Anschul v. Sitmar Cruises, Inc.

• Decision Date: 18 October 1976
• Docket Number: No. 74-1908,74-1908
• Citation: 544 F.2d 1364
• Parties: Simon ANSCHUL, Individually and on behalf of all persons similarly situated, Plaintiff-Appellant, v. SITMAR CRUISES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1364

544 F.2d 1364

Simon ANSCHUL, Individually and on behalf of all persons

similarly situated, Plaintiff-Appellant, v. SITMAR CRUISES, INC., Defendant-Appellee.

No. 74-1908.

United States Court of Appeals,

Seventh Circuit.

Argued April 8, 1976.

Decided May 17, 1976.

Certiorari Denied Oct. 18, 1976.

See 97 S.Ct. 272.

Erwin I. Katz, Chicago, Ill., for plaintiff-appellant.

Michael A. Snyder, Chicago, Ill., for defendant-appellee.

Before SWYGERT and BAUER, Circuit Judges, and BRYAN, Senior District Judge. ^*

PER CURIAM. ^**

Defendant-appellee Sitmar Cruises, Inc., advertised and sold tickets for a 14-day pleasure cruise departing and returning to Los Angeles, California. The original itinerary included the ports of Acajutla, El Salvador, and Cabo San Lucas. Before departing Sitmar gave notice to various travel agents that these two ports (which were located in the southern tip of the proposed cruise) had been eliminated from the scheduled ports-of-call. Defendant stated that the change in plans was due to the fuel crisis during the winter of 1973-74. The defendant alleges that it was unable to secure a commitment for sufficient fuel in the southern ports. The 757 passengers were still provided with a 14-day cruise. The port of Manganillo was added to the itinerary and the passengers were given an extra day in Acapulco.

The passage contracts had been negotiated on behalf of the defendant by different travel agencies. Notice of the change in itinerary was only given to the respective travel agents. This notice advised the agents to notify the individual passengers who had already booked passage.

The individual passenger tickets contained a provision under paragraph 18(c) requiring that notice of any claim against the carrier be made within fifteen days after completion of the cruise. Within the fifteen day period plaintiff caused a notice of claim to be served on the defendant Sitmar Cruises on behalf of himself and sought to serve notice for all persons similarly situated. This lawsuit followed seeking damages, in the alternative, for (a) the difference in value between the cruise as advertised and as performed, or (b) the amount by which defendant was unjustly enriched by the elimination of the ports-of-call.

The trial court entered an opinion and order denying class action status to the plaintiff on the basis that the plaintiff's notice of the claim was not effective to preserve or create a cause of action for all the other passengers. Plaintiff seeks a review of the trial judge's decision.

I. THE DEATH KNELL DOCTRINE

The issue of whether or not an order denying class status is appealable ¹ was first seriously presented in Eisen v. Carlisle & Jacquelin, 370 F.2d 119 (2d Cir. 1966), cert. denied, 386 U.S. 1035, 87 S.Ct. 1487, 18 L.Ed.2d 598 (1967) (Eisen I.). The case earned immediate fame because of the difficulty of the litigation and its immense proportions. ² In Eisen I the Court of Appeals for the Second Circuit said:

"Dismissal of the class action in the present case . . . will irreparably harm (the plaintiff) and all others similarly situated, for, as we have already noted, it will for all practical purposes terminate the litigation. Where the effect of a district court's order, if not reviewed, is the death knell of the action, review should be allowed."

Thus nearly ten years ago the "death knell" doctrine was born. However the idea never really has reached maturity. For awhile the Second Circuit used the death knell doctrine as an exception to the finality rule of28 U.S.C. § 1291 ³ and allowed an interlocutory appeal in cases wherein the plaintiff's individual claim was so small that continued prosecution of the complaint was improbable. Green v. Wolf Corp., 406 F.2d 291 (2d Cir. 1968); Korn v. Franchard Corp., 443 F.2d 1301 (2d Cir. 1972). We rejected the death knell doctrine in King v. Kansas City Southern Industries, 479 F.2d 1259 (7th Cir. 1973) as did other circuits in Hackett v. General Host Corporation, 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972); Graci v. United States, 472 F.2d 124 (5th Cir.), cert. denied, 412 U.S. 928, 93 S.Ct. 2752, 37 L.Ed.2d 155 (1973); Falk v. Dempsey-Tegeler & Co., Inc., 472 F.2d 142 (9th Cir. 1972). Generally these decisions criticize the death knell doctrine as being too mechanical and having a discriminatory effect in that it does not permit appeals by defendants or by plaintiffs who had the economic ability or personal interest to prosecute the lawsuit on their own behalf. Eventually even in the Second Circuit, "the rumblings of disapproval" were heard ⁴ as was noted recently in Shayne v. Madison Square Garden Corp., 491 F.2d 397 (2d Cir. 1974). However, the court decided not to take a second look at the death knell doctrine because of the pendency of the Eisen case in the Supreme Court.

