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Abrams v. Interco Inc.

decided: September 28, 1983.


Appeal from orders of the District Court for the Southern District of New York, Thomas P. Griesa, Judge, in a private antitrust action for treble damages. One order, 93 F.R.D. 331 (1981), denied a motion for certification of a nationwide class of purchasers of defendant's products. A second order dismissed the action for lack of a justiciable case or controversy after defendant made an offer of judgment of three times the total amount of plaintiffs' purchases and reasonable attorneys' fees, but preserving plaintiffs' right to appeal the denial of class certification. Affirmed.

Friendly, Kearse and Cardamone, Circuit Judges.

Author: Friendly

FRIENDLY, Circuit Judge:

This appeal in a private antitrust action for treble damages in the District Court for the Southern District of New York for illegal price-fixing raises two principal questions. One is whether the District Court properly denied the certification of a class consisting of all persons throughout the nation who bought any of defendant's products in the four years preceding the filing of the complaint, 93 F.R.D. 331 (1981). The other is whether the court erred in entering judgment dismissing the complaint for lack of a justiciable case or controversy, subject to plaintiffs' right to appeal the denial of class certification, when defendant tendered three times the amount of plaintiffs' purchases and agreed to pay reasonable attorneys' fees. Before addressing these questions we must determine, although the issue has not bee raised by the parties, whether the judgment lacks the finality required by 28 U.S.C. § 1291 until attorneys' fees are fixed.

The Facts and the Proceedings in the District Court

Interco, Inc., a manufacturer of Florsheim shoes, Thayer McNeil shoes, London Fog raincoats, and scores of other items of men's, women's and children's footwear and wearing apparel, entered into a provisional consent agreement with the Federal Trade Commission on July 13, 1978, requiring it to cease engaging in a variety of alleged price-fixing activities. 43 Fed. Reg. 31345 (1978). The agreement, which contained the usual disclaimer of admission of violation of law, concerned Interco's dealings with independent retailers that sold its products, including over 7,800 independent retail shoe stores. The agreement and the order subsequently issued did not affect Interco's practices in its more than 650 owned or leased shoe stores and shoe departments.

Plaintiff Burton M. Abrams is an attorney, with experience in the conduct of class actions, and has other business interests. On July 20, 1978, he and his wife filed a complaint in the District Court for the Southern District of New York on behalf of a class consisting of all purchasers of Interco products throughout the nation over the previous four years. Plaintiffs were able to establish that they had purchased nine pairs of defendant's shoes, all from Interco-owned stores in New York, at a total purchase price of $408.10. Count One of their complaint, which tracked the draft complaint of the Federal Trade Commission that had been attached to the agreement, alleged that Interco had violated § 1 of the Sherman Act, 15 U.S.C. § 1, by "entering into combinations, agreements, or understandings" with retail outlets ("dealers") not owned or leased by Interco to adhere to prices and sale periods; by "withholding allowances or other benefits" from dealers who sold Interco's products at lower prices; by "urging, inducing, persuading, compelling, or coercing" dealers to charge Interco's established prices and ultimately "terminating" dealers who refused; by "granting rebates, credits, benefits, or allowances" to dealers who sold at established prices; and by various other "direct or indirect" means. Count Two alleged that Interco sold only to dealers who agreed not to sell goods of any of Interco's competitors, and Count Three alleged that Interco discriminated among dealers. The complaint sought a judgment declaring the action to be a proper class action, requiring defendant to pay plaintiffs and the class they represented three times the damages incurred as a result of the alleged wrongs, and awarding the reasonable expenses of the action including attorneys' fees.

On April 17, 1980, the district court dismissed Counts Two and Three on the ground that plaintiffs, as retail customers, lacked standing to allege antitrust violations directed against Interco's competitors and dealers. Plaintiffs do not appeal this ruling. On October 15, 1980, more than two years after filing the complaint, plaintiffs moved for class certification. Nearly one more year passed before the district court denied the motion on September 16, 1981, 93 F.R.D. 331. In all this time plaintiffs had made no effort to pursue discovery either on the feasibility of class certification or on the merits of their claims.

Thereafter, on February 17, 1982, Interco offered to allow that judgment be taken against it in the sum of $1,224.30, three times the amount of plaintiffs' purchases from Interco over the four years preceding the filing of the complaint, together with costs and reasonable attorneys' fees.*fn1 The offer provided that it was "not to be construed either as an admission that the defendant is liable in this action, or that the plaintiffs have suffered any damages". Plaintiffs rejected the offer for three reasons. First, they contended that the unspecified "reasonable attorney's fee" would almost certainly be calculated as some fraction of the amount recovered, and therefore would not compensate their counsel for time charges already amounting to more than twenty times Interco's offer. Second, they argued that the amount offered was undoubtedly more than any damages they would individually recover after trial, with the result that acceptance of the offer would create the appearance that the named plaintiffs were willing to benefit themselves at the expense of the class they had sought to represent. Finally, plaintiffs expressed doubt whether the issue of class certification could be preserved for appeal unless the offer was refused and judgment was entered over their objection. Interco thereupon moved for dismissal under Fed. R. Civ. P. 12(b)(1) on the ground that no justiciable case or controversy remained. The district court granted the motion on October 19, 1982, ordered the parties to settle a judgment, and provided that if they could not agree on the attorneys' fees, the court would fix them. Judgment dismissing the complaint was entered on January 28, 1983, without agreement on the subject of attorneys' fees; it expressly preserved plaintiffs' right to appeal from the denial of class certification. Before the district court had determined a reasonable fee award, plaintiffs appealed to this court from the order of dismissal and the previous order denying class certification.

