 ed. fl Since, hereinafter, pointed as will be out Villager Industries, Greenfield v. single resulting judgment Cf. in a ease Inc., 1973). 483 F.2d 824 given estoppel which will be collateral against losing in effect defendant is 23(b)(3) rule most al class actions an Objections Carte Blanche’s to method, compara ternative available Class Action Treatment comparative efficiency tive fairness urges Carte Blanche that the district method that As must considered. finding court erred both in its of su- predominance, with the determination of periority findings pre- its our looks first review at whether the points out, dominance. It and Katz properly applied rele concedes,6 that the claim that Carte to vant criteria the facts of the If case. Blanche’s annual is an im- $15.00 fee say this has been done it fair that to properly charge disclosed finance ordinarily we will defer to its exercise extremely validity. or- doubtful Yet the if, example, of discretion. But appealed der from directs that notice rejecting district court has in alterna this claim be sent to all of card hold- its adjudication tive available methods of suggestion they ers with that disregarded possible unfairness of the to able re- recover the minimum $100 particular defendant, action to covery specified in 15 U.S.C. § its determination is not entitled such 1640(a)(1). points out Carte Blanche deference. See Wilcox Commerce that almost all of card its holders City, Bank Kansas 474 F.2d at 339 & debtors, also account it its foresees n. 7. effect, possibly catastrophic it, scope Professor Moore summarizes the that a substantial the ac- number of of review: upon receipt count debtors of the no- will determining points payments. out, “In whether an action tice withhold It -brought good well, given as a class action is to be so that at time a many maintained trial court should care- of its account debtors are delin- fully apply criteria, quent entirely apart delinquency set forth ., Rule 23 . to the . facts induced notice. a class action As Appellee’s Reply making power, Brief Act and Petition with rule lias issued Rehearing interpretation declaring charges an at 33: such charges. Subsequent grant- “The claim of Carte to be finance ing Blanche’s $15.00 annual fee constitutes the Motion For Determination of Class improperly charge Action, disclosed finance within trial court it has made abundant- meaning ly Lending. litigation of Truth Events clear this and other transpired litigation interpretation. Only which have since this intends to follow that appellate was commenced and since the trial court’s failure of trial and courts determination, accept certainty interpretation make ait near could conceiva- liability imposed respect bly liability will be' result the enormous Board, argument.” that claim. The Federal which Carte Reserve Blanche bases agency charged with administration parties debtors, notice all non-nominal if after bind account these ac- is the class out, case they opt Blanche will outcome Carte fail to applic- 13(a) The term test case as required tion.3 Rule file Procedure Federal Rules Civil that an ac- our has decided Since circuit course, compulsory This counterclaim. proceed proposed shall as a class tion disruptive urges, nor- de- it of its it is would be unless and until a class action as pro- otherwise, members of the all termined practices rela- of its mal collection properly posed non-nominal class are more those debtors. All tions with its account parties non-parties. Kahan See than urges, effects, will take disruptive it 1970).” (3d Rosenstiel, 424 F.2d 161 Cir. establishing place prevails it even if F.R.D. at 540-541. compliance TILA. It its own full here, therefore, a test case able means making urges court, in that the district practical purposes. In other disregard- determination, superiority its words, plaintiff’s if the motion elements of unfair- ed these substantial de- is a class action determination disre- ness to it. And the court also garded becomes, in the instant action nied practical Congress af- has the fact that effect, legally a case not remedy litigants a forded to individual binding anyone Mr. other than attorneys they relegated to fees if Katz, superiority of and it is the making lawsuits, such individual relegation thus alternative which must eval- we individual not unfair to the uate. Moreover, it class members. contends making the predominance erred in its district court There in Kahan v. Rosen finding, each since as to 1970), stiel, 161, 424 F.2d alleged it entitled member will be class language similar to district court’s liability hearing to a on the fundamental it tak footnote but the footnote challenged of whether finance issue charge en in Kahan v. out of context. saidWe imposed in connection with a alleged class action Rosenstiel that trans- consumer rather than business purposes should be treated such for as issues, factual action. These individual compromise there is dismissal or until heavily predominate urged, over a full determination that a class action relating legal Carte and factual issues not, is not maintainable. We did Blanche’s conduct. judge apparently believed, rule district

