108 See discussion in Benjamin S. DuVal, Jr., The Class Action as an Antitrust Enforcement Device: The Chicago Experience (I), 1976 A.B.F. Res. J. 1021, 1087-95 [hereinafter cited as Part I]. For a definition of “per se,”“quasi per se,”“Robinson-Patman,” and “other offense” see Part I at 1087-91.Google Scholar

109 The Childrens Books cluster, Illinois v. Harper & Row Publishers, Inc., and related cases, 67 C 1899 (N.D. Ill., filed Nov. 1, 1967), included 49 cases, grouped in nine entities, which stayed in the district. The Auto Fleet cluster, Connecticut v. General Motors Corp. and related cases, 71 C 830 (N.D. Ill., filed Apr. 2, 1971), contained 44 cases. For a more detailed description see Part 1, supra note 108, at 1036, 1043.Google Scholar

110 Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961).Google Scholar

111 Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959).Google Scholar

112 For an explanation of the concept of “controlling for” see Part 1, supra note 108, at rotes 43 & 63.Google Scholar

113 See Part I, supra note 108, at 1087-95.Google Scholar

114 See id., text at notes 95-97.Google Scholar

115 See discussion in id. at n.91 and authorities cited therein.Google Scholar

116 The attorney interviews indicated that two of these cases could not have been otherwise maintained.Google Scholar

117 No implication is intended as to the appropriateness of class action treatment in the particular Robinson-Patman cases brought as class actions.Google Scholar

118 Of ten such cases either the named plaintiffs or the class have recovered $100,000 or more in eight and obtained injunctive relief in a ninth. In the one case in which no relief was obtained, plaintiff chose not to proceed with his case when he discovered that he was already included as a class member in an action previously filed in another district. “Cases” includes both cases and case clusters. One cluster of cases, Corona Constr. Co. v. Ampress Brick Co. and related cases, 73 C 1082 (N.D. Ill., filed Apr. 26, 1973), was treated as a terminated case for these computations, even though one of the cases in the cluster remained pending at the time the data were gathered, because of the entry of a substantial settlement in four of the cases. A cluster of cases that was determined not to be antitrust in character to any substantial extent was excluded. There were, in all, 29 cases and clusters considered terminated for purposes of these computations.Google Scholar

119 Illinois v. Harper & Row Publishers, Inc., and related cases, 67 C 1899 (N.D. Ill., filed Nov. 1, 1967); Liebman v. J. W. Petersen Coal & Oil Co. and consolidated cases, 71 C 1340 (N.D. Ill., filed June 2, 1971); Colson v. Hilton Hotels Corp., 71 C 1590 (N.D. Ill., filed July 2, 1971); Corona Constr. Co. v. Ampress Brick Co. and related cases, 73 C 1082 (N.D. Ill., filed Apr. 26, 1973).Google Scholar

120 In one of these cases, moreover, the extent of the recovery obtained by the class is questionable (Butkus v. Chicken Unlimited Enterprises, Inc., and related cases, 71 C 1607 (N.D. Ill., filed July 2, 1971)–see discussion at pp. 1314-16 infra), while in a second a judgment for plaintiff in the trial court was reversed on appeal. Mayer Paving & Asphalt Co. v. General Dynamics Corp., 69 C 1803 (N.D. Ill., filed Aug. 29, 1969).Google Scholar

121 15 U.S.C. sec. 16(a) (1970).Google Scholar

122 Illinois v. Harper & Row Publishers, Inc., and related cases, 67 C 1899 (N.D. Ill., filed Nov. 1, 1967). The government enforcement suits, 18 in number, were filed on April 18, 1967. United States v. Harper & Row Publishers, Inc., and related cases, 67 C 612 (N.D. Ill.).Google Scholar

123 Although there is a general policy of “secrecy in grand jury proceedings,” disclosure of grand jury transcripts is permissible on a showing of particularized need. See, e.g., Dennis v. United States, 384 U.S. 855 (1966); United States v. Procter & Gamble Co., 356 U.S. 677 (1958); In re Cement-Concrete Block Chicago Area Grand Jury Proceedings, 1975-1 Trade Cas. para. 60109 (N.D. Ill. 1974) (ordering disclosure); Illinois v. Harper & Row Publishers, Inc., 50 F.R.D. 37 (N.D. Ill. 1969), cert. denied, 394 U.S. 944 (1969) (ordering disclosure); section of Antitrust Law of the American Bar Association, Antitrust Law Developments 276-78 (Chicago: American Bar Association, 1975); 1 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure sec. 109 (St. Paul: West Publishing Co., 1969). Access to documents produced in a government investigation, including documents presented to the grand jury, has been ordered without a showing of particularized need. See, e.g., Cement-Concrete Block Chicago Area Grand Jury Proceedings, 1974–1 Trade Cas. para. 75131 (N.D. Ill. 1974); Illinois v. Harper & Row Publishers, Inc., 1969 Trade Cas. para. 72784 (N.D. Ill. 1968); section of Antitrust Law, supra, at 276-78. It is noteworthy that one of the reasons given by the Judicial Panel on Multidistrict Litigation for transferring the Childrens Books cases filed in other districts was that “the United State [sic] filed its seminal antitrust actions in that district and, of course, the grand jury documents relating to the actions are in Chicago.”In re Library Editions of Children's Books, 297 F. Supp. 385 (J.P.M.L. 1968). For contrasting views of the developments regarding discovery of the results of government investigations, compare Seymour Kurland, Discovery: Its Uses and Abuses–the Plaintiffs' Perspective, 44 Antitrust L.J. 3 (1975), with Peter D. Byrnes, Discovery: Its Uses and Abuses–the Defendants' Perspective, 44 Antitrust L.J. 14 (1975).Google Scholar

