Snyder v. Harris Gas Service Company/Dissent Fortas

by Abe Fortas

United States Supreme Court

394 U.S. 332

Snyder  v.  Harris Gas Service Company

 Argued: Jan. 21 and 22, 1969. --- Decided: March 25, 1969

Mr. Justice FORTAS, with whom Mr. Justice DOUGLAS joins, dissenting.

The Court today refuses to conform the judge-made formula for computing the amount in controversy in class actions with the 1966 amendment to Rule 23 of the Federal Rules of Civil Procedure. The effect of this refusal is substantially to undermine a generally welcomed and long-needed reform in deferral procedure. ^[1]

Its impact will be noticeable not only in diversity of citizenship cases but also in important classes of federal question cases in which federal jurisdiction must be based on 28 U.S.C. § 1331, the general federal question provision, rather than on one of the specific grants of federal jurisdiction. ^[2]

The artificial, awkward, and unworkable distinctions between 'joint,' 'common,' and 'several' claims and between 'true,' 'hybrid,' and 'spurious' class actions which the amendment of Rule 23 sought to terminate is now re-established in federal procedural law. Litigants, lawyers, and federal courts must now continue to be ensnared in their complexities in all cases where one or more of the coplaintiffs have a claim of less than the jurisdictional amount, usually $10,000.

It was precisely this morass that the 1966 amendment to Rule 23 sought to avoid. The amendment had as its purpose to give the Federal District Courts wider discretion as to the type of claims that could be joined in litigation. That amendment replaced the metaphysics of conceptual analysis of the 'character of the right sought to be enforced' by a pragmatic, workable definition of when class actions might be maintained that is, when claims of various claimants might be aggregated in a class action, and it carefully provided procedures and safeguards to avoid unfairness. ^[3]

The amendment was formulated with care by an able committee and recommended to this Court by the Judicial Conference of the United States pursuant to 28 U.S.C. § 331. ^[4] It was accepted and promulgated by this Court ^[5] and, with congressional acquiescence, became the law of the land on July 1, 1966. 28 U.S.C. § 2072 (1964 ed., Supp. III). Now the Court, for reasons which in my opinion will not stand analysis, defeats the purpose of the amendment as applied to cases like those before us here and insists up n a perpetuation of distinctions which the profession had hoped would become only curiosities of the past.

The Court is led to this unfortunate result by its insistence upon regarding the method of computing the amount in controversy as embodied in an Act of Congress, as unaffected by the subsequent amendment of Rule 23, and as immune from judicial re-examination because any change would be an impermissible expansion of the jurisdiction of the courts. None of these premises is correct.

Since the first Judiciary Act, Congress has included in certain grants of jurisdiction to the federal courts-notably the grants of jurisdiction based on diversity of citizenship ^[6] and the later-established grant of a general jurisdiction to consider cases raising federal questions ^[7]-a requirement that the 'matter in controversy' exceed a stated amount of money. Congress has never expanded or explained the bare words of these successive jurisdictional amount statutes. Over the years the courts themselves have developed a detailed an complex set of rules for determining when the jurisdictional amount requirements are met. ^[8]

Among these rules is the proposition that multiple parties cannot aggregate their 'separate and distinct' claims to reach the jurisdictional amount. E.g., Troy Bank v. G. A. Whitehead & Co., 222 U.S. 39, 40, 32 S.Ct. 9, 56 L.Ed. 81 (1911); Oliver v. Alexander, 6 Pet. 143, 147, 8 L.Ed. 349 (1832). Applying that general principle to traditional property law concepts, the courts developed the more specialized rule that multiple parties who asserted very similar legal claims could not aggregate them to make up the jurisdictional amount if their interests, however similar in fact, were in legal theory 'several,' e.g., Pinel v. Pinel, 240 U.S. 594, 36 S.Ct. 416, 60 L.Ed. 817 (1916), but that such aggregation was permissible where the parties claimed undivided interests in a single 'joint' right. E.g., Texas & Pacific R. Co. v. Gentry, 163 U.S. 353, 16 S.Ct. 1104, 41 L.Ed. 186 (1896); Shields v. Thomas, 17 How. 3, 15 L.Ed. 93 (1855).

