Lipsett v. United States, 359 F.2d 956 (2d Cir. 1966). · Go Syfert
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Lipsett v. United States, 359 F.2d 956 (2d Cir. 1966). Cases Citing This Book View Copy Cite
45 citation events (1 in the last 25 years) across 13 distinct courts.
Strongest positive: Hill v. Western Electric Co. (ca4, 1982-03-01) · Strongest negative: Ionian Shipping Company, and Allied Chemical Corporation, Intervenor-Appellant v. British Law Insurance Co., Ltd. (ca2, 1970-05-08)
Treatment trajectory · 1966 → 2026 · click a year to view as-of
1966 1996 2026
Top citers, strongest first. 16 distinct citers. How cited ↗
discussed Cited "but see" Ionian Shipping Company, and Allied Chemical Corporation, Intervenor-Appellant v. British Law Insurance Co., Ltd.
2d Cir. · 1970 · signal: but see · confidence high
But see Lipsett v. United States, 359 F.2d 956 (2d Cir. 1966) (appeal from denial of permissive intervention dismissed where no abuse *189 of discretion); Brotherhood of Railroad Trainmen v. Baltimore & Ohio R.R.
discussed Cited as authority (rule) Hill v. Western Electric Co.
4th Cir. · 1982 · confidence medium
Montgomery v. Rumsfield, 572 F.2d 250, 255 (9th Cir. 1978); Lipsett v. United States, 359 F.2d 956, 959-60 (2d Cir. 1966); 3B Moore’s Federal Practice ¶ 24.10[4]; Wright & Miller, supra, § 1913 at 556-57.
discussed Cited as authority (rule) 28 Fair empl.prac.cas. 130, 28 Empl. Prac. Dec. P 32,478 Ollie T. Hill, John W. Ward, Charles R. Merriwether, Jr., Edward H. Minatee, Minnie Marble, Mary E. Carter, Individually and on Behalf of All Other Persons Similarly Situated v. Western Electric Company, Inc., Equal Employment Advisory Council, Amicus Curiae
4th Cir. · 1982 · confidence medium
Montgomery v. Rumsfield, 572 F.2d 250, 255 (9th Cir. 1978); Lipsett v. United States, 359 F.2d 956, 959-60 (2d Cir. 1966); 3B Moore's Federal Practice P 24.10(4); Wright & Miller, supra, § 1913 at 556-57.
discussed Cited as authority (rule) Alexander v. State (2×)
Alaska · 1980 · confidence medium
In Lipsett v. United States, 359 F.2d 956, 959 (2d Cir. 1966), the court stated: “[A]n exercise of discretion based on a misconception of the law is an abuse of discretion.” See also American Bd. Cas., Inc. v. Walter Reade-Sterling, Inc., 43 Cal.App.3d 401 , 117 Cal.Rptr. 617, 621 (1974); In re Adoption of Driscoll, 269 Cal.App.2d 735 , 75 Cal.Rptr. 382 , 384 (1969); Pitts v. White, 10 Terry 78 , 109 A.2d 786 , 788 (Del.1954); Peterson, Howell & Heather v. O’Neill, 314 So.2d 808, 810 (Fla.App. 1975); Sokol v. Liebstein, 9 N.J. 93 , 87 A.2d 1, 4 (1952); Associates Discount Corp. v. Wise, …
discussed Cited as authority (rule) Stanley WILLIAMS Et Al., Plaintiffs-Appellants, v. WALLACE SILVERSMITHS, INC., a Division of HMW Industries, Inc., Defendant-Appellee
2d Cir. · 1977 · confidence medium
City of New York v. International Pipe & Ceramics Corp., 410 F.2d 295 (2 Cir.1969); Lipsett v. United States, 359 F.2d 956, 958 (2 Cir.1966); All American Airways v. Elderd, 209 F.2d 247 (2 Cir.1954); cf. Male v. Crossroads Associates, 469 F.2d 616 , 619 n.3 (2 Cir.1972) (class action determination not reviewable absent “extraordinary circumstances”, citing Eisen and referring to the death knell doctrine, “with no discussion of the possibility of jurisdiction under section 1292(a)(1) although it would seem to be an appropriate case for it”, Marguiles, Appealability of Class Action Dete…
cited Cited as authority (rule) McMonagle v. Allstate Insurance
Pa. Super. Ct. · 1974 · confidence medium
