Cobb v. Lewis

Citation488 F.2d 41
Decision Date09 January 1974
Docket NumberNo. 72-2457.,72-2457.
PartiesWalter J. COBB et al., on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Jerry LEWIS et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Coleman R. Rosenfield, Hallandale, Fla., Baxter L. Davis, Atlanta, Ga., A. Blenn Taylor, Jr., Brunswick, Ga., Jerry S. Cohen, Herbert E. Milstein, Michael D. Hausfeld, Washington, D. C., Harold E. Kohn, P.A., Philadelphia, Pa., for plaintiffs-appellants.

Edward W. Killorin, Lloyd Sutter, Atlanta, Ga., Simon Rose, Joel M. Leifer, New York City, for Network Cinema Corp.

Before WISDOM, GEWIN and COLEMAN, Circuit Judges.

WISDOM, Circuit Judge:

This case presents questions relating to the arbitrability of claims arising under the federal antitrust laws. The plaintiffs-appellants1 brought this suit seeking damages for, among other things, alleged violations by the defendants of the federal antitrust laws. Before the plaintiffs filed suit, the defendants had started arbitration proceedings in New York under a general arbitration clause in the contract between the plaintiffs and the defendants. Shortly after filing of the suit, the district court entered an order granting a motion by the defendants to stay the suit pending arbitration, and refusing a motion by the plaintiffs for a preliminary injunction against the arbitration proceedings. The plaintiffs appeal from this interlocutory order. We reverse.

I.

On February 12 and December 1, 1970, and on June 10, 1971, the plaintiffs-appellants, owners and operators of motion picture theaters, entered into agreements with Network Cinema Corp., a franchiser of a nationwide chain of motion picture theaters doing business under the name of "Jerry Lewis Cinemas". Under the terms of the agreement, in several Georgia counties Network granted the plaintiffs the exclusive right to operate motion picture theaters under the trade name of "Jerry Lewis Cinemas". In return, the plaintiffs promised to purchase, lease, or otherwise acquire from Network or its designees substantially all the signs, equipment, fixtures, furnishings, motion picture films, and short subjects needed in the course of operation of a Jerry Lewis Cinema. The agreement provided for arbitration of all disputes and stated that all questions arising under the agreement would be governed by New York law.

On December 1, 1971, one of the plaintiffs, Michael Solomon, doing business as Solomon Cinemas, Inc., allegedly defaulted on some of his contractual obligations. On December 15, 1971, Network, alleging numerous breaches of the franchise agreement on Solomon's part, as well as "unfair competition" and "general misrepresentations", served a demand for arbitration. On December 28, 1971, Solomon filed a motion seeking an extension of time for the filing of an answer and counterclaim in the proceeding. By letter dated January 4, 1972, the American Arbitration Association directed that the answer and counterclaim be filed before January 20, 1972.

On January 17, 1972, Solomon filed its answer and counterclaim with the Association. The answer simply denied Network's allegations; the counterclaims alleged fraud in the inducement by Network, failure of consideration, breach of contract on Network's part, and violations by Network of the federal securities and antitrust laws. Solomon's counterclaim was the first mention in the arbitration proceedings of the federal antitrust or securities laws. By letter, January 24, 1972, Solomon requested the Association to appoint a panel of three arbitrators. On January 25, however, counsel for Solomon informed both the Association and Network that Solomon was rejecting any arbitration and revoking "any and all provisions, stipulations and methods for arbitration proceedings and all reference relating thereto in the franchise agreement". Two days later, on January 27, Solomon and two other franchisees of Network, the plaintiffs-appellants here, filed this class action, in their own behalf and in behalf of the class comprising all of Network's franchisees. The complaint substantially restated the allegations of Solomon's counterclaim in the arbitration proceeding. It alleged violations by Network of section 1 of the Sherman Act, 15 U.S.C. § 1 (1970) (Count I); violations of section 3 of the Clayton Act, 15 U.S.C. § 14 (1970) (Count II); violations of the Securities Act of 1933, 15 U.S.C. § 77e (1970) by Network's sale of unregistered securities (Count III); common law fraud and misrepresentation (Count IV); violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1970), and of the Securities and Exchange Commission's rule 10b-5, 17 C.F.R. § 240.10b-5 (1972) (Count V); breach of contract and warranty (County VI); and violations of § 2-302 of the Uniform Commercial Code (Count VII). The plaintiffs also requested a preliminary injunction against the New York arbitration proceedings. In its answer, Network denied the appellants' contentions and requested a stay of the suit, under 9 U.S.C. § 3 (1970),2 pending the outcome of the arbitration proceedings.

