1 The present article is based on data collected through May 1975, except where otherwise noted. A fuller account of the antibiotics class action, to its end, must await further research and will, it is hoped, be the subject of future publications.Google Scholar

2 Among the diseases and infections for which antibiotics in their present state of development are useful are tuberculosis, rheumatic fever, bacterial pneumonia, endocarditis, bacterial meningitis, enteric infections, urinary tract infections, syphilis and gonorrhea, osteomyelitis, septic arthritis, and forms of streptococcal infection.Google Scholar

3 Senate Subcomm. on Antitrust and Monopoly of the Comm. on the Judiciary, Report, Administered Prices: Drugs, S. Rep. No. 448, 87th Cong., 1st Sess. (1961).Google Scholar

4 Perhaps one of the most persuasive arguments against transfer away from the transferor forum was made by counsel for plaintiffs in Lee's Prescription Shops, Inc. v. Chas. Pfizer & Co., which was ordered transferred to Judge Wyatt from the federal court for the Southern District of Florida. The complaint for this case asserted a right to recover because the price-fixing conspiracy violated the antitrust laws of the State of Florida. Resolution of questions of Florida state law thus might be bound up with the pretrial matters that might arise before Judge Wyatt. But the Panel pointed out that (a) the complaint alleged a factual basis for the state law claim identical to that alleged under the federal antitrust laws; and (b) the complaint attempted to allege a federal antitrust right of recovery in behalf of a class that purported to include all drug wholesalers and retailers in the United States. These two matters required that this case, like the others, be consolidated before a single federal judge for uniform pretrial treatment.Google Scholar

5 The hearing on this set of tag-along cases was in Washington, D.C., on February 28, 1969. As will be seen, the hearing thus occurred shortly after the terms of a February 6, 1969, “global” settlement offer of $100 million had been communicated to attorneys for the various plaintiffs. By then it must have been obvious to many plaintiffs' attorneys that the terms on which their client, or the class it purported to represent, would be permitted to assert a claim against the settlement would depend heavily on the kind of class action certification that was approved by Judge Wyatt. Apparently, many attorneys would have much preferred to have their personally chosen federal judges decide this critical issue.Google Scholar

6 One of the cases transferred from the Southern District of California by the order of October 21 was Bidan Bros. v. Cbas. Pfizer & Co. It had been brought as a class action in behalf of all raisers of livestock in California with respect to their purchases of livestock feed containing antibiotics. The differences between this case and the human consumption cases had not been noted at that time. After transfer the Bidart Bros, case was dismissed voluntarily by the plaintiff.Google Scholar

7 Eisen v. Carlisle & Jacquelin, 391 F. 2d 555 (2d Cir. 1968). The opinion by Judge Medina very expansively encouraged the lower courts to attempt innovative and experimental solutions to the procedural problems that confronted consumers or consumer groups attempting to maintain class actions of millions of members. Five years later the same Second Circuit reversed its attitude dramatically in the Eisen III decision in which serious obstacles were placed in the way of consumer class actions. Eisen v. Carlisle & Jacquelin, 479 F. 2d 1005 (2d Cir. 1973), rehearing en banc denied, 479 F. 2d 1020 (2d Cir. 1973). The Supreme Court agreed with the second decision of the court that federal rule 23 required that individual notice be sent to each member of the class, even if the class were composed of millions of consumers, before the class could be certified. Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974). In 1968 these unfavorable developments lay far ahead, however. For the moment the early trend of decisions after the 1966 amendments to the Federal Rules seemed to be running rather strongly in favor of the plaintiffs.Google Scholar

8 In a subsequent opinion, Judge Wyatt spoke of the terms of this contract as revealed in a letter of February 6. But Judge Wyatt failed to point out in his opinion (1) that this date is three days after the closed-door meeting at which the agreement was first revealed to Judge Wyatt and (2) whether the date of the written agreement was accurate or whether, to the contrary, there was a prior written agreement. It appears from some court documents that another letter of April 3, 1970, had amended the original agreement.Google Scholar

9 This and quotations in the succeeding paragraph are from City of Philadelphia v. Chas. Pfizer & Co., 345 F. Supp. 454, 471 (S.D.N.Y. 1972).Google Scholar

10 Mr. Kohn stated in his 1971 petition for fees that attorneys Richardson Dilworth and Harry A. Kalish of the Philadelphia firm of Dilworth, Paxson, Kalish, Kohn and Levy would share in the fee. They were described as law partners of Mr. Kohn at the time of the February 1969 agreement with the defendants.Google Scholar

11 One of the many ironies of timing in the antibiotics cases was that the second offer of settlement in the private hospital/Blue Cross cases was made only 13 days before the Second Circuit reversed the defendants' criminal convictions and remanded for new trials.Google Scholar