in Kahan v. Rosenstiel on the 23(b)(3) class when in a rule case the as an The Test Case Available be made. action determination must Alternative Method. 23(c) (1) provides the determi Rule rejecting conten- In Carte Blanche’s practi nation should be made as soon given to tion that not be notice should ac after cable the commencement noncompli- its until its account debtors practicable” But tion. soon as “[a]s requirements ance with TILA disclosure practicable in the must mean as soon as light established, court had been 23(b)(3) fac of the relevant rule rejected the test case as discussed and predominance superiority. tors of writing: alternative, an available postpone Where defendant' seeks surrounded the confusion “Some on that determination ment meaning term A test case. ground fairness, practicable as soon as binding legal ef- case with classic test necessarily mean does not outset out- affected its fects all those of the lawsuit. course, possible, with- not come is points court out that express af- The district all those consent of out non-parties. it would fected, parties Katz’ case forward alone went both binding upon anyone other than judiee In the sub in which only partly true. express Mr. Judgment against That obtaining Katz. consent of pro- impractica- Katz would parties is an non-nominal against tect Blanche other procedural Carte bility, device members, but for Katz would Rules concluded that members brought prior other bind Carte Blanche suits should to the deter- making superiori liability, members. In mination of defendant’s thus ty making estoppel determination over mutual. See Advi- disregarded factor, sory Proposed looked that Note Committee’s fact was content Carte Blanche Amendments to Rule 39 F.R.D. (1966); Continuing take its rather Kaplan, chances stare decisis Work judicata. than res No reference was of the Civil Committee: Amend- 1966 Supreme made to Court's the decision ments of the Federal Rules of Civil Pro- Blonder-Tongue Laboratories, 356, (I), v. Inc. cedure 81 Harv.L.Rev. 385 University Foundation, (1967). joinder early of 402 Illinois To make at stage 313, 1434, practically achievable, “opting U.S. 91 L.Ed.2d S.Ct. 28 788 the (1971), well-developed jurispru or to the out” mechanism liter- was devised. The flowing Judge development dence this circuit from ature on the of rule 23(b)(3) quite Hastie’s well-known decision Bru makes clear States, early requirement directly v. szewski United 181 F.2d 419 notice re- was (3d Cir.), denied, 865, cert. U.S. lated 340 71 to dissatisfaction with the lack of 87, (1950). mutuality estoppel S.Ct. L.Ed. 95 632 To un which resulted York, derstand of Pentland, Nisley relevance Blonder- from the rule. Tongue superiori and Bruszewski to the Of course the 1966 amendment to rule ty finding one must start with a consid 23(b) (3) was also based the under- eration of case law under the old rule lying assumption dispo- that class action amendments, 23. Prior to the 1966 cas multiple claims, espe- of sition similar by es which now would be covered rule cially claims, socially small consumer 23(b)(3) commonly were referred socially desirable. But the desirable ef- spurious. Guaranty In York Trust v. fects, point looked at from the of view Co., (2d 503, 1944), 143 F.2d 529 Cir. anyone defendant, than other grounds relevant, on rev’d not here 326 York, were as achievable 99, 1464, U.S. 65 S.Ct. 89 L.Ed. 2079 Pentland, Nisley rule as under rule (1945), Judge Frank for the Second Cir prohibiting one-way A intervention. Corp., cuit and in Pentland v. Dravo major policy social in favor of the § 851, (3d 1945), Judge F.2d Cir. 23(b)(3) prevention class action is the suggested Goodrich for this court that it multiple relitigation of the factual proper would be to make the legal issues as to a defendant’s lia- permit determination and class members bility. Nisley result accommodated to intervene after the defendant’s liabili policy perfectly any case where ty single had been determined liability was established. In cases lawsuit. In Union Carbide & Carbon prevailed, where the defendant other Corp. Nisley, 561, 300 F.2d 588-589 were, course, class members free to cert, (10th 1961), petition Cir. dis try again. practically speaking, But missed, 13, 801, 83 S.Ct. U.S. L. provided stare decisis a substantial de- (1963), Ed.2d 46 the Tenth Circuit held terrent most instances. Another ma- “one-way” that such intervention after a jor policy social in favor of the § judgment adverse to the defendant was 23(b)(3) encourage- class action is its proper. Many objected commentators private ment of enforcement on behalf one-way intervention had the effect Again Nisley of small claimants. giving estoppel collateral effect to the policy, result accommodated that since liability in a case where the given notice potential could to all estoppel was mutual. This was claimants liability once the defendant’s thought to be unfair to the defendant. was established. Moreover a fee award point'-that To one-way meet inter light could be made in value defendant, vention was unfair to the the benefit conferred on the entire class. Advisory Committee Lindy Builders, Federal Bros. Inc. v. American Sanitary by Corp., quired TILA and the wheth- Standard Radiator & ; given 1973) any Kahan er card holder ais consumer F.2d 161 487 Rosenstiel, objection or not supra. user. a business Whether given with class action treatment at Nisley conflict was not result litiga judicial outset, system not, favoring since will policies Bigelow Blonder-Tongue case, required to v. Old the tion, with but conflict Smelting Mining relitigate finding Carte Copper & after a Dominion required dis- L.Ed. did not Blanche make Co., 32 S.Ct. 225 U.S. finding had announced If there is a That closures. sys- general liability, judicial principle elementa judgment defendant is a “[i]t ry estoppel relitigation protected tem will law that legal compliance essentially at 32 S.Ct. Id. issue be mutual.” must regulations Judge in Bruszew TILA discour- Hastie quite principle agement relitigation ski did not think afforded elementary Where, in 1912. here, had de- as it seemed as the so stare decisis. unanimously Supreme Court the claim that fendant makes nonfrivolous In Bigelow authority mailing by the rejected prejudiced of of the it will be the University Blonder-Tongue hardly of notice, say the it is case. Illinois, supra. fair anima; legis ju- judicial system Ratio est insist on res must legis et lex. estoppel ratione mutatur mulata dicata rather than collateral Especially stare this decisis. so when Blanche In case Carte recalled, plaintiff, it the not the upon it what have conferred seeks judicial system, controls whether or perceives be dubious benefit it the As to ask class action treatment. willing perfectly estoppel. It is mutual relating the versus issues to consumer loses the class to run the risk that it postponement use, business is- of those enlarged than, rather later be sues until ac- violation decided will suggests, think We Katz contracted.7 tually system protect judicial the from Blonder-Tongue requires the decision expense might time and which have been look taken at alterna that a new nonliability wasted on them in case. early of an of a test lieu tive case by judicial system may, Moreover the new That class action determination. postponing class action treatment until 23(b)(3) must, su all look periority determinations, as with rule proved, violation been what- has avoid ac take into expense it, ever time and as distin- Supe different interests. count several guished parties, might from in- have point riority from the must be looked at preparation curred the notice. system, (2) (1) judicial of view of the Postponement of determi- class action members, (3) potential of the class nation been until violation has present plaintiff, attor (4) the neys proved way prejudices poten- public litigants, (5) of his tial class If Katz members. loses large (6) at. listing of the defendant. they not be bound. case violation will necessarily of im is not in order they If Katz violation establishes the portance respective Su interests. op- opting can out be afforded the same periority looked must at also tion, the notice them that but will advise point the issues. view of establishing there is a viola- tion, Turning in- more in this their decision will be issues early factually legally a clear formed than if the notice sent case there is proceedings. poten- in the real Carte line whether between tial re- mem- harm to the absent class the disclosures Blanche has made stipu- arising filing appropriate Any problem ex- an out of the doubt tice agreeing by pressed Judge by be bound the defendant to the extent of lation Seitz as mutuality estoppel potential can be favor of class members the demise of liability. conditioning postponement adverse of no- determination resolved running bers, attorneys of limi- statute award of reasonable fees are go tations, thought likely possible begging once to be a for want of an at- torney. problem, has been eliminated holding Pipe in American & Construc- We have no doubt Utah, tion Co. v. 414 U.S. 94 S.Ct. potential maximization of recoveries (1974), 38 L.Ed.2d 713 that the fil- single lawsuit which has resulted from ing complaint of a class action tolls the pro the 1966 amendments to rule has running of the statute of limitations for interesting duced the desirable effect of the entire class. The Court has thus outstanding attorneys pursuit adopted holding Tenth same protection consumer The en lawsuits. Nisley might Circuit in It case. couragement legiti of that interest ais suggested that the seventh amendment mate consideration in the district courts’ gives right the absent class members a 23(b)(3). administration of rule It is unitary to a bility trial to all issues of lia- not, however, the sole consideration. damages single jury. before a explicit is an Fairness criterion for a hardly This can be the as to ab- superiority determination, and fairness members, sent however, since it to the defendant must be balanced discretionary rule 23 with the against any disincentive for they court whether will be included litigation might result from the the case at all. If the seventh amend- possibility postponing presents any problem

ment all, ais determination until a violation has been problem rights related to the the de- proved. major %The incentive to the bar fendant. practically, And more the even possibility aggregating is the of small appealed contemplates order from a non- different, claims. That incentive no is unitary liability determination of since the members be same class will damage relating issues to the individual opted in once a violation been .has class members. proved, attorney’s and the fee will original As plaintiff, Katz, to the he measured to the same extent as hereto respect by is affected upon with to the respect fore the benefit conferred the recovery Lindy Builders, amount of his class. or Bros. Inc. v. may pro- Sanitary to the trial of the case. American Radiator He & Standard expense, Corp., supra; Rosenstiel, tected from the su Kahan v. $37,500, mailing par- pra. of out to a notice Another incentive the is the to bar rights. ties leverage who have no he re If first es- increased settlement which violation, aggregating tablishes the district court sults from small claims. may different, conclude that the defendant rather That is no the incentive potential than aggregation he should bear the initial cost if a violation mailing. only possible the proved remains, adverse still the defend upon postponing effect compulsion him of the class will to ants be under less action proves class, determination until after he make a settlement offer to the legitimate a violation is that it be more when claim confronted with attorney violation, difficult for past. him to obtain an Indeed than in the willing pursue infrequently his claim. Further we have observed that negotiations reference will precede be made to the effect of settlement do postponing the class action determina- action Villager See Greenfield determinations. willingness attorneys supra. tion Industries, Inc., What para- attorneys deprived undertake such cases next would be graph. Here, point postponement we out that in TILA action determina Congress provided proved has for the tion until a violation has award been attorneys leverage reasonable the additional settlement U.S.C. fees. 1640(a)(2). injury unlikely disruption It from seems that ac- results tions any under TILA or busi other federal which occur to a defendant’s regulatory providing regardless relationships statute mer- ness right any sending seventh amendment waived the mere its claim single jury on unitary leverage trial before is said That notice. issues, that all and would realize considerable. to be instant defendants legitimate favor was tolled in is, think, of limitations than a statute It we less well, lose, ab- He procedural If of the class. would device. use of a against estoppel effect at- collateral provides some disincentive sence actions, pursuit torneys’ class of a favorable liability.8 of class in- be tolerated disincentive must of fairness. terest Manageability. large public interest has an appeal separate ground of As a pro- that the class action device the fact contends that the Carte Blanche supplementary enforcement

vides regulatory concluding it could court erred in we have said statutes. What determining, sep manage problem of attorneys’ pursuit about disincentives to 800,000 po arately each, which of applies to the of public actions as well those tential nonbusiness class members were incentive interest. There is Although the litera credit card users. possibility aggregating enough in the re rule 23 often ture and case law under adding to small claims without lever- “manageability” finding aas fer to a separate requirement age resulting aggregation un- from for a class resulting notice toward effects possibly from actually determination, one of groundless actions. be taken nonexclusive factors which turning

