State of West Virginia v. Chas. Pfizer & Co.

• Citation: 440 F.2d 1079
• Decision Date: 29 March 1971
• Docket Number: No. 513-597,Dockets 35700-35784.,513-597
• Parties: STATE OF WEST VIRGINIA, Plaintiff-Appellee, v. CHAS. PFIZER & CO., Inc., et al., Defendants-Appellees. ALPINE PHARMACY, INC., et al., Plaintiffs-Appellees, v. CHAS. PFIZER & CO., Inc., et al., Defendants-Appellees. Cotler Drugs, Inc., et al., Plaintiffs-Appellants, and Louis Patlogan, formerly doing business as Patlogan's Western Pharmacy, Petitioner-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

440 F.2d 1079 (1971)

STATE OF WEST VIRGINIA, Plaintiff-Appellee, v. CHAS. PFIZER & CO., Inc., et al., Defendants-Appellees.

ALPINE PHARMACY, INC., et al., Plaintiffs-Appellees, v. CHAS. PFIZER & CO., Inc., et al., Defendants-Appellees.

Cotler Drugs, Inc., et al., Plaintiffs-Appellants, and

Louis Patlogan, formerly doing business as Patlogan's Western Pharmacy, Petitioner-Appellant.

Nos. 513-597, Dockets 35700-35784.

United States Court of Appeals, Second Circuit.

Argued March 16, 1971.

Decided March 29, 1971.

Edward A. Berman and Harry Rubenstein, Chicago, Ill. (Lawrence Walner, Lewis W. Schlifkin and Bernard B. Brody, Chicago, Ill., on the brief), for petitioner-appellant.

Richard F. Levy, Chicago, Ill. (Levy & Erens, Chicago, Ill., Jay Erens and Howard A. Tullman, Chicago, Ill., on the brief); (Schwartz & Alschuler, Benjamin F. Schwartz and Herbert A. Karzen, Los Angeles, Cal., on the brief), for plaintiffs-appellees, Alpine Pharmacy, Inc., and others, by the Committee of Counsel.

John E. F. Wood, New York City (Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for Chas. Pfizer & Co., Inc.; Donovan, Leisure, Newton & Irvine, New York City, for American Cyanamid Co., Cravath, Swaine & Moore, New York City, for Squibb Beech-Nut, Inc. and Olin Mathieson Chemical Corp.; Covington & Burling, Washington, D. C., for the Upjohn Co.; Winthrop, Stimson, Putnam & Roberts, New York City, attorneys for the Bristol Myers Co., on the brief), for defendant-appellees.

David I. Shapiro, New York City, for the States of Alabama, Florida, Georgia, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Mississippi, Missouri, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Texas, Vermont, Virginia, Wisconsin, the District of Columbia, and the Cities of New York and Memphis. (Harold E. Kohn and David Berger, Philadelphia, Pa., Counsel for the State of Delaware, the County of Erie, New York; the County of Summit, Ohio; the County of Allegheny, Pa.; and the Cities of Tampa, Florida, Dearborn, Detroit, Flint, Lansing, Madison Heights, and the Township of Redford, Michigan; Buffalo, New York; Akron and Cleveland, Ohio; and Pittsburgh, Pennsylvania. Mark I. Harrison, Phoenix, Ariz., for the State of Arizona. Robert E. Sher, Washington, D. C., Counsel for the Commonwealth of Puerto Rico. Dickstein, Shapiro & Galligan, Washington, D. C., Arthur J. Galligan, Frank F. Flegal, Washington, D. C., of counsel); and Lee A. Freeman, Chicago, Ill. (Lee A. Freeman, Jr., Jerrold E. Salzman, Chicago, Ill., on the brief), (Chauncey H. Browning, Jr., Atty. Gen. of West Virginia, Gene Hal Williams, Deputy Atty. Gen., William J. Scott, Atty. Gen. of Illinois, John P. Meyer, Sp. Asst. Atty. Gen., Theodore L. Sendak, Atty. Gen. of Indiana, Wendell C. Hamacher, Deputy Atty. Gen., Fred Speaker, Atty. Gen. of Pennsylvania, Vincent X. Yakowicz, Deputy Atty. Gen., Frank J. Kelley, Atty. Gen. of Michigan, Maxine B. Virtue, Asst. Atty. Gen., Duke W. Dunbar, Atty. Gen. of Colorado; Warren B. Rudman, Atty. Gen. of New Hampshire, William F. Cann, Deputy Atty. Gen., William O. Bradley, Sp. Asst. Atty. Gen. of Nevada, Richard L. Curry, Corp. Counsel of the City of Chicago; Charles E. Griffith, III, Director of Law of the Metropolitan Government of Nashville and Davidson County, Tennessee, Robert E. Kendrick, Deputy Director of Law), Nashville, Tenn., of counsel for the Plaintiffs-Appellees, States of West Virginia, Illinois, Indiana, Pennsylvania, Michigan, Colorado, New Hampshire, Nevada, and the Cities of Chicago and Nashville, for plaintiffs-appellees State of Alabama, and others.

George C. Mantzoros, Asst. Atty. Gen. (Louis J. Lefkowitz, Atty. Gen. of the State of New York, Samuel A. Hirshowitz, First Asst. Atty. Gen., John M. Desiderio, Asst. Atty. Gen., of counsel), for appellee State of New York.

M. J. Bowen, Asst. Atty. Gen. of the State of South Carolina (Daniel R. McLeod, Atty. Gen. of the State of South Carolina, of counsel), for appellee State of South Carolina.

