Professional Documents
Culture Documents
2d 820
1979-1 Trade Cases 62,699
Forrest and Iva Judd, appellants, filed an action against Meridian Mortgage
Company (Meridian) and five Indianapolis banks for conspiracy to require
mortgagors to deposit advance tax and insurance payments in escrow accounts
on which the mortgagors receive no interest, all in violation of antitrust laws.
Appellants sought class action certification, the class to consist of all persons
who obtained mortgage loans from the defendant mortgage company and
banks.
In October 1976, the district court certified the class as all persons who
obtained mortgage loans from Meridian between January 1, 1960 and July 22,
1976. Appellants moved to enlarge the certified class. The district court denied
the motion.
4
In July 1977, the district court ordered appellants' counsel to compile a list of
the names and addresses of class members by making a search of Meridian's
business records (1977 order).
Appellants filed a motion for permission to use the computer list for class
notification purposes because it would cost between $16,000 and $24,000 less
to use the computer list than to compile a class list from Meridian's files.
Appellants agreed to include in the notice an explanation to help mortgagors
determine whether they belong to the plaintiff class.
Meridian objected to the motion on the grounds that the computer list would
confuse a great number of its customers, would require it to spend much time
and money to answer inquiries generated by the notices and would damage
Meridian's good will.
In July 1978, the district court denied appellants' motion and ordered them to
comply with the 1977 order.
Appellants appeal from the July 1978 order. They assert that the district court
failed to comply with Rule 23(c) Fed.R.Civ.P. which requires the court to
"direct to the members of the class the best notice practicable under the
circumstances, including individual notice to all members who can be identified
through reasonable effort."
10
11
We have "jurisdiction of appeals from all final decisions of the district courts . .
. " 28 U.S.C. 1291.
12
Appellants concede that the 1978 order is not a "final decision," but they assert
that the order is appealable under the doctrine announced in Cohen v.
Beneficial Industrial Loan, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949).
13
In Cohen, Plaintiff brought a derivative action in federal court alleging that the
directors and managers of the defendant corporation were guilty of fraud and
mismanagement. Plaintiff and an intervenor together held about 0.0125% Of
the corporation's stock. Defendants moved to require plaintiff to post the
security for costs required by a New Jersey statute which they asserted would
amount to about $125,000. The district court denied the motion. Defendants
sought immediate review of the question whether the state statute applied in
federal court. The Supreme Court held that the district court order was
appealable under 1291, even though it was not a final decision, so that it could
consider that issue. The Court stated:
14 (district court) decision appears to fall in that small class which finally
"This
determines claims of right separable from, and collateral to, rights asserted in the
action, too important to be denied review and too independent of the cause itself to
require that appellate consideration be deferred until the whole case is adjudicated."
337 U.S. at 546, 69 S.Ct. at 1225-1226.
15
The Supreme Court has recently held that the Cohen Exception, or "collateral
order doctrine," applies only to orders which
16
"conclusively
determine the disputed question, resolve an important issue
completely separate from the merits of the action, and (are) effectively unreviewable
on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463,
468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978).
17
18
The Supreme Court held that the Cohen exception did not apply, because
orders granting or denying class certification are subject to revision in the
district court, and, unlike the order in Cohen, may effectively be reviewed even
after final judgment.
19
In Weit v. Continental Illinois National Bank, 535 F.2d 1010 (7th Cir. 1976),
plaintiffs in an antitrust class action sought to review an order determining the
form of notice sent to class members. We found that the order did not involve a
broad question of general applicability, and the propriety of the notice was an
issue capable of review after the entire case was resolved in the district court.
Regardless of whether plaintiffs prevailed on the merits, the district court could
order the notification costs which were later held to have been improper. We
held that the collateral order doctrine did not apply and that the district court
order on the form of the notice was not appealable.
20
The issue here is the costs which appellants must incur to notify the plaintiff
class. That is not "an important issue completely separate from the merits of
this action." Nor does the 1978 order "conclusively determine the disputed
question." As in Weit, regardless of who prevails on the merits, if a court later
decides that appellants were improperly required to incur costs of the notice,
the court can order appellees to reimburse them.
21
22
23
Appeal Dismissed.
The Honorable Gus J. Solomon, Senior District Judge of the United States
District Court for the District of Oregon, is sitting by designation