APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 74-771).
Aldisert, Forman and Weis, Circuit Judges. Reargued: Seitz, Chief Judge, Forman, Van Dusen, Aldisert, Adams, Gibbons, Rosenn, Hunter, Weis and Garth, Circuit Judges. Seitz, Chief Judge, concurring. Adams, Circuit Judge, dissenting. Judge Rosenn joins in this opinion. Van Dusen, Gibbons, Circuit Judges, dissenting.
Whether an antitrust action with potentially 300,000 claimants is manageable as a class action is the question directed to us in this § 1292(b) appeal. We decline to answer on the ground that the matter is one of fact subject to determination by the district court. A second query asks whether there may be separate juries utilized during the liability and damage phases of a bifurcated trial. In the absence of a definitive order on that subject by the district court, the inquiry is essentially a request for an advisory opinion, which we may not honor.
Plaintiffs Link and Katz owned Mercedes automobiles which were repaired at various times by authorized dealers. Believing the costs to be excessive, plaintiffs filed this suit under the Sherman and Clayton Acts alleging a conspiracy to fix prices. They requested a class action certification and sought injunctive relief as well as treble damages and attorneys' fees.
The plaintiffs contend that defendant Daimler-Benz A.G., the parent corporation located in West Germany, and an American subsidiary, Mercedes-Benz of North America, conspired with Mercedes dealers in the United States to maintain high prices for nonwarranty repairs. It is alleged that there was an illegal agreement to base repair rates on artificially-maintained prices of parts and flat labor repair times set out in the manufacturer's manual.
Pursuant to Fed.R.Civ.P.23(b)(3), the district court certified the plaintiff class, consisting of some 300,000 persons in the United States who had Mercedes cars repaired during the four years in question.*fn1 The court also listed as controlling questions of law under 28 U.S.C. § 1292(b):
A. Whether it is proper to certify a class of approximately 300,000 members where the proof of damages will vary for each member of the class;
B. Whether there can be a bifurcated trial in this case of liability and damages with separate juries for each segment of the case.
A panel of this court allowed the appeal, and two weeks later the district court filed its "Memorandum Opinion" explaining the reasons for its belief that immediate appellate review was indicated.
We have held that a grant or denial of class action certification is not a final order and, hence, not appealable under our general jurisdictional statute, 28 U.S.C. § 1291. Kramer v. Scientific Control Corp., 534 F.2d 1085 (3d Cir. 1976); Hackett v. General Host Corporation, 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 32 L. Ed. 2d 812, 92 S. Ct. 2460 (1972). However, an interlocutory order of this nature may qualify for accelerated appeal under 28 U.S.C. § 1292(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. . . ."
This Court does not follow a policy of freely accepting an appeal from the grant of a class action certification where such action is grounded in the discretionary power of the district court. We have taken the position that "to qualify for interlocutory review in this circuit, a class certification decision must be attended by special factors which take it outside the ambit of the general rule. Katz v. Carte Blanche Corp., 496 F.2d 747, 756 (3d Cir.), cert. denied, 419 U.S. 885 [42 L. Ed. 2d 125, 95 S. Ct. 152] (1974)." Kramer v. Scientific Control Corp., 535 F.2d at 1087; Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211, 1213 (3d Cir.), cert. denied, 45 U.S.L.W. 3250 (U.S. Oct. 4, 1976).
We recognize that class action determination has significant, practical effects on the litigation and an aggrieved party may have a very real interest in securing early appellate review. But the same considerations apply to many other types of interlocutory orders and we cannot sanction an erosion of the prohibition against "piecemeal" appellate review. Our constantly increasing caseload*fn2 reinforces the other more philosophical reasons for that policy.
Further, as we noted in Johnson v. Alldredge, 488 F.2d 820 (3d Cir. 1973), cert. denied, 419 U.S. 882, 95 S. Ct. 148, 42 L. Ed. 2d 122 (1974), 28 U.S.C. § 1292(b) is not designed for review of factual matters but addresses itself to a "controlling question of law." In the cases where we have considered and reversed class action certification, there were other overriding legal issues: e.g., Ungar v. Dunkin' Donuts, supra, ("individual coercion" and tying arrangements); Katz v. Carte Blanche, supra, (superiority of test case in Truth in Lending context); Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727 (3d Cir. 1970), cert. denied, 401 U.S. 974, 28 L. Ed. 2d 323, 91 S. Ct. 1190 (1971), (eligibility of class representative). Because Rule 23(c) provides that the district court's determination to permit a class action "may be conditional, and may be altered or amended before the decision on the merits," that determination, in and of itself, does not present a "controlling question of law" to which this court should be hospitable under § 1292(b). If the district court has qualms about determining a class, because it has a serious question whether it is "apply[ing] the correct criteria to the facts of the case," Katz v. Carte Blanche Corp., 496 F.2d at 756, (a) it should hesitate in determining the class until reasonably assured of the correctness of its ruling, and (b) it should not certify for § 1292(b) consideration without stating persuasive reasons why the particular class action question is so unusual as to demand the intervention of an appellate court. In affording immediate appellate review of "controlling questions of law," § 1292(b) was not designed to substitute wholesale appellate certainty for trial court uncertainty under circumstances where, as here, the Rule gives broad discretion to the district court to revise its class action determination at any time prior to the decision on the merits.
