Hackett v. General Host Corporation

• Decision Date: 14 January 1972
• Docket Number: No. 19320.,19320.
• Citation: 455 F.2d 618
• Parties: Kathleen HACKETT, on behalf of herself and all others similarly situated, Appellant, v. GENERAL HOST CORPORATION et al.
• Court: U.S. Court of Appeals — Third Circuit

455 F.2d 618 (1972)

Kathleen HACKETT, on behalf of herself and all others similarly situated, Appellant, v. GENERAL HOST CORPORATION et al.

No. 19320.

United States Court of Appeals, Third Circuit.

Argued October 21, 1971.

Decided January 14, 1972.

Seymour Kurland, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa. (Bernard Chanin, Donald E. Matusow, Philadelphia, Pa., on the brief), for appellant.

Henry T. Reath, Duane, Morris & Heckscher, Philadelphia, Pa., John H. Schafer, III, Covington & Burling, Washington, D. C. (Lovejoy, Wasson, Lundgren & Ashton, New York City, Gerald P. Norton, Washington, D. C., Pepper, Hamilton & Scheetz, J. B. H. Carter, Peter Hearn, Montgomery, McCracken, Walker & Rhoads, Charles A. Wolfe, Albert S. Shaw, Jr., Morgan, Lewis & Bockius, Benjamin M. Quigg, Jr., Peter C. Ward, Schnader, Harrison, Segal & Lewis, Arthur H. Kahn, Philadelphia, Pa., Kramer, Lowenstein, Nessen & Kamin, Geoffrey Kalmus, New York City, Dechert, Price & Rhoads, Henry Kolowrat, Philadelphia, Pa., on the brief), for appellees.

Before ALDISERT, GIBBONS and MAX ROSENN, Circuit Judges.

OPINION OF THE COURT

GIBBONS, Circuit Judge.

Kathleen Hackett, a consumer of bread purchased at retail, filed a complaint under Section 4 of the Clayton Act, 15 U.S.C. § 15 (1971) seeking treble damages, costs and attorney's fees from the defendants for their alleged violation of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2 respectively. The defendants are seven bakers of pan-baked bread who sell such bread through various channels of distribution in the Philadelphia market area. Mrs. Hackett's complaint seeks recovery for injury to herself and to all other members of a class whom she claims to represent, consisting of all individual consumers in the Philadelphia market area who have purchased pan-baked bread from retail stores for their own consumption or for consumption by members of their family. The parties agree that her individual claim is for roughly nine dollars. She asserts that some one and one-half million purchasers of bread from retail stores, who purchased the bread involved for the use of some six million consumers comprise the class, of which she claims to be an appropriate class representative.

Mrs. Hackett's complaint was inspired by an indictment, United States of America v. General Host Corp., Crim. No. 23,200 (E.D.Pa., filed Mar. 13, 1968), which charged that the defendants conspired to fix the prices and terms of sales of bread in the Philadelphia market. The district court accepted a plea of nolo contendere to that indictment. There is pending in the district court a civil action Philadelphia v. General Host Corp., Civil No. 68-704 (E.D. Pa., filed Apr. 2, 1968) in which Philadelphia, on behalf of itself and various other public and private institutions, is seeking recovery of the damages of such institutional purchasers occasioned by the alleged price fixing conspiracy.

The defendants moved for a pretrial conference and a stay of all proceedings until the district court should, pursuant to E.D.Pa. R 45(c), determine whether the case should be maintained as a class action. See Fed.R.Civ.P. 23(c) (1). By an order dated May 4, 1970 and in accordance with Rule 23(c) (1), the district court fixed a schedule for the filing of affidavits and briefs dealing with the class action issue. On July 30, 1970, the court filed an opinion and order, the crucial provisions of which follow:

"It is our considered opinion that under the facts of this case, the problem of management of the proposed class is clearly insurmountable. The class is so large that it would be unmanageable and could only result in knotty, complicated and unnecessary problems.

ORDER

The plaintiff\'s request for confirmation of her action as a class action is Denied."

Mrs. Hackett then requested the district court to amend the July 30, 1970, order to set forth a statement, pursuant to 28 U.S.C. § 1292(b) (1971) that its decision on the class action issue involves a controlling question of law as to which there is substantial ground for difference of opinion and that immediate appeal would materially advance the ultimate termination of the litigation. On August 25, 1970 the district court declined to issue such § 1292(b) certification.