Finally, making required de to the into account findings predominance superiori interest, it must understood fendant’s dealing only ty. de order with the we are We have concluded protection appealed because fendant who declines reversed must be against one-way superiority finding after a vio intervention error. was suggested, proved procedure which rule lation been has With we have designed ultimately any, 23(b)(3) class, If includ to be afford. early may class action defendant insists ed and notice considera receive be notice, manage he bly 800,000. class action is, determination smaller than rule, problem may it. But be under the ment considerably later entitled appears where he nonfrivolous claim at makes a different than stage juncture or dis that his will harmed business be this at a later since willing rupted by notice, may content of the notice bly be considera say specific. run the risk that the determination more If suffices loses, given determining liability, point effect if he will that be this class, 800,000 in in favor of the with notice consumer claimants was a determination, businessman, if the de event of rather than a such seriously chooses, may, that alter to insist court must native, consider fendant as compel proof each, appears should, on the surface absent other management ling prob circumstances, pursue present course. that formidable undoubtedly taking position A reconsid lems and will be defendant such a would, course, to have ered if the court concludes deemed district Guffey Smith, whether, (1965). Ed.2d v. 237 do in this 8 We case decide Cf. 526, solely 101, jurisdiction 856 di- 35 59 L.Ed. the basis U.S. S.Ct. for federal comparatively versity, rare. arises under Such class actions cause of action Paper Co., law, applicable re- su- Zahn v. International state and the state law But see many quires pra. Early diversity estoppel, mutuality in cases the class action notice postponed defend- and late have no adverse effects on the determination Guaranty opting permitted. Compare Blonder-Tongue probably ant. Moreover by many York, 99, states 65 will be the future Trust Co. v. 326 U.S. S.Ct. followed mutuality yet 1464, (1945), v. with Hanna which have not abandoned 89 L.Ed. 2079 Plumer, 1136, estoppel requirement. 460, L. 14 380 85 U.S. S.Ct.

763 proved points attorneys provision has all three claimed Katz fee in § 1640(a)(2) suggesting violations.9 inter- such an pretation. Neither of the district court opinions Truth Actions and passed Class explicitly upon that con- Lending Act however, tention. urges, Carte Blanche implicit that it is in the district court’s urges addi Carte Blanche as an superiority determination. It does not objection or court’s tional to the district appear to implic- have been decided even enacting 1640(a) der 15 U.S.C. § itly for, as Carte Blanche concedes in its particular provision penalty and in petition sug- rehearing, there is Congress 1640(a)(1), intended gestion Congress pro- intended to penalty in an could recovered damages recovery hibit action. It actual individual and not in a class (E.D.La., 1973) ; 9, Feb. con Berkman v. 9. We note that of 51 courts Sin (N.D.Ill. Corp., sidering clair Oil 59 F.R.D. 602 motions for class actions under 1973) ; Community Bank, TILA, while Roth v. Nat’l 40 have denied such motions Civ. (N.D.Ohio, 1973) ; only 11, including 13, No. Mar. the district court C-72-1031 pro Lindig City Bank, case, permitted v. have action to Nat’l 59 F.R.D. 154 (S.D.Ohio 1973) Mourning Family ; City Co., v. Publica Coleman v. Fin. ceed. Denied: Inc., (S.D.Fla. (D.Md., 27, Inc., Civ.No. Mar. tions Civ.No. 70-559 72-685-K Serv. 1973) ; Tucker, 27, 1970) ; Century v. Hollis v. Civ.No. Nov. Allerton Credit 72-735-K (S.D.Fla. (D.Md., Corp., 27, 1973) ; Graybeal Mar. Nov. v. Ameri Civ.No. 70-1614 1970) ; Co., Ass’n, (D.D. F. can v. Fin. 333 & Loan 59 Buford American Sav. F.R.D. 7 C.1973) Supp. (N.D.Ga.1971) ; ; Chem. v. 1243 Ratner v. Pennino Morris Kirschman & Co., Co., Inc., Apr. 27, (E.D.La., Bank New York F.R.D. 412 Trust 54 Civ.No. 72-1339 (S.D.N.Y.1972) 1973); ; Co., Ford, Inc., v. v. Gerlach Allstate 338 Altenbach Francis ; F.Supp. (S.D.Fla.1972) ; Rogers 1973) (D.Or., Apr. 30, 642 v. Civ.No. Co 72-963 Corp., (N.D.Ga. Steelreath Co., burn Fin. 1972), modifying 54 F.R.D. v. American Nat’l Bank Trust & 417 (N.D.Ga. May 23, (S.D.Ala., 53 F.R.D. 182 Civ.No. 6799-71-P 1971) Kenney 1973) ; ; Group, Bank, Griffin v. v. Landis Financial First Nat’l Civ.No. Inc., (N.D.Iowa F.Supp. 1972) ; (S.D.Ala., May 23, 1973); 6800-71-P Hoff Valley Bank, Inc., Charnita, (M.D. v. man Shields Nat’l 56 F.R.D. 448 v. 58 F.R.D. 86 (D.Ariz.1971) ; Bank, Pa.1973) ; Alpert Indus., Inc., Wilcox v. Commerce v. S.U. (D.Kan.1972), aff’d, (C.D.Cal.1973) ; 55 F.R.D. 134 F.R.D. 474 F.2d v. Richmond (10th 1973) ; Railey’s Appliance Center, Inc., Roesel v. Fulton 59 F.R.D. Bank, May 25, (N.D.Ga., (E.D.Va.1973) ; Nat’l Civ.No. 15376 Fisher v. First Nat’l 1972) ; Co., Bank, 72-0-156, (D.Neb., v. Grubb Dollar Loan Civ.Nos. Civ.Nos. 82-0-157 20, 1973) (N.D.Ga., May 25, 1972) ; ; May Co., June v. Turoff No. Bank, (N.D.Ohio, 23, 1973). July v. Shields First Nat’l 56 F.R.D. 442 C71-948 Grant (D.Ariz.1972) ; Sears, Family ed : Greer Martin Roebuck & & Alexander Co., (S.D.W.Va., July Serv., Inc., (D.Vt., Civ.No. 72-80 Publications No. 5829 1972) ; Kriger European Inc., 30, 1970) Spa, ; v. June Health Richardson v. Time Premi Co., ; Boggs (E.D.Wis.1972) 4, (S.D.Fla., 56 um F.R.D. 104 v. Civ.No. 70-1814 Feb. Sales, Inc., 1971) ; Douglas Co., Alto Trailer Civ.No. v. Beneficial Fin. 71-1271 334 (E.D.La., Aug. 7, 1972) ; Haynes Logan F.Supp. (D.Ala.1971), v. 1166 rev’d on other Mart, Inc., grounds, (9th ; Furniture 1972) Civ.No. 70-C-1827 469 F.2d 453 (N.D.Ill., Sept. 20, 1972) ; Magazine Smith v. Goldman v. First International Serv. Bank, (N.D.Ill.1972) Atlantic, ; Inc., (N.D. Nat’l 56 Mid F.R.D. 587 Civ.No. 71-16-F Furniture, Inc., W.Va., 29, 1971) ; Johnson v. Austin Civ.No. Oct. Katz v. Carte (N.D.Ill., 10, 1972) ; Corp., 510, 72-C-724 Blanche Oct. 52 Garza v. F.R.D. 53 F.R.D. 539 Chicago Clubs, Inc., (W.D.Pa.1971) ; Joseph Health 56 F.R.D. 548 v. Norman’s Health (N.D.Ill.1972), modifying Club, Inc., F.Supp. F.Supp. (D.Mo.1971) ; 329 336 936 307 (N.D.Ill.1971) ; Rodriguez Family Novelty La Co., v. Publi Mar v. H & B & Loan 55 Serv., Inc., (C.D.Cal. (D.Or.1972) ; Flickinger cations F.R.D. 22 57 F.R.D. 189 v. 1972) ; Alsup Montgomery Co., Corp., v. Ward & Horseshoe Dev. Civ.No. 11-334-C-l (N.D.Cal.1972) (S.D.Iowa, ; 10, 1972) ; 57 F.R.D. 89 Mullen March Kristiansen v. Montgomery Co., Inc., Sons, Inc., Ward & 57 John & F.R.D. 89 Mullins 59 F.R.D. 99 (N.D.Cal.1972) ; (E.D.N.Y.1973) ; Kroll v. Cities Serv. Oil Eovaldi v. First Nat’l Co., F.Supp. (N.D.Ill.1972) Bank, ; (N.D.Ill., 15, Hunter No. 71 C 1654 June 1973), Inc., modifying (N.D.Ill. Gross Bros. Furniture Civ.No. C- F.R.D. 20, 1972) (N.D.Cal., 1972) ; ; Hollander, 71-2443 Dec. Winston McDermott v. 60 F.R.D Commerce, v. Nat’l (E.D.La.1973). Bank of Civ.No. 71-1986 appealable. has The The district court ders become draftsmen action. a class 1292(b), proponents however, will yet it whether determined § statutory penalties provided view that for re- as well were of the award interlocutory damages. superiority in “ex- determination view of orders Its ceptional” U.S.Code, on the as- have no different cases. would been See might Cong. 5259, pp. sumption Admin.News, re- members & that class only. damages reversal Our 5260-5261. draftsmen’s desire cover actual availability limit of such to ex- between review does not on the difference turn penalties. ceptional damages statutory policy eases reflected another actual underlying 1292(b): jurisdiction appellate consideration exercise § We cannot piecemeal yet. dis- need to avoid review and its over an decided issue delays attendant of time. Id. trict waste court. pp. at was 5261-5263. As re- appealed from will be The order accompanying noted in the letter the Ju- to the dis- remanded versed and the case dicial draft bill: Conference’s proceedings con- trict court for further opinion. sistent with this recognized always has been It competing considera- there are two Judge (dissenting). SEITZ, Chief bearing upon appeals from inter- tions major premise of The unarticulated locutory too On the one hand orders. majority for decision a distaste rigid against appeals such bar present actions, at least in the con- injustice result distaste, I not believe such text. do stage preventing early the final judicial widely justifies shared, however might be decision of an which issue emasculation of Rule 23. determinative of case and burden- ing expense parties with the Appealability pro- proceedings, perhaps subsequent pursuant appeal comes to us This longed, On the other avail. 1292(b) taking 28 U.S.C. 1292(b) Section great ap- § too hand freedom interlocutory permits appeal peals from of the district court orders controlling ques- orders that involve “a “piecemeal prior judgment, to the final tion of as to there substan- law appeals” they called, make opinion ground tial for difference delay expense of and increase the appeal order from the litigation. [if] may materially ter- advance the ultimate p. Id. at litigation . . . .” mination of the compet- Attempting to harmonize correctly majority notes that ing considerations, re- the draftsmen allowing appeals primary un- reason for ap- agree quired that an two courts to 1292(b) trials der wasted avoid peal proper limited the class of was litigants. brief and harm the After a involving appealable orders those terms, majority nod completes statute’s order, controlling questions law, stating syllogism substantial as ground to which there allowing appeal determi- opinion. This difference trials, nation orders can avoid wasted appeal gives limitation the chance appealable. therefore this order is judgment where a “clean” before final turning underlying In to the statute’s legal involved, as to which issue is one majority guidance, has policy for the ex- controlling legal principles in are the dispute expanding amined the reason require the but does not interlocutory appeals, availability appellate make fact determina- court to countervailing ignored con- and has tions. allowing appeal of less siderations majority great dem- care in takes interlocutory The If take we than all orders. (cid:127) involving onstrating that even orders sole as our trials avoidance of wasted appealable. interlocutory exercise of discretion guide, or- a multitude of