12 Of the 27 private hospital and Blue Cross actions that had been filed by the time of the eventual settlement, only 19 alleged classes. All the Blue Cross plans in the United States had intervened and were actual parties. Eleven hospital associations had filed actions or intervened in behalf of all their member hospitals. They asserted no actual damage to themselves and probably served as little more than window dressing. They were not included among the plaintiffs in the settlement class that eventually was formed but accepted and supported the eventual settlement because their members accepted and supported it.Google Scholar

13 The reduction for Blue Cross-covered admissions was approximated from figures showing the percentage of state residents covered by Blue Cross. Every private hospital was treated similarly, even though the character of patients and possibly the requirements for antibiotics therapy might be expected to differ between, e.g., general admission hospitals and hospitals that specialized in an activity such as surgery or convalescence.Google Scholar

14 The Mutual of Omaha class was treated as virtually an opt in class. Members of the class were told in the notice of the creation of the class that they would be required to submit an estimate of purchase reimbursements. Failure to file the estimate would result in exclusion from the class. Similar treatment was requested by the defendants in others of the six classes that Judge Lord certified, but he resisted the effort everywhere but (a) in the insurance class and (b) with regard to an estimate of purchases by the institutional members of the CCS classes. The Second Circuit refused to grant mandamus to compel the consumers in the seven nonsettling states to submit claims prior to trial. Pfizer, Inc. v. Lord, 447 F. 2d 122 (2d Cir. 1971). The exceptions for the insurance class and the CCS damage estimate were explicable on the grounds that the class was small, that each member of this class had a sizable claim, and that the members of the class were likely to have the assistance of regular counsel in determining whether to request inclusion in the class or not. One hundred and ninety-five members of the insurance class eventually submitted claims totaling $50 million.Google Scholar

15 The matter of a transfer for trial to Minnesota had been raised before Judge Lord actively entered the case. Attorney John A. Cochrane, counsel in one of the largest of the farm cases from Minnesota, had argued in June 1970 in a hearing before Judge Wyatt that three farm classes should be created (the suggested farm classes were identical to the classes later certified by Judge Lord) and that all the farm cases should be transferred to Minnesota. Judge Wyatt resisted the suggestion, thinking that “transfer” could occur only after the completion of pretrial. In no event, he believed, could he as the pretrial judge order transfer of cases that had not originally been filed in Minnesota.Google Scholar

16 The timing of Judge Lord's change of venue order is interesting. The Second Circuit had affirmed Judge Wyatt's approval of the settlement of the 43 settling states and the wholesaler-retailers on March 29, 1971, only 13 days after hearing oral argument on the appeal. West Virginia v. Chas. Pfizer & Co., 440 F. 2d 1079 (2d Cir. 1971). The ensuing petition to the Supreme Court for certiorari would not be ruled upon until October 12, when it was denied. Coder Drugs, Inc. v. Chas. Pfizer & Co., 404 U.S. 871 (1971). But it was fairly certain after the Second Circuit ruling in late March that the Supreme Court would not intervene to upset the settlement at this late point. Judge Wyatt's order approving the private hospital/Blue Cross settlement was entered on April 21, 1971. Hartford Hospital v. Chas. Pfizer & Co., 52 F.R.D. 131 (S.D.N.Y. 1971). The ensuing appeal to the Second Circuit by California Physicians' Service was not considered a serious threat to the settlement. (It was rejected when the Second Circuit affirmed the order of approval in a per curiam opinion that simply adopted the opinion written by Judge Wyatt. American Hospital Ass'n v. Chas. Pfizer & Co., 448 F. 2d 790 (2d Cir. 1971)).Google Scholar

Certainly by April of 1971 it was fairly clear that the cases settled under Judge Wyatt would not be returned to the trial court for further proceedings, aside from implementing the distribution schemes. Thus there was little danger in April that a transfer of the unsettled cases to Minnesota for trial might leave a second great mass of cases in New York for trial.Google Scholar

17 The May 14, 1971, transfer order covered all the nonsettling human consumption cases, except several “competitor” cases and a few miscellaneous cases. The nontransferred cases presented special problems. The defendants objected to their transfer to the District of Minnesota because Minnesota was not an available transferee venue under the venue statutes. It was felt that the objection had greater weight in these cases.Google Scholar

In July 1972 die Chief Justice extended Judge Lord's temporary assignment to the Southern District for such indefinite period “as may be required to complete unfinished business.” Judge Lord thus continued to “sit” in New York. By an administrative order (no. 71–12; August 6, 1971) Judge Lord had ordered that all filings and pretrial proceedings in the untransferred cases in the Southern District of New York were to take place in Minnesota. This effectively moved these cases to Minneapolis for pretrial purposes. Some of the competitor cases were transferred to Minnesota under section 1404(a) as late as July 11, 1974, for consolidated trial. Several related cases (involving patent claims) remain technically venued in New York or in other districts, preventing their joint trial with the transferred competitor cases. They will, however, probably benefit from whatever res judicata advantages are forthcoming from the trial of the transferred competitor cases.Google Scholar

