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Schiff v. Metzner

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


decided: May 18, 1964.

MARGOT B. SCHIFF, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF HERBERT SCHIFF, DECEASED
v.
HONORABLE CHARLES M. METZNER, DISTRICT JUDGE OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK.

Author: Swan

Before SWAN, SMITH and MARSHALL, Circuit Judges.

SWAN, Circuit Judge:

Almost immediately after the decision in United States v. E.I. du Pont de Nemours & Co . 353 U.S. 586 (June 3, 1957) holding that du Pont's ownership of stock in General Motors Corporation was a violation of Section 7 of the Clayton Act, four derivative actions were brought by shareholders of General Motors to recover on its behalf damages caused it by du Pont's violation of the anti-trust laws.*fn1 In February 1958, on motion of the defendants, three of the derivative actions (the fourth having been dismissed) were consolidated under the title Rita Gottesman et al. v. General Motors Corporation and E.I. du Pont de Nemours & Co . In the Gottesman case Judge Weinfeld entered an order on July 3, 1958 restraining all stockholders of General Motors from prosecuting any derivative action except Gottesman .*fn2 On October 6, 1959 the consolidated Gottesman action was assigned to Judge Metzner for all purposes.

On February 25, 1963 Margot B. Schiff, Individually and as Exeutrix of the Estate of Herbert Schiff, deceased, filed a derivative action as owner of General Motors stock.This action was assigned to Judge Metzner on March 6, 1963, the plaintiff consenting thereto. The Schiff action raises substantially the same issues of law and of fact that are presented in the consolidated Gottesman action. In that action Judge Metzner has ruled (opinion reported in 28 F.R.D. 325) that the earliest date for which damages are recoverable is May 4, 1950. In Schiff plaintiff claims that her holding of General Motors stock can be traced back to prior to November 25, 1936.

The order of July 15, 1963 which the petition for mandamus seeks to have vacated provides that the time of the defendants General Motors and du Pont to move or answer with respect to the Schiff complaint "is extended to and including a day thirty (30) days following termination of the stay provided for in paragraph 9 of the order of" Judge Weinfeld dated July 3, 1958 in the Gottesman case, and that "the application for modification of the provisions of said paragraph 9" is denied. It is obvious that denial of Schiff's application for modification of the stay ordered by Judge Weinfeld involved the exercise of discretion by Judge Metzner.*fn3

While the motion for modification was pending, and before its decision, Schiff also moved to consolidate her derivative action with the Gottesman action. This motion was also denied. This, too, involved the exercise of discretion by Judge Metzner.

The Supreme Court definitely recognized in Landis v. North American Co ., 299 U.S. 248, 254 that "The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself for counsel, and for litigants." See also Mottolese v. Kaufmdn, 2 Cir., 176 F.2d 301. No type of case is more appropriate for "economy" than derivative suits by stockholders. Schiff's action is the seventh proceeding in the court below to raise the issues being litigated in the Gottesman case. Her suit was started nearly six years after Gottesman and was stayed for five years by Judge Weinfeld's order without protest by her. Trial preparation of the Gottesman case was well under way long before her action was filed. Both actions have been assigned to Judge Metzner for all purposes.

The orders Schiff seeks to have vacated will not deprive her of her day in court. Decision of the common issues in Gottesman will simplify the issues to be tried in the Schiff case and will promote "economy" of effort for all concerned. Under the circumstances there was no abuse of discretion in denying her motions. Consequently we hold that her application for a writ of mandamus is unjustified and deny it.


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