*2 TRASK, Cir DUNIWAY Before POWELL,* District Judges, cuit Judge. Judge
* Powell, District for the Eastern United States District Senior L. Honorable Charles by designation. sitting Washington, during period ices in the sale 4-year OPINION which is defined property, residential TRASK, Judge: Circuit property of real any parcel lot or im- under proceeding In this the Interlocu- dwelling to 12 proved with from 1 units. tory Appeals Act of 28 U.S.C. participating Defendants denied 1292(b), called we are to decide Board admit- conspiracy. The defendant n *3 by interlocutory appeal means of an publishing distributing ted a com- and whether this suit be maintained as denied any mission schedule but a class action under Federal required to follow it. The member was Rules of Civil Procedure. The action a commission of suggested schedule fee brought by plaintiffs Richard and purchase price. total of the percent six Kline, wife, Margo husband and on be- in schedule states of the The foreward and all half of themselves sellers of resi- part: Angeles dential real estate Los Coun- “It should be understood that no ty against Angeles Realty the Los Board member Los Angeles of the Realty and its several and 32 divisions named Board, any or other Realtor is in any representing real estate brokers way bound Schedule. The consisting of all real estate brokers who amount of the any commission on real were during members of the Board estate transaction is a matter for the 4-year period to prior filing of the parties to that transaction and is in no action. way subject to the control of the Los allege Plaintiffs that the and its Board Angeles Realty Board.” conspired members section violation of The trial court received motion for Act, .1, 1 of the Sherman U.S.C. § proper certification of the action as un- fix brokerage through commissions dis- der having Rule 23. After considered tribution of a recommended fee schedule motion, opposition, voluminous to its Plaintiffs claim members. supporting filings documents and the fee commissions schedule fixed at a having argument, after extensive heard higher rate than it would been ab- the district granted court motion in schedule, causing sent damage to part part and denied it in to the follow- plaintiffs they are which entitled to have ing effect: 4 of trebled under Act, the Clayton section During 15. 4-year (1) plaintiffs Richard and named period involved, 800,000 approximately wife, Kline, Margo husband were deeds were recorded Angeles Los of a class representative found to be County. Based this fact defend- residential persons property all who sold upwards 400,000 ants estimated County, California, Angeles within Los sales with approximately that number of 24, 1966, September during period plaintiffs could well be involved in this and used September the serv- By virtue class suit.1 alleged con- ices more named defend- of one or spiracy and the damages sustained the or brokerage ant estate brokers real plaintiffs prayed judgment against for a Angeles of the Los firms or member the defendants aas class and each of (including divisions) its Realty Board them individually totaling million $250 compensated said brokers firms for actual damages trebled to million $750 their services. trial, according to adduced at (2) The 32 named defendant real es- together attorney’s with a reasonable fee brokerage togeth- firms tate brokers and and costs of suit. Angeles Realty er with the Los Board 2,000 brokers who were More than were determined to and its branches Angeles Realty Los representative members of the defendants’ of a class of performed Board and its divisions serv- during all real brokers who estate disagree suggested not argument did but at oral as a of caution that there word might be more. period same were members Los was a schedule prepared, of commissions Angeles Realty including published Board its distributed the defend- capacity branches acted in that and who ants and whether said schedule was sub- connection with the sale of residential stantially adhered to the broker de- property. real fendants. This central and subissue should not have to be tried on more than (3) The district court denied Martin occasion, court, one said the and al- representative of a status as a Simon though individual issues did exist such as sellers of real class of “unsuccessful whether the individual brokers knew of it would have been property,” because schedule con- Rule 23. inappropriate under it, formed these individual issues did (4) representa- The court also denied predominate over the common issues tive status to sellers of commercial and of law and fact. The court having con- property. industrial cluded that its order involved a control- *4 ling question of law as to which there findings representa- of The court’s two was a ground substantial for difference part were on its tive status based opinion, of certified it for immediate ap- the central issue con- determination that peal under 28 1292(b). U.S.C. § This conspiracy was a cerned whether there court has entered its order permitting the defendants to fix entered into appeal.2 the appeal Defendants the dis- prices commissions in sales of resi- trict court’s order finding the case to be property Angeles real in Los dential proper class action. issue, found, County. This the court law presented questions expressly common of Without stating, so par- the any ques- predominated appear agreement which over ties fact that whether affecting only indi- proper tions