18 An additional witness-gathering device to which Judge Lord later referred was to have a private plaintiff's witnesses subpoenaed as if those witnesses were to testify in behalf of the United States. The United States, unlike private litigants, has a nationwide reach of subpoena power in antitrust cases. In effect, Judge Lord cajoled the United States into serving as the conduit for reaching otherwise unavailable witnesses who were sought to be subpoenaed for trial by private litigants.Google Scholar

19 Administrative order 71–2. The experts were Dr. Francis M. Boddy, Professor of Economics and Associate Dean of the Graduate School of the University of Minnesota, and Dr. John Neter, Professor of Quantitative Analysis in the School of Business Administration at the University. Their fees were approximately $40–$50 per hour. They played an increasingly active role, at a point holding hearings, receiving evidence, and listening to arguments.Google Scholar

20 The defendants submitted a single check through the Donovan firm. The plaintiffs submitted a single check through the treasurer of the Plaintiffs National Steering Committee. Collection for the PNSC was aided by judicial authority. On June 7, 1972, administrative order 72–20 provided that no plaintiff could dismiss or settle a case until after the PNSC had confirmed in writing that the party's assessed costs had been paid. The assessments by the PNSC were self-imposed and self-allocated, apparently on a calculation of potential recovery. Among the seven states, the following percentage basis for allocation was agreed to in September 1971: California, 61.61; Hawaii, 1.58; Kansas, 8. 22; Oregon, 4.68; North Carolina, 12.76; Utah, 2.00; Washington, 9.15.Google Scholar

21 Administrative order 71–13, August 5, 1971. The order names as masters attorneys Leonard E. Lindquist of Minneapolis and Murray L. Galinson of Minneapolis. Payment of the fees of the masters ($75 and $50 per hour, respectively) was to be divided equally between plaintiffs and defendants. Administrative order 71–13A, August 25, 1971, added then Dean Douglas R. Heidenreich of the William Mitchell College of Law in St. Paul as the third master (at $60 per hour). Administrative order 72–23 (September 25, 1972) replaced Galinson (who had moved from Minneapolis) with Professor Loftus E. Becker, Jr., of the University of Minnesota Law School.Google Scholar

At a hearing in St. Paul on July 28 at which the idea of discovery masters was discussed, the defendants offered to advance the full costs of the system. The offer was rejected by the plaintiffs, reportedly because they feared this would leave the defendants, who were paying the piper, too much in control. Rejection resulted in payment of the enormous fees of the masters being allocated equally to plaintiffs and defendants. The plaintiffs later conceded that they had unwisely rejected the defendants' offer to carry the entire cost.Google Scholar

22 Discovery order no. 71–15. Entry of the order on October 1 came several days after the defendants had filed (and Judge Lord had orally denied) a motion that Judge Lord recuse himself from the case because of bias and prejudice. The recusal motion might have been filed prior to, and in anticipation of, the unfavorable ruling in order to provide an additional argument on appeal that Judge Lord should not have entered the order approving the discovery masters' recommendations.Google Scholar

23 The tentative argument would have settled the claims of the United States for $14.3 million. In addition, the defendants would have agreed to dedicate the tetracycline patent to the public. The United States would have dismissed its complaint, but was prepared to deliver all its trial preparation material to the remaining plaintiffs. Judicial approval of the contemplated settlement was not required.Google Scholar

24 While the recusal motion was denied, some of the snap was gone from the flag. After attending to other pretrial administrative details at the same hearing, Judge Lord commented: “As I say, the haste has gone out of this now. We are settling down, as I see it, for a longer, more steady pull. And which, incidentally, the court will take some of the therapy that has been served in the form of a petition and will not be pushing the lawyers so hard, whatever the result of the petition.”Google Scholar

25 The criminal appeals had been argued in the Second Circuit almost a year previously– on May 7, 1969. The record was extensive; the transcript of testimony and exhibits ran to 12,000 printed pages. Nonetheless, the delay was significant and doubtless had an impact on negotiations that were then under way in the private hospital/Blue Cross cases. A written offer of settlement was made by the defendants on April 3, 1970, 13 days before the Second Circuit opinion issued reversing the criminal convictions.Google Scholar

26 The proposed settlement offers by the defendants to Hawaii and to the United States that Judge Lord prevented from being consummated in May and September 1971 were not inconsistent with this attitude. Both offers involved only human consumption claims.Google Scholar

27 In fact, the FTC order on remand finding that the defendants had committed fraud on the Patent Office was amended by the commission at the suggestion of the defendants to make it explicit that the commission finding related only to the sale of tetracycline for human consumption.Google Scholar

