VANCE, Circuit Judge:
In this appeal, we are called upon to review the interclass allocation of a settlement in an antitrust class action. Sixty direct purchasers of chickens have objected to the interclass sharing agreement that was reached by the representatives of the different plaintiff classes in this suit prior to substantial negotiations with any of the defendants. The objectors challenge the allocation plan on three grounds. First, they allege it was the result of bargaining by attorneys whose representation of the various classes was tainted by a conflict of interest. Second, objectors contend that the allocation is unfair in light of available
In April 1973 the United States Department of Justice filed a civil antitrust action against the National Broiler Marketing Association (NBMA) in the United States District Court for the Northern District of Georgia. The complaint alleged that the NBMA, its members, and other chicken producers had conspired to fix broiler prices and restrict broiler production in violation of section one of the Sherman Act, 15 U.S.C. § 1.
The government's lawsuit spawned a rash of private civil actions against the NBMA and the participants in the conference call program,
On February 20, 1975 plaintiffs filed a joint motion seeking class certification of five classes based upon functional distinctions among the plaintiffs: governmental entities; supermarkets; hotels, restaurants, and contract institutional feeders; fast food establishments; and wholesale distributors.
Although two of the defendants reached a settlement with the plaintiffs in April 1975, no serious settlement negotiations occurred until 1977. This inaction was due in large part to the NBMA's reluctance to negotiate while it tested a defense in the parallel action by the Justice Department that it was an agricultural cooperative and therefore immunized from liability for antitrust violations by the Capper-Volstead Act, 7 U.S.C. §§ 291-292. It was also partially the result of the demand by plaintiffs that each defendant stipulate to class certification.
In an effort to solidify their negotiating posture and improve the chances for class certification, counsel for the class representatives met on November 17, 1976 to negotiate an interclass allocation of the expected settlement or judgment proceeds. At that meeting the liaison counsel advised the attorneys present of the need to reach an allocation agreement, but otherwise did not participate in the negotiations. After the liaison counsel had spoken, an attorney who represented the supermarket class as well as several members of the governmental entities class took the lead. He stated that he could not represent all of his clients at that point, and that he elected to represent only the supermarket class. Another lawyer was to represent the governmental entities class, although he also was the attorney for the fast food class. Yet another attorney was designated to represent the fast food class in the allocation negotiations. Despite this shifting representation, one lawyer represented the wholesale distributor class exclusively during these negotiations and throughout all of the subsequent proceedings. The following agreement resulted from the negotiations, subject to ratification by the state attorneys general who did not participate in the negotiations:
Class I Governmental Entities 15% Class II Supermarkets 50% Class III Hotels, Restaurants, Institutional Feeders 11% Class IV Fast Food Distributors 14% Class V Wholesale Distributors 10%
While market share of purchases was the starting point of the negotiations, other factors, such as actual damages, ease of proof, and responsibility in the lawsuit, were taken into account to reach the final agreement.
Class I Governmental Entities 9.4% Class II Supermarkets 50.0% Class III Food Preparers 15.6% Class IV Wholesale Distributors 25.0%
The allocation scheme was presented to the district court for approval on July 13, 1977, but the court did not rule on it.
Prior to the decision in Illinois Brick, this court ruled adversely to the NBMA on its claim of antitrust immunity under the Capper-Volstead Act. In United States v. National Broiler Marketing Association, 550 F.2d 1380 (5th Cir. 1977), aff'd 436 U.S. 816, 98 S.Ct. 2122, 56 L.Ed.2d 728 (1978), we held that the NBMA was not an agricultural cooperative whose actions were immune from antitrust scrutiny. This decision spurred defendants to begin serious settlement negotiations because it effectively eliminated their defense from liability in the private civil suits. Over the next five months settlement negotiations proceeded rapidly and plaintiffs reached agreement with all but three defendants. Defendants would not agree to any settlement, however, unless they were assured of "total peace" in the future. Accordingly, they insisted upon a settlement that included all potential plaintiffs in any state or federal antitrust action, and they demanded the creation of a fifth, catchall class of other direct purchasers. This demand necessitated the negotiation of a third interclass sharing proposal, the one that is before us now. Counsel for the class representatives decided that they would fix the share of the governmental entities class without regard to the new class. They also determined that members of the new class should receive the same return on purchases as the average return for classes two, three, and four. The negotiations led to the following allocation proposal:
Class I Governmental Entities 9.40% Class V Other Purchasers That proportion of 90.60% equal to class five's proportion of overall claims filed by nongovernmental classes Class II Supermarkets 55.19% of balance Class III Food Preparers 17.22% of balance Class IV Wholesale Distributors 27.59% of balance
Subsequent to these negotiations, class notice was sent to over 200,000 broiler purchasers describing the settlement and allocation plan.