765 agree. prior quite judgment. I Yet that ad does not to final The order argument. majority’s granting status, vance For however, involved involving question: one contends that orders another whether the Truth in appealed Lending exercise discretion cannot be prohibits implicitly Act mainte- 1292(b). under numerous What pro- § nance of class actions to enforce its stated, ruling appeals courts have question law, visions. This one de- variety including orders, in cision of which controls order before transfers, appeals ter-district is that us. I appealable would find the order 1292(b) ground. cannot under maintained on this § propriety judge’s to test the of a district g., Standard Review exercise discretion. E. United Salter, 1393, v. F.2d 1394 States 421 Although construction of Truth in (1st 1970); Cir. v. & Akers Norfolk Lending presents controlling Act Co., 78, Western Railroad F.2d question ap- of law that makes the order (4th Drilling 1967); J. Cir. C. Trahan pealable 1292(b), under Court § Contractors, Sterling, Inc. v. 335 F.2d Appeals ap- is instructed to decide the (5th 1964); Burnham, Phelps Cir. peal, merely making question 1964); (2d 327 F.2d Cir. appealable. Alldredge, order Johnson v. Packing Corp., Standard v. F. Stoll 1973). (3d 488 F.2d 822-823 Cir. (3d 1963). 1292(b) 2d Cir. Were § recognizes approach This an or- once simply available to review exercise court, judicial economy der is before the discretion, appellate prior courts, complete pro- mandates priety, decision of its judgment, engaged final would be including questions decision of time-consuming weighing of facts that, involved, if alone would not render sought the section’s drafters to avoid. agree appealable. Thus, an order I with involving anYet order majority exercise that, unless the Truth Lending question discretion action, also involve a Act bars we 1292(b). appeal law that allows must determine whether the district § judge Two transfer cases in the Circuit Second abused discretion in determin- his point. ing illustrate this In & A. Olinick that this suit could be maintained as Dempster Bros., Inc., Sons v. 365 F.2d a class action. (2d 1966), Cir. the court stated My agreement majority, how- with the 1292(b) was unavailable review ever, majori- qualification, needs judge’s district exercise of discretion reviewing ty, while the district court’s evaluating supporting certain factors his discretion, purports not to be exercise years order. Id. at 442-443. Just three majority first concerned it. later, the court declared that transfer fractures the district court’s class appealable 1292(b) orders were under § non-discretionary determination into concerning where a was raised proper component, identification of the power the district court’s to transfer. considered, a discre- factors to be Wyatt, Farrell v. 408 F.2d 664-665 tionary component, evaluation 1969).1 Cir. factors; majority elaborates next, the questioned Were purporting the order proper and, before us still criteria solely grounds on the non-discretionary the ma- decided com- to ponent scrutinize jority, judge determination, that the abused his of the class discretion, appealable it would not be looks whether “at point pro Johnson, restricting Another illustration of this from in addition to Georgia Highway plaintiff class, bolding vided Johnson effect Ex press, Inc., (5th 1969). proper representative, 417 F.2d 1122 denied a mo- appeal simply jury in Johnson was not demand for tion strike defendant’s ground availability jury the that trial. The a trial was a court abused its of entering controlling allowing legal question appeal discretion in a class action of deter Rather, appealed 1292(b). mination order. the order order the Superiority applied criteria to properly relevant the (which appears to of the case” the facts ground by majority The relied on precisely the mat- be an of examination reversing supe- in the district court was majority within identified as ter the riority. disagree . I ma- must with the finally, discretion); district court’s jority say I cannot dis- because that the for majority district court reverses judge trict find- abused his discretion in finding superi- improperly a class action ing superior action to other class proceeding, the rea- to forms of or other litigation. disposing for means of this being postponement that reversal son for according mistake, The determination district court’s of the class per majority, its to superior was failure majority by deemed postponing ceive the benefits of determination. class action affirmative a deter until determination after My the matter somewhat view of liability. of Carte Blanche’s mination 23(b)(3) simpler. of Federal Rule stumbling majority’s One block to requires the Procedure Rules of Civil pro 23(c)(1), approach is Rule judge questions find of district practicable aft vides that soon as “[a]s predom- to the class law or fact common an action er the commencement of questions to in- inate over relevant action, brought the court shall as a class and that dividual class members to be determine order whether superior for res- class action form Considering recent so maintained.” The olution of some all of the issues. (1966) light provision law in must informed district court exercise its developments, majority decides findings making discretion in these longer per portion of the rule propriety of to the can reversed as provision, The forms a useful function. findings only discre- these abuse majority declares, adopted was Cypress Newport News General tion. “one-way intervention,” prevent distaste Association, Hospital & Non-Sectarian require on the which was bottomed 1967) (in (4th 648, 653 375 F.2d mutuality estoppel. The ma ment guide banc). To jority goes the mutuali on claim that provides making findings, the rule these ty Supreme interred test was listing” Blonder-Tongue relevant con- Laboratories, a “non-exclusive Court University Advisory Foundation, Inc. Illinois Committee’s siderations. 28 L.Ed.2d U.S. S.Ct. Proposed Amendments to suing patent successful; after it had (4) on his lawyer that identifying exceptional competence invalid. After held been would be as likely prosecute and dis- issue before Court narrow an individual action it, patent cussing law on effect of majority’s class action. The reli- examined the economic conse- ance on assumptions the Court such factual indi- mutuality requiring patent quences of in cates the extent to which review for patent invalidity was assert- requires suits where abuse discretion fact evalua- estoppel. 334- the defensive Id. at tion—these ed as evaluations are entrusted to court, The Court’s abandon- appeals district S.Ct. and courts of requirement mutuality supposed for the ment not to substitute their judgment particular type estoppel involved for the district courts’. The Blonder-Tongue largely majority’s engage its on based need to in fact evalu- analysis rely ation the cost continued adher- for reversal on as- mutuality analy- by sumed facts, ence to economic found not —that court, up roughly why sis makes one-half of the also indicates the exercise of opinion emphasizes justify discretion 1292(b) Court’s “al- does not re- though patent only por- view. trials are a small litigation tion of the total amount of The majority’s end result of the as- courts, they federal the proportionate length.” tend of dis- to be sumptions, specific some to this case and Id. S. general, prior some is that, atCt. 1452 [footnote omitted]. liability, on determining no order that a majority analyze The does not the eco- proper be maintained is consequences (1) nomic where objects of continued adher- (2) the defendant plaintiff mutuality can, requirement ence to the successful, recover rea- us, attorney’s cases such as one before nor sonable does I fees. do not read majority peculiar limiting face Rule difficul- 23 as availability of class thought ties often inhere “offen- treatment to the narrow class of estoppel. Instead, sive” use of majority’s ma- cases not covered rule. jority simply mutuality evaluating assumes has, district court after longer required 23(b)(3), assertion of an factors listed in Rule estoppel any purpose any supe- found that case.2 a class action would be unsturdy major- foundation, On this rior proceeding. to other forms ity argument builds its that was Since Carte error Blanche has failed dem- any for the court to onstate district make affirm- abuse of the district court’s discretion, ative class action determination at this I would not reverse the dis- stage proceedings. faulty trict court’s order as on based superiority finding. To majori- reach its desired result the ty assump- vigorously makes a number of Carte Blanche factual does attack Among tions conclusion, support- without record basis. district court’s questionable ing assumptions (1) superiority finding, these are: that this suit will, manageable that Carte Blanche’s card would be as a holders class action. clearly majority notice, no matter how worded the does not reach the issue of payments manageability, withhold pro- Carte Blanche at this state in the suit; learning (2) ceedings, Carte a class action. Carte Blanche will be Blanche harmed assertion of contends since con- compulsory counterclaims; credit, business, sumer (3) that a uses lawyer company’s would take a case if card can he serve as the basis $100 get attorney’s Lending could suit, “reasonable fees” if a Truth in the Wright expressed 2. Professor has even view action situations where there are no diametrically opposed po- estoppel. Wright, this matter other limits on use of O. majority. 