FEINBERG, Circuit Judge:
Defendant Tams-Witmark Music Library, Inc. appeals from an order of the United States District Court for the Southern District of New York, Kevin T. Duffy, J., which certified a plaintiff class in this antitrust action. Tams-Witmark argues that the claims asserted are not suitable for class action treatment and that the named plaintiffs will not fairly and adequately protect the interests of the class. For reasons given below, we hold that the district court prematurely certified the class, and we vacate that certification.
The four named plaintiffs are owners and operators of theaters that deal with Tams-Witmark, a prominent licensor of stage rights to musical plays. Plaintiff Chateau de Ville Productions, Inc. (Chateau de Ville) operates dinner theaters in Massachusetts, Rhode Island and Connecticut, and is a wholly-owned subsidiary of a publicly owned corporation. Plaintiffs Westbury Music Fair, Inc., Connecticut Performing Arts Foundation, Inc. and Delta D. & I. Corp. operate musical theaters in Westbury, New York, Wallingford, Connecticut and Latham, New York, respectively. Westbury Music Fair, Inc. is also a wholly owned subsidiary of a publicly owned corporation. Tams-Witmark tells us that the controversy leading to this litigation began in 1975, when it advised several licensee theaters that they were improperly deducting so-called parking fees from gross box office receipts thereby reducing the basis on which royalties remitted to Tams-Witmark were computed. Some of the purported representative plaintiffs became involved in the controversy, which apparently became intense enough so that in October 1975, the president of Westbury's parent company wrote Tams-Witmark: "If a lawsuit is what you desire, we are not afraid of it and have a few of our own weapons to utilize." And in May 1976, plaintiffs forwarded a draft of a proposed class action complaint naming Tams-Witmark as defendant, which Tams-Witmark charges was sent for the purpose of negotiating a "settlement" of plaintiffs' private disputes with it. A lawsuit styled as a class action was then filed against Tams-Witmark in June 1976, shortly after efforts to resolve the controversy proved unsuccessful.
The complaint, which seeks damages and equitable relief, alleges that Tams-Witmark unlawfully acquired and monopolized licensing rights to copyrighted musical plays, allowing it to charge excessive licensing fees, and unlawfully tied to licenses a requirement
In August 1976, after filing the complaint and before defendant had filed its answer, plaintiffs moved for class certification. The only papers in support of the motion were a 3½ page affidavit of Chateau de Ville's president, which, among other things, indicated the size and importance of Chateau de Ville and Westbury, and three short lawyers' affidavits attesting to the experience of counsel for the purported class. In October, Tams-Witmark cross-moved for discovery on issues affecting the propriety of class status and for a stay of decision on plaintiffs' class certification motion, pending such discovery. Among the issues on which defendant sought discovery were whether questions of law and fact common to the members of the alleged class of plaintiffs predominate, whether the claims of the representative parties are typical of the claims of the alleged class, and whether the named plaintiffs can fairly and adequately protect the interests of the alleged class of plaintiffs.
In March 1977, Judge Duffy denied defendant's motion for a stay of class certification pending discovery and held that the lawsuit could be maintained as a class action on behalf of defendant's licensees
In this court, appellant makes a number of arguments involving both the nature of plaintiffs' action and the ability of plaintiffs to represent the class. Tams-Witmark claims, among other things, that the so-called class of some 100 theaters is not a true class at all. Appellant relies strongly on a recent decision of Judge Frankel in another suit by Chateau de Ville against one of Tams-Witmark's competitors, which held class status inappropriate because of a lack of both typicality and predominance of common questions. Chateau de Ville Productions, Inc. v. Samuel French, Inc., 76 Civ. 2926 (Nov. 23, 1976, S.D.N.Y.). Appellant claims that since musical plays differ in quality, style and popularity, determination of antitrust liability to any theater necessarily depends on differing facts as to any theater necessarily depends on differing facts as to each play license and as to each theater in the plaintiff class. Appellant also argues that the antitrust actions brought by plaintiffs are not appropriate for class action treatment because the plaintiffs must prove the fact of antitrust injury as an element of the substantive
Appellees respond vigorously to most of these contentions, arguing that common questions predominate over individual ones,
The case thus bristles with numerous thorny questions regarding the amenability of various kinds of antitrust suits to class action treatment and the fitness of these particular plaintiffs as class representatives. Although the former group of issues doubtless led—at least in part—to this court's earlier § 1292(b) certification, we do not believe it appropriate to reach them. On this record, we believe that the district court acted prematurely in resolving the latter issues, those concerning the adequacy or fairness of representation.
As set forth above, defendant sought discovery to show, inter alia, that the named plaintiffs had used the class action device for personal purposes, and
While the management of discovery is committed to the sound discretion of the trial court, Lewis v. Texaco, Inc., 527 F.2d 921, 926 (2d Cir.1975), we are required to determine whether that discretion was abused. Although the trial court must determine if an action is to be maintained as a class action "[a]s soon as practicable after the commencement" of the action, Fed.R.Civ.P. 23(c)(1), this does not mandate precipitate action. The court should defer decision on certification pending discovery if the existing record is inadequate for resolving the relevant issues. In particular, "discovery may be necessary in order to ... appraise the adequacy of representation." Frankel, Some Preliminary Observations Concerning Civil Rule 23, 43 F.R.D. 39, 41 (1967). See generally Cruz v. Estelle, 497 F.2d 496, 499 (5th Cir.1974); Huff v. N.D. Cass Company of Alabama, 485 F.2d 710, 712-13 (5th Cir.1973) (en banc); Yaffe v. Powers, 454 F.2d 1362, 1366 (1st Cir.1972). Failure to allow discovery, where there are substantial factual issues relevant to certification of the class, makes it impossible for the party seeking discovery to make an adequate presentation either in its memoranda of law or at the hearing on the motion if one is held.
We believe that in this case the district judge acted precipitately in deciding the class certification motion without fuller development of the facts on the issues concerning fairness and adequacy of representation. The serious issues thus raised were either not discussed at all in the district court opinion or were disposed of too summarily.
The order of the district court is therefore reversed and the case is remanded for further proceedings consistent with this opinion.