124 Transcript of Proceedings Before J. Bauer on December 13, 1973, United States v. Ampress Brick Co., 73 Cr. 312 (N.D. Ill.), at 22-23. When settlements had been negotiated in private actions he stated, “I think I twisted the arms of the defendants in the case to proceed with some diligence to dispose of the claims of outstanding people who were injured by their actions.” Transcript of Proceedings Before J. Bauer on July 29, 1974, at 18.Google Scholar

125 Excluding Childrens Books and Auto Fleet. Since both of these giant clusters were based on conduct challenged in government enforcement proceedings, if they are included a prior or contemporaneous government enforcement proceeding is a feature of most clustered cases.Google Scholar

126 In addition, in two class actions that did not appear to have significant antitrust aspects there was a related proceeding by a federal administrative agency other than the Federal Trade Commission.Google Scholar

127 Annual Report of the Director of the Administrative Office of the United States Courts, 1974 [annual reports hereinafter cited as 19 Admin. Office U.S. Cts. Annual Rep.]. In addition 87 criminal prosecutions were initiated. Id. Since criminal prosecutions generally duplicate companion civil cases, the appropriate figure for comparison is the number of civil enforcement proceedings and not the combined total.Google Scholar

128 1967 id. at 206; 1968 id. at 198; 1969 id. at 210; 1970 id. at 236; 1971 id. at 268; 1972 id. at 298; 1973 id. at A-16. These figures are slightly misleading, since 18 of the government enforcement actions filed in this district were the Childrens Books cases.Google Scholar

129 1967 FTC Ann. Rep. 21-28; 1968 FTC Ann. Rep. 17; 1969 FTC Ann. Rep. 21; 1970 FTC Ann. Rep. 17; 1971 FTC Ann. Rep. 22.Google Scholar

130 See, e.g., Beverly C. Moore, Jr., The Potential Function of the Modern Class Action Suit, 2 Class Action Rep. 47 (1973); David I. Shapiro, Processing the Consumer's Claim, 41 Antitrust L.J. 257 (1972).Google Scholar

131 See FTC v. Texaco, Inc., 393 U.S. 223, 226 (1968):Google Scholar

That Texaco holds dominant economic power over its dealers is clearly shown by the record in this case. In fact. such power is “inherent in the structure and economics of the petroleum distribution system.”Google Scholar

132 Counting each entity that contained a suit by a natural person consumer or investor as a single case. If each clustered case is counted separately, 10 percent of antitrust cases during the 1967-73 period were brought by natural person consumers or investors.Google Scholar

133 Insdorf v. Chicago Mercantile Exch., 61 C 606 (N.D. Ill., filed Apr. 6, 1961). Plaintiffs were investors in commodities futures and alleged actual damages amounting to $146,179.Google Scholar

134 There was a high level of agreement among attorneys regarding whether cases on which they had been involved could have been brought other than as class actions. There were only three instances of clear-cut disagreement. In all three instances the plaintiff's attorney stated that the proceeding could not have been brought other than as a class action, while the defendants' attorney thought it could have been. In two of these three cases an indication of the size of the claim of the named plaintiffs could not be obtained.Google Scholar

135 The defendants' attorneys in this case were of the view that enough was at stake to warrant a nonclass proceeding.Google Scholar

136 Although one of the defendants' attorneys in this case was of the view that the suit could have been maintained by the named plaintiff, circumstances surrounding the settlement tend to support the assertion by the plaintiff's attorney.Google Scholar

137 15 U.S.C. sec. 15 (1970).Google Scholar

138 Comment, Attorneys' Fees in Individual and Class Action Antitrust Litigation, 60 Cal. L. Rev. 1656 (1972).CrossRefGoogle Scholar

139 The following tabulation shows considerations mentioned by attorneys as influencing decision to bring case as a class action:Google Scholar

Size of attorneys' fees 9Google Scholar

Leverage in obtaining a settlement 7Google Scholar

To assist in obtaining discovery 3Google Scholar

To bring about a change in defendant's behavior 1Google Scholar

Psychological satisfaction 2Google Scholar

Protection against inclusion of client in another attorney's class action 1Google Scholar

Reflex action 1Google Scholar

140 Fed. R. Civ. P. 26(6)(1); see 4 James Wm. Moore & Jo Desha Lucas, Moore's Federal Practice para. 26.56(1] (New York: Matthew Bender, 1975).Google Scholar

141 Bergen Rambler, Inc. v. American Motors Sales Corp., 30 F.R.D. 334, 335 (D.N.J. 1962).Google Scholar

142 Id.Google Scholar

143 Allied Shoe Mach. Corp. v. United Shoe Mach. Corp., 19 F.R.D. 181 (D. Mass. 1956). See Schenker v. Pepperidge Farm, Inc., 7 Fed. Rules Serv. 2d 34.41, Case 5 (S.D.N.Y. 1963); Leonia Amusement Corp. v. Loew's, Inc., 20 Fed. Rules Serv. 34.41, Case 1 (S.D.N.Y. 1954).Google Scholar

143a Using Fisher's exact test, the difference between 4 of 120 nonclass cases and 0 of 20 class actions is not statistically significant.Google Scholar

144 Only one of which had been terminated and neither of which resulted in any litigated judgments.Google Scholar

145 Poller v. Columbia Broadcasting Sys., Inc., 368 U.S. 464, 473 (1962);Google Scholar

We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of “even handed justice.”Google Scholar

146 If the Childrens Books cluster is taken into account the proportion of cases in class and mixed clusters that were voluntarily dismissed would be substantially increased. Of the cases in mixed and class clusters 95 percent were voluntarily dismissed if the Childrens Books cases are taken into account. This illustrates the tendency to mislead of figures that treat each clustered case as a separate unit, since the dismissals in the Childrens Books cases were entered pursuant to a limited number of package settlements.Google Scholar

147 The description of the class settlements is based solely on reported opinions and documents on file with the clerk.Google Scholar

148 Illinois v. Harper & Row Publishers, Inc., and related cases, 67 C 1899 (N.D. Ill., filed Nov. 1, 1967).Google Scholar