1970). sition taken He would Federal Courts 314 ed. estoppel allow the offensive use of may Since the district court treat the to ascertain each have first court would legal liability separately I note that basic issue as to his plaintiff’s card. use goes to not from determination each individual’s of card use this examination proper membership, accept legal al- would Katz’ I with class issues connected plain- finding liability to legations each court’s as but to district membership. predominance.3 Having abused its dis- class tiff’s entitlement to finding in class cretion neither that a long representative is as the class So superior action is to other means card, user of the bona fide consumer a finding in a resolution of the case nor purported member use each predominance questions, the of common deter- card need not be of his makes district be affirmed court’s order should on the a determination mined before for- is unless class action enforcement controlling legal The district issues. by Lending bidden Truth Act. course, de- can, make its court modify and can conditional termination interim class determination its Lending Truth in during proceedings. Fed.R. time light my In belief that the district would, therefore, 23(c)(1). re- I Civ.P. court has abused not its discretion its argument ject this Carte Blanche’s that findings predominance superiori- on and unmanageable a' inherently as suit is ty, I must Blanche’s conten- reach Carte class action. Congress only in- tion that intended that enforce- dividual suits allowed for be Predominance Lending ment Act of the Truth in finding that com- The court's district (hereinafter Act”). “the This was predominate or fact mon issues of law principal argument Carte be- Blanche’s by judged is, finding, superiority like its panel fore the heard this and that The of discretion standard. abuse argued rehearing. also was on The dis- argument by primary advanced Carte court, explicitly however, trict did not urging the district court Blanche in that contention, majority reach this finding that abused discretion its appellate jurisdiction can- declares that predominant questions are common yet not be exercised “over an issue not each that individual consideration decided the district court.” requir- card class member’s use majority’s scope 23(c)(4)(A) provides view that ed. Rule considerably appellate appropriate an ac- review differs ... “[w]hen thought may brought to the law from I had be as what tion or maintained making subject. respect particular on reviewa- is- After action class sues, with interlocutory 1292(b) every provisions of ble under . . and the . ap- discretionary ac- determination on class rule then be this plied accordingly.” shall construed majority status, The Rules tion abstains Commit- deciding adding subsection, clearly simply tee, it was in- an issue because orders, spoken treatment We review dicated that below. might rulings judgments, issues; any appropriate for resolution ruling order, though questions is- to the common other issue relevant judgment even litigated may appeal, may individual- be considered sues ly. Advisory have Notes, supra party long or the court has Committee’s so as right the issue was it. Whether at 106. raise opinion judge that he district noted his elected to divide While court might 23(c)(4)(A) 23(c)(4)(B), in this case. utilize the class into subclasses under (E.D.Pa.1971). by I note that F.R.D. issues rather than first divide the suit found, availability liability judge 23(c)(4)(A), the district dam- 23(c)(4)(A) decide individual for use holding, age, difficulty graphic to re- well as individual entitlement makes card, judgment, is bet- court abused cover as consumer user ‘of before final proceedings. predominance. finding ter left individual its discretion in ment, immaterial, given (1) Carte below is Blanche relies on decided the (2) judicial proper- attorneys’ provision Act’s relevance fees to some appeal ly issues, such to common under review. Some sense. Carte argument subject jurisdiction, point be Blanche’s matter first availability attorneys’ appeal even court or raised on fees plaintiffs party lower court’s successful a boon to the who invoked is individ- the jurisdiction. ual provi- Co. actions and Brown v. inclusion this See Shoe 294, 305-306, sion in States, 82 the Act United 370 an intent to U.S. indicates promote (1962); 1502, individual, class, L.Ed.2d 510 not enforce- S.Ct. 8 Casualty ment. All Finn, v. that American Fire & Co. can be inferred from in- 534, 6, 17-18, provision L.Ed. clusion the Act 341 95 of a for U.S. 71 S.Ct. (1951). may award of 702 lost if fees Other issues successful enforcement below, having Congress not but been raised suits is that raised desired to encour- age private below, appellate Act; find deci- suits to enforce the the necessary, disposi- probable, sion of or even those issues essential to inference Congress appeal, can the be drawn tion even where lower that the intended promote grounds. prohibit decision was on other individual court’s suits and Helvering 238, Gowran, class See suits. 302 U.S. 154, 245, 58 S.Ct. 82 L.Ed. 224 argument Carte Blanche’s second is Carte com- Blanche in its answer to the liability large judgments that could plaint class ac- raised its contention that ruin entire the consumer credit indus- tion treatment here with is inconsistent try, Congress an absurd result which Rejection the of that contention is Act. could not have Carte intended. necessary for affirmance. potential liability, however, Blanche’s majority by prohibiting observes, As the would Carte reduced argument, Act; Blanche’s this class that case can- enforcement the re- not, covery by injured, Act, consistent those with the be main- whom the Act sought protect, action, part merely tained as a would class is based be made harmony assumption more difficult —a result not in erroneous that Katz Congressional any expressed with other class members seek intent. imposition U.S.Code, Cong. penalty See 1968 News, pp. Admin. minimum & $100 provided by argument, Thus, 1962-2030. I would re- Act. ject however, Carte by is contention defeated Blanche’s that obser- that vation. The class action treatment heart Carte inconsistent Blanche’s Act, permitting with the I contention and would affirm the or- is that ac- class tion der of the enforcement district court. ex- Act would pose Blanche, Carte and other credit staggering companies, possibly card judgments. (dissent- Judge ALDISERT, Circuit possible ing). loss less- is not by ened fact the class involved majority opinion Much of the is com damages possibly here seeks in excess of defending principle mitted statutory recovery. minimum class determination vel non be the subject Interlocutory Appeals Carte Blanche concedes the lack of Act legislative history supporting of 1958, 1292(b). conten- I its was not U.S.C. § tion, explains potentially challenged, but being that “the aware that this was annihilating imposing liability Dreyfus Inc., effect” of see Fund, Kauffman per plaintiff-card at least 1970), holder $100 F.2d cert. de brought nied, class action L. “was never U.S. S.Ct. Congress very (1971). Rather, attention time real Ed.2d 323 being problem exemplified 1292(b) Act In at- this considered.” § tempting appeal imperative that, to set forth nonetheless, show Congress “controlling question passing specificity intent of Act is with there is inconsistent with action enforce- law as which substantial agree- squarely, opinion. and I am in total sue ground difference disposition with treatment and no as- ment his had in banc .” This court A sum of it. class action but court which sistance case, may part, ap- parts. one If appeal, case for certified this TILA, appellant con- so panel under it, filed pellant filed who statutory cedes, bar to can be no permitted to be there court which combining parts. all of the ac- lodged. The mere fact usually sub- ordered is has been tion action, ‘so “Because a class instinct ground differ- ject of a “substantial benefits, wrought with mis is also frankly majority opinion,” as the ence of imperative effect,’ it chievous grant every litigants Yet if admits. participating the court 1292(b) certified denial were sight laudatory funda never lose swamped appellate would courts procedural the purposes de of this mental second-guessing process of class by the purpose was to alle vice. Its historical predomi- I view which determination the fa the burden on court and viate in sounding fact, nately in than rather where claim was com cilities cases a question of I an exotic law. fail see large of...persons.” mon to a number requiring or refinement definition law by Inc., Villager-Industries, Greenfield v. is when sole issue this court the (3d 1973) F.2d 824, (foot 831 Cir. 483 given complex of factual a whether the omitted). note requirements the case meets .class difficulty which arises when Another Questions 23, of of Rule F.R.Civ.P. appellant, court, and this the the law, fact, not of inhered Kauffman precise identify “con- fail court supra,, Dreyfus, met issue trolling question possibili- of law” is the plaintiff, of a a a whether not member ty appellate of an court decision based class, representative. could abe nor on contentions neither briefed ap- question If a of lurks in law this Although argued by parties. this suspect peal, and I that one can be dis- difficulty in Johnson v. did arise appellant’s brief, tilled from an is- it is Alldredge, (3d 1973), F.2d 488 820 damage aspects sue restricted of happened here. I fear what has complaint. Although plaintiff’s revers- opin- to its essence the court’s Distilled ing determination, the class action today yields a ion conclusion that court has failed meet this issue. Blonder-Tongue patent case Laborato- Appellant’s ries, University theme, basic sounded in Foun- Inc. v. Illinois dation, 313, 1434, Ratner v. 28 L. Chemical Bank New York 402 91 U.S. S.Ct. Co., (S.D.N.Y. (1971), Trust 54 412 alters ortho- Ed.2d 788 somehow F.R.D. 1972), repeated reported thinking interpretations. in some 34 dox on Rule 23 unreported opinions today district court faults and reverses chanting concluding litany, the same district court that an for not superior action should not lie because individual test case a class liability, liability phase event the court award finds action on the this law statutory penalty concept each col- because the “new” $100 suit purpose estoppel class member would defeat the Blonder- lateral enunciated Lending Tongue: Blonder-Tongue Act, of the Truth in 15 U.S.C. “We think (cid:127) seq., and, moreover, 1601 requires et would look tak- decision a new solvency appellant threaten the at the test case in en alternative of a statutory penalty early because would lieu of an class action determina- potential greatly damages. 760.) opinion exceed (Majority actual tion.” at posited, difficulty present So this case does I have extreme with this. proper appeal controlling point estoppel First, on a issue collateral parties argued par- law which the nor briefed neither briefed argued, today ties, panel but which nor this court does neither before before Judge least, very meet. Chief the is- the court in At the Seitz met banc.

