KAUFMAN, District Judge.
This is an appeal brought by The Bon Ami Company, defendant below, from an order of Judge Cashin denying (a) pre-trial consolidation of three stockholders' derivative actions under a consolidated complaint; (b) the appointment of general counsel for the consolidated plaintiffs and (c) an injunction restraining other stockholders from commencing further suits in the federal court on the same causes of action.
The three actions now before us were all instituted by minority shareholders seeking recovery on behalf of The Bon Ami Company against its officers, directors and controlling shareholders for breach of their fiduciary duty. Faced with similar actions pending in the state courts of New York and Delaware, the appellants moved for consolidation for all purposes and other relief under Rule 42(a) Fed.R.Civ.P., 28 U.S.C.A., alleging that three similar and unconsolidated actions will precipitate duplicatory motion practice with its attendant waste of judicial time and effort. Two of the three plaintiffs below joined in the appellant's motion and consented to the requested consolidation. The third representing the MacAlister group strenuously opposed the motion. The trial court by the order dated June 9, 1958 consolidated the three actions for trial only, denying all other requested relief.
Interesting questions concerning the scope and content of Rule 42 are presented by this appeal. However, preliminary to any discussion of the substantive merits of appellant's contentions we must ascertain whether our jurisdiction permits us at this time to entertain an appeal from the order below.
With certain notable exceptions not now material, interlocutory orders have generally not been appealable. 28 U.S.C. §§ 1291, 1292. But this rule of finality has not been mechanically applied in patent disregard of the practicalities of litigation. In many instances such so-called "interlocutory" orders
The finality required by statute has therefore been judicially qualified to mean, not only decisions terminating litigation but also orders which are collateral and which are irreparable in their effect upon the rights of some party. See Underwood, Appeals in the Federal Practice From Collateral Orders, 36 Va. L.Rev. 731, 736 (1950); 6 Moore, Federal Practice, Para. 54.14 (2d Ed.1953).
This collateral order doctrine has long been applied by the federal judiciary. It was given prominence in the Cohen case where the Court upheld the appealability of an order denying a motion for security for costs in a stockholders' derivative suit. The doctrine has been subsequently applied in a variety of situations.
In Johnson v. Manhattan Ry. Co., 2 Cir., 1932, 61 F.2d 934, 940, affirmed, 1932, 289 U.S. 479, 53 S.Ct. 721, 77 L.Ed. 1331, this court held an order of consolidation appealable on grounds that immediate appeal was the only effective means of correcting the error, if there be one, since after the final decree the damage "would have become moot and would not survive." On the other hand the Tenth Circuit in Skirvin v. Mesta, 10 Cir., 1944, 141 F.2d 668, has stated that an order of consolidation or a denial of a motion to vacate such consolidation is not appealable.
We do not attempt here to prescribe a rule of universal application to orders granting or denying consolidation. Suffice it to say that under the circumstances here presented we are satisfied that the order below sufficiently meets the tests set out in Cohen v. Beneficial Industrial Loan Corp., supra. A denial of the consolidation sought bears no relation to the substantive claims in the case, is collateral thereto and is not merged in the final judgment. Furthermore, the duplication and confusion which appellant fears will ensue if the order below is permitted to stand, may prove oppressive. Under these circumstances such relief as appellant may now be entitled to will be unavailing if review were to be deferred until final judgment.
In reaching this conclusion we are not unmoved by the fact that serious and unsettled questions are presented for review. A search for relevant precedents reveals that this is the first time that the power of the courts to order consolidation for the pre-trial stages and the appointment of general counsel to supervise and coordinate the prosecution of plaintiffs' case has been presented to a federal appellate court. In view of this state of affairs direction from an appellate court would define powers in an area presently uncertain and indeed insure uniform treatment and consistency in approach within this circuit.
B. Consolidation and Appointment of General Counsel
The court below questioned its power to consolidate actions for purposes other than for trial. We think such power exists. The purpose of consolidation is to permit trial convenience and economy in administration. Toward this end Rule 42(a) in addition to providing for joint trials in actions involving common questions of law and fact specifically confers the authority to "make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay." Certainly, overlapping duplication in motion practices and pre-trial procedures occasioned by competing counsel representing different plaintiffs in separate stockholder derivative actions constitute the waste and inefficiency sought to be avoided by the lucid direction contained in the rule. Special treatment is often called for in stockholders' derivative actions where the stockholder sues, not in his own right, but in that of the corporation and on behalf of his fellow stockholders. Often many such suits by other stockholders are brought, attacking the same transactions. The cost of defending these multiple actions may well do serious harm to the very corporation in whose interest they are supposedly brought. An order consolidating such actions during the pre-trial stages, together with the appointment of a general counsel may in many instances prove the only effective means of channeling the efforts of counsel along constructive lines and its implementation must be considered within the clear contemplation of the rule. It certainly does not clash with the oft repeated policy underlying consolidation under Rule 42, to wit, "[C]onsolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties, in one suit parties in another." Johnson v. Manhattan Ry. Co., 1933, 289 U.S. 479, 496-497, 53 S.Ct. 721, 727, 77 L.Ed. 1331. See also Greenberg v. Giannini, 2 Cir., 1944, 140 F.2d 550, 552, 152 A.L.R. 966; Toledo, St. L. & K. C. R. Co. v. Continental Trust Co., 6 Cir., 1899, 95 F. 497, 506, certiorari denied, 1900, 176 U.S. 219, 20 S.Ct. 383, 44 L.Ed. 442; National Nut Co. of Cal. v. Susu Nut Co., D.C.N.D.Ill.1945, 61 F.Supp. 86.
