Catena v. Capitol Industries, Inc.

Decision Date07 October 1976
Docket NumberNo. 74-2555,74-2555
Citation543 F.2d 77
PartiesRocco CATENA, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. CAPITOL INDUSTRIES, INC., a New York Corporation, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Edith S. Newman (argued), Arleta, Cal., David B. Gold (argued), San Francisco, Cal., for plaintiff-appellant.

Peter K. Shack (argued), Los Angeles, Cal., James H. Schropp, Atty. (argued), Securities & Exchange Commission, Washington, D. C., for defendants-appellees.

Before DUNIWAY and ELY, Circuit Judges, and SOLOMON, * District Judge.

DUNIWAY, Circuit Judge:

Catena appeals from an order of the district court prescribing the form of the notice to be sent to all members of the plaintiff class. We conclude that the order is not appealable and dismiss the appeal.

Catena brought the underlying action on behalf of himself and all others who purchased Capitol Industries stock between June, 1969 and December, 1971. He alleged that Capitol, its officers and directors, and its parent corporation, EMI, Ltd., fraudulently manipulated the company's reserve accounts in order to inflate its reported earnings, and in so doing violated the Securities and Exchange Act of 1934 and Rule 10(b)(5) of the Securities and Exchange Commission. He further alleged that this manipulation induced investors to buy stock in Capitol which fell in price from $56.00 per share to $6.00 per share between June, 1969, and December, 1971, resulting in a $40 million loss to the minority shareholders.

The district court provisionally certified the action as a class action under F.R.Civ.P. 23(a) and (b)(3). It ordered that the notice sent to class members include a demand for information concerning individual losses sustained by each shareholder and a provision that anyone failing to provide such information, but not "opting out" of the class within a specified time, would be bound by the judgment but would not be permitted to recover damages should defendants be found liable. After much haggling over the contents of the notice, and after numerous requests by Catena to lift the requirement of the "affirmative action" clause were denied, the court entered its order on August 12, 1974. This appeal was filed immediately thereafter, stay pending appeal was denied, and the notice was sent out in September and November of 1974. Catena argues that the "affirmative action" requirement violates class members' rights to due process of law and exceeds the authority conferred on the court by F.R.Civ.P. Rule 23(c)(2).

The district court declined to certify the question for an interlocutory appeal under 28 U.S.C. § 1292(b). Appellees have moved to dismiss the appeal, and that motion was submitted to us when we heard the appeal.

Courts of appeals have jurisdiction over appeals from "all final decisions" of the district courts under 28 U.S.C. § 1291. This jurisdiction has been held to include certain collateral orders even though the action has not been concluded by a final judgment, e. g., Cohen v. Beneficial Industrial Loan Corp., 1949, 337 U.S. 541, 545-47, 69 S.Ct. 1221, 93 L.Ed. 1528, but these exceptions are narrowly drawn. Cohen requires an interlocutory or collateral order to pass three tests to qualify as a "final decision": (1) the order must be "separable from, and collateral to" the merits of the action; (2) the order must present a "serious and unsettled question"; and (3) immediate review must be necessary to avoid irreparable harm to appellant's rights. Id. See 9 Moore's Federal Practice P 110.10, p. 133 (2d ed. 1975). An order not meeting these criteria is not...

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2 cases
  • Cullen v. Margiotta
    • United States
    • U.S. Court of Appeals — Second Circuit
    • February 2, 1987
    ... ... unreviewable on appeal from a final judgment.' " Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 105 S.Ct. 2757, 2761, 86 L.Ed.2d 340 (1985) ... See, e.g., Shattuck v. Hoegl, 523 F.2d at 516; Catena v. Capitol Industries, Inc., 543 F.2d 77, 78-79 (9th Cir.1976) (order ... ...
  • Bauman v. U.S. Dist. Court
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • July 1, 1977
    ... ... 1976); Pan American World Airways, Inc. v. United States District Court, 523 F.2d 1073, 1076 (9th Cir. 1975); ... In Catena v. Capitol Industries, Inc., 543 F.2d 77 (9th Cir. 1976), the district ... ...

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