149 This amount does not include interest or the amount of the Massachusetts settlements that were reached before the cases were transferred to Illinois.Google Scholar

150 Although in two of these cases classes had been certified the cases were not treated as class actions for settlement purposes.Google Scholar

151 (1) All public school systems in the United States with an enrollment of 12,000 students or more, and (2) all state and municipal agencies that maintain libraries for the use of the general public and annual book funds in excess of $10,000. Although the classes so defined included approximately 1,324 members, the trial judge stated that if the named plaintiffs and class members in statewide class actions are excluded fewer than one-half of the 1,324 class members remain. Illinois v. Harper & Row Publishers, Inc., 301 F. Supp. 484, 492 n.21 (N.D. Ill. 1969). The court ruled that members of the national class who had commenced private suits or were included in any of the statewide class actions would be excluded from the national class unless they specifically requested inclusion.Google Scholar

152 It is not clear whether the 285 school districts and 396 libraries include school districts and libraries in Michigan. It is possible, therefore, that the number of distributees is greater and the average amounts distributed correspondingly smaller than reported here.Google Scholar

153 Illinois v. Harper & Row Publishers, Inc., 55 F.R.D. 221, 226 (N.D. Ill. 1972) (decision on attorneys' fees).Google Scholar

154 Liebman v. J. W. Petersen Coal & Oil Co. and consolidated cases, 71 C 1340 (N.D. Ill., filed June 2, 1971), 1974 Trade Cas. para. 75117 (N.D. Ill. 1974) (approving settlement).Google Scholar

155 71 C 1590 (N.D. Ill., filed July 2, 1971).Google Scholar

156 The class in the cases transferred to California was estimated at 40 million persons. In re Hotel Telephone Charges, 500 F.2d 86, 88 (9th Cir. 1974).Google Scholar

157 Id.Google Scholar

158 Corona Constr. Co. v. Ampress Brick Co. and related cases, 73 C 1082 (N.D. Ill., filed Apr. 26, 1973).Google Scholar

159 Butkus v. Chicken Unlimited Enterprises, Inc., and related cases, 71 C 1607 (N.D. Ill., filed July 2, 1971). At the request of the parties the court ordered that the settlement agreement should be placed in camera and under seal of the court. Although earlier efforts to locate a copy of the agreement had failed, a painstaking search of the files in the clerk's office undertaken after dismissal of the appeal uncovered a copy of the agreement.Google Scholar

The practice of placing the settlement agreement in a class action in camera is improper. Unlike settlement agreements in nonclass cases, which are essentially private contracts between the parties, settlements in class actions require judicial approval. The effect of placing the agreement in camera is to shield the judicial decision approving it from effective scrutiny.Google Scholar

160 1971 Trade Cas. para. 73780 (N.D. Ill., 1971).Google Scholar

161 The total amount allocable to each plaintiff and class member prior to deducting the amount owed the franchisor defendants was set forth in the settlement agreement and ranged from $3,000.00 to $33,861.43. The basis of the allocation, however, was not disclosed in the settlement agreement, although it apparently was disclosed to the court in a separate memorandum.Google Scholar

162 70 C 3111 (N.D. Ill., filed Dec. 11, 1970).Google Scholar

163 The settlement formula fixes the “settlement sum” as the amount of commission paid by the class member in excess of 6 percent times a fraction representing the proportion of sales by the settling brokers to the total sales in suit. The agreement provided for recovery by customers of the nonsettling brokers (by assigning them to one of the settling brokers for purposes of the settlement). Thus, although the amount any class member could receive was less than the amount of the overcharge, in theory the potential liability of the settling brokers was equal to the amount which they had charged in excess of 6 percent. It appears that at least 75 percent of the transactions (and the actual percentage may be considerably higher) were with the settling brokers.Google Scholar

164 71 C 2477 (N. D. Ill., field Oct. 14, 1971).Google Scholar

165 Cr. No. 67-273 (W.D. Pa., filed Oct. 16, 1967) (Blue Book No. 1965). Fines were entered aggregating $150,000. Trade Reg. Rep. para. 45067, at 52657-58 (Transfer Binder).Google Scholar

166 The plumbing fixtures cases were an outgrowth of two criminal prosecutions, one charging a conspiracy to fix prices of enameled cast iron and vitreous china plumbing fixtures and the other charging a conspiracy to fix prices of staple vitreous china plumbing fixtures, and a companion civil case. United States v. American Radiator & Standard Sanitary Corp., Cr. 66-295 (W.D. Pa., filed Oct. 6, 1966) (Blue Book No. 1920); United States v. Plumbing Fixtures Mfrs. Ass'n, Cr. 66-296 (W.D. Pa., filed Oct. 6, 1966) (Blue Book No. 1922); United States v. American Radiator & Standard Sanitary Corp., 66 C 1184 (W.D. Pa., filed Oct. 6, 1966) (Blue Book No. 1921). At least 370 cases were filed, many class actions by plumbing contractors, and transferred by the Judicial Panel on Multidistrict Litigation to the Eastern District of Pennsylvania. See Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 341 F. Supp. 1077, 1079 (E.D. Pa. 1973) (describing various of the settlements), vacated, 487 F.2d 161 (3d Cir. 1972). A settlement on behalf of a nationwide class of plumbing, mechanical, and general contractors amounting to $2 million was approved. Ace Heating & Plumbing Co. v. Crane Co., 453 F.2d 30 (3d Cir. 1971). One of the plumbing fixture cases was brought by Althoff's. 69 C 1084 (N.D. Ill., filed May 20, 1969).Google Scholar

167 70 C 2495 (N.D. Ill., filed Oct. 8, 1970).Google Scholar

168 United States v. Ciba Corp., Civ. 791-69 (D.N.J., filed July 9, 1969), United States v. Ciba Corp., Civ. 792-69 (D.N.J., filed July 9, 1969), Trade Reg. Rep. para. 45069, at 52725. (Transfer Binder.)Google Scholar