Lipsett v. United States, 359 F. 2d 956, 958 (2d Cir. 1966); Nagler v. Admiral Corp., 248 F. 2d 319, 327 (2d Cir. 1957). 4 Anderson, Rule 2230.7 at p. 588 (1962).
cited Cited as authority (rule) Hyatt v. United Aircraft Corp.
D. Conn. · 1970 · signal: cf. · confidence medium
City of New York v. International Pipe & Ceramics Corp., supra; cf. Lipsett v. United States, 359 F.2d 956, 958-59 (2 Cir. 1966); All American Airways v. Elderd, 209 F.2d 247, 249 (2 Cir. 1954).
cited Cited as authority (rule) Moss v. Lane Co.
W.D. Va. · 1970 · confidence medium
Lipsett v. United States,, 359 F.2d 956, 959 (2d Cir. 1966) ; Nagler v. Admiral Corp., 248 F.2d 319, 327 (2d Cir. 1957).
cited Cited as authority (rule) Mersay v. First Republic Corp. of America
S.D.N.Y. · 1968 · confidence medium
Lipsett v. United States, 359 F.2d 956, 959 (2d Cir. 1966); Nagler v. Admiral Corp., 248 F.2d 319, 327 (2d Cir. 1957).
discussed Cited as authority (rule) Miller v. Steinbach
S.D.N.Y. · 1967 · confidence medium
Lipsett v. United States, 359 F.2d 956, 959 (2d Cir. 1966); All American Airways v. Elderd, 209 F.2d 247, 249 (2d Cir. 1954); California Apparel Creators v. Wieder of California, Inc., 162 F.2d 893, 895 , 174 A.L.R. 481 (2d Cir.), cert. denied 332 U.S. 816 , 68 S.Ct. 156 , 92 L.Ed. 393 (1947); Oppenheimer v. F. J.
cited Cited "see" Candelaria v. Conopco, Inc.
E.D.N.Y · 2023 · signal: see · confidence high
See Lipsett v. United States, 359 F.2d 956, 958 (2d Cir. 1966).
cited Cited "see" Securities & Exchange Commission v. Everest Management Corp.
2d Cir. · 1972 · signal: see · confidence high
See Lip-sett v. United States, 359 F.2d 956 , 959-60 (2 Cir. 1966).
discussed Cited "see" Sec v. Everest Management Corporation
2d Cir. · 1972 · signal: see · confidence high
See Lipsett v. United States, 359 F.2d 956, 959-60 (2 Cir. 1966). 17 Moreover, the importance to a private litigant of being permitted to intervene in an SEC action strikes us as exaggerated by appellants. 5 They claim that they would not have access to the SEC's extensive resources and information regarding this particular action if a consent decree were to be entered.
discussed Cited "see" Rolle v. New York City Housing Authority
S.D.N.Y. · 1969 · signal: see · confidence high
See Lipsett v. United States, 359 F.2d 956 (2d Cir. 1966); Fox v. Glickman Corp., 355 F.2d 161, 165 (2d Cir. 1965), cert. denied, Levy v. Glickman Corp., 384 U.S. 960 , 86 S.Ct. 1585 , 16 L.Ed.2d 672 (1966).
discussed Cited "see" Eisen v. Carlisle & Jacquelin
unknown court · 1966 · signal: see · confidence high
See Lipsett v. United States, 359 F.2d 956, 959 (2d Cir. 1966) ; All American Airways, Inc. v. Elderd, 209 F.2d 247 (2d Cir. 1954) ; Kainz v. Anheuser-Busch, Inc., 194 F.2d 737 (7th Cir. 1952); Schatte v. International Alliance of Theatrical Stage Employees, etc., 183 F.2d 685 (9th Cir. 1950); California Apparel Creators v. Wieder of California, 162 F.2d 893 , 174 A.L.R. 481 (2d Cir. 1947); Cutler v. American Federation of Musicians, etc., 211 F.Supp. 433 (S.D.N.Y.1962).
cited Cited "see, e.g." Hynard v. Internal Revenue Service
E.D.N.Y · 1994 · signal: see, e.g. · confidence low
See e.g., Lipsett v. United States, 37 F.R.D. 549 (S.D.N.Y.1965), appeal dismissed, 359 F.2d 956 (2d Cir.1966).
Retrieving the full opinion text from the archive…
Julius Lipsett and Betty Lipsett, and Myron L. Chase and Sylvia L. Chase, on Behalf of Themselves and All Other Similarly Situated Option Holding Employees of Ogden Corporation or Its Subsidiaries
v.
United States
30064_1.
Court of Appeals for the Second Circuit.
Apr 29, 1966.
359 F.2d 956
Cited by 11 opinions  |  Published

