In re Heddendorf

• Citation: 263 F.2d 887
• Decision Date: 26 February 1959
• Docket Number: No. 5450,5451 Original.,5450
• Parties: In the Matter of George B. HEDDENDORF, Fayette Associates, Inc., Pomerantz, Levy & Haudek, Jules E. Angoff, Irvin M. Davis, and David Berdon & Co., Petitioners, In the Matter of Harold BROWN and Joseph Galdi, Petitioners. George B. HEDDENDORF et al. v. Bernard GOLDFINE et al.
• Court: U.S. Court of Appeals — First Circuit

263 F.2d 887 (1959)

In the Matter of George B. HEDDENDORF, Fayette Associates, Inc., Pomerantz, Levy & Haudek, Jules E. Angoff, Irvin M. Davis, and David Berdon & Co., Petitioners In the Matter of Harold BROWN and Joseph Galdi, Petitioners George B. HEDDENDORF et al. v. Bernard GOLDFINE et al.

Nos. 5450, 5451 Original.

United States Court of Appeals First Circuit.

Submitted January 13, 1959.

Decided February 26, 1959.

Jules E. Angoff, Boston, Mass., and Pomerantz, Levy & Haudek, New York City, for Heddendorf and others.

Harold Brown, Boston, Mass., for Brown and another.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Chief Judge.

We have before us an application for leave to appeal under the recent amendment of 28 U.S.C. § 1292 enacted by the Congress last year. 72 Stat. 1770. It is perhaps unfortunate that the first application to us under this new statute involves the adequacy of the allowance of various fees in a minority stockholders' suit — a subject matter about which ordinarily an appellate court can do little.

In enacting an amendment to § 1292, the Congress left untouched 28 U.S.C. § 1291, the basic jurisdictional statute under which an appeal can be taken as a matter of right from a "final decision" of the district court. After the provisions of § 1292 allowing appeals as a matter of right in certain special cases of "interlocutory" decisions, the Congress added by amendment the following:

"(b) When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order."

As stated by the district court in Kroch v. Texas Co., D.C.S.D.N.Y., 1958, 167 F.Supp. 947, 949:

"While there is as yet little authority on the extent to which this new statute should be used, it is plain that it should be used sparingly and `only in exceptional cases where an intermediate appeal may avoid protracted or expensive litigation\'. Milbert v. Bison Laboratories, Inc., 3 Cir., 1958, 260 F.2d 431, 433."

Such an exceptional case might be one where the district court has denied a motion to dismiss for want of jurisdiction which raised a novel question and is reluctant to embark upon an extended and costly trial until assured that its decision on the motion to dismiss is sustained.

It is to be seen that this amendment requires judicial action both by the district court and by the court of appeals before a prospective appellant will be allowed to proceed with an appeal from an interlocutory decision not otherwise appealable under § 1292. Though the appellate court is thus protected to some extent by the specified necessity that the party wishing to appeal prevail upon the district court to give the required certificate, it is evident that, if the district court is so persuaded, nonetheless the appellate court must do more than give a pro forma "rubber-stamp" approval of the district court's certificate. In that respect the effect of the certificate of the district court differs from that which an express direction for the entry of final judgment might have under Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S.C. — a rule which is obviously inapplicable here.

Although the statute does not expressly lay down standards to guide the court of appeals in its exercise of judicial "discretion", it would seem that the appellate court should at least concur with the district court in the opinion that the proposed appeal presents a difficult central question of law which is not settled by controlling authority, and that a prompt decision by the appellate court at this advanced stage would serve the cause of justice by accelerating "the ultimate termination of the litigation".

In applying these standards, the court must weigh the asserted need for the proposed interlocutory appeal with the policy in the ordinary case of discouraging "piecemeal appeals". Perhaps there is always some hardship caused by the application of the "final decision" rule. Yet the rule is beneficial in most applications, because piecemeal appeals would result in even greater hardships and tremendous additional burdens on the courts and litigants which would follow from allowing appeals from interlocutory orders on issues that might later become moot. The "discretion" of the appellate court should be exercised in the light of this fundamental consideration.

A decision by us whether to allow the appeals sought by the present petitions is rendered more difficult by this court's lack of familiarity with the present case. Of course the record is not before us on a petition for leave to appeal, and even if it were, it is inconceivable that the court of appeals should have to peruse and digest what might be a voluminous record in order to decide on what by its nature should be a summary and preliminary determination. The merits of the case will in any event remain for later decision, whether or not the petition for leave to appeal is granted. In deciding whether to grant leave to pursue the interlocutory appeal, this court necessarily must rely upon the would-be appellant to supply in his petition, or in a supporting memorandum attached thereto, a certified copy of the challenged order, a concise but adequate presentation of facts showing the proceedings below prior to the challenged order and the proceedings remaining in the district court, and a statement of the precise nature of the controlling question of law involved, together with a brief argument showing the grounds for the asserted difference of opinion and the way in which the allowance of the petition would "materially advance the ultimate termination of the litigation". The other party, who would become the appellee if the petition were granted, might then express any disagreement on the desirability of interlocutory review, in such papers in opposition as he should choose to file in the three days allowed to him.

The district court's scant recital in this respect was as follows:

"Pursuant to the amendment to 28 U.S.C. § 1292 by the Act of September 2, 1958 (72 Stat. 1770) this Court certifies that an immediate appeal from this order may be taken."

It is obvious that this certificate does not specifically make the statements required by § 1292(b), as amended. It does not identify any controlling question of law "as to which there is substantial ground for difference of opinion", nor does it indicate why an immediate interlocutory appeal would advance "the ultimate termination of the litigation". In the case of the denial of the motion to dismiss, mentioned above, the appellate court, if it disagreed with the decision of the district court, could finally and ultimately terminate the litigation by a direction to the district court to dismiss the complaint. If the appellate court should disagree with the determinations by the district court as to the amount of the fees, all it could do would be to remand the case for further consideration by the district court...