Finality of the Judgment

Under Coopers & Lybrand v. Livesay, 437 U.S. 463, 57 L. Ed. 2d 351, 98 S. Ct. 2454 (1978), and Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 336-40, 63 L. Ed. 2d 427, 100 S. Ct. 1166 (1980), denial of class certification is appealable as a matter of right only after the entry of final judgment. Although the point has not been raised by the parties, we must nevertheless consider whether dismissal of plaintiffs' action prior to the determination of the amount of attorneys' fees to be awarded constitutes such a judgment.*fn2

While we have held that where reasonable attorneys' fees are a contractually specified element of damages, a judgment on the merits failing to set the amount of the fees is not a final judgment, Aetna Casualty & Surety Co. v. Giesow, 412 F.2d 468, 470 (2 Cir. 1969); Union Tank Car Co. v. Isbrandtsen, 416 F.2d 96, 97 (2 Cir. 1969) (per curiam), we suggested in dictum in Cinerama, Inc. v. Sweet Music, S.A., 482 F.2d 66, 69-70 & n.2 (2 Cir. 1973), that failure to fix the amount of attorneys' fees allowable as a matter of judicial discretion would not deprive a judgment on the merits of finality, even when the fees will constitute an additional burden on the defendant rather than come out of a fund. That approach was rejected in Johnson v. University of Bridgeport, 629 F.2d 828, 829-30 (2 Cir. 1980) (per curiam), at least in cases, such as this one, in which attorneys' fees have been authorized by statute, see 15 U.S.C. § 15, and were part of the relief sought in the complaint, although the court thought the question to be "very close". Other courts of appeals held that judgments determining liability and damages were final and appealable although the district court had not yet fixed an additional amount payable as attorneys' fees. See, e.g., Hidell v. International Diversified Investments, 520 F.2d 529, 532 n.4 (7 Cir. 1975) (per curiam); Memphis Sheraton Corp. v. Kirkley, 614 F.2d 131, 133 (6 Cir. 1980); Obin v. District No. 9 of Int'l Ass'n of Machinists, 651 F.2d 574, 582-84 (8 Cir. 1981). In contrast, the Fifth and Third Circuits considered that a judgment on the merits was not final prior to the determination of the amount of attorneys' fees. Williams v. Ezell, 531 F.2d 1261, 1263 (5 Cir. 1976); Croker v. Boeing Co., 662 F.2d 975, 983-84 (3 Cir. 1981) (en banc). The difference of opinion was natural in light of the opposing policy considerations. Allowing immediate appeal, usually by the defendant, may eliminate the need for what may be a long proceeding with respect to the amount of attorneys' fees if the judgment is reversed; it will also permit the district court to fix the fees for the trial and the appeal in one proceeding if the judgment is affirmed. On the other hand, postponing the finality of the judgment will allow the court of appeals to decide the issues on the merits and with respect to attorneys' fees in one appeal rather than two.

However these considerations might be balanced, we consider that the question has now been settled in favor of immediate appealability by White v. New Hampshire Dep't of Employment Security, 455 U.S. 445, 452, n.14, 71 L. Ed. 2d 325, 102 S. Ct. 1162 (1982). Although the case involved the Rule 59(e) problem, see note 2 supra, the Court noted with apparent approval the position of the Sixth, Seventh and Eighth Circuits that "decisions on the merits may be 'final' and 'appealable' prior to the entry of a fee award". The Court based its holding that the 10-day limitation in Fed. R. Civ. P. 59(e) did not apply to post-judgment requests for attorneys' fees under 42 U.S.C. § 1988 in part on this view that "the collateral character of the fee issue establishes that an outstanding fee question does not bar recognition of a merits judgment as 'final' and 'appealable'." Id. The Third Circuit has since held that the White decision overrules its holding in Croker, supra, 662 F.2d at 983-84, that a judgment is not appealable until statutory attorneys' fees have been set, Halderman v. Pennhurst State School & Hospital, 673 F.2d 628, 644 & n.1 (3 Cir. 1982) (en banc, on petition for rehearing), cert. granted, 457 U.S. 1131, 73 L. Ed. 2d 1348, 102 S. Ct. 2956 (1982), restored to calendar for reargument, 463 U.S. 1226, 77 L. Ed. 2d 1409, 103 S. Ct. 3568 (1983). Two other Courts of Appeals have also followed the reasoning in White by holding that judgments on the merits are appealable although statutory attorneys' fees have not been determined, Cox v. Flood, 683 F.2d 330, 331 (10 Cir. 1982); American ReInsurance Co. v. Insurance Comm'r of California, 696 F.2d 1267, 1268 (9 Cir. 1983). Although the Fifth Circuit has endeavored to reconcile its prior holdings of nonappealability with White, see Holmes v. J. Ray McDermott & Co., 682 F.2d 1143, 1146 (5 Cir. 1982), we consider, as the Third Circuit has done under similar circumstances, see Halderman, supra, 673 F.2d at 644, that our holding in Johnson v. University of Bridgeport that a judgment for the plaintiff on the merits does not become final under 28 U.S.C. § 1291 until statutory attorneys' fees are fixed can no longer stand in the light of White. Indeed we have already stated in a related context, "in White, the court made clear that an award of attorney's fees is independent of final judgment; consequently, the need to determine a fee award should in no way affect the requirement that a judgment be entered promptly under Fed. R. Civ. P. 58", Goodman v. Heublein, Inc., 682 F.2d 44, 47 (2 Cir. 1982). See also Hastings v. ...

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