771 requested approval rejection. court should have additional wholesale or But briefing argument very oral this issue.1 they at counsel least us to Second, important, and more I mutuality re-examine whether of es- premises majority underlying toppel paten- ais viable rule where a suggestion relitigate Blonder- validity 1971 tee seeks Tongue jurisprudential patent makes once a federal court has de- litigation contribution to class action clared it to be invalid. present this circuit which was not at the 327, 402 at U.S. 91 at S.Ct. time of the 1966 class amendments (Footnotes omitted.) years prior Rule 23. For sixteen to the Moreover, Services, Sea-Land Inc. v. adoption of the modern class action Gaudet, 573, 806, U.S. S.Ct. rules, the courts in this circuit followed (1974), L.Ed.2d did not accord to the doctrine Bruszewski v. United Blonder-Tongue the inclusiveness attrib- States, Cir.), 181 F.2d 419 de cert. (At majority. uted 94 S.Ct. nied, S.Ct. 95 L.Ed. U.S. 819.) sum, In there is no “new look” in this Blonder-Tongue As to the effect circuit, questionable and it least non-patent cases, am other circuits I Blonder-Tongue case mandates Blonder-Tongue not at all certain that re-tailoring estoppel non-pat- law sweep has the to it. The now attributed jurisdictions ent cases in those which do extremely cautionary utilized some court not share our Bruszewski views. language: recently We have said: “Also influ- Undeniably, court-produced doc- the encing general acceptance the of class mutuality estoppel un- trine of of is recognition actions been has of the fact dergoing change in the fundamental that the or tech- collective accumulative pristine common-law In its tradition. nique possible of this device makes an formulation, increasing of an number many effective of assertion claims which rejected principle courts have the otherwise enforced, would not for be unsound. Nor irrelevant that the is it practical reasons, economic or were it abrogation mutuality been ac- has joinder procedure. not for the The 1966 companied by developments— other amendments Rule 23 are a restate- expansion such as definition public policy, ment and reinforcement merger “claim” in bar and contexts mutually by expressed the Con- Judicial expansion preclusive and ef- States, ference the United its advi- judgments fects afforded in criminal sory committee on Rules of Proce- Civil litigation civil ca- enhance the —which dure, Supreme Court, the and the Con- pabilities of the to deal courts gress, candidly which en- facilitate and swiftly fairly. some issues but courage the use actions.” estop- Obviously, Villager Industries, Inc., these mutations Greenfield v. pel doctrine are not before supra, Although us for F.2d at the 831. arguments 1. A sponte; number of (3) and rationaliza court sua some cases this urged general concept enlarged tions have been the rule fun- last has been into a appellate jurisdictional damental, that will court consider not which limitation sponte legal argument presented sua question not foreclosed the consideration urged by litigants. might finally court; the These not raised the lower (1) (4) losing party opportu- summarized as follows: the liti- the has had no gants right litiga- nity accepted by argument have the control to rebut tion, court, erroneous, therefore court should decide in fact be questions by parties; those raised and the court has received no assistance (2) requiring no error deciding question litigants has rectification by been committed the lower court since who are well informed in the matter. by Vestal, Sponte Appel- lower definition —not Sua has — Consideration Review, ruled on the matter if late 27 Ford.L.Rev. appellate (1958-59). (Footnote raised for omitted.) first time judgment weak, underly- appear or if a bers pay lip to “the majority service possibility disposi- precluded of a favor- ing assumption that class putative determination, claims, such especially able multiple tion of similar socially class who chose claims, desir- members consumer small parties join would not as- intervene its frontal able,” the brute effect of judgment. This situ- be bound policy con- debilitate on will sault this potential suggest so-called that ation—the “one-way To sumer class actions. strength con- litigative intervention” —aroused lone consum- aof ground match siderable criticism claim can er one small members resources, simply to allow adversary’s be- it was unfair for the favorable of a from a provision benefit in TILA there cause subjecting ignore attorneys’ fees, them- without payment of is to binding litigative of an un- effect blithely selves to modern realities 1966 amendments one. The processes. favorable is biblical there While designed, part, specifically to support notion that were for the historical perceived slay Goliath, mend defect the social this one David did mem- desirability former Rule and to assure class actions of consumer plaintiff would be had bers that a David was to insure identified against trial the merits and would capability a propensities the Goliath Goliath before subsequent adversary, orders thus be bound all his judgments.13 power adver- of the courtroom the real equalized. have a I saries would Advisory See Committee’s Note to Pro- court, gnawing his- with a fear posed Procedure, 39 F.R.D. Rules Civil protection, 98, 105-106. toric tradition of consumer today major step takes a backwards. (At 763) (My emphasis). S.Ct. at compelled Finally, the observation (Footnote omitted.) guise majority, under the Because was faced with a statute of “superiority” finding, rewrit have now issue, limitations meticu- Court was Rule opening ten the mandate emphasizing lous when class ac- practicable 23(c)(1): “As soon as after tion determination should be made: brought action the commencement anof deter action, as shall a class present Rule, Under the a determi- by so to be mine whether it is order nation an shall be whether They now have it maintained.” would maintained as a class action is made by practicable “As soon as read: after practicable the court soon “as as liability, shall the court establishment of after the commencement of an action brought class a an action determine brought as a . .” class action. . poli to the runs counter action.” This 23(c)(1). Rule deter- Once it Supreme cy, letter, may mined that main- expression actions Court’s of class latest tained as a action under sub- class Pipe Co. American & Construction (b)(3), man- division the court Utah, L. 94 S.Ct. U.S. dated to direct to of the members (1974): Ed.2d 713 practicable class “the best notice un- advising abuse under source of der the A recurrent them circumstances” lay may they in the . [Rule 23] . . former be excluded from the request, they claimed potential they that members class if so will by await judgment, could in some situations be bound class whether final developments even not, in the or favorable or trial and that a member de- to judgment request in order on merits who does not exclusion participation appearance would enter an Rule termine whether the case. If the 23(c)(2). Finally, present to their interests. Rule be favorable pro- provides made their 23(b)(3) evidence at trial that in actions the judgment position mem- spective class as actual include all those found shall improper. Having to be members who have the class concluded that received not re- giving notice who have the district court erred in not quested 23(c)(3). Rule fuller exclusion. consideration to the “test case” as Thus, potential class members retain adjudication, alternative means of option participate in or with- approach, my the better judgment, only until draw from the class action would be Court to remand for a point litigation a “as soon by new determination the district court practicable the commencement” after proceed whether the case should as a of the action when the is allowed doing suit so, action. Rather than they a majority continue as are seems to bar the district court sent notice of their inclusion within reconsidering whether class action the confines class. Thereafter appropriate liability treatment at the they non-parties stage are either the suit appears, me, of this case. This ineligible participate re- to be erroneous. covery by judgment, or or be bound Blonder-Tongue, together taken with they who must else are full members certainly Bruszewski, require does judgment, abide the final whether However, “new look” test case. favorable adverse. or implications Blonder-Tongue (At 547, 763) (Footnotes 94 S.Ct. at majority appears not so settled as the omitted.) think. example, For even if that de reasons, I signals For these and would dissent general cision demise of the judgment of affirm the “mutuality” requirement, there is no court. means could, this Court certainty, predict judicata res what ADAMS, Judge (dissenting): Circuit estoppel collateral effect would be ac