On March 1, the district court entered its opinion and order dismissing Counts III and V of the complaint, denying the plaintiffs' prayer for a preliminary injunction of the New York arbitration proceedings, and granting the defendants' application for a stay of the district court suit. The district court's opinion is reported at 339 F.Supp. 96. On March 10, the plaintiffs filed a motion for reconsideration. After the district court denied that motion on May 3, the plaintiffs filed a motion to appeal under 28 U.S.C. § 1292(b). The district court granted this motion, certifying, as required by § 1292(b), that the case raised controlling questions of law as to which there was substantial ground for difference of opinion. On June 1, 1972, this Court denied the plaintiffs' motion to appeal under § 1292(b), but at the same time entered an order docketing the cause "pursuant to 28 U.S.C. § 1292(a)". Section 1292(a) allows appeals as of right from interlocutory orders of the district courts granting or refusing injunctions. At no time did the plaintiffs-appellants file a notice of appeal in the district court, as required in appeals taken as of right under Rule 3 of the Federal Rules of Appellate Procedure.

II.

At the outset, by motion to dismiss, the appellees raise two jurisdictional issues.

A. First, they contend that the appellants failed to comply with F.R.A.P. 3(a) that requires the filing of a notice of appeal with the clerk of the district court. The appellants argue that Rule 3(a) was satisfied by their filing in this Court, within the time for taking an appeal, of their Petition for Leave to Appeal under 28 U.S.C. § 1292(b) and by this Court's subsequent order denying the plaintiffs' motion but docketing the cause under § 1292(a).

Courts of appeals have discretion, when the interests of substantive justice require it, to disregard irregularities in the form or procedure for filing a notice of appeal. In Crump v. Hill, 5 Cir. 1939, 104 F.2d 36, for example, we refused to dismiss an appeal for failure to file a notice of appeal under F.R.Civ. P. 73(a), the predecessor of F.R.A.P. 3(a): the appellant had filed a copy of the appellees' waiver of service of notice of appeal within the time for filing the appeal, the appellee had entered an appearance, and the appellee had joined the appellant in designating the record on appeal. For the Court, Judge Hutcheson wrote:

It is true that Rule 73 does specifically provide that the only thing necessary to be done to perfect an appeal is to file a notice thereof with the Clerk, making it the duty of the Clerk to see that notice thereof is served, and that a literal compliance with the rule requires timely filing of the notice with the Clerk. The reason for the Rule, however, to set the appeal in motion by mere notice without judicial action, makes it quite clear we think that the appellant, when he procured from appellee and filed, her waiver of notice, her acceptance of designation, and her entry of appearance, just as effectively started his appeal as if he had merely filed the notice of appeal with, and left its service to, the Clerk. It is true enough that the starting of an appeal within the time fixed is jurisdictional and that good practice requires conformity to the formal requirements of the Rule. But it would we think be a harking back to formalistic rigorism of an earlier and outmoded time, as well as a travesty upon justice, to hold the extremely simple procedure required by the Rule is itself a kind of Mumbo Jumbo, and that the failure to comply formalistically with it defeats substantial rights.

104 F.2d at 37-38.

We have also held that an application for leave to appeal in forma pauperis is to be regarded as the equivalent of a notice of appeal. Des Isles v. Evans, 5 Cir. 1955, 225 F.2d 235; Roth v. Bird, 5 Cir. 1956, 239 F.2d 257; Tillman v. United States, 5 Cir. 1959, 268 F.2d 422. Accord, Hoover v. United States, 10 Cir. 1959, 268 F.2d 787; Fitzsimmons v. Yeager, 3 Cir. 1968, 391 F.2d 849. In Des Isles, we explained:

The rules have for their primary purpose the securing of speedy and inexpensive justice in a uniform and well-ordered manner; they were not adopted to set traps and pitfalls by way of technicalities for unwary litigants, Alabama Great Southern Railroad Co. v. Johnson, 5 Cir., 1944, 140 F.2d 968. Therefore, substantial compliance with the rules is sufficient, and appellant\'s petition for leave to appeal in forma pauperis adequately met the requirements of Rule 73(a).

225 F.2d at 236. In Carter v. Campbell, 5 Cir. 1960, 285 F.2d 68, we held that the appellants' application to this Court for leave to proceed upon the original record and our order granting such leave constituted adequate notice of appeal.

Other courts have held that the requirement of notice of appeal is satisfied by a ...

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