of law and fact this is a class action is to be de- the classes. A subis- members of 23(b)(3). termined under vidual We are in sue, court, 23(b) the was whether there ruled accord.3 Rule requires first ability concentrating litigation Although questions of the were raised as to the forum; particular (D) Interlocutory Appeals claims ficulties application the dif- Act of likely certifying to be encountered in the trial court to the order of the appeal management one, interlocutory ques- of a class action.” as an those by counsel on both sides enacted, tions were briefed originally As Rule 23 would not granting permission order to submit and the have accommodated a suit like that filed granted by interlocutory appeal anoth- provided only here. It for a “true class suit” panel do not further which, rule, er of this court. We joinder in interested but for the persons of all question. essential, examine would have been Moore, (1974); 3B Practice 1] J. Federal 23.08 23(b) part: pertinent “hybrid” 3. Rule states in the the class suit where the interests of parties spe- were several but concerned a “(b) . . . An action be main- lj23.09; property, “spurious” cific and the id. prerequisites tained as a action if the class jural class suit where there was no relation- satisfied, (a) of subdivision are and in addi- ship parties ques- between the but a common tion: tion of law or fact existed. Such an action having was an invitation to those such an “(3) questions join requirement the court finds that the of interest they accept. but not a j[ importance law or fact common to the members of the Id. 23.10. The predominate any questions outstanding. af- over Rule 23 at this time was not members, fecting only provide individual and that a 1966 the rule was amended to a more superior remedy. class action is to other available flexible Recoveries would be availa- adjudica- methods for the fair and efficient ble for or on behalf of all members of the controversy. perti- judgments binding upon pro- The tion of the matters class and the all (A) findings requirements nent to the include: the inter- vided the of the rule were met. individually popularity of members of the class in The est controlling separate class actions increased four- period years developed prosecution or defense fold within a host of Blecher, actions; champions (B) Compare the extent and nature and critics. controversy any litigation concerning Doing of already Is the Class Action Rule Simon, (Plaintiff’sviewpoint), against members Job? Actions—Useful Tool or with Class commenced class; desirability Engine (C) or undesir- of Destruc- prerequisites 23(a) of Rule must ones; and, predominate over individual be satisfied. They (1) are that the class (2) “manageable.” whether the action is so joinder numerous that of all mem- bers is impracticable, (2) there are ques- Questions I. Whether the Law tions of law or fact class, common to the Fact Common the Members (3) the claims or defenses of the repre- Any the Class Over Predominate parties sentative are typical of Questions Only Affecting Individu- claims or class, defenses of the (4) al Members. representative parties will fairly and adequately protect the interests of the The crux of argument defendants’ class. propriety of the certification questions that individual concerning the plaintiff both and defendant classes liability of each individual broker de- and of the class action general must fendant injury and the of each individual against measured requirements. these plaintiff predominate over common
questions of a conspiracy. adversely contend prevail can appears clear prerequisites legal on a theory which avoids individu- classes, (1) (2) satisfied both alized issues of liability, defendant which question no has been raised as to the plaintiff injury establishes in general, adequacy representation under and which leaves the determination of Although Mr. and Mrs. represent Kline quantum of individual recovery to a 400,000sellers, some they are sellers who process *5 mechanical separate adjudi- or to employed one the defendant class short, appellees cation. In argue members; that there are 32 named brokers they can prevail generalized aon anti- brokerage corporations and as well as the theory trust (utilizing “per rules) se” Angeles Realty Los Board and its branch appellants while the deny argue this and defendants, as es and it can well be as that individual litigated. issues must be 2,000 sumed other defendants controversy Resolution requires adequately represented by are them. an examination of substantive antitrust Whether the claims representatives defenses of the law. parties are named typical of all the claims and defenses of
the absent members of under section prevail the two In order to classes Act, 1, will be considered under 1 of the 15 U.S.C. and § Sherman subsection 23(b)(3), since to a recover treble under section considerable extent Act, 15, Clayton consider, the criteria are similar. 4 of the 15 § We then, requirements prove the additional both the de plaintiffs must of Rule 23(b)(3): (1) 1 whether contravened section questions common fendants’ conduct
tion,
365,
55 F.R.D.
375
The courts
jurisdictional
amount
claims did not meet the
solving
have had their own
difficulties
requirements.
Jacquelin,
v.
&
Eisen
Carlisle
generated
problems
156,
the rule. Eisen v.
2140,
416
94
L.Ed.2d 732
U.S.
S.Ct.
40
Jacquelin,
(2d
370
119
Cir.
Carlisle &
F.2d
(1974), upheld
the decision of the Court
1035,
1966),
denied,
III,
cert.