169 General Glass Co. v. Globe Glass & Trim Co., 71 C 921 (N.D. Ill., Feb. 27, 1973).Google Scholar

170 Arenson v. Chicago Mercantile Exch. and related cases, 71 C 854 (N.D. Ill., filed Apr. 7, 1971).Google Scholar

171 United States v. Board of Trade, 71 C 2875 (N.D. Ill., filed Dec. 1, 1971), consent decree, 1974–1 Trade Cas. para. 75071 (N.D. Ill. 1974).Google Scholar

172 Report of the Administrator, Commodity Exchange Authority, at 76-77, in United States v. Board of Trade, 71 C 2875 (N.D. Ill., filed Dec. 1, 1971).Google Scholar

173 Id. at 2.Google Scholar

174 Under rule 23(b)(2) an action may be maintained as a class action if “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.” Although in an action maintained under rule 23(6)(3), where the maintenance of the case as a class action rests upon the predominance of common questions, class members must be given notice of the proceeding advising each class member that the court will exclude him from the class if he so requests–rule 23(c)(2)–there is no similar requirement in suits brought under rule 23(b)(2).Google Scholar

175 372 F. Supp. 1349 (N.D. Ill. 1974).Google Scholar

176 372 F. Supp. at 1353 n.4.Google Scholar

177 In 1961 the SEC commenced a series of studies that led it in 1973 to order the abolition of minimum commission rates by May 1, 1975. See Gordon v. New York Stock Exch., 422 U.S. 659, 669-81 (1975) (holding minimum commission rates for stock exchange transactions not subject to attack under antitrust laws). Minimum commission rates for stock exchange transactions had been strongly attacked as violative of the antitrust laws by several commentators prior to 1971. William F. Baxter, NYSE Fixed Commission Rates: A Private Cartel Goes Public, 22 Stan. L. Rev. 675 (1970); John R. Johnson, Application of Antitrust Laws to the Securities Industry, 20 Sw. L.J. 536 (1966). Note, Antitrust and the Stock Exchange: Minimum Commission or Free Competition? 18 Stan. L. Rev. 213 (1965). The New York Stock Exchange's minimum commission rates had been challenged unsuccessfully as an antitrust violation in a treble damage suit filed in the Northern District of Illinois in 1965. Kaplan v. Lehman Bros., 250 F. Supp. 562 (N.D. Ill. 1966), aff'd per curiam, 371 F.2d 409 (7th Cit.), cert. denied, 389 U.S. 954 (1967).Google Scholar

178 Had plaintiffs' counsel not assumed the responsibility of agreeing to the fundamental settlement embodied in the master Settlement Agreement, it is quite possible that the plaintiff's class would not have been certified.Google Scholar

372 F. Supp. at 1353.Google Scholar

[T]he possibility of trial producing a more favorable recovery for the class would be remote.Google Scholar

Id. at 1358.Google Scholar

179 Under Eisen, plaintiffs must initially bear the cost of notice. Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974). The pre-Eisen decisions were conflicting. Compare Buford v. American Fin. Co., 333 F. Supp. 1243 (N.D. Ga. 1971), with Liebman v. J. W. Petersen Coal Co. and related cases, 71 C 1340 (N.D. Ill. Nov. 1972); see Arthur R. Miller, Problems of Giving Notice in Class Actions, 58 F.R.D. 313, 322-24 (1973).Google Scholar

180 Chicago Bd. of Trade v. United States, 246 U.S. 231 (1918).Google Scholar

181 372 F. Supp. at 1355-56 & n.9.Google Scholar

182 71 C 569 (N.D. Ill., filed Mar. 5, 1971), opinion on certification of class, 1972 Trade Cas. para. 74212 (N. D. Ill., 1972).Google Scholar

183 Rule 23(e) requires that “A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class.” There is authority in the district, moreover, that a case filed as a class action is to be treated as a class action for purposes of dismissal or compromise until there has been a decision on certification of the class. Yaffe v. Detroit Steel Co., 50 F.R.D. 481 (N.D. Ill. 1970). See, e.g., Rotzenburg v. Neenah Joint School Dist., 64 F.R.D. 181 (E.D. Wis. 1974); Muntz v. Ohio Screw Prods., 61 F.R.D. 396 (N.D. Ohio 1973); Held v. Missouri Pac. R.R. Co., 64 F.R.D. 346 (S.D. Tex. 1974); Wright & Miller, supra note 123, sec. 1797 at 236-37. But cf., Elias v. National Car Rental Sys., Inc., 59 F.R.D. 276 (D. Minn. 1973) (plaintiff did not wish to proceed; no settlement). Despite the language of the rule, it has been held that notice is not required when the suit is involuntarily dismissed since involuntary dismissal does not present risk of collusion. See Wright & Miller, supra note 123, at 235 and cases cited therein.Google Scholar

184 In neither of these cases was notice of the dismissal sent to members of the class. The failure to provide notice has generally been deemed proper when the court has determined that class treatment was inappropriate. See, e.g., Held v. Missouri Pac. R.R. Co., 64 F.R.D. 346 (S.D. Texas 1974); Muntz v. Ohio Screw Products, 61 F.R.D. 396 (N.D. Ohio 1973). But cf. Miller v. Central Chinchilla Group, Inc., 66 F.R.D. 411 (S.D. Iowa 1975) (ordering that notice be given to members of alleged class of dismissal of class allegations).Google Scholar

185 Connecticut v. General Motors Corp. and related cases, 71 C 830 (N.D. Ill., filed Apr. 2, 1971).Google Scholar

186 United States v. General Motors Corp., 1974–2 Trade Cas. para. 75253 (E.D. Mich. 1974); United States v. General Motors Corp., 1973 Trade Cas. para. 74335 (E.D. Mich. 1973).Google Scholar

