State of Ala. v. Blue Bird Body Co., Inc.

• Decision Date: 22 May 1978
• Docket Number: No. 76-3529,76-3529
• Citation: 573 F.2d 309
• Parties: 1978-1 Trade Cases 62,041 The STATE OF ALABAMA, Dr. Wayne Teague, as Superintendent of Education of the State of Alabama and the Perry County Board of Education, Plaintiffs-Appellees, v. BLUE BIRD BODY COMPANY, INC., Blue Bird Mid-South, Inc., Superior Coach Corporation, Sheller-Globe Corporation, Thomas Built Buses, Inc., Ward School Bus Mfg., Inc., Wayne Corporation, Carpenter Body Works, Inc., Waits Sales & Equipment Co., Inc., Duncan Mfg. & Equipment Co., Inc., Alabama Bus Company, Eddins Bus Sales, Inc., Carpenter Bus Sales of Alabama, Everett Equipment Co., Inc. and Phillips Supply Co., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 309

573 F.2d 309

1978-1 Trade Cases 62,041

The STATE OF ALABAMA, Dr. Wayne Teague, as Superintendent of Education of the State of Alabama and the Perry County Board of Education, Plaintiffs-Appellees, v. BLUE BIRD BODY COMPANY, INC., Blue Bird Mid-South, Inc. Superior Coach Corporation, Sheller-Globe Corporation Thomas Built Buses, Inc., Ward School Bus Mfg., Inc., Wayne Corporation, Carpenter Body Works, Inc., Waits Sales &amp Equipment Co., Inc., Duncan Mfg. & Equipment Co., Inc. Alabama Bus Company, Eddins Bus Sales, Inc., Carpenter Bus Sales of Alabama, Everett Equipment Co., Inc. and Phillips Supply Co., Defendants-Appellants.

No. 76-3529.

United States Court of Appeals, Fifth Circuit.

May 22, 1978.

Edward W. Killorin, Thomas W. Rhodes, Gambrell, Russell, Killorin & Forbes, Atlanta, Ga., John R. Matthews, Jr., Ball, Ball, Matthews & Lamar, Montgomery, Ala., for Blue Bird Body Co., Inc.

Harry T. Ice, James E. Hawes, Jr., Ice, Miller, Donadio & Ryan, Indianapolis, Ind., Joseph C. Espy, II, Montgomery, Ala., for Carpenter Body Works, Inc.

Bruce L. Smith, Eastman, Stichter, Smith & Bergman, Toledo, Ohio, Robert Huffaker, Rushton, Stakely, Johnston & Garrett, Montgomery, Ala., for Sheller Globe Corp.

Stephen W. Terry, Jr., Baker & Daniels, Indianapolis, Ind., M. R. Nachman, Jr., Steiner, Crum & Baker, Montgomery, Ala., for Thomas Built Buses, Inc.

Robert E. Jensen, Williams & Jensen, Washington, D. C., D. Coleman Yarbrough, Jones, Murray, Stewart & Yarbrough, Montgomery, Ala., for Ward School Bus Mfg., Inc.

Trammell E. Vickery, Kent E. Mast, Hansell, Post, Brandon & Dorsey, Atlanta, Ga., William I. Hill, II, Hill, Hill, Carter, Franco, Cole & Black, Montgomery, Ala., for Wayne Corp.

John R. Matthews, Jr., Ball, Ball, Matthews & Lamar, Montgomery, Ala., for Eddins Bus Sales, Inc.

James R. Shaw, Bessemer, Ala., for Waits Sales and Equipment.

Sam R. Shannon, Jr., Shannon, Odom, Robertson & Jackson, Birmingham, Ala., for Duncan Mfg. & Equipment Co. and Carpenter Bus Sales of Ala.

B. F. Garrett, Garrett, Thompson & Price, Brewton, Ala., for Everett Equipment Co.

Richard H. Gill, Hobbs, Copeland, Franco & Screws, Montgomery, Ala., for Phillip Supply Corp.

Thomas W. Rhodes, Atlanta, Ga., for Eddins Bus Sales, Inc. Thomas W. Thagard, Jr., Montgomery, Ala., of counsel: William J. Baxley, Atty. Gen. of Ala., Montgomery, Ala., George L. Beck, Deputy Atty. Gen., Montgomery, Ala, E. C. Hornsby, Special Asst. Atty. Gen., Tallassee, Ala., Smith, Bowman, Thagard, Crook and Culpepper, Montgomery, Ala., for appellees.

Appeal from the United States District Court for the Middle District of Alabama.

Before COLEMAN and FAY, Circuit Judges, and KING, District Judge. ^*

FAY, Circuit Judge:

We are presented today with an interlocutory appeal from a district court order certifying this antitrust case as a class action on behalf of two plaintiff classes. The issue is whether the district court erred when it certified both a "national class" and a "state class" under Fed.R.Civ.P. 23(b)(3). For a number of reasons, we feel that the granting of class action status as to the plaintiff national class was inappropriate, and, as to that class, we