Robert L. Woodahl, Atty. Gen. for the State of Montana (William N. Snell, Asst. Atty. Gen., of counsel), on the brief for appellee State of Montana.

Evelle J. Younger, Atty. Gen. of California, Robert E. Murphy, Deputy Atty. Gen., Robert Morgan, Atty. Gen. of North Carolina, Jean A. Benoy, Deputy Atty. Gen., Bertram T. Kanbara, Atty. Gen. of Hawaii; Lee Johnson, Atty. Gen. of Oregon, Edward A. Nugent, Chief Counsel; Kent Frizzell, Atty. Gen. of Kansas, Donald Barry, Sp. Asst. Atty. Gen., Crane Martin, Claussen & Ashworth, Topeka, Kan., Vernon B. Romney, Atty. Gen. of Washington, William H. Ferguson, Sp. Asst. Atty. Gen., Ferguson & Burdell, Seattle, Wash., on the brief for States of California, Hawaii, Kansas, North Carolina, Oregon, Utah and Washington as amicus curiae.

Robert K. Killian, Atty. Gen. of Connecticut (Norris L. O'Neill, Hartford, Conn., of counsel); George F. Kugler, Jr., Atty. Gen. of New Jersey, Elias Abelson, Asst. Atty. Gen., Francis B. Burch, Atty. Gen. of Maryland; George L. Russell, City Solicitor, Baltimore, Md., William L. Siskind, Baltimore, Md., Attorney for the State of Maryland and the Mayor and City Council of Baltimore, Maryland; James A. Maloney, Atty. Gen. of New Mexico; William C. Marchiondo, Albuquerque, N. M., Robert M. Robson, Atty. Gen. of Idaho; James E. Barrett, Atty. Gen. of Wyoming; Max P. Zall, City Atty., City and County of Denver, Colo., Leo T. Zuckerman, Denver, Colo., Granvil I. Specks, Josef D. Cooper, Perry Goldberg, Chicago, Ill., for the States of Connecticut, New Jersey, Maryland, New Mexico, Idaho, Wyoming; Mayor and City Council of Baltimore, and City and County of Denver.

Before MOORE and SMITH, Circuit Judges, and TIMBERS,^* District Judge.

J. JOSEPH SMITH, Circuit Judge:

This is an appeal from an order of the United States District Court for the Southern District of New York, Inzer B. Wyatt, Judge, dated September 18, 1970 entering final judgment in favor of defendants-appellees and dismissing the actions as to them. The opinion is reported at 314 F.Supp. 710.

This case involves some 66 civil actions, 26 of which were commenced in the Southern District of New York and 40 of which were transferred to that district by the Judicial Panel on Multi-district Litigation "for coordinated or consolidated pre-trial proceedings." The claim in each of these actions is that the defendants, who manufacture certain broad spectrum antibiotic drugs, are guilty of violations of the antitrust laws in the sale of these antibiotics, specifically sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2). Treble damages were sought, as authorized in 15 U.S.C. § 15.

Before these actions proceeded to trial the defendants, on February 6, 1969 (as modified on May 9, 1969), proposed an offer of settlement in the amount of $100,000,000 as to the claims of the following groups:

(1) States, counties, cities and their political subdivisions and agencies and any other governmental entities (excluding the Federal Government) arising out of their direct purchases or out of payments to or for the benefit of recipients of welfare or other aid; and

(2) Wholesalers, retailers, and individual consumers arising out of their purchases, including claims of the states as parens patriae on behalf of their citizens or on behalf of classes including the state as a consumer and all other consumers in the state.

The terms of this settlement offer were as follows:

(1) The appropriate actions would be determined to be maintained as class actions pursuant to Rule 23 of the Federal Rules of Civil Procedure and the appropriate notices with option to be excluded from the class would be directed to all class members;

(2) If the exclusions were "substantial" and "material" the defendants could withdraw the offer;

(3) The $100 million settlement figure would be reduced appropriately to reflect the exclusions from class membership;

(4) Any plaintiff accepting the settlement could present to the Court a proposed plan for the allocation of the amount received within each class;

(5) If all the plaintiffs did not agree on a common plan, then the defendants could elect to proceed with any proposed plan;

(6) The plan either agreed to or selected by the defendant would be submitted to the District Court for approval pursuant to Rule 23 (e) of the Federal Rules of Civil Procedure.

(7) The administrative and other costs of the litigation would be paid from the settlement fund; and

(8) If the settlement were approved, all claims covered within its terms would be "satisfied or otherwise terminated."

On May 26, 1969, after the settlement had been accepted in principle by nearly all the plaintiffs, the district court issued an order containing the following provisions:

(1) The several states, Puerto Rico, and the District of Columbia were designated as a "temporary national class" from which any of these plaintiffs not accepting the offer of settlement could by notice exclude themselves. As to those states accepting the offer of settlement, each action commenced by them was to be maintained as a class action as to two classes: (a) claims of states, counties, cities and their political subdivisions and agencies arising out of their purchases or out of payments to or for the benefit of recipients of welfare or other aid; and (b) individual members of the consuming public who bought antibiotics in the state.

(2) City and county government entities which as plaintiff or intervenor plaintiff had pleaded by June 10, 1969 a class claim on behalf of consumers resident within their territorial limits could maintain a class action as proper representatives of the class.

(3) Actions commenced by wholesale drug stores which had accepted the offer of settlement were consolidated into the "consolidated wholesaler-retailer class" whose members were specified to be all purchasers of broad spectrum antibiotics who bought for "resale at wholesale or retail."

Having determined that...