Eisen v. Carlisle & Jacquelin

417 U.S. 156 (1974)


Eisen (P) filed a class action suit against D on May 2, 1966, on behalf of P and other odd-lot traders on the NYSE. P charged D with violations of antitrust and securities law. Subsequently, the class was limited to those who traded in odd lots from May 1, 1962, to June 30, 1966. P charged that D had monopolized odd lot trading and set the differential at an excessive level in violation of the Sherman Act. P's individual stake in this litigation is a damage award of only $70. A number of cases and a protracted series of litigations resulted in three different cases and appeals. The case was finally granted certiorari after eight years of litigation with essentially no trial on the merits. 

Eisen I: The suit was dismissed, and P appealed; the denial of a class action status is appealable as a final order under ¤1291.

Eisen II: The court of appeals reversed the dismissal of this phase of the litigation; the only potential barrier to maintenance of this class action was the difficulties likely to be encountered in the management of the class. This issue centered around the distribution of any ultimate recovery to the class. The most formidable issue was notice to all the members of the class. P argued that publication notice was sufficient, but D wanted mailed notice. This issue was not decided and remanded for an evidentiary hearing on notice, manageability, adequacy of representation, and any other matter the district court would consider pertinent. 

Eisen III: After the evidentiary hearing, the district court allowed the suit to proceed as a class action. The court addressed the issue of sharing in the eventual judgment if any and determined that the recovery would be to a future odd-lot traders because of the prohibitively high cost of computing and awarding multitudinous small damages claims on an individual basis. The notice issue was addressed for the notice of six million class members with two million identified, and the cost of mail notice would be $225,000 and the expense of publication notice to the other four million unidentified members. The court determined that P could use mail notice to firms, commercial banks, trust departments, notice to 2,000 identifiable class members with 10 or more transactions, and notice to 5000 members selected at random and publication in the Wall Street Journal and other newspapers in California and New York; costing $21,720. The court decided to impose 90% of the cost of notice on D if P could show a strong likelihood of success on the merits. The court of appeals opposed the partial notice and that the cost of notice must fall upon P, and rejected the fluid recovery approach and ordered the suit dismissed.