Mrs. Hackett then filed a notice of appeal. She contends that the July 30, 1970, order is a final appealable order within the meaning of 28 U.S.C. § 1291. The defendants contend that the appeal is interlocutory and should be dismissed.

No request was made to the district court that the July 30, 1970, order be treated for purposes of Fed.R.Civ.P. 54 (b), as a dismissal of the complaint on behalf of the one and one-half million class members or for a determination and direction pursuant to that rule, that the order be entered as a final judgment. Cf. Hayes v. Sealtest Foods Division of National Dairy Products Corp., 396 F.2d 448 (3d Cir. 1968).

Mrs. Hackett predicates her claim that this court must entertain her appeal upon the so called "death knell" rule of the Second Circuit which first appeared 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). In that case Mr. Eisen sued both for himself and on behalf of all odd lot purchasers and sellers on the stock exchange. His individual claim amounted to only seventy dollars, and in a previous appeal in Eisen Judge Kaufman wrote:

"... We can safely assume that no lawyer of competence is going to undertake this complex and costly case to recover $70 for Mr. Eisen.

* * * * * *

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

370 F.2d at 120-121. (citations omitted)

The court in Eisen relied upon Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), as authority for its "death knell" rationale. In this circuit we have referred to the Cohen rule as the "collateral order doctrine," and we have not been overly hospitable to requests for its extension. See e. g., Borden Co. v. Sylk, 410 F.2d 843 (3d Cir. 1969); but cf. Greene v. Singer Co., Civil No. 71-1835 (3d Cir., filed Nov. 2, 1971). We have not, however, ever been confronted directly with the problem of the appealability of a determination adverse to the confirmation of a class which leaves a single plaintiff to litigate a small claim for money damages.

Indeed no other circuit has had occasion either to adopt or expressly to reject the "death knell" rational.¹ The experience of the Second Circuit has shown the application of the rule to be somewhat difficult. In Green v. Wolfe Corp., 406 F.2d 291 (2d Cir. 1968), cert. denied, Trostee, Singer & Co. v. Green, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969), Green had an individual claim amounting to less than $1000 for overcharges on publically traded securities. The court held that an order dismissing the class action aspects of the complaint was appealable. In City of New York v. International Pipe and Ceramics Corp., 410 F.2d 295 (2d Cir. 1969) and Caceres v. International Air Transport Association, 422 F.2d 141 (2d Cir. 1970) where the individual claims of the plaintiffs seeking to represent a class were $1,560,000 and $150,000, respectively, the court declined to apply the Eisen rule and dismissed the appeal. Most recently, in Korn v. Franchard Corp., 443 F.2d 1301 (2d Cir. 1971), the court considered two appeals. In one the appellant Korn, whose individual claims totaled $386, appealed from an order revoking a class action designation. In the other, the appellant Millberg, and her husband, who was acting as her attorney, had claims totaling $8,500. Millberg appealed from an order denying class action designation. Korn's appeal was held to fall within the Eisen rule while Millberg's appeal was dismissed. These results disturbed Judge Friendly, who in concurring wrote:

"Since I regard Judge Feinberg\'s opinon as correctly applying the present law in this circuit, I concur therein. However, despite the obvious appeal of the `death-knell\' doctrine, I am not sure it affords a rule that is truly workable or, indeed, is legally sustainable. If my fears should be realized, I might wish on some subsequent occasion to request that the court consider in banc whether we are not obliged to formulate a rule that will avoid the necessity of making such ad hoc judgments as have been required in these and other cases and also will afford equality of treatment as between plaintiffs and defendants. Perhaps, before occasion for doing this should arise, we shall have received enlightenment from the Supreme Court." 443 F.2d 1301 at 1307.

Judge Friendly's mention of equality between plaintiffs and defendants refers, of course, to the peculiarity of the "death knell" rationale that it operates only in favor of the plaintiff who has unsuccessfully sought to be designated as a class representative. It neither requires nor permits general supervision by the court of appeals over class action designations.² Indeed the rule operates in a very narrow area.

First, Eisen does not operate at all in those cases in which federal jurisdiction depends upon jurisdictional amount. In Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1968) the Supreme Court rejected the contention that the revised Fed.R.Civ.P. 23 permitted aggregation of claims for purposes of jurisdictional amount. Since the court which developed the Eisen "death knell" doctrine has in Korn v. Franchard Corp., supra, drawn the survivability line as low as $8,500, it is clear that in no case where a party with a $10,000 claim is before the court will the "death knell" doctrine be...