One other observation is in order. Section 1292(b) is not intended to grant the appellate courts power to give advice on speculative matters. While counsel and the district court might believe it helpful to have the appellate court's view on proposed alternate courses of action, our jurisdiction extends only to orders of the district court. These orders must be definitive, effective, and in a posture capable of affirmance or reversal. Requesting that the Court of Appeals choose from a number of alternatives submitted is not the type of appeal envisioned by § 1292(b).
With these concepts in mind, we turn to an analysis of the case at hand. The district court's memorandum discusses the troublesome problems anticipated in proving the damages of 300,000 separate class members and notes that a number of courts have held a class of that size unmanageable. See Ralston v. Volkswagenwerk A.G., 61 F.R.D. 427 (W.D. Mo. 1973), Boshes v. General Motors Corp., 59 F.R.D. 589 (N.D. Ill. 1973). Contrary authority is also cited for the position that sheer size does not defeat the superiority of a class action. In re: Master Key Antitrust Litigation, 70 F.R.D. 23 (D. Conn., filed May 27, 1975), 1975-1 Trade Cases P 60,377. However, earlier in the memorandum, the judge stated:
". . . in the event liability is found against the defendant, a further determination will be made as to the continuation of the class action on the damage issue."
The district court therefore viewed the scope of its order as limited and contingent. It contemplated - but did not order: (1) a bifurcated trial on liability, and (2) a re-examination of class certification before the damage phase begins.
We have some doubt that the anticipated difficulties of proving damages on behalf of the large class are actually before us. The district court mused that counsel might be able to devise methods of solving the problem before that time arrived, and listed several possibilities. In any event, we conclude that the issue is not one which this court should decide on interlocutory review.
It is obvious that the district court's concern - a justifiable and serious one - is with manageability. This is a practical problem, and primarily a factual one with which a district court generally has a greater familiarity and expertise than does a court of appeals. Consequently, it is an area in which the trial court must of necessity be granted a wide range of discretion. The housekeeping problems involved in notifying an extremely large group of people, reviewing replies, answering inquiries, and processing of claims as well as the effect on other cases on the court's docket, are all matters which can best be evaluated by the man on the scene. These are often difficult judgments and that fact has not been overlooked in the rules.
Rule 23(c)(1) provides that the determination must be made "as soon as practicable." That does not necessarily mean at the onset of the litigation. The designation should be made at a time when the trial court has had adequate opportunity to acquaint itself with the case and the complexities likely to be encountered in its disposition. Moreover, as we noted earlier, a class certification, once made, is not irrevocable. The rule in a pragmatic approach states that "an order under this section may be conditional, and may be altered or amended before the decision on the merits." Thus, after a determination of liability, the district court is free to decertify the class for a proper reason,*fn3 and unmanageability would be such a circumstance.
The district court also has the option of creating subclasses if that appears helpful in handling the litigation. In short, the rule is flexible and recognizes that whether the case can be managed must be left to the informed discretion of the trial court which will manage it. There are no circumstances in this case which make manageability a controlling question of law, and we therefore will not answer the question submitted.
The second question certified by the district court is the propriety of having separate juries for each segment of the bifurcated trial. The court, however, entered no order directing separate juries and whether it will is a matter of pure speculation at this juncture. As the memorandum points out, the parties may be able to develop a method of proving damages which both satisfies legal standards and permits the efficient use of court time. The utilization of a master is a possibility. A jury waiver would not be unexpected in the damage phase of a trial where the evidence consisted only of the mechanical application of mathematical formulations.
A consideration important to our decision is that the case is in a preliminary stage. At the time the appeal was taken, the defendants had not yet filed their answers, the early skirmishing having been confined to discovery on jurisdictional issues. Those matters have since been resolved against the defendants, and the parties are now in a position to prepare the case on the merits. We believe that further development of the facts will aid the trial court in choosing among the alternative procedures discussed in its memorandum. By the time of the pretrial conference, the issues should be more sharply defined, and the district court may be in a better position to make positive rulings - rather than merely "thinking out loud," as its memorandum may fairly be characterized.
The better appellate practice is to rule on those issues which have been decided, and where a decision will "materially advance the ultimate termination of the litigation." We read the district court's order and memorandum as failing to meet those criteria. In short, we have been asked for an advisory opinion on an interesting legal proposition but one which may never be invoked in this case, see Nickert v. Puget Sound Tug & Barge Co., 480 F.2d 1039 (9th Cir. 1973); Control Data Corp. v. International Business Mach. Corp., 421 F.2d 323 (8th Cir. 1970). We must decline the invitation.*fn4
Accordingly, we remand this case to the district court.
We remand this case to the district court.
I believe that the majority have not adequately explained their refusal to answer either of the questions certified by the district court. It is not incumbent upon the court to state reasons why it would or would not vote to accept an appeal under § 1292(b). Senate Report No. 2434, 85 Cong. 2d Sess., pp. 3, 4. However, I consider it useful to do ...