187 Discussed pp. 1313-14 supra.Google Scholar

188 Full restitution would require (a) receipt by each class member of an amount equalling the actual damage sustained as a result of the defendant's violation; (b) a realistic interest payment on that amount measured from the time of injury; (c) reasonable compensation for the time spent by those class representatives whose efforts contributed to the award of restitution; and (d) separate payment by the defendants of all costs related to the litigation and to distribution to the class of the restitution payments.Google Scholar

189 The profits retained by defendants will be reduced not only by the amount directly paid out under the settlement agreement but also by the amount expended by defendants in legal fees and by the time expended by defendants' management personnel in connection with the litigation. The extent to which these costs will be viewed as a cost of engaging in an illegal practice is uncertain. These are costs entailed by even a successful defense and may be viewed as a cost of doing business generally to be spread over the total business done by the company rather than a cost of engaging in the conduct that gave rise to the litigation. A tendency to view these costs as general costs of doing business is heightened to the extent that they are paid out as the litigation proceeds rather than at the time of the settlement and are lumped with other legal costs incurred by the company. Although the risk of incurring such costs is increased when the company engages in practices it knows are or probably are unlawful, it can have no assurance that it will not be subjected to such costs if it avoids practices of questionable legality.Google Scholar

190 Indeed a settlement that does no more than deprive a defendant of its ill-gotten gains is unlikely to act as an effective deterrent. Antitrust violations will often go undetected. Even when the violation is discovered, suits to recover damages will often be unsuccessful. In consequence, if the most that an enterprise stands to lose is its profits from the illegal activity, while it stands to gain substantially increased profits if the practice goes undetected, an economically rational profit maximizer will engage in the practice. For a discussion of factors that limit the deterrent effect of damage awards on corporate conduct and that suggest that only awards that are quite large in comparison with the potential profits are likely to be effective, see Christopher D. Stone, Where the Law Ends 38-57 (New York: Harper & Row, 1975).Google Scholar

191 Except to the extent that the plaintiff can pass on the overcharge to the plaintiff's customers.Google Scholar

192 Joseph L. Alioto, The Economics of a Treble Damage Case, 32 Antitrust L.J. 87, 93 (1966) (author a prominent plaintiffs' attorney); cf. H. Robert Halper, The Unsettling Problems of Settlement in Antitrust Damage Cases, 32 Antitrust L.J. 98, 99 (1966) (suggesting a range of from 50 percent of “realistic single damages on the low side” to total actual damages plus litigation costs “on the high side”). Some years before, the editors of the Yale Law Journal observed that while “the precise extent and scope” of settlements was unknown, defense counsel indicated that “settlements payments are generally far less than damages claimed.” Comment, Antitrust Enforcement by Private Parties: Analysis of Developments in the Treble Damage Suit, 61 Yale L.J. 1010, 1060 (1952). This finding was based on responses from eight defendants' firms to a questionnaire that had been sent to more than 90 defendants' firms. It should be noted, moreover, that the damages “claimed” may not bear any very close relation to a realistic estimate of actual damages.Google Scholar

193 Seven statewide classes–Minnesota, Illinois, Texas, Kansas, Wisconsin, Indiana, and Tennessee–and one city, Chicago, were covered by the nine cases. The remaining cases included the nationwide class and such major jurisdictions as California and New York.Google Scholar

194 Fluid class recovery was first adopted in the Antibiotics litigation where the court approved a settlement plan under which after individual claims were satisfied the residue was to be turned over to the states to be used on behalf of consumers. In re Coordinated Pretrial Proceedings in Antibiotics Antitrust Actions, 333 F. Supp. 267, 282-83 (S.D.N.Y. 1971). It was subsequently employed by Judge Tyler in the Eisen case, but rejected by the second circuit on appeal. Eisen v. Carlisle & Jacquelin, 52 F.R.D. 253 (S.D.N.Y. 1971), rev'd, 479 F.2d 1005 (2d Cir. 1973), vacated on other grounds, 417 U.S. 156 (1974). The use of fluid class recovery in litigated cases has been rejected in several decisions. In re Hotel Telephone Charges, 500 F.2d 86 (9th Cir. 1974); Philadelphia v. American Oil Co., 53 F.R.D. 45, 72 (D.N.J. 1971); Windham v. American Brands, Inc., 68 F.R.D. 641, 657 (D.S.C. 1975). Its critics, both off and on the bench, have argued that fluid recovery, by treating the claims of class members collectively, significantly alters substantive rights under the antitrust statutes in violation of the Enabling Act and denies the defendant “his basic constitutional right to a judicial proceeding, at least to resist sham or exaggerated claims.”See, e.g., In re Hotel Charges supra; Eisen v. Carlisle & Jacquelin, 479 F.2d 1005, 1018 (2d Cir. 1973), vacated on other grounds, 417 U.S. 156 (1973); Michael Malina, Fluid Class Recovery as a Consumer Remedy in Antitrust Cases, 47 N.Y.U.L. Rev. 477, 492-93 (1972); Milton Handler, Twenty-fourth Annual Antitrust Review, 72 Colum. L. Rev. 1, 34-42 (1972). But see Note, Managing the Large Class Action: Eisen v. Carlisle & Jacquelin, 87 Harv. L. Rev. 426, 446-54 (1973), Comment, Damage Distribution in Class Actions: The Cy Pres Remedy, 39 U. Chi. L. Rev. 448 (1972).Google Scholar

195 His prediction turned out to be true for some claimants but not for others.Google Scholar

196 Lupia v. Stella D'Oro, 1974 Trade Cas. para. 75046, at 96,688 (N.D. Ill. 1972); accord Gaines v. Budget Rent-A-Car Corp., 1972 Trade Cas. para. 73860, at 91605 (N.D. Ill. 1972); McMackin v. Schwinn Bicycle Co., 1974 Trade Cas. para. 75047 (N.D. Ill. 1973).Google Scholar