II. THE COLLATERAL ORDER DOCTRINE

In Eisen, preliminary to its decision on the merits, the Supreme Court was required to "decide whether the Court of Appeals in Eisen III had jurisdiction to review the District Court's orders permitting the suit to proceed as a class action and allocating costs of notice," 94 S.Ct. 2148. The Supreme Court found the question under its consideration controlled by its prior decision in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). Quoting from Cohen, the Court stated:

"This decision appears to fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated."

The Court then reasoned:

"Analysis of the instant case reveals that the District Court's order imposing 90% of the notice costs on respondents likewise falls within, 'that small class'. It conclusively rejected respondent's contention that they could not lawfully be required to bear the expense of notice to the members of petitioner's proposed class. Moreover, it involved a collateral matter unrelated to the merits of petitioner's claims. Like the order in Cohen, the District Court's judgment on the allocation of notice costs was a 'final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it,' id., at 546-547, 69 S.Ct. 1226, and it was similarly appealable as a 'final decision' under § 1291 . . ." 94 S.Ct. 2150, 2149-50.

The Court then held that the court of appeals had jurisdiction to review fully the district court's resolution of the class notice problem in that case. In this Circuit, since we do not believe that the death knell doctrine is a viable test we must determine whether the collateral order doctrine is applicable in light of the Supreme Court's recent decision. The Court must determine whether the decision of the district court denying class action status falls within "that small class" of decisions defined in Cohen,supra, in that it finally determined a claim of right separable from, and collateral to, rights asserted in the action; which claim of right is too important to be denied review, and, too independent of the cause itself, to require that appellate consideration be deferred until the whole case is adjudicated.

We conclude that this case does not fall within that small class.

Unlike the Supreme Court's decision in Eisen there is no question raised about the cost of notice. Eisen involved a district court order allowing class designation and apportioning the cost of notice. This case only presents the question of whether or not the district court order denying class status was improper. That question can still be reviewed on the merits after the case has reached final judgment. Here there is no claim of right which will escape review.

III. APPELLATE REVIEW UNDER 28 U.S.C. § 1292(b) CERTIFICATION

We fully realize that by our continued refusal to review district court decisions denying and granting class status there is a possibility of procedural problems preventing a proper review of the substantive issues.

In recent years, class actions "have sprouted and multiplied like the leaves of the green bay tree" (Eisen III at 1018), allowing the federal courts the opportunity to deal with important rights of consumers and small claimants whose individual claims might otherwise have never been recognized. Concomitant with these new opportunities provided by Rule 23 F.R.C.P. comes the responsibility, which must be borne by the courts, of developing the law in a way which is consistent with both the limited resources of the federal court system and the rights of the parties to adequately present the appropriate claims and defenses.

The threshold decision of whether to allow class status is enormously important. Since the adoption of Rule 23 eight years ago most decisions have advocated that it be construed liberally. However, there are only a limited number of appellate decisions which provide any meaningful guidelines for the district court in making a determination on class status. Nevertheless a clear majority of the members of the district court have acted admirably in handling these problems. Our judicial system is built in large part on the studied discretion of the individual trial judge. Consequently we are not shocked nor disturbed by the fact that the trial judge alone must make the "big decision." ⁵ The problem, of course, is the case wherein the parties and the court are in agreement that the class decision is unprecedented and difficult. Thus in these few instances where the question of class status is a very close decision a certification under 1292(b) might be appropriate. ⁶ This approach has now found some support in the Second Circuit where the death knell doctrine difficulties have become obvious. As Judge Friendly stated in Parkinson v. April Indus., 520 F.2d...