Papilsky v. Berndt

• Decision Date: 09 December 1974
• Docket Number: Nos. 477-482,D,s. 477-482
• Citation: 503 F.2d 554
• Parties: Fed. Sec. L. Rep. P 94,575 Paulette PAPILSKY, Plaintiff-Appellee, v. Alvin H. BERNDT et al., Defendants-Appellants. Harry LEVINE, Plaintiff-Appellee, v. Robert S. DRISCOLL et al., Defendants-Appellants. ockets 73-2187-- 73-2190, 73-2506 and 73-2510.
• Court: U.S. Court of Appeals — Second Circuit

Page 554

503 F.2d 554

Fed. Sec. L. Rep. P 94,575

Paulette PAPILSKY, Plaintiff-Appellee, v. Alvin H. BERNDT et al., Defendants-Appellants.

Harry LEVINE, Plaintiff-Appellee, v. Robert S. DRISCOLL et al., Defendants-Appellants.

Nos. 477-482, Dockets 73-2187-- 73-2190, 73-2506 and 73-2510.

United States Court of Appeals, Second Circuit.

Argued March 11, 1974.

Decided May 24, 1974, Certiorari Denied Dec. 9, 1974.

Abraham L. Pomerantz, New York City (Mordecai Rosenfeld, Daniel W. Krasner and Pomerantz Levy Haudek & Block, New York City, on the brief), for plaintiff-appellee in Nos. 73-2188 and 73-2190.

Wendell Davis, Jr., New York City (McConnell, Schenermann & Davis, New York City, on the brief), for plaintiff-appellee in Nos. 73-2187 and 73-2189.

Judson A. Parsons, Jr., New York City (Keith E. McClintock, Jr. and Dewey, Ballantine, Bushby, Palmer & Wood, New York City, on the brief), for defendants-appellants Alvin H. Berndt, Robert S. Driscoll and Lord, Abbett & Co. in both actions.

James D. Zirin, New York City (Edward J. Ross and Breed, Abbott & Morgan, New York City, on the brief), for defendant-appellant Affiliated Fund, Inc. in both actions.

Before MANSFIELD and TIMBERS, Circuit Judges, and DAVIS, Judge. ^*

PER CURIAM:

This is the second appeal from an interlocutory order that has come before us during the three year life of this litigation in the district court.

Two years ago we heard, pursuant to 28 U.S.C. 1292(b) (1970), an appeal by defendants in the Papilsky action which was commenced in June 1971, from an order of the district court denying their motion for summary judgment on grounds of res judicata based on the dismissal of two prior actions that had been commenced in January 1967 and February 1968. We affirmed the order of Judge Wyatt denying summary judgment. Papilsky v. Berndt, 466 F.2d 251 (2 Cir.), cert. denied, 409 U.S. 1077 (1972). ¹

The instant appeal, as to which a 1292(b) certification was denied by the district court, seeks to bring up for review an interlocutory order entered on March 16, 1973 in the Southern District of New york by Harold R. Tyler, District Judge, denying motions by defendants in both actions to dismiss the complaints for failure to comply with the particularity requirements of Fed.R.Civ.P. 23.1, or in the alternative to strike certain allegations from the complaints pursuant to Fed.R.Civ.P. 11. We dismiss the appeal for lack of appellate jurisdiction.

The gravamen of defendants' motions below to dismiss was that the complaints do not allege with particularity the reasons for plaintiffs' failure to obtain the action they desired from the directors of the Fund or for not making the effort to obtain the desired action from the directors. Defendants argued that the allegations of domination and control of the unaffiliated directors by the minority affiliated directors are insufficiently precise for purposes of Rule 23.1. They also contended that these allegations are without evidentiary basis and sought to establish this on the instant motions by attempting to introduce voluminous documentary evidence attacking the factual basis of the complaints.

In a reasoned opinion, Judge Tyler denied the motions chiefly on the ground that plaintiffs' allegations that the unaffiliated directors were dominated by a minority of the affiliated directors, coupled with the allegations that all directors had participated or acquiesced in the challenged transactions, were sufficient as a matter of pleading to show the futility of a demand. The judge also refused to consider the evidence offered by defendants to show that the unaffiliated directors were not dominated.

In dismissing this appeal for lack of appellate jurisdiction, we are not aware of, and counsel have not cited us to, any case where federal appellate review of an order denying a motion addressed to the pleadings had been permitted. We believe that our decision in Gottesman v. General Motors Corp., 268 F.2d 194, 196-97 (2 Cir. 1956), refusing to permit an appeal, although certified by the district court prusuant to 1292(b), from the denial of a motion to dismiss for failure to make a demand upon stockholders, is controlling here.

Appellants place chief reliance on Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), in urging that the interlocutory order in question is appealable. Of the three requirements of Cohen that must be satisfied 'lest this exception swallow the salutary 'final judgment' rule', Weight Watchers of Philadelphia, Inc. v. Weight Watchers International, Inc., 455 F.2d 770, 773 (2 Cir. 1972), we reject out of hand appellants' arguments with respect to two: the order here clearly is not one 'too important to be denied review', see Gottesman v. General Motors Corp., supra, 268 F.2d at 196-97;...