This general aggregation rule, and its much later application to class actions, ^[9] rest entirely on judicial decisions, not on any Act of Congress. There is certainly no reason the specific application of this body of federal decisional law to class actions should be immune from reevaluation after a fundamental change in the structure of federal class actions has made its continuing application wholly anomalous. ^[10]

The majority rather half-heartedly suggests that this judicial interpretation of the jurisdictional amount statute is not subject to judicial re-evaluation because Congress by re-enacting the jurisdictional amount statute from time to time has somehow expressed an intent to freeze once and for all the judicial interpretation of the statute. As the majority frankly acknowledges, there are 'hazards and pitfalls involved in assuming that re-enactment of certain language by Congress always freezes the existing judicial interpretation of the statutes involved.'

While re-enactment may sometimes signify adoption, in my view the appropriate position on the matter is that stated in Girouard v. United States, 328 U.S. 61, 69-70, 66 S.Ct. 826, 830, 90 L.Ed. 1084 (1946):

"It would require very persuasive circumstances enveloping Congressional silence to debar this Court from re-examining its own doctrines.' It is at best treacherous to find in congressional silence alone the adoption of a controlling rule of law. * * * The silence of Congress and its inaction are as consistent with a desire to leave the problem fluid as they are with an adoption by silence of the rule of those cases.' ^[11]

This case, far from being one in which there are 'very persuasive circumstances' indicating congressional adoption of prior judicial doctrines, is one where only by the most obvious fiction can congressional re-enactment of a general statute be said to manifest an intention to adopt and perpetuate an existing technical judicial doctrine designated to facilitate administration of the statute.

The hearings and reports on the 1958 statute raising the jurisdictional amount from $3,000 to $10,000-which the majority fastens on as the adopting re-enactment-include not one word about the whole complex body of rules by which courts determine when the amount is at issue, much less any reference to the particular problem of aggregation of claims in class action cases. ^[12] The majority speculates that it is 'possible, if not probable,' that Congress 'implicitly' took into account the existing aggregation doctrines as applied to class action cases when it decided to raise the jurisdictional amount to $10,000 rather than some higher or lower amount. If we are to attribute to Congress any thoughts on this highly technical and specialized matter, it seems to me far more reasonable to assume that Congress was aware that the courts had been developing the interpretation of the jurisdictional amount requirement in class actions and would continue to do so after the 1958 amendments.

I cannot find any meaningful sense in which the aggregation doctrines in class action cases should be any less subject to re-evaluation in the light of new conditions because Congress in 1958 re-enacted the jurisdictional amount statute in raising the dollar amount required.

Whatever the pre-1966 status of the aggregation doctrines in class action cases, the amendment of the Rules in that year permits and even requires a re-examination of the application of the doctrines to such cases. The fundamental change in the law of class actions effected by the new Rule 23 requires that prior subsidiary judicial doctrine developed for application to the old Rule be harmonized with the new procedural law. By Act of Congress, the Rules of Procedure, when promulgated according to the statutorily defined process, have the effect of law and supersede all prior laws in conflict with them. 28 U.S.C. § 2072 (1964 ed., Supp. III). Thus, even if the old aggregation doctrines were embodied in statute-as they are not-they could not stand if they conflicted with the New Rule.

Under the pre-1966 version of Rule 23 the very availability of the class action device depended on the 'joint' or 'common' 'character of the right sought to be enforced.' ^[13] If the right were merely 'several,' only a 'spurious' class action could be maintained and only those members of the class who actually appeared as parties were bound by the judgment. ^[14] It was in this context of a law of class actions already heavily dependent on categorization of interests as 'joint' or 'several' that the traditional aggregation doctrines were originally applied to class actions under the Federal Rules. In such a context those aggregation doctrines which the majority now perpetuates in the quite different context of the new Rule, whatever their other defects, were at least not anomalous and eccentric.

Scholarly and professional criticism of the 'character of interest' classification scheme was vigorous and distinguished. ^[15] Courts as well found the old Rule 23 categories confusing and unhelpful in making practical decisions. Not only was the categorization difficult, ^[16] but dividing group interests according to whether they were 'joint' or 'several' did not isolate those cases in which a class action was appropriate from those in which it was not. ^[17] In proposing amendment of Rule 23, the Advisory Committee summed up experience under the old Rule by saying:

'In practice the terms 'joint,' 'common,' etc., which were used as the basis of the Rule 23 classification proved obscure and uncertain.' 39 F.R.D. 98.

In response to the demonstrated inappropriateness of the 'character of interest' categorization, the Rule dealing with class actions was fundamentally amended, effective in July 1966. Under the new Rule the focus shifts from the abstract character of the right asserted to explicit analysis of the suitability of the particular claim to resolution in a class action. The decision that a class action is appropriate is not to be taken lightly; the district court must consider the full range of relevant factors specified in the Rule. However, whether a claim is, in traditional terms, 'joint' or 'several' no longer has any necessary relevance to whether a class action is proper. Thus, the amended Rule 23, which in the area of its operation has the effect of a statute, states a new method for determining when the common interests of many individuals can be asserted and resolved in a single litigation.