386 U.S.
87 S.Ct.
Appeals
supra,
in Eisen
individual
1487,
(1967)
I);
(Eisen
18
Eisen v.
L.Ed.2d 598
given
be
to all
mem-
notice must
identifiable
Jacquelin,
(2d
Carlisle
391
555
Cir.
&
F.2d
plaintiffs
expense
bers of the class at
(Eisen II);
1968)
Eisen v. Carlisle & Jac
and
preliminary
“mini-hearing”
on
and
that a
(2d
1973), vacated,
quelin,
F.2d
479
1005
Cir.
might
to determine whether
it
the merits
156,
2140,
L.Ed.2d 732
416 U.S.
94 S.Ct.
improper.
action was
maintained as a class
(1974) (Eisen III).
than one
Our own court has had more
term,
Supreme
problems
at the last
Octo-
Court
to consider the
occasion
involving
passed upon
recently
two cases
ber
be-
we have had
as amended. Most
Co.,
scope
Novelty
Zahn v. Interna-
of class actions.
v. H & B
& Loan
fore us La Mar
Co.,
1973),
Paper
(9th
94 S.Ct.
414 U.S.
In
tional
Re Hotel
prices might be effectuated. This does
California Pharmaceutical Association as
mean, however,
every
that
mem-
establishing the law of this circuit that
Association, by
his
ber
the
reason of
printing
the
price
of a
schedule
its
alone,
membership
becomes a co-con-
distribution to members
enough
is not
to
States,
spirator. Knauer v.
237
United
establish civil or criminal liability. Proof
8,
(8th
1916).
F.
19-20
Cir.
Knowl-
here, therefore,
by
even
admission of the
edge
participation
required.
Realty Board that it
a suggest
prepared
proof
parallel
Nor will
be-
business
ed commission schedule and distributed
conclusively
havior alone
establish
it to its members does
the
not establish
agreement.
Enterprises v.
Theatre
illegal
necessary
a recovery.
conduct
Paramount,
257,
537,
346
74 S.Ct.
U.S.
rely heavily upon
Plaintiffs also
(1954).”
98
273
L.Ed.
Northern Cali-
United
States National Association of
fornia
Ass'n v. United
Pharmaceutical
Boards,
485,
Real Estate
70
U.S.
States,
379,
(9th
306 F.2d
388-389
So we cannot be
tive
element
successful treble
proof
conspiracy
case
damage
Gray
in this
antitrust action.
v. Shell
illegal
Co.,
(9th
1972),
conduct of each defendant
Oil
469 F.2d
Cir.
accomplished by generalized
denied,
means.
cert.
U.S.
S.Ct.
(1973);
doc
legal significance of the written
L.Ed.2d
Winckler & Smith
Growers,
bylaws
and the rules or
Citrus
Co. v.
ument
Products
Sunkist
*8
compil
Inc.,
1012,
of
Realty
(9th Cir.),
Board and the method
346 F.2d
1014 n. 1
ques
be a
may
denied,
document
indeed
382
ing the
cert.
U.S.
86 S.Ct.
to all
(1965).
de
of law and fact common
The matter liability potential operator indi- faces for estimated vidual prayer three-quarters of a billion upwards of many instances the dam- of in cates or her assets which all of his dollars for would be substantial. ages if recoverable of a recov- The amount responsible. com- are The fact sales of 12-unit con- ordinarily in a lawsuit is disputed ery trans- included in plexes are wrong has been inflicted where a in that direction.5 cern points also actions 2,000 But when injury and an suffered. pro- to the potential benefit Thus in which each joined in an action is 23 use of Rule does are posed class liable, liability jointly severally as those to the same dimension not rise n progression. geometric in sought only is is increased damage award where the 2,000 real each of against an award Jacquelin, & Eisen v. Carlisle Such $70. would shock $2, Telephone broker defendants re Hotel estate supra, or In (9th 1974). 86 Cir. the conscience. Charges, 500 F.2d goodly that a entirely probable is also circumstances, In somewhat similar transactions would number of the total outrageous sought actions have litigable for one reason or anoth- not be cases such statutory penalty amounts in 6er; and, ’course, larger some of the under the Truth minimum as the $100 rea- brokerage firms could brokers and v. 1968. Ratner Chemi Lending Act of 4-year peri- over the sonably expected be Co., 54 F.R.D. New York Trust cal Bank number of resi- od to have a substantial (S.D.N.Y.1972) (aggregate $13 412 in- which would be dential transactions National v. First sought); million Shields against that one single volved in a defendant; Arizona, (D.Ariz. F.R.D. 442 Bank of finally, of the ab- some sought); 1972) million (aggregate $100 might to be- plaintiffs sentee not desire Co., Ward & Alsup Montgomery litigation in the at all. come involved (N.D.Cal.1972) (aggregate F.R.D. 89 consolidated