By such a procedure, one general counsel is not substituted for the counsel of each party plaintiff's choice. The function of general counsel is merely to supervise and coordinate the conduct of plaintiffs' cases. The separate actions are not merged under the direction of one court appointed master of litigation — each counsel is still free to present his own case, to examine witnesses and to open and close before the jury, if there be one. But even if the rule were more restricted in its scope we would be most reluctant to deny such inherent power to the district courts. The power to order consolidation prior to trial falls within the broad inherent authority of 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." Cardozo, J. in Landis v. North American Co., 1936, 299 U.S. 248, 254, 57 S.Ct. 163, 166, 81 L.Ed. 153.
We see no reason nor has any been suggested by counsel why the considerations permitting consolidation for trial are not equally apposite in connection with consolidation in the period before trial. Indeed, an orderly and expeditious disposition at trial is dependent in large part on the manner in which the pre-trial proceedings are conducted. If one of the purposes of consolidation for trial be to expedite the proceedings and avoid needless time and expense to the litigants and to the court, such objectives are as desirable and as attainable in the period utilized in preparing for the trial.
Consolidation for all purposes and the appointment of general counsel is not new. It has long been recognized by the courts in New York as an expeditious
Appalling calendar conditions have prompted numerous studies into calendar and trial practice. Such diagnosis as has been made has been varied; so has the proposed cure. But progress there has been — mainly through a greater utilization of pre-trial techniques and devices.
The benefits achieved by consolidation and the appointment of general counsel, i.e. elimination of duplication and repetition and in effect the creation of a coordinator of diffuse plaintiffs through whom motions and discovery proceedings will be channeled, will most certainly redound to the benefit of all parties to the litigation. The advantages of this procedure should not be denied litigants in the federal courts because of misapplied notions concerning interference with a party's right to his own counsel. Cf. Mottolese v. Kaufman, 2 Cir., 1949, 176 F.2d 301.
But while the district courts are invested with the power to consolidate actions for all purposes and to appoint a general counsel they have no such authority to order a consolidated complaint as requested by appellant. See Levin v. Skouras, supra; National Nut Co. of Cal. v. Susu Nut Co., supra. Such an order would tend to merge the various actions in disregard of the caveat expressed in Johnson v. Manhattan Ry. Co., 1933, 289 U.S. 479, 496-497, 53 S.Ct. 721, 77 L.Ed. 1331.
C. Exercise of Discretion
Finding that the necessary power is reposed in the district court to order pre-trial consolidation and the appointment of one general counsel it remains for us to determine whether the declination to do so constituted an abuse of discretion under the circumstances presented. Relief of this type is concededly extraordinary. It should be granted only under compelling circumstances and
Many avenues of relief were open to the appellant to forestall the possible confusion and duplication which it alleges will inevitably result from the present state of affairs. If appropriate, application might have been made for the appointment of a pre-trial master as was done in Levin v. Skouras. Such masters have proven effective in the past in cases such as Ferguson v. Ford Motor Co., Civ. 44-482 (S.D.N.Y.) and Schwartz v. Broadcast Music, Inc., Civ. 89-103 (S.D. N.Y.) in preventing the very duplication and harassment which appellant fears here. See Kaufman, Masters in the Federal Courts: Rule 53, 58 Colum.L.Rev. 452, 466-68 (1958). Indeed, because a pre-trial master would be in a position to reduce the length of depositions, make the depositions more orderly, and be available for on-the-spot rulings, if desired, his entry into a case might well prove more beneficial to the parties than pre-trial consolidation and the appointment of a general counsel.
Similarly, an application for the assignment of a single judge pursuant to Rule 2 of the General Rules of the District Courts for the Southern and Eastern Districts of New York might well have been considered. Finally, though several notices of examination have already been filed appellant has not sought the protection of Rules 30(b) or 30(d). Failure to invoke any or all of these devices precludes any finding that the relief then requested was essential to the adequate protection of appellant's rights, and necessary to the orderly conduct of the proceedings.
There is present in this case still another factor militating against the granting of the relief requested by appellant. The MacAlister group charges that appellant and one of the other plaintiffs below have cooperated in an attempt to oust counsel for MacAlister from control of their own litigation and to lodge control in a "friendly" counsel. This allegation indicates that there is more than the usual amount of animosity present in these cases, and that there is small likelihood that counsel will be able to work harmoniously under the guiding hand of one general counsel. See Price v. Creole Petroleum Corp., Sup.1944, 51 N.Y.S.2d 783.
For this reason, the lower court was justified at that time in denying the appointment of a general counsel even for the limited purpose of supervising the conduct of plaintiffs' case at trial. In any event, whether a general counsel is necessary to insure the orderly procedure at trial is a question for future determination.
D. The Denial of the Injunction
There remains for our consideration the propriety of Judge Cashin's denial of an injunction restraining all other stockholders from asserting the same claims in court actions not yet commenced. Without deciding the authority of the District Court to grant such relief we find appellant's fears of being deluged with similar derivative stockholders' suits to be based on mere surmise and speculation. If such fears should prove well founded the court below can then consider the propriety of issuing stays pending the determination of the suits now at issue, should the interests of justice so dictate.
The order below is affirmed in all respects.
"[T]here can be but one master of a litigation on the side of the plaintiffs. It is also plain that it would be as easy to drive a span of horses pulling in diverging directions, as to conduct a litigation by separate, independent action of various plaintiffs, acting without concert, and with possible discord."