28 Few actions had been filed by farm plaintiffs compared to the number of human consumption filings. The explanation of the discrepancy can hardly be found in the insignificance of the farm market for antibiotics. In the 13-year period after 1953, the defendants had agricultural sales of antibiotic products of a value between $475 and $500 million. Some of the claims within the farm group were represented in the Midwest Veterinary Supply case. But the great majority were represented in the Doughboy and Hoffert cases.Google Scholar

29 Because of the clear conflict between the farmer end-users and the manufacturers or wholesalers from whom they purchased, the Doughboy and Midwest Vet class definitions were explicitly worded so as to cover, and then just in the Doughboy class, only those end-users who had purchased antibiotics products directly from the defendants. These were primarily large corporate animal feeders who purchased antibiotic products directly from the defendants and mixed their own feed. End-users who did not purchase directly would have had interests in conflict with the dealers from whom they had purchased because of the Hanover Shoe passing on and remoteness issues.Google Scholar

30 North Carolina appealed the resulting judgment to the Fourth Circuit Court of Appeals. As of November 1975 the matter is in the process of briefing.Google Scholar

31 California's attempt to represent its institutional entities ran afoul of the aspirations of Los Angeles and San Francisco to represent themselves and their consumers. Both of these entities filed claims separate from those of the state. Judge Wyatt had certified each of these municipalities (as well as several other “breakaway” municipalities) as the representative of a class composed of the municipality's consumers. Los Angeles and San Francisco had originally agreed to the $100 million settlement in 1969, but Judge Wyatt permitted both to withdraw from the settlement in February 1970 after they had reached an accommodation with the State of California.Google Scholar

32 Hawaii, like California, was afflicted by the “breakaway” tendencies of a constituent municipality. The City and County of Honolulu had brought a separate action before the state had filed its own. Honolulu then insisted on accepting its portion of the $100 million settlement offer, despite Hawaii's rejection of it. Honolulu was permitted by Judge Wyatt to proceed separately, and it received a share from the 1969 settlement. Honolulu was, therefore, excluded from the class definitions of government entities and consumers within the state of Hawaii when Judge Lord later certified litigating classes. The excision of Honolulu cut the claim of the state almost in half.Google Scholar

33 The original certification of the consumer classes was in class action order no. 71–5 (Feb. 10, 1971), see 333 F. Supp. 278 (S.D.N.Y. 1971). Class action order no. 71–11 (April 13, 1971), see 333 F. Supp. 291 (S.D.N.Y. 1971), amended the class definition, as above, to include hospital patients.Google Scholar

34 In one of his published 1971 orders, Judge Lord rejected attorney Scanlon's collateral attack on the New York settlement on the ground that he had represented his clients in the hearing on that settlement and thus was estopped. In re Coordinated Pretrial Proceedings in Antibiotic Antitrust Actions, 333 F. Supp. 296 (S.D.N.Y. 1971). But the opinion stopped short of saying that the arguments were without merit. Judge Lord's ruling was affirmed per curiam by the Second Circuit. Connors v. Chas. Pfizer & Co., 450 F. 2d 1119 (2d Cir. 1971).Google Scholar

35 See In re Antibiotic Antitrust Actions, 333 F. Supp. 278, 286 (S.D.N.Y. 1971).Google Scholar

36 During the hearings on certification of the consumer classes, one of the defense attorneys had gone to some length to establish that it would take Judge Lord 8,000 years to try the consumer damage claims in the seven states. Judge Lord was later to remember the argument as conclusively establishing the utter unreality of any approach to the consumer claims other than a fluid damage theory.Google Scholar

37 The intention was eventually reduced to an order. On September 11, 1973, Judge Lord issued administrative order no. 73–31 ordering consolidation for trial of the state claims, the insurance class claims, and the union health and welfare class claims on the issue of liability and impact of the alleged conspiracy. The trial was to commence on October 1, 1973. Administrative order no. 73–32 (September 21, 1973) extended the trial date to October 10, 1973. The order was in response to a motion filed by the nonsettling states in May 1973, which requested that the court set an early trial date.Google Scholar

38 An exception was the state of Hawaii, which had approached the defendants in 1971 with an offer to settle on the same basis as that achieved in the CCS settlement in 1969 in New York. The Hawaii claims were quite small, particularly since the City and County of Honolulu had been permitted to participate in the CCS and consumer portions of the 1969 settlement. Judge Lord, as has been described earlier, successfully induced the attorney for Hawaii not to settle.Google Scholar

39 Both cases may, however, be atypical. Both are human consumption cases that seem to be riding the coattails of the United States and competition claims (neither of which is a class action and only one of which, the competition cases, is for treble damages).Google Scholar