359 F.2d 956

66-1 USTC P 9392

Julius LIPSETT and Betty Lipsett, and Myron L. Chase and
Sylvia L. Chase, on Behalf of themselves and all other
similarly situated option holding employees of Ogden
Corporation or its subsidiaries, Appellants,
v.
UNITED STATES of America, Appellee.

No. 320, Docket 30064.

United States Court of Appeals Second Circuit.

Argued April 5, 1966.
Decided April 29, 1966.

Jerome Kurtz, Philadelphia, Pa. (Judah I. Labovitz, and Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., and Irving S. K. Chin, and Holtzmann, Wise & Shepard, New York City, on the brief), for appellants.

Harvey R. Blau, Asst. U.S. Atty., Southern District of New York (Robert M. Morgenthau, U.S. Atty., and Laurence Vogel, Asst. U.S. Atty., Southern District of New York, on brief), for appellee.

Before SMITH and HAYS, Circuit Judges, and CLARIE, District Judge.[*]

J. JOSEPH SMITH, Circuit Judge:

[*~956]1

Julius Lipsett (and Betty Lipsett) and Myron L. Chase (and Sylvia L. Chase), and proposed intervening plaintiffs appeal from an order of the United States District Court for the Southern District of New York, John M. Cannella, Judge, striking allegations in the pleadings designating the action as one brought on behalf of a class, and denying motions to intervene made by eleven persons. We find no abuse of discretion, and dismiss the appeal.

2

Lipsett and Chase brought this action for a refund of taxes paid. They were among 94 holders of options to purchase shares in the Ogden Corporation. Ogden organized Syntex Corporation to acquire assets recently purchased by it, and issued rights to Syntax stock to its shareholders and to the holders of options, on the basis of one right for each for Ogden shares held or subject to option. The proceeds of the resulting Syntex stock issue was used to purchase the assets.

3

The Internal Revenue Service claimed the issuance of Syntex rights to option holders created ordinary income; Lipsett and Chase paid the tax, and brought this suit as a class action for themselves and the 92 other option holders. Eleven of them moved to intervene. All had made refund claims and waited the necessary six months before suit. I.R.C. 6532 and 7422. The motions to intervene were denied, and the government's motion to strike the allegations of a class action was granted.

[*~957]4

The first issues are jurisdictional. The order striking the allegation of a class action is certainly not appealable. As to the intervenors, they lack standing altogether. As to the original plaintiffs, the matter is not within the collateral order doctrine, Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), because they too lack standing. Striking the allegation merely 'prettifies' the pleadings, see All American Airways v. Elderd, 209 F.2d 247, 249 (2 Cir. 1954), and the fact that a matter is a spurious class action, Rule 23(a)(3),[1] does not make such a case any stronger. All American; California Apparel Creators v. Wieder of California, 162 F.2d 893, 897 (2 Cir.), cert. den.332 U.S. 816, 68 S.Ct. 156, 92 L.Ed. 393 (1947). Hence the removal of that allegation does not prejudice anyone. While, as appellants note citing Nagler v. Admiral Corp., 248 F.2d 319, 327 (2 Cir. 1957), a spurious class action is an 'invitation * * * to join the battle,' striking the allegation does not ruin the invitation. 'Thus the order can have no possible effect as withdrawing an invitation * * * since each will make his plea to intervene under F.R. 24(b),' All American, at 249. See also Rogers v. Alaska S.S. Co., 249 F.2d 646, 648 (9 Cir. 1957).