Agreement was reached with the three remaining defendants
At the outset, we are confronted with a challenge to our jurisdiction to hear this appeal. Appellee settlement proponents contend that appellants' objections to the sharing proposal raise issues which are ancillary to the class certification decision and the March 7 approval of the settlement fund. In effect, appellees argue that the orders were tantamount to final judgment in this case, and that by failing to appeal those orders, objectors lost all right of appeal here. We find this argument devoid of merit.
As a general rule, only final orders of the district court are appealable and unless an order fully disposes of all issues in a case it is not usually final. Brown v. New Orleans Clerks and Checkers Union No. 1497, 590 F.2d 161, 163-64 (5th Cir. 1979). This rule expresses a policy against piecemeal appeals that is embodied in the final judgment rule codified at 28 U.S.C. § 1291.
Appellees argue that if the order approving the settlement agreement was not a final judgment, it was nonetheless an order falling within the collateral order exception to the final judgment rule.
Our rejection of appellees' arguments simplifies the question whether this court has appellate jurisdiction to hear this case. Appellants filed a timely notice of appeal from the order approving the allocation proposal, the district court certified that issue for appeal, and a panel of this court accepted jurisdiction. In re Chicken Antitrust Litigation, No. 80-8610 (5th Cir. Oct. 10, 1980). Therefore, the case is properly before us pursuant to 28 U.S.C. § 1292(b).
Appellant objectors first contend that the district court should have disapproved the settlement allocation plan because it was negotiated by attorneys with conflicts of interest that adversely affected their representation of one or more classes. Objectors point to the original negotiations at which certain counsel were assigned to represent certain classes even though they had clients who were members of other classes. This, they contend, so infected the negotiations that no arms length bargaining was possible and the interests of certain classes were sacrificed to the interests of others.
Objectors are members of the wholesale distributor class. This class was represented throughout the allocation negotiations by one attorney who represented no other clients. This attorney continued to represent the class throughout the litigation and was responsible for instituting new negotiations once the Illinois Brick decision was announced. Whatever irregularities there may have been that affected members of the other classes,
Even if we were to assume that a potential conflict existed that would have prevented effective representation at trial, our conclusion would remain the same as to the settlement negotiations. Even "`irregular settlement negotiations may ... form the basis for a judicially acceptable class action settlement.'" In re Corrugated Container Antitrust Litigation, 643 F.2d 195, 207-08 (5th Cir. 1981) (Container I) (quoting In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1131-32 (7th Cir.), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95 (1979)). It is enough if representation of the class during the negotiations was adequate and that the settlement itself is fair. We will consider the fairness of the allocation terms in a later section of this opinion; it is sufficient for our purposes here to say that we believe that the agreement was fair. We also believe that the objectors received adequate representation during the negotiations. Container I teaches us that class members in settlement negotiations receive adequate representation if: (1) the general interests of all class members are amenable to unified representation, and (2) no specific feature of the settlement sacrificed the interests of some class members to those of others. See Container I, 643 F.2d at 208. Clearly, the first prong of our test for adequate representation was met. At the stage of negotiations all members of the wholesale distributor class shared a single goal, that of maximizing the class' share of the settlement proceeds, and were thus amenable to unified representation. As to the second prong of our test, it is up to the objectors to point to a trade-off of their rights and actual prejudice. Id. Objectors have failed to present any specific evidence that their interests were unfairly compromised apart from their general complaint that their share of the rewards was unsatisfactory. The percentage the class received was admittedly low at the outset, but appellees have adequately explained the reasons for such a share. Thus, even if objectors have demonstrated the existence of a conflict of interest that affected them, which we doubt, appellants have failed to demonstrate that their rights were unfairly compromised by such a conflict and the district court properly refused to disapprove the sharing proposal on these grounds.
Appellants next contend that the interclass sharing proposal should be disapproved because it is not fair, adequate, and reasonable. Rule 23(e) of the Federal Rules of Civil Procedure requires judicial approval of any class action settlement,
Appellants primarily contend that the allocation agreement is unfair because it enables indirect purchasers to recover part of the settlement fund notwithstanding the decision in Illinois Brick, 431 U.S. at 720, 97 S.Ct. at 2061. Appellants fail to recognize that the starting point for the settlement negotiations was defendants' insistence upon "total peace." Defendants' insistence upon obtaining a complete release from all significant potential plaintiffs necessarily meant that no settlement would have been reached unless indirect purchasers released their claims against defendants. This, in turn, meant that indirect purchasers had the power to frustrate any settlement and unless those classes primarily composed of indirect purchasers also received a share of the settlement proceeds, there would have been no settlement.