197 Thompson v. T.F.I. Cos., Inc., 64 F.R.D. 140, 148 (N.D. Ill. 1974).Google Scholar

198 Commentators have noted that most of the claims for back pay under the Fair Labor Standards Act have been brought by former rather than current employees. G. W. Foster, Jr., Jurisdiction, Rights, and Remedies for Group Wrongs under the Fair Labor Standards Act: Special Federal Questions, 1975 Wis. L. Rev. 295, 310 & n.48.Google Scholar

199 To the extent that former franchisees have an additional claim for damages resulting from their termination for refusing to go along with the allegedly unlawful practice, the former franchisees will have all that is required for standing and representation to take that on as well. But factual questions as to reasons for dismissal may differ sufficiently from franchisee to franchisee to render class treatment inappropriate.Google Scholar

200 Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 139 (1968). The Court did not rule whether a showing that the franchisee supported the entire restrictive pro-gram would bar the suit, and lower courts have continued to allow a defense where plaintiffs were equally responsible for the conspiracy. See, e.g., Premier Elec. Constr. Co. v. Miller-Davis Co., 422 F.2d 1132, 1138-39 (7th Cir.), cert. denied, 400 U.S. 828 (1970); Columbia Nitrogen Corp. v. Royster Co., 451 F.2d 3 (4th Cir. 1971). But see, Schokbeton Prods. Corp. v. Exposaic Indus., Inc., 308 F. Supp. 1366, 1369 (N.D. Ga. 1970); Morton v. National Dairy Prods. Corp., 287 F. Supp. 753, 765 (N.D. Fla. 1968) (dictum), aff'd, 414 F.2d 403 (3d Cir. 1969), cert. denied, 396 U.S. 1006 (1970).Google Scholar

201 64 F.R.D. 140, 146-48 (N.D. Ill. 1974).Google Scholar

202 The court may have been influenced, despite its protestations that it was not prejudging the merits, by doubts as to whether the plaintiff could establish the existence of illegal tying. Both the failure to allege that approval of alternative sources had been unreasonably withheld and the admission of plaintiff and another franchisee that they had indeed purchased supplies from other sources–points stressed by the court–relate more closely to whether defendant practiced tying than to whether there are common questions of law or fact.Google Scholar

203 E.g., Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211 (3d Cir. 1976); 7-Eleven Franchise Antitrust Litigation, 1972 Trade Cas. para. 74156 (N.D. Cal. 1972); Plekowski v. Ralston Purina Co., 68 F.R.D. 443 (M.D. Ga. 1975); Abercrombie v. Lum's, Inc., 345 F. Supp. 387 (S.D. Fla. 1972). But see, In re Clark Oil & Refining Corp., 1974–1 Trade Cas. para. 74880 (E.D. Wis. 1974).Google Scholar

204 Lah v. Shell Oil Co., 50 F.R.D. 198, 200 (S.D. Ohio 1970); Halverson v. Convenient Food Mart, Inc., 1975–1 Trade Cas. para. 60254 (N.D. Ill. 1974); Abercrombie v. Lum's, Inc., 345 F. Supp. 387, 392 (S.D. Fla. 1975) (quoting Lab). But see, In re Clark Oil & Refining Corp., 1974–1 Trade Cas. para. 74880, at 95972 (E.D. Wis. 1974).Google Scholar

205 The Court in Northern Pacific declared that the vice of tying arrangements is that “They deny competitors free access to the market for the tied product, not because the party imposing the tying requirements has a better product or a lower price but because of his power or leverage in another product” and force “buyers. to forego their free choice between competing products.” Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 6 (1958). The Court accordingly ruled that when a seller with “sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product” used this leverage–conditioned the sale of the tying product on the purchase of the tied product–so that “a ‘not insubstantial' amount of commerce [in the tied product] is affected,” a violation was established. Id. The Court added that “where the seller has no control or dominance over the tying product so that it does not represent an effectual weapon to pressure buyers into taking the tied item any restraint of trade attributable to such tying arrangements would obviously be insignificant at most.”Id.Google Scholar

206 In Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211 (3d Cir. 1976), the court declared that “[p]roof of economic power must, perforce, focus on the seller; but proof of tie-in must focus on the buyer, because a voluntary purchase of two products is simply not a tie-in.” But, however coerced a buyer may feel, if the seller has not in fact used its power over the tying product to exert pressure on its customers no violation exists. Paranoia is not a substitute for evidence of conduct by the seller.Google Scholar

207 Advance Business Sys. & Supply Co. v. SCM Corp., 415 F.2d 55, 63-64 (4th Cir. 1969), cert. denied, 397 U.S. 920 (1970) (“persistent and deliberate misrepresentations, sabotage, and threats of cancellation”); Lessig v. Tidewater Oil Co., 327 F.2d 459, 467 (9th Cir. 1964), cert. denied, 377 U.S. 993 (use of short-term leases, dealers told to purchase tied product, dealers' premises inspected for competing merchandise, threats of nonrenewal of leases); Brandeis Mach. & Supply Corp. v. Barber-Greene Co., 1973–2 Trade Cas. para. 74672 (W.D. Ky. 1973), aff'd, 503 F.2d 503 (6th Cir. 1974) (termination of distributorship); United States v. Sun Oil Co., 176 F. Supp. 715 (E.D. Pa. 1959) (tying inferred from complex of practices and behavior including threats and cancellations); Tire Sales Corp. v. Cities Serv. Oil Co., 1976–1 Trade Cas. para. 60827, at 68610 (N.D. Ill. Mar. 4, 1976) (threats of termination and refusal to make station repairs); Northwest Controls, Inc. v. Outboard Marine Corp., 333 F. Supp. 493, 511–13 (D. Del. 1971) (tying may be inferred from misrepresentations, sabotage, and threats of cancellation) (dictum).Google Scholar

