Eisen v. Carlisle & Jacquelin

Supreme Court of the United States · 1974 · Civil Procedure

417 U.S. 156 (1974)

Updated July 29, 2026

Civil ProcedureClass ActionsRule 23NoticeAppealabilityFRCP 23Rule 23(b)(3)Rule 23(c)(2)

Facts

Petitioner sued on behalf of himself and a class of odd-lot traders on the New York Stock Exchange, alleging that respondent brokerage firms monopolized odd-lot trading and set an excessive odd-lot differential, and that the Exchange failed to regulate that differential. Petitioner's own damages stake was only $70, making the case economically viable only if it could proceed as a class action. The District Court found that about 2,250,000 class members could be identified by name and address through reasonable effort, and that individual notice to them would cost hundreds of thousands of dollars. To reduce cost, the District Court approved limited individual notice plus publication and, after a preliminary hearing on the merits, ordered respondents to pay 90% of the notice cost.

Issue

In a Rule 23(b)(3) class action, may a court dispense with individual notice to all identifiable class members because the cost is prohibitive, and may it shift most of the notice cost to defendants after a preliminary inquiry into the merits? Also, was the order allocating notice costs immediately appealable under 28 U.S.C. § 1291?

Rule

In a Rule 23(b)(3) class action, Rule 23(c)(2) unambiguously requires the best notice practicable under the circumstances, including individual notice to all class members who can be identified through reasonable effort. A court has no authority under Rule 23 to conduct a preliminary inquiry into the merits in order to allocate notice costs, and the representative plaintiff ordinarily must initially bear those costs in a truly adversary suit. An order conclusively allocating notice costs to defendants is appealable as a collateral order under Cohen because it resolves a separable, important issue collateral to the merits.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Flores files a federal damages class action in Chicago under Rule 23(b)(3) against Lakefront Transit Systems, alleging systematic overcharges on commuter passes. The company’s records and cooperating vendors can identify 420,000 riders by name and mailing address through database matching, but Nina asks the court to approve only newspaper and radio notice because individual mailings would cost $180,000.

How should the court rule on the proposed notice plan?

Explanation. In a Rule 23(b)(3) class action, Rule 23(c)(2) unambiguously requires the best notice practicable, including individual notice to all class members who can be identified through reasonable effort. High cost does not permit the court to substitute publication for mailed individual notice where names and addresses are reasonably ascertainable. Adequate representation does not eliminate the separate notice requirement.