The jurisdictional amount statutes require placing a value on the 'matter in controversy' in a civil action. Once it is decided under the new Rule that an action may be maintained as a class action, it is the claim of the whole class and not the individual economic stakes of the separate members of the class which is the 'matter in controversy.' That this is so is perhaps most clearly indicated by the fact that the judgment in a class action properly maintained as such includes all members of the class. Rule 23(c)(3). This effect of the new Rule in broadening the scope of the 'controversy' in a class action to include the combined interests of all the members of the class is illustrated by the facts of No. 117. That class action, if allowed to proceed, would, under the Rule, determine not merely whether the gas company wrongfully collected $7.81 in taxes from Mr. Coburn. It would also result in a judgment which, subject to the limits of due process, ^[18] would determine-authoritatively and not merely as a matter of precedent-the status of the taxes collected from the 18,000 other people allegedly in the class Coburn seeks to represent. ^[19] That being the case, it is hard to understand why the fact that the alleged claims are, in terms of the old Rule categories, 'several' rather than 'joint,' means that the 'matter in controversy' for jurisdictional amount purposes must be regarded as the $7.81 Mr. Coburn claims instead of the thousands of dollars of alleged overcharges of the whole class, the status of all of which would be determined by the judgment.

In past development of rules concerning the jurisdiction amount requirement, the courts have, properly, responded to changes in the procedural and substantive law. ^[20] Now, confronted by an issue of the meaning of the jurisdictional amount requirement arising in the context of a new procedural law of class actions, we should continue to take account of such changes. We should not allow the judicial interpretation of the jurisdictional amount requirement to become petrified into forms which are products of, and appropriate to, another time. To do this would vitiate a significant part of the reform intended to be accomplished by the amendment of Rule 23. For the majority result will continue to make determinative of the maintainability of a class action just that obsolete conceptualism the amended Rule sought to make irrel vant. In this sense, continued adherence to the old aggregation doctrines conflicts with the new Rule and is improper under 28 U.S.C. § 2072 (1964 ed., Supp. III).

Permitting aggregation in class action cases does not involve any violation of the principle, expressed in Rule 82 and inherent in the whole procedure for the promulgation and amendment of the Federal Rules, that the courts cannot by rule expand their own jurisdictions. While the Rules cannot change subject-matter jurisdiction, changes in the forms and practices of the federal courts through changes in the Rules frequently and necessarily will affect the occasions on which subject-matter jurisdiction is exercised because they will in some cases make a difference in what cases the federal courts will hear and who will be authoritatively bound by the judgment. ^[21] For example, the development of the law of joinder and ancillary jurisdiction under the Federal Rules has influenced the 'jurisdiction' of the federal courts in this broader sense. ^[22] Indeed, the promulgation of the old Rule 23 provided a new means for resolving in a single federal litigation, based on diversity jurisdiction, the claims of all members of a class, even though some in the class were not of diverse citizenship from parties on the other side. ^[23] Similarly, the creation in a Rule having statutory effect of a new type of class action-one meeting the requirements of the new Rule as to suitability for class-wide resolution, although involving 'several' interests of the members of the class has changed the procedural context in which the subject-matter-jurisdiction statutes, like those referring to jurisdictional amount, are to be applied. Making judicial rules for calculating jurisdictional amount responsive to the new structure of class actions is not an extension of the jurisdiction of the federal courts but a recognition that the procedural framework in which the courts operate has been changed by a provision having the effect of law.

In a larger sense as well, abandonment of the old aggregation rules for class actions would fulfill rather than contradict the command that courts adhere to the jurisdictional boundaries established by Congress. In a large number of instances, Congress has said that cases raising claims with a certain subject matter may be heard in federal courts regardless of the amount involved. However, it has also provided generally that in the two great areas of Article III jurisdiction-federal questions and diversity of citizenship-any suit, regardless of specific subject matter, may be heard if 'the matter in controversy exceeds the sum or value of $10,000.' Just as it would be wrong for the courts to exercise a jurisdiction not properly theirs, so it would be wrong for the courts to refuse to exercise a part of the jurisdiction granted them because of a view that Congress erred in granting it.