208 See Lessig v. Tidewater Oil Co., 327 F.2d 459, 467 (9th Cir. 1964), cert. denied, 377 U.S. 993 (finding of tying based on conduct of defendant towards its dealers generally and testimony of dealers other than plaintiff that they feared to purchase competing brands of tied product); Osborn v. Sinclair Oil Co., 286 F.2d 832, 835-36 (4th Cir. 1960), cert. denied, 366 U.S. 963 (1961) (relying in part on evidence of pressure directed toward other dealers). In several of the other cases cited in note 207 supra, tying was inferred from a pattern of conduct. While these cases involved government and competitor suits, they support the principle that tying can be inferred from a pattern of coercive conduct.Google Scholar

209 See In re Clark Oil & Refining Corp., 1974–1 Trade Cas. para. 74880, at 95972 (E.D. Wis. 1974); cf. Allied Shoe Mach. Corp. v. United Shoe Mach. Corp., 19 F.R.D. 181 (D. Mass. 1956).Google Scholar

210 Northem Pac. Ry. Co. v. United States, 356 U.S. 1, 6 (1958). See Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 499 (1969).Google Scholar

211 Id. at 502. The Sixth Circuit's recent decision in Davis v. Marathon Oil Co., 528 F.2d (6th Cir. 1975), illustrates the possible consequences of a failure to establish a pattern of conduct. Plaintiff, a former service station lessee, introduced some, but in the court's view insufficient, evidence to support a finding that the defendant oil company had terminated him because of a failure to buy Marathon-sponsored TBA. The court held, however, that even if plaintiff had shown that Marathon had required him to purchase Marathon TBA to retain his lease, there was no evidence that this was a general practice of Marathon imposed on many or all of its other lessee operators, noting that the only evidence was the testimony of five other lessee operators that they had not been threatened.Google Scholar

212 J.W.T., Inc. v. Joseph E. Seagram & Sons, Inc., and related cases, 63 F.R.D. 139 (N.D. Ill. 1974).Google Scholar

213 See pp. 1306-7 supra.Google Scholar

214 Plaintiff's attorney stated that his client had turned out to be a bad witness.Google Scholar

215 Although attorneys were invited to make suggestions of changes that might reduce the burdens imposed they had few to offer.Google Scholar

216 Compare Brennan v. Midwestern United Life Ins. Co., 450 F.2d 999 (7th Cir. 1971), cert. denied, 405 U.S. 921 (1972), and Robertson v. NBA, 67 F.R.D. 691 (S.D.N.Y. 1975), with Wainwright v. Kraftco Corp., 54 F.R.D. 532 (N.D. Ga. 1972), and Fischer v. Wolfinbarger, 55 F.R.D. 129 (N.D. Ky. 1971). See Note, Party Discovery Techniques: A Threat to Underlying Federal Policies, 68 Nw. U.L. Rev. 1063 (1974); Note, Requests for Information in Class Actions, 83 Yale L.J. 602 (1974).Google Scholar

217 Fed. R. Civ. P. 30, 31. The use of dismissal from the class as a sanction for failure to appear for a deposition, however, raises essentially the same doctrinal issue as directing interrogatories to class members. Dismissal from the action is an authorized remedy only if class members are deemed “parties” to the action for purposes of the rules. See Fed. R. Civ. P. 37.Google Scholar

218 In Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974), cert. denied, 419 U.S. 1070 (1974), defendants both directed interrogatories to and sought depositions from class members. The burden on the class member may also be greater when his deposition is taken since the class members will be “required to appear for questioning and are subject to often stiff interrogation by opposing counsel with the concomitant need for counsel of their own.”Id. at 341.Google Scholar

219 The Uniform Class Actions Act as approved (subject to revision by the style committee) by the National Conference of Commissioners on Uniform State Laws provides that:Google Scholar

section 10Google Scholar

(a) Discovery under [applicable discovery rules] may be used against class members who are not representative parties or who have not appeared only on order of the court. In deciding whether discovery should be allowed the court shall consider, among other relevant factors, the timing of the request, the subject matter to be covered, whether representatives of the class are seeking discovery on the subject to be covered, and whether the discovery will result in annoyance, oppression, undue burden or expense for the class members.Google Scholar

“Whether good cause is shown” was listed as one of the factors to be considered in an earlier draft but omitted from the listing of factors in the final version. See The Proposed Uniform Class Actions Act, 4 Class Action Rep. 181, 185 (3d Tent. Draft, 1975). Although no provision similar to sec. 10 is found in rule 23, in Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974), cert. denied, 419 U.S. 1070 (1974), the court held that discovery against class members–whether by interrogatory or deposition–might be obtained only upon a showing by the party seeking discovery both of the “necessity” for such discovery and of the “absence of any motive to take undue advantage of the class members.” 501 F.2d at 341. See Robertson v. NBA, 67 F.R.D. 691 (S.D.N.Y. 1975) (limiting the content of interrogatories to class members and barring dismissal from class as a sanction); Gardner v. Awards Marketing Corp., 55 F.R.D. 460 (D. Utah 1972) (showing of need had not been met).Google Scholar

220 Fed. R. Civ. P. 23(a). For a proposal before the Advisory Committee on Civil Rules that would relax this requirement see 4 Class Action Rep. 289.Google Scholar

221 Two other attorneys–one a plaintiffs' attorney and one a defendants' attorney–also stressed the importance of early certification. The defendants' attorney, however, argued not that early certification was more efficient but that delaying the certification ruling created the risk that the judge's decision on certification might be affected by his view of the merits and that the decision of class members whether to opt out would be influenced by plaintiffs' success in resisting motions to dismiss.Google Scholar

222 At least in those instances in which the defendant consents to such a procedure. Dismissal prior to certification of a class deprives the defendant of a decree that is binding against class members but the likelihood that a class member will find an attorney willing to file suit in the face of a dismissal is probably slight.Google Scholar