I corded from the reached dissent result favor of Katz.2 majority. germane More still observation requirement of mutuality, though possibly yet moribund, is not a. Blonder-Tongue dead. Both and Bru here, threshold though expressing principles szewski course, is whether the district court’s wide-ranging implications, in their were pro- determination that analysis mutuality cases where was dis subject ceed as inter- action is permit carded to col “defensive” use of locutory 1292(b).1 review under section estoppel. plaintiffs lateral Yet the other agree by I with the conclusion reached ' seek, majority’s in this case would in the the' other members of the that Court hypothetical instance, to make “offen question this is reviewable. against sive” use a Carte Blanche of in favor I am not of Katz. b. prepared, time, at least at to hold this settling appealabili- After Blonder-Tongue issue of that either or Bruszew ty, majority rules that the class ac- necessarily ski permit would re such tion determination of the court sult. question 1. That the class action is reviewable [Rule of 23] caused Courts to determine 1292(b) particularly by ‘controlling under is made clear that there was no of Continuing Kaplan, law,’ only questions Professor in Work of but of ‘discretion’ subject (b) the Civil Committee —1966 Amendments to to review under of Subdivision (1), the Federal Rules Procedure of Civil Title 28.” Section of by (1967), Harv.L.Rev. n. 131 Report Special conducting ABA of the Committee an action cannot “[A] court Procedure, predetermine judicata on Federal Rules of 38 F.R.D. .... its res effect Special only subsequent 104-05 The ABA Com can in be tested [T]his that, Courts, Wright, mittee stated “[W]e should be dis action.” C. Federal turbed, however, change 1970). if the in form ed. consider did not court The district unsteady res law though the Thus, Congress forbid intended justifies estoppel whether judicata collateral re- the disclosure enforcement case as test of the consideration further Blanche, pre- action, quirements Carte Act. it is a class an alternative strenuously argues Con- course, that that law—a cisely unsteadiness The gress meliorated, an did such intent. manifest fostered, not quality Blonder-Tongue ques- majority to consider prevents me from declines —that any ground tion, apparently that certainty that attaining majority’s rendered opinion be appar- on the matter would “superior.” The will be test case advisory deter- mutuality should the district requirement ent erosion damages” may re- mine covered, “actual that development, not incipient an is fait since, suggestion shaky “there is accompli, as a serves and thus Congress prohibit intended outright that reversal for an foundation damages ac- recovery a class in of actual class determination. court’s the district only generates Blonder-Tongue tion.” Rather, many among to be one consideration weighed by puzzling. decisional reticence This court. damages” “actual Whether sought, the damages are minimum $100 arguments Blanche Carte advanced e. too, preclusion of a my Court judgment, the absolute In favor of dispose my equally opportunity are, judgment, take this should class action pertinent. prime con- appellant’s First, contention: Carte Blanche Congress prohibit en- is incon- that intended class enforcement tends that Lending pro- Act the Act the Truth forcement of with the section sistent attorney’s Act) by way recovery The (the viding actions. of class correct, dissenting opinions Second, I maintains Blanche other fees. Carte maintaining recovery think, the effect the Act that a class that large completely is might determination the Act the class as to be so may problem impact ar- unjust. not be circumvented of these of each stage ease, especially guments when the fact this undiminished already damages by briefed this issue has been that “actual” — greater argued. something meant, presumably, re- than the $100 minimum-— recovery, in provides The Act for the guide Thus, to action.6 coverable private actions, the amount of twice class determina- the district court in its charge proved to finance tion, lay claims to rest all we should illegally How- have been undisclosed.3 absolutely prohibits, or invaria- the Act ever, the award such an bly permits, enforcement. $1,000, to less not exceed nor amount pro- legisla- support further than Act makes There is little $100 attorney’s proposition history fee for the vision award of tive creating Congress plaintiffs, “a all class thus intended bar successful True, attorney general’ species ‘private Act. Senator enforcement of proponent Utah, participate prominently in enforce- active Moss of 5 Lending legislation, did re- ment.” the Truth in (a)(1). only damages 3. 15 U.S.C. 1640 § 6. The in a TILA recoverable plaintiff’s action are actual dam- double the recovered, separate may 4. Id. A award ages, except damages when actual exceed course, in each consumer connection with (in $500 be re- which case $1000 any illegal non- credit in transaction covered) (in or less than which case $50 disclosure occurs. recovered). $100 5. Ratner v. Bank New York Trust Chemical (S.D.N.Y.1971). Co., F.Supp. 270, 329 280 hearing made, permits “I not believe be mark at a do maintenance of permissible if, alia, under class action class actions are inter district Truth-in-Lending.”7 Attor- Assistant court: (now McLaren, ney Judge) in General . . . that a “Finds class action response Moss, ex- to Senator direct pressed superior other available methods contrary opinion. He stated adjudication for the fair and efficient private right provided of action controversy.” subject in the Act Federal majority The reverses the district Rules Civil Procedure and so amena- finding “superiority,” court’s and or ble to class action treatment.8 This postponement ders action de background inadequate scant offers an termination until the of liabili ruling basis enforcement that class ty my been is, has settled. There in absolutely proscribed. of the Act is Still view, ruling. no basis for such history less does this con- warrant proper appear course would to be to re always clusion that class treatment mand, giving the the bene district court appropriate. accept To Carte Blanche’s appropriate fit of our on views fac therefore, contention, accept or “superiority” tors to be considered in its converse, clairvoy- “would be work investigation. This conclusion—that re ance and not of or construction mand, outright reversal, called for interpretation.” —proceeds open- from the “broad and attempting conjure up the Without gener 23, ended terms” of Rule and the myriad might situations occur thereby ous discretion vested in district where class action treatment would be cou rt.12 appropriate inappropriate, or it is suffi- Upon or, any event, such remand exercising cient to remark that when the class determination is pragmatic “considerable discretion of a finally made, there are considerations nature” conferred “broad emanating directly from the Truth in open 23, ended terms” of Rule a dis- Lending Act which should bear pay trict court should close attention to inquiry superiority. into court’s provisions, potential the Act’s and to the recovery effect of a class in a Truth First, litiga- it must be noted that the Lending case. provided tive incentive often the class 23(b)(3), Rule under which the class action, through aggregation of small determination this case was and will large enough claims into one to call Hearings 7. before (O) desirability undesirability the Consumer Subcommit- tee of the concentrating litigation Senate Committee Commerce of the claims 2246, 3092, Cong., particular S. forum; S. 91st 1st 2nd& Sess., 91-43, pt. 1, (1970). (D) ser. likely at 27 The difficulties to be encoun- management tered of a class ac- 8. Id. tion.” City, 9. Wilcox v. Bank Commerce of Kansas (l0th 1973), Ratner, supra 474 F.2d a, wherein Note 54 F.R.D. at 416. might Frankel, Preliminary also ruled that there See also Some Obser Concerning class action enforcement of the Act. vations Civil Rule 43 F.R.D. (1967) ; Note, Proposed Rule 23: Class 10. Ratner v. Chemical Bank New York Trust 629, 642, Actions Reclassified 51 Va.L.Rev. Co., (S.D.N.Y.1972). 54 F.R.D. Judge Aldisert, dissenting, 650-60 pertinent” 11. Rule 23 states that appears “matters approach says this view lie when finding superiority every include: grant “if class action or denial were “(A) The interest of members 1292(b) appellate certified individually controlling prose- swamped courts would be the second- separate ; cution or defense process guessing actions determination (B) any litiga- The extent and nature of predominantly sounding fact, which I view concerning controversy already tion the rather than law.” by against commenced or members of the class; 776 crippling. impact potential financing requisite the in- the class to case, forth the least, very recovery should, suit, at the is, fur- be in this stitution of — weighed in the provision district court’s exercise by for a “rea-

