Rodriguez v. Banco Cent., 85-1620

• Decision Date: 07 May 1986
• Docket Number: No. 85-1620,85-1620
• Citation: 790 F.2d 172
• Parties: Raul F. RODRIGUEZ, et al., Plaintiffs, Appellees, v. BANCO CENTRAL, et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 172

790 F.2d 172

4 Fed.R.Serv.3d 1325

Raul F. RODRIGUEZ, et al., Plaintiffs, Appellees, v. BANCO CENTRAL, et al., Defendants, Appellants.

No. 85-1620.

United States Court of Appeals, First Circuit.

Argued Feb. 3, 1986.

Decided May 7, 1986.

Luis Sanchez-Betances, with whom Cepeda, Sanchez-Betances & Sifre, Marcos A. Ramirez and Ramirez & Ramirez, Hato Rey, P.R., were on brief, for defendants, appellants.

Alberto F. Tellechea, Orlando, Fla., with whom Francisco Lopez Romo, Hato Rey, P.R., and Ambrette & Tellechea, Orlando, Fla., were on brief, for plaintiffs, appellees.

Before CAMPBELL, Chief Judge, BREYER and TORRUELLA, Circuit Judges.

LEVIN H. CAMPBELL, Chief Judge.

Defendants-appellants Banco Central, et al., appeal from an order of the United States District Court for the District of Puerto Rico deferring decision on the certification of plaintiffs-appellees' action as a class action pending trial of a "test case" brought on behalf of one of the named plaintiffs. We conclude that we do not have jurisdiction over this interlocutory appeal and dismiss.

I.

On August 2, 1982, plaintiffs Raul F. Rodriguez, Maria Alonso, and approximately 50 other named individuals filed suit in the United States District Court for the District of Puerto Rico against defendant Banco Central and a number of real estate owners, developers, and brokers. The complaint alleges that defendants defrauded plaintiffs in connection with the sale of property in three real estate developments in the state of Florida in violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. Secs. 1701 et seq. (1982 & Supp. II 1984), the Securities Exchange Act of 1934, 15 U.S.C. Secs. 78a et seq. (1982 & Supp. II 1984), and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961 et seq. (1982 & Supp. II 1984). Plaintiffs further allege that they represent a class of more than 3,000 similarly situated persons who purchased real estate from defendants.

On September 16, 1982, plaintiffs filed a motion for class certification, which defendants opposed. ¹ The district court directed the parties to engage in discovery in respect to the class certification issue. Over the following two years, discovery took place under supervision of a magistrate. During this period additional named plaintiffs also joined in the complaint.

At a conference held on April 26, 1985, the magistrate said he would allow defendants discovery as to all plaintiffs, and not simply as to a representative group of the putative class. Thereafter, on May 14, plaintiffs filed a motion requesting that the decision regarding class certification be held in abeyance pending trial of a "test case" involving one of the named plaintiffs. The district court approved plaintiffs' motion over the objection of defendants on May 31, 1985, and subsequently denied defendants' motion for reconsideration. This appeal followed.

II.

Defendants' principal contention is that the district court erred in deciding, over their objection, to postpone its ruling on plaintiff class certification until after the trial of a test case. Defendants persuasively point out that the district court's decision to proceed with a test case prior to ruling on plaintiffs' motion for class certification pursuant to Fed.R.Civ.P. 23(b)(3) is proscribed by Fed.R.Civ.P. 23(c), ² which provides in subpart (c)(1) that a district court must make a determination on the question of class certification "[a]s soon as practicable after the commencement of an action." Although a ruling on certification may be made conditionally and subsequently altered or amended, subpart (c)(1) states that any amendment should be made "before the decision on the merits." ³

Defendants not only contend that the court's order violates the strictures of Rule 23(c), but also urge that it will result in a fundamentally unfair procedure. If the plaintiff class is certified, and if notice only issues after a decision on the merits in a test case, the absent class members will not be bound by an adverse judgment, for they can request exclusion from the class under Rule 23(c)(2). If, on the other hand, the result of the test case is favorable to the plaintiff, the absent class members will be free to participate in the judgment. Defendants point out that those cases which hold or suggest that it may be appropriate for a district court to proceed with a test case on the merits before ruling on the issue of class certification in a Rule 23(b)(3) class action are all predicated on the theory that the party opposing the class has either expressly or constructively waived its right under Rule 23(c) to a premerits determination of the class certification issue. ⁴ Here the parties opposing the class have not waived their right, and strenuously oppose the procedure.