223 American College Trial Lawyers, Report and Recommendations of the Special Committee on Rule 23 of the Federal Rules of Civil Procedure (1972); American Bar Association section of Corporation, Banking and Business Law, Recommendation Regarding Consumer Class Actions for Monetary Relief, Summary of Action and Reports to the House of Delegates, American Bar Association, 1973, Annual Meeting, Washington, D.C., Aug. 6-8, 1973, at 31.Google Scholar

224 E.g., Butkus v. Chicken Unlimited Enterprises, Inc., 71 C 1607 (N.D. Ill., order filed Mar. 28, 1972); Weight Watchers v. Weight Watchers Intl, 53 F.R.D. 647 (E.D.N.Y. 1971); Siegel v. Chicken Delight, Inc., 271 F. Supp. 722, 728 (N.D. Cal. 1967); Manual for Complex Litigation sec. 1.41 (1973); Moore's Federal Practice, supra note 140, para. 23.75. But see Rodger v. United States Steel Corp., 508 F.2d 152 (3d Cir. 1975), cert. denied, 420 U.S. 969 (holding rule barring communication by parties with members of class not authorized by statute to the extent that it prohibited communication before certification of class).Google Scholar

225 Weight Watchers v. Weight Watchers Intl, Inc., 455 F.2d 770 (2d Cir. 1972); American Fin. Sys., Inc. v. Harlow, 65 F.R.D. 572 (D. Md. 1974). For an assertion that some courts have disapproved of such piecemeal settlements see section of Antitrust Law, supra note 123, at 325.Google Scholar

226 The difference in the number of claimants in 6 states in which such a campaign was undertaken when compared with the response in 43 other states where for the most part notice was limited to newspaper publication of a “legal notice” has been accurately characterized as “stark.” Charles W. Wolfram, The Antibiotics Class Actions, 1976 A.B.F. Res. J. 251, 360. Approximately one million claims were filed in the 6 states (out of approximately 10 million households), as contrasted with 35,000 in settlements with 43 other states (less than 1 percent of the total households). Id. See David Lebedoff, Operation Money Back, 4 Class Action Rep. 147, 161 (1975) (report of special master). The media campaign was importantly supplemented by mailing a claim form (which had been devised and pretested by an advertising agency) at the third-class bulk rate to each household in the state. Whether comparable results would have been achieved without the mass mailing but with claim forms being made available in post offices and public libraries is uncertain. For a description of the methods used to elicit responses see Lebedoff, supra. The success of the efforts in the six state settlement is all the more notable since the amount distributed to most individual claimants appears not to have been particularly large, apparently averaging about $30.00. See id. at 159; Developments, 4 Class Action Rep. 146, 229 (1975).Google Scholar

227 Pub. L. No. 94-435. On the background of the parens patriae portions of the act, see S. Rep. No. 94-803, 94th Cong., 2d Sess. 39-42, 46 (1976). For a sampling of commentary critical of decisions restricting the consumer class action see, e.g., Sidney B. Jacoby & Michael G. Cherkasky, The Effects of Eisen IV and Proposed Amendments of Federal Rule 23, 12 San Diego L. Rev. 1 (1974) (suggesting the need for congressional action and for amendment of rule 23); Note, supra note 194, Note, The Manageability Crisis of Consumer Class Actions: The Severe Example of Eisen III, 7 Ind. L. Rev. 361 (1973); Note, Reflections on Eisen v. Carlisle & Jacquelin: Class Actions in the Federal Courts, 46 U. Colo. L. Rev. 243 (1974). The editors of the Harvard Law Review described the effect of the Supreme Court's opinion in Eisen as “to foreclose recovery when damages are too small to warrant individual suits, thereby eliminating perhaps the only mechanism for forcing the corporate price-fixer to disgorge its ill-gotten profit.” The Supreme Court, 1973 Term, 88 Harv. L. Rev. 41, 48 (1974). But see, David I. Shapiro & James Van R. Springer, Management of Consumer Class Actions After Eisen: Notice and Determination of Damages, 26 Mercer L. Rev. 851 (1975) (“Eisen III and IV are not the end of the world for injured consumers”).Google Scholar

228 In any action under section 4C(a)(1), [authorizing the state to sue for damages on behalf of natural person residents] in which there has been a determination that a defendant agreed to fix prices in violation of the Sherman Act damages may be proved and assessed in the aggregate by statistical or sampling methods, by the computation of illegal overcharges, or by such other reasonable system of estimating aggregate damages as the court in its discretion may permit without the necessity of separately proving the individual claim of, or amount of damage to persons on whose behalf the suit was brought.Google Scholar

Pub. L. No. 94-435, sec. 301. Although the determination of damages in the aggregate is expressly authorized only if pricefixing is established, Senator Hart in explaining the bill made clear that this was not intended to bar the determination of damages on an aggregate basis in other instances if the courts found such an approach to be permissible. 122 Cong. Rec. S15417 (Sept. 8, 1976).Google Scholar

229 The act departs from the language of rule 23 in providing that notice to persons on whose behalf suit is brought shall be given by publication unless the court finds that providing notice solely by publication would deny due process. In many instances this divergence will be without practical effect. While under rule 23 the court is directed to provide individual notice to “all members [of the class] who can be identified through reasonable effort,” Fed. R. Civ. P. 23(c)(2), in many instances the members of a consumer class cannot be identified. The act tracks the language of rule 23(e) in providing that a parens patriae action “shall not be dismissed or compromised without the approval of the court, and notice of any proposed dismissal or compromise shall be given in such manner as the court directs. Similarly, the act provides that any procedure for the distribution of monetary relief shall “afford each person a reasonable opportunity to secure his appropriate portion of the net monetary relief.”Google Scholar

230 It is clear that in some instances the state will proceed when the violation is confined to a locality in the state. See pp. 1310-14 supra. Obviously, however, a willingness to proceed on behalf of Chicago area consumers does not necessarily imply a readiness to undertake cases involving a smaller locality. The question is whether the state can and will proceed in all or most such cases.Google Scholar

231 Pub. L. No. 94-435, sec. 301.Google Scholar