sought million in one $20 that from allegation another); Gerlach case and billion $8 during 800,000 400,000 transactions Co., F.Supp. v. Allstate Insurance damages will question period approxi (S.D.Fla.1972) (aggregate of which million of $250 in excess proved case In each mately sought). billion $1 In million. aggregate $750 will trebled class ac court denied cited the district asking for costs addition, are in Rat Judge tion treatment. Frankel ele these All of attorneys’ fees. stated: among ner other reasons provi within the recovery are ments broadly, perhaps too “Briefly, if 15. The amounts § sion of 15 U.S.C. stated, mainte- against the reasons addition, prayer staggering. are: as a class action nance of this against the defendants recovery “(1) need there is no affirmative of Wash severally. jointly and State justification pro- for such Pipe & Construction American ington v. circum- ceeding in the actual (S.D.Cal.) manda Co., F.Supp. 802 case; and stances of the nom., Pipe & American sub mus denied “(2) thousands of the allowance of Pence, 393 F.2d v.Co. Construction plain- like minimum recoveries denied, issue), cert. Cir.) (unrelated (9th an absurd carry to tiff’s would 21 L.Ed.2d 842, 89 S.Ct. 393 U.S. attorneys’ 400,000 Since fees and causing costs are also Assuming recov- transactions action, erable in a successful 15 it damage excess commissions the esti- may safely great many assumed that a average $250 over million the mated sum separately prosecuted. the cases could be damage $625. Tre- recoverable amounts bled, recovery the individual would amount to 6. Affidavits of some defendants in the file $1,875 aggregate $750 million the and the vehemently assert that did not follow the prayer. arrive at that aver- amount To suggestions; Board’s others assert other age figure, obviously many damage claims litigation defenses which would make of a would result in a have been estimated that figure *9 poor plaintiffs claim a risk. considerably average. in excess of that
235
is now
he
proper commissions
as to
tions
stultifying
the
extreme
obligated legally
pay
to
$750 million. At
essentially
specific
incon-
point
some
the logic
law leads in
remedy Congress pre-
sistent
this situation to an ad absurdum result.
private
scribed as the means of
We believe this is
light
it.7
of the
at
enforcement.”
54 F.R.D.
problems engendered by
requirement
414.
damages,
we cannot find that
H
stated in LaMar v.
& B
This court
under
23(b)(3)
Rule
this class action is
Co.,
(9th
461
Novelty
Loan
489 F.2d
&
superior to other available methods for
1973):
Cir.
the fair
adjudication
and efficient
authority for
clear trend of
ac-
“The
controversy.
alleging
the Con-
tions
a violation of
.
Act
sumer Credit Protection
II. Manageability of the Action.
inappropri-
holds that class actions
The final consideration for
ate.”
status involves the question managea-
We
the same rea
find
bility under
23(b)(3)(D),
e.,
i.
“the
treble-damage
to
actions
soning applies
difficulties likely to be encountered in
Clayton
the Sherman and
Acts.
under
the management of a class action.” This
compensatory
Under those statutes
dam
problem was recognized by the Advisory
trebled,
ages
Day-Glo
must
Locklin v.
Committee’s Notes on
Proposed
873,
(7th
Corp.,
Color
429 F.2d
878
Cir. Amendments
to Rules of Civil Proce-
denied,
1020,
1970),
91
cert.
U.S.
dure,
69,
39 F.R.D.
(1966),
where the
582,
S.Ct.
L.Ed.2d 632
The Committee discussed
types
of cases
trebling
damages
in such cases is a which would generally qualify under the
statutory
punitive
As ex
measure.
rule.
then
way of reservation
pressed by Judge Learned Hand in
pointed out that certain cases would be
Lyons Westinghouse
Corp.,
v.
Electric
inappropriate as class
stating
actions
184,
(2d Cir.),
denied,
222 F.2d
cert.
an example
accident,
that a mass
825,
52,
350 U.S.
76 S.Ct.
as retribution
or as
*10
their
and maintain
schedule
judgment
fee
the trial court
The
that
Board;
membership in the
may
as a class
the action
be tried
action
to the
adhere
the Board
reversed.
members
is
fixing their
in
schedule
fee
‘suggested’
DUNIWAY,
(concur-
Judge
Circuit
brokerage commissions.”
ring):
plaintiffs’ case as
only the
is
But this
in
judgment,
concur
but for
I
There are
defendant.
an individual
reasons.
somewhat different
evidence
2,000
Perhaps such
defendants.