5

The order denying intervention is appealable only if there was an abuse of discretion, since the question is one of permissive intervention within Rule 24(b); accordingly the question of appellate jurisdiction as to this order must await the merits. Levin v. Ruby Trading Corp., 333 F.2d 592, 594 (2 Cir. 1964); Fox v. Glickman Corp., 355 F.2d 161 (2 Cir. 1965).

6

On the merits, the striking of the allegations of a spurious class action ought generally to be improper unless the court knows no intervention is possible. Here the court treated the questions in reverse order. First it struck the allegations, then it denied intervention, and one of the reasons for the denial of intervention was that the allegations had been struck.

7

Since the spurious class action is a mere device for permissive joinder, the proper procedure is to leave the allegation standing to facilitiate (even though the effect is probably minimal anyway) intervention.[2] 'If it shall later appear that the plaintiffs are not able within a reasonable time to obtain others to intervene in the class action it may properly be dismissed as a class action * * *' Oppenheimer v. F. J. Young Co.,144 F.2d 387, 390 (2 Cir. 1944).

8

In other words, ordinarily the District Court should leave undisturbed the allegation until it is convinced no motion for intervention will be granted. Thus the pleadings should not be altered, ordinarily, before some intervenors have appeared, and their motion has been ruled on. Under certain circumstances the court will be able to tell after ruling on one motion to intervene, that no others will be treated differently; then the court could strike the allegation of a class suit, though the only reason would be esthetic. That is the case here; this is the type of action where the court can predict from one denial of intervention that the remaining 81 option holders would be similarly treated should they attempt to come in.

[*~958]9

Furthermore, again because Rule 23(a)(3) is merely a device for permissive joinder, there should be little, if any, inquiry into whether the class is of appropriate size, or whether any members of the class will meet jurisdictional bars (really an aspect of the size of the class). Unlike the 'true' class action, Rule 23(a)(1), the non-party members are not bound by the judgment, at least an adverse one.[3] Oppenheimer, supra; All American, supra. There is really no question of adequacy of representation, for in fact there is no representation at all, of non-party members. Since the District Court must use its discretion on ruling on motions to intervene, there would be no point in deciding the matter earlier, even if it could, when the question is largely speculative. Indeed, the question of size is irrelevant for a spurious class action, except as it bears on convenience in intervention.

10

Turning to the question, then, whether denying intervention was an abuse of discretion, it is undoubtedly true that if the denial was solely based on the striking of the allegation, the matter would require reversal, for an exercise of discretion based on a misconception of the law is an abuse of discretion. But the District Court relied, alternatively, on a conclusion that to allow intervention would confuse the trial with collateral issues possibly to be raised due to the doctrine of equitable recoupment, that the suit for refund involves an examination of every element of the return. In this respect where there is a lively probability of trial confusion, the denial of intervention is not an abuse of discretion even though there is a well defined issue common to all the claims. While separate trial might have been available, it is hard to see what would be gained, and the inconvenience to the government, in having to try the refund suits in an area outside the normal, was a proper matter for consideration. Each taxpayer and available a remedy by separate action in a proper forum if he met the statutory requirements for a tax suit.

[*~959]11

There was here a proper exercise of discretion, and since the ruling is only appealable if at all in case of abuse of discretion, the appeal must be dismissed. It is so ordered.

*

Sitting by designation

1

The new Rule 23, transmitted to Congress February 28, 1966, to take effect, absent Congressional action, see 28 U.S.C. 2072, July 1, 1966, radically alters treatment of cases now known as spurious class actions, particularly in allowing nonappearing members to be bound by the judgment, and in providing, for that reason, for notice, Rule 23(c)(2), early determination of the existence of a class, Rule 23(c)(1), and a requirement of adequate representation in all class actions, Rule 23(a)(4)

2

The new Rule 23, with built-in provisions for intervention in a case formerly known as a spurious class action, and requiring the early determination of the existence of a class, is another matter

3

Cf. the new Rule 23