Of course, had indirect purchasers been completely without any colorable legal claims against defendants, it would have been an abuse of the court's discretion to allow them to share in the settlement fund. That is not the case. Indirect purchasers held many potential claims against defendants which required releases before total peace could be obtained. First, despite the holding of Illinois Brick as to monetary damages, the indirect purchasers were not without any federal remedies to redress the injury they suffered as a result of defendants' putative antitrust violations. Illinois Brick rests not on a lack of injury to indirect purchasers, but on the belief that difficulties in proving indirect damages might weaken the effectiveness of private antitrust actions. Consequently, this circuit has held that indirect purchasers may obtain injunctive relief pursuant to section 16 of the Clayton Act, 15 U.S.C. § 26, even if monetary relief is generally unavailable. In re Beef Industry Antitrust Litigation, 600 F.2d 1148, 1167 (5th Cir. 1979), cert. denied, 449 U.S. 905, 101 S.Ct. 280, 66 L.Ed.2d 137 (1980). It is also apparent that many of the indirect purchasers could resort to state law remedies to vindicate their claims against defendants. Many states have tried to fill the interstices of federal antitrust law by enacting legislation which
Illinois Brick itself also left open the possibility of suits by some indirect purchasers. In generally rejecting antitrust damages claims by indirect purchasers, the Supreme Court stated an exception for those indirect purchasers who can demonstrate that normal market pressures to establish prices had somehow been circumvented. Thus, if direct purchasers used a "cost-plus" pricing schedule or were owned or controlled by the producer, indirect purchasers who bought from them could bring suit. 431 U.S. at 735-36 & n.16, 97 S.Ct. at 2069-70. In this case, there is evidence to suggest that both exceptions to the Illinois Brick rule apply to some of the plaintiff purchasers. Both objectors and proponents introduced affidavits concerning "cost-plus" pricing. We agree with the district court that whether or not wholesale distributors used such a system, the issue of "cost-plus" pricing created enough problems so that a settlement could reasonably try to take them into account by including indirect purchasers in the allocation fund. In addition, allegations that some of the members of the wholesale distributor class were corporate subsidiaries of broiler producers created the possibility that some direct purchasers might not be entitled to damages if the suit went to trial. Certainly the problems that could arise from this issue favored inclusion of indirect purchasers in the settlement for they would benefit from proof of this situation. Finally, proposed legislation to overrule the holding of Illinois Brick created legitimate uncertainties about the status of indirect purchasers,
Other considerations also favor inclusion of indirect purchasers in the settlement distribution. At no point during the settlement negotiations had the district court certified the case as a class action. In fact, the court had on two occasions expressed doubts as to the manageability of classes that contained both direct and indirect broiler purchasers. To shore up their position on class certification and their consequent negotiating power, the plaintiff class representatives decided to reach an allocation agreement and thus demonstrate the effectiveness and manageability of the class actions by removing the major potential source of intraclass dispute. It was not an abuse of the court's discretion to take into account the benefit that accrued to all of the plaintiff classes by virtue of the participation of the indirect purchasers in the settlement agreement. See id. Additionally, because of the uncertain economic effect of the NBMA's conference call program both direct and indirect purchasers faced great difficulty in proving damages. Unless the case was settled, there was a very real chance that none of the plaintiffs would be able to recover any monetary damages. Cf. Cotton v. Hinton, 559 F.2d at 1330 (inquiry into fairness should contrast settlement rewards with likely rewards if case goes to trial); Lowenschuss v. Bluhdorn,
Objectors also complain that the allocation scheme should be disapproved because it bears no relation to economic data as to relative injury. To justify this position objectors present several calculations showing that wholesalers will receive less per pound in damages than members of the other classes. While superficially appealing, this argument cannot withstand analysis. The reason that wholesalers might receive less damages per pound of purchase is not a result of discrimination against that class, but rather is the result of a much greater claims response by wholesalers.
All of the above considerations convince us that the inclusion of indirect purchasers in the sharing proposal was reasonable, that the sharing proposal was adequately supported by economic data, and that the sharing proposal was fair, adequate, and reasonable. We will not disturb the district court's exercise of discretion.
Objectors finally complain that there was insufficient discovery before the
15 U.S.C. § 1.
15 U.S.C. § 4.
Section four of the Clayton Act provides for damage suits by private parties:
15 U.S.C. § 15.
Section sixteen of the Clayton Act authorizes private injunctive actions and provides in pertinent part:
15 U.S.C. § 26.
28 U.S.C. § 1291.
28 U.S.C. § 1292(b).