But
prima
case.
a
facie
First,
establish
would
think
I
that
this case
con-
right
would then have
the defendant
by the
our
trolled
rationale of
decision in
proof;8
his
submit
to come forward
Charges, Cir.,
Telephone
In re Hotel
deny some of
categorically
case,
F.2d
That
like
86.
may submit
plaintiffs or
proof
one,
case,
involving
was an antitrust
trial must re-
avoidance. This
matter in
peat
plaintiffs
large
potential
classes
with individual differences
itself
We
held that the
defendants.
there
case
2,000
as we
times
as
far
some
proper
a
one for class
was not
be-
pleadings
discern based
(1)
can
for
reasons:
that com-
treatment
two
questions
There are some
us now.
fore
predominate
questions
mon
did not
over
only once
proved
need be
that would
questions (see
23(b)(3),
Rule
individual
F.R.Civ.P.),
schedule,
distribution of the
88-90;
such as the
(2)
at
F.2d
are other matters which would
but there
proposed
action was
a
that the
not
many times
gone into as
as
have to be
adjudication (see
superior method of
by
sales
dur-
were
defendant
there
23(b)(3)),
90-92.
Rule
500 F.2d at
The
period.
jury
4-year
could
ing that
One
facts here
not identical
those
try
as to all de-
obviously not
the facts
Telephone
but the
Charges,
Hotel
differ-
question
There is a
fendants.
serious
and, my opinion,
minor
ences are
prop-
ordinary
such
trials could
significant enough to make the rationale
then,
referred to master. And
erly be
inapplicable
that case
to this one.
liability
the case on
is submitted or
after
Second,
I
cannot believe
tried,
procedure would have to
the same
amended,
as
was intended
should be
damages.9
as to
would
be followed
judi-
kind of
construed
authorize the
generalized
treatment would
appear
juggernaut
and their
cial
into
law suits.
soon fall
individualized
The plain-
counsel seek to create here.
unman-
point the actions become
At that
designated
Kline
been
as the
tiffs
ageable as
class action.
400,000
an estimated
representatives of
conclude
we
foregoing
property
Angeles
reasons
of real
in Los
sellers
For
unsuitable for County,
dwellings
action is
sellers
present
of residential
that the
that in
note
up
We
units.
containing
treatment.
to twelve
class action
we intimate
residence,
determination
one
making this
Klines sold
for
the merits.
$42,500. They paid
on
judgment
a commission to one
no
right
by jury
serve the
of trial
as at com
suggested
generalized proof
8.
It has been
mon law and as declared
the Seventh
damages might
under Rule 23.
suffice
But
Amendment
to the Constitution.”
See Col
need
ultimate
rule does not
eliminate
grove
Battin,
149, 161,
413 U.S.
93 S.Ct.
proof
individual
each mem-
(1973);
circumstances in which it the only via- obtaining
ble means of relief for classes truly actively aggrieved plain- courts
tiffs. But should not be in the encouraging
business of the creation of
lawsuits like this one. join judgment
I in the of reversal. *13 Ross,
Sandra WETZEL and Mari on be half of themselves and all others simi situated,
larly Equal Opportunity
Commission as amicus curiae MUTUAL
LIBERTY INSURANCE COMPANY, corporation,
Appellant.
No. 74-1515. Appeals,
United States Court of
Third Circuit.
Argued Oct. 1974.
Decided Jan. 1975.
As Amended
Feb.
notes
(Emphasis added.)
linking
for
key
“The
element
the acts of
It thus clearly appears
member to
an Association
that in order for
showing
a
a
organization is
member
a
his
trade association to be-
guilty
the act
in come
in
of and condoned
a criminal
knew
case or liable
added.)
in a
(Emphasis
damage
treble
issue.”
case he must have
“knowingly,
intentionally
actively
court considered
issue
This
participated in an
capacity
individual
Pharmaceutical As
Northern California
the scheme.”
States,
F.2d 379
sociation v. United
denied,
Cir.),
(9th
cert.
371 U.S.
Plaintiffs’
reliance
this case and
9 L.Ed.2d
That was
S.Ct.
Plymouth Dealers’ Association of North
indicted
a criminal case. The
defendants
States,
California United