The new Rule 23, by redefining the law of class actions, has, with the effect of statute, provided for a decision by the district courts that the nominally separate and legally 'several' claims of individuals may be so much alike that they can be tried all at once, as if there were just one claim, in a single proceeding in which most members of the class asserting the claim will not be personally present at all. When that determination has been made in accordance with the painstaking demands of Rule 23, there is authorized to be brought in the federal courts a single litigation, in which, both practically and in legal theory, the thing at stake, the 'matter in controversy,' is the total, combined, aggregated claim of the whole class. When that happens the courts do not obey, but violate, the jurisdictional statutes if they continue to impose ancient and artificial judicial doctrines to fragment what is in every other respect a single claim, which the courts are commanded to stand ready to hear.

For these reasons, I would measure the value of the 'matter in controversy' in a class action found otherwise proper under the amended Rule 23 by the monetary value of the claim of the whole class.

Notes

1. On the background of the amendment to Rule 23 and its reception, see, e.g., Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 Harv.L.Rev. 356, 380-386 (1967); Cohn, The New Federal Rules of Civil Procedure, 54 Geo.L.J. 1204, 1213-1214 (1966); Note, Proposed Rule 23: Class Actions Reclassified, 51 Va.L.Rev. 629, 630-636 (1965). See also 2 W. Barron & A. Holtzoff, Federal Practice and Procedure § 561 and n. 15.1 (C. Wright ed. 1968 Pocket Part) (hereinafter cited as Barron & Holtzoff). Even commentators critical of the apparent breadth of the new Rule welcomed abolition of the categories of the old Rule. E.g., Ford, The History and Development of Old Rule 23 and the Development of Amended Rule 23, 32 ABA Antitrust L.J. 254, 257-258 (1966).
2. The majority says broadly, 'A large part of those matters involving federal questions can be brought, by way of class actions or otherwise, without regard to the amount in controversy.' Ante, at 341. However, in at least one vitally important type of federal question case-an action alleging that governmental action, state or federal, violates constitutional limits-the task of demonstrating the existence of federal jurisdiction would in many instances be significantly complicated if 28 U.S.C. § 1331 were not available. There are, to be sure, a large number of specific statutor provisions conferring on the federal courts jurisdiction to hear certain types of federal question cases.
3. The Rule, as amended, reads:
4. 1965 U.S. Judicial Conf. Proceedings Rep. 52-53. See Kaplan, supra, n. 1, at 357-358.
5. 383 U.S. 1031 (1966).
6. 28 U.S.C. § 1332.
7. 28 U.S.C. § 1331. Other jurisdictional statutes providing a monetary requirement include 28 U.S.C. § 1335 (interpleader); § 1346 (claims against United States); § 1445 (removal of certain actions against carriers).
8. See generally 1 J. Moore, Federal Practice 0.90-0.99; 1 Barron & Holtzoff § 24; Ilsen & Sardell, The Monetary Minimum in Federal Court Jurisdiction: I, 29 St. John's L.Rev. 1 (1954), Id., II, p. 183 (1955); Note, Federal Jurisdictional Amount: Determination of the Matter in Controversy, 73 Harv.L.Rev. 1369 (1960).
9. Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001 (1939); Buck v. Gallagher, 307 U.S. 95, 59 S.Ct. 740, 83 L.Ed. 1128 (1939). See Thomson v. Gaskill, 315 U.S. 442, 62 S.Ct. 673, 86 L.Ed. 951 (1942).
10. For a criticism of the aggregation doctrine in another context, see Note, The Federal Jurisdictional Amount Requirement and Joinder of Parties Under the Federal Rules of Civil Procedure, 27 Ind.L.J. 199 (1952).
11. See also Helvering v. Reynolds, 313 U.S. 428, 432, 61 S.Ct. 971, 973, 85 L.Ed. 1438 (1941); Note, Legislative Adoption of Prior Judicial Construction: The Girouard Case and the Reenactment Rule, 59 Harv.L.Rev. 1277 (1946). In Francis v. Southern Pacific Co., 333 U.S. 445, 450, 68 S.Ct. 611, 613, 92 L.Ed. 798 (1948), the majority noted the difficulty of regarding re-enactment as a congressional adoption of existing judicial doctrines, but decided that 'in the setting of this case' adoption was implied. The dissent responded:
12. See Hearing on H.R. 2516 and H.R. 4497, before Subcommittee No. 3 of the House Committee on the Judiciary, 85th Cong., 1st Sess., ser. 5 (1957); H.R.Rep.No.1706, 85th Cong., 2d Sess. (1958); S.Rep.No.1830, 85th Cong., 2d Sess. (1958).
13. A 'true' class action could also be maintained to enforce a right 'secondary in the sense that the owner of a primary right refuses to enforce that right and a member of the class thereby becomes entitled to enforce it.' Stockholders' derivative actions were the most significant type of suit within this group. They are now separately dealt with under Rule 23.1 in addition. Under the former Rule 23(a)(2), if the right was 'several' in character, 'and the object of the action is the adjudication of claims which do or may affect specific property involved in the action,' a 'hybrid' class action could be maintained which would determine the interests of each member of the class in the particular property.
14. See, e.g., All Amer. Airways, Inc. v. Elderd, 209 F.2d 247 (C.A.2d Cir. 1954). Thus, under the prior Rule, the 'spurious' class action was in effect little more than a permissive joinder device. The preamendment categorization and its consequences are explicated in detail in 3A J. Moore, Federal Practice 23.08-23.14.
15. E.g., Z. Chafee, Some Problems of Equity 243-295 (1950); C. Wright, Handbook of the Law of Federal Courts 269 (1963); Kalven & Rosenfield, The Contemporary Function of the Class Suit, 8 U.Chi.L.Rev. 684 (1941). See Note, Proposed Rule 23: Class Actions Reclassified, 51 Va.L.Rev. 629, n. 3 (1965).
16. A notable example is Deckert v. Independence Shares Corp., 27 F.Supp. 763 (D.C.E.D.Pa.), rev'd, 108 F.2d 51 (C.A.3d Cir. 1939), rev'd, 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189 (1940), on remand, 39 F.Supp. 592 (D.C.E.D.Pa.), rev'd sub nom. Pennsylvania Co. for Insurances on Liv s, etc. v. Deckert, 123 F.2d 979 (C.A.3d Cir. 1941). The views of successive courts on the proper classification of the Deckert action are discussed in Chafee, supra, n. 15, at 263-269.
17. See Fed.Rule Civ.Proc. 23, Advisory Comm. Note, 39 F.R.D. 98-99.
18. See Hansberry v. Lee, 311 U.S. 32, 42-43, 61 S.Ct. 115, 118-119, 85 L.Ed. 22 (1940).
19. If members of the class elected to exercise the right, which might be extended them under Rule 23(b)(3), to exclude themselves from the litigation, they would not be included in the judgment in the class action.
20. For example, the general rule is that if suit is brought only for past installments due under an installment contract, the jurisdictional amount is in controversy only if the installments due at the time of suit exceed the jurisdictional amount. E.g., New York Life Ins. Co. v. Viglas, 297 U.S. 672, 56 S.Ct. 615, 80 L.Ed. 971 (1936). However, if, because of the structure of equitable remedies or the availability of a declaratory judgment, the action can put in issue the validity of the contract as a whole, the 'matter in controversy' is not the accrued damages, but the potential value of full performance. Landers Frary & Clark v. Vischer Products Co., 201 F.2d 319 (C.A.7th Cir. 1953); Franklin Life Ins. Co. v. Johnson, 157 F.2d 653 (C.A.10th Cir. 1946); Davis v. American Foundry Equip. Co., 94 F.2d 441, 115 A.L.R. 1486 (C.A.7th Cir. 1938). See Note, Developments in the Law, Declaratory Judgments-1941-1949, 62 Harv.L.Rev. 787, 801-802 (1949).
21. See Mississippi Pub. Corp. v. Murphree, 326 U.S. 438, 445 446, 66 S.Ct. 242, 246. 90 L.Ed. 185 (1946); Kaplan, supra, n. 1, at 399-400. Cf. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 116-125, 88 S.Ct. 733, 741-746, 19 L.Ed.2d 936 (1968).
22. See Wright, supra, n. 15, at 19-20; Fraser, Ancillary Jurisdiction and the Joinder of Claims in the Federal Courts, 33 F.R.D. 27, 28.
23. It has long been established that if the requisite diversity existed between the original parties federal jurisdiction is not ousted merely because later intervenors or members of the class represented by the original parties are citizens of the same State as an adverse party. Stewart v. Dunham, 115 U.S. 61, 5 S.Ct. 1163, 29 L.Ed. 329 (1885); Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921). The original Rule 23 provided new occasions for the assertion of this principle, with respect to both 'true' class actions, Montgomery Ward & Co. v. Langer, 168 F.2d 182 (C.A.8th Cir. 1948), and those merely 'spurious,' Amen v. lack, 234 F.2d 12 (C.A.10th Cir. 1956), dismissed as moot, 355 U.S. 600, 78 S.Ct. 530, 2 L.Ed.2d 523 (1958).