nished the Act’s attorney’s by attorney’s Rule 23. of the discretion conferred sonable fee.” variety by courts, in Numerous other a victorious fee is recoverable circumstances, irrespective that Truth in plaintiff, he have ruled of whether Lending may pursued some claims not be as award or seeks the minimum $100 larger per- Thus, have it be class actions. Such courts amount. while between the private action of- ceived a similar confluence conceded that class provisions and considera- of induc- of the Act ten the useful function serves 23(b)(3).15 by socially specified ing Rule benefi- tions citizens to institute litigations, certainly very prevents appears Rule me nature of 23 cial goal by saying must district court this has been well-served provision attorney’s a a fees. conclude that will not be Act class adjudicating “superior” Accordingly, this not nec- method of essarily controversy.16 Nonetheless, “superior” to an individual ac- the effect finding superiority tion, at as such of the Act is periority” that a of “su- least insofar such bring might unlikely, at derive from the incentive to would seem least vantage. from this suit. pro- Second, case is allowed might action, in- ceed as a class d. 700,000 many 800,000 or

clude as as commentators, As noted Rule members, of Carte or the number 23 confides to a the district courts broad Blanche Were such cardholders.13 range managerial and of discretion lati- merits, on the class to victorious be regarding tude class actions.17 It recovery might run as in this action they, courts, appellate rather than the high only mini- $80,000,000, as even if provide imagina- who must creative damages sought by each mum were necessary worka- tion make the Rule liability plaintiff. could conceiv- Such factors, ble. There are numerous already considered, some ably bankrupt defendant, and force not, some operation. prospect of a it to This cease have district court in this case should annihilating possibly “horrendous, evaluating: prime responsibility punishment” technical violation for a 23(c) Rule ac- (l)’s directive that certainly consid- of the a relevant Act tion as determination be made as “soon “superi- any inquiry into the eration in provi- practicable;” attorney’s fee ority” as a means of a class action Act; potentially stultify- sion of enforcing the statute. ing impact recovery; the al- of a class factors, existence These then—the case;18 two possibility ternative of a test attorney provision, fee plaintiffs may barred some enormity potential 13. fact —the Sons, Inc., This 59 F.R.D. John Mullins & proceeds the busi- (E.D.N.Y.1973). from the nature of class' — ness as as from the structure well accompanying 11, supra, 16. See Note Act, normally thereof can violation text. against expected been committed have all, large Frankel, number, supra, 17. or a of the credit card Note F.R.D. See company Blanche. 39. holders of such Carte Advisory 18. Note As Committee’s supra, Ratner, 14. 54 F.R.D. at 416. Note suggests, “one more actions Rule agreed parties See, g., 9; Gray Ratner, supra ac model test or e. Note Ass’n., preferred Savings to a class action. beal American Loan tions ” . (D.D.C.1973) ; . . . Eisen v v. Com See also Carlisle F.R.D. 7 Wilcox 1962) City, Jacquelin, 391 Cir. merce F.2d Bank of Kansas 474 F.2d J.). (dissenting opinion Lumbard, (10th 1973). Compare C. Kristiansen limitations;19 the statute of and other express

considerations dictated

terms of Rule 23. short, indicated, previously

In as the ap- court, Court, not this is the

propriate forum for the resolution of particular whether go

should, time, at this forward aas action.

e.

Thus, I would reverse the decision

the district court and remand for a new determination. al.,

R. J. ADAMSZEWSKI et Plaintiffs-Appellants, 1487,

LOCAL LODGE INTERNATIONAL

ASSOCIATION OF MACHINISTS AND AFL-CIO, WORKERS, AEROSPACE al., Defendants-Appellees. et

No. 73-1166. Appeals,

United States Court of

Seventh Circuit.

Argued 18, Jan. 1974. 12, April

Decided 1974.

Rehearing Denied June 1974. Though Supreme stated, may class,” yet Court has there be circumstances under Pipe American and Construction Co. bar individual actions. which the statute will Utah, members, Pipe U.S. S.Ct. 38 L.Ed.2d as In American certain class (1974), tolled, “the commencement aof had to whom the statute was held suspends applicable statute made to intervene under Rule motions against limitations to all asserted members after court had decided parties the class who would have been had This maintenance a class action. circum- permitted the action been to continue as this case. stance not obtain Notes Procedure, F. Rules of Civil Federal (1966). These consid- R.D. 103-104 Passing quoted over fact that the erations, members interest of language remains, there is rule actions, pursuing extent individual to which the extent some desirability changed. litigation, The Su- pending has been reason related BIonder-Tongue preme decision Court’s concentrating proceedings in the forum mutuality appear to have killed does not manageability ac- court, and although outright, inflicted the wound tion, dis- account into were taken may someday prove fatal. there findings superiori- judge his trict BIonder- to note that was careful Court Tongue according Thus, ty predominance. estop- “offensive did not involve majority’s authority selection to the liability, use, is, pel”, to establish judge standard, unless the review by a different “a obtained discretion, Truth or the abused his prior against same plaintiff suit action, Lending his bars this class Act 329-330, S. at defendant.” U.S. Moore, 3B affirmed. J. order should at- omitted]. Ct. [footnote Practice, estoppel ed. in BIonder- j[ 23.50 tempted Federal use Moore’s patent holder prevent Tongue 1969).

Case Details

Case Name: Reuben J. Katz, on Behalf of Himself and All Others Similarly Situated v. Carte Blanche Corporation

Court Name: Court of Appeals for the Third Circuit

Date Published: Apr 9, 1974

Citation: 496 F.2d 747

Docket Number: 72-1054

Court Abbreviation: 3rd Cir.