## Facts

- Morton Eisen, an “odd-lot” trader, sued two dominant odd-lot dealers and the New York Stock Exchange alleging antitrust violations and regulatory failures affecting odd-lot investors.
- Odd-lot trades (fewer than 100 shares) are executed outside the regular auction market and handled by specialized dealers acting as principals.
- The proposed class covered roughly 2.25 million odd-lot purchasers and sellers over a four-year period; the trial court found their names and addresses could be identified with reasonable effort.
- The trial court found individualized mailed notice to all identifiable class members would cost about $225,000.
- Eisen’s individual claim was small (about $70), making individual litigation impractical and leaving a class action as the only economically realistic vehicle for the claim.
- The trial court approved a notice plan providing individual notice to only a limited subset and publication notice to the remainder.
- After a preliminary merits hearing, the trial court concluded Eisen was likely to prevail and ordered defendants to pay 90% of the notice costs.
- The court of appeals reversed, requiring individual notice to all identifiable members, rejecting cost-shifting based on a preliminary merits view, and concluding the class action could not be maintained.

## Issues

1. Whether the court of appeals had jurisdiction under 28 U.S.C. § 1291 to review the district court’s notice and notice-cost allocation orders.
2. Whether Rule 23(c)(2) requires individual notice to all class members identifiable through reasonable effort in a Rule 23(b)(3) class action.
3. Whether a district court may shift most notice costs to defendants based on a preliminary assessment that the representative plaintiff is likely to succeed.
4. Whether the class action could be maintained given Rule 23(b)(3)’s manageability considerations once proper notice and cost rules are applied.

## Decision

- The Supreme Court affirmed the judgment directing dismissal of the action as a class suit.
- The Court held the notice-cost allocation order was appealable under § 1291 as a collateral order because it conclusively resolved an important issue separate from the merits and would be effectively unreviewable after final judgment.
- The Court held Rule 23(c)(2) mandates individual notice to all class members who can be identified through reasonable effort in a Rule 23(b)(3) class action.
- The Court held the representative plaintiff must initially bear the cost of providing the required notice and that the district court lacked authority to shift those costs to defendants based on a preliminary merits evaluation.

## Legal Principles

- Under the collateral-order doctrine, an order is appealable as “final” when it conclusively determines an important question separate from the merits and would otherwise evade effective review.
- In a Rule 23(b)(3) class action, “the best notice practicable” includes individual notice to all class members identifiable through reasonable effort; publication cannot substitute when names and addresses are available.
- The financial burden of providing Rule 23(c)(2) notice rests initially on the representative plaintiff seeking class treatment; Rule 23 does not authorize reallocating that cost through preliminary merits adjudication at the certification stage.
- Courts may not dilute Rule 23’s notice protections or reallocate notice costs to make an otherwise uneconomic class action feasible.

## Conclusion

The Court required individualized notice to all reasonably identifiable Rule 23(b)(3) class members, barred shifting notice costs to defendants based on a preliminary merits view, and treated notice-cost allocation as an appealable collateral order, resulting in dismissal of the proposed class action.


Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974)