These are potent arguments; the district court, on its own initiative, may well wish to reconsider its proposed actions in light of them. Nonetheless, this court cannot adjudicate these matters unless we have jurisdiction over this appeal. After careful consideration, we conclude that the order from which the appeal is taken is not appealable at this time, being interlocutory and outside the collateral order exception to the final judgment rule. Accordingly, we must dismiss the appeal.

A. Untimeliness of Notice of Appeal

Before analyzing the appealability of the challenged order, we turn to plaintiffs' alternate contention that defendants' appeal fails because filed several weeks beyond the 30-day period for filing a notice of appeal. Fed.R.App.P. 4(a)(1) provides in part,

In a civil case in which an appeal is permitted by law as of right from a district court to a court of appeals the notice of appeal ... shall be filed with the clerk of the district court within 30 days after the date of entry of the judgment or order appealed from.

Here, the district court's order granting plaintiffs' motion to hold class certification in abeyance pending trial of a test case was entered on June 4, 1985. Nine days later, on June 13, 1985, defendants filed a motion for reconsideration in the district court requesting the court to set aside its June 4 order or, in the alternative, to permit an appeal of the issue to this court under 28 U.S.C. Sec. 1292(b) (1982). ⁵ Defendants' motion for reconsideration was denied in an order entered on July 2, 1985. On July 29, 1985, defendants filed their notice of appeal. Thus, while defendants' notice of appeal was filed within 30 days of the entry of the district court's denial of their motion for reconsideration, more than 30 days had elapsed since the entry of the district court's contested June 4 order.

Under Fed.R.App.P. 4(a)(4),

If a timely motion under the Federal Rules of Civil Procedure is filed in the district court by any party: (i) for judgment under Rule 50(b); (ii) under Rule 52(b) to amend or make additional findings of fact, whether or not an alteration of the judgment would be required if the motion is granted; (iii) under Rule 59 to alter or amend the judgment; or (iv) under Rule 59 for a new trial, the time for appeal for all parties shall run from the entry of the order denying a new trial or granting or denying any other such motion.

Plaintiffs argue that defendants' June 13, 1985 motion for reconsideration did not restart the 30-day period for notice of appeal prescribed in Fed.R.App.P. 4(a)(1), because it was not a motion made under Fed.R.Civ.P. 50(b), 52(b), or 59. Therefore, they say, defendants' notice of appeal was untimely as to the underlying June 4, 1985 order holding class certification in abeyance.

Plainly, defendants' motion for reconsideration cannot be classified under either Rule 50(b) (motion for judgment notwithstanding the verdict) or Rule 52(b) (motion for amendment of findings). ⁶ Nonetheless, we think it fits within Rule 59, leading us to believe that the notice of appeal was timely with respect to the original June 4 order.

Rule 59, which concerns new trials and amendment of judgments, provides in subpart (e) for motions "to alter or amend a judgment," and states that "[a] motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment." While defendants' motion for reconsideration was made within ten days of the district court's June 4 order holding class certification in abeyance, plaintiffs argue that Rule 59(e) has no application here because the district court's June 4 order was not a "judgment."

However, the term "judgment" is broadly defined in the federal rules as including "a decree and any order from which an appeal lies." Fed.R.Civ.P. 54(a) (emphasis added); see Bankers Trust Co. v. Mallis, 435 U.S. 381, 384 n. 4, 98 S.Ct. 1117, 1119-20 n. 4, 55 L.Ed.2d 357 (1978) (per curiam). Thus if the order entered on June 4, 1985 were an appealable order, but see discussion in part II B, infra, it would technically be a "judgment," and defendants' timely motion for reconsideration would delay the running of the 30-day appeal period prescribed in Fed.R.App.P. 4(a)(1) until the district court, on July 2, 1985, denied the motion for reconsideration. See Denley v. Shearson/American Express, Inc., 733 F.2d 39 (6th Cir.1984) (applying Rule 59(e) to motion for reconsideration of district court's order staying proceedings pending arbitration, where order was appealable under 28 U.S.C. Sec. 1292(a)(1)). We, therefore, reject plaintiffs' contention that defendants' notice of appeal was filed too late.

We would be tempted to reach the same result even were the technical applicability of Rule 59 in doubt. The vast majority of interlocutory district court orders are nonappealable, so a litigant's only speedy avenue of recourse is to request the district court to reconsider its ruling. Little purpose would be served in penalizing a party for requesting a district court to reconsider a disputed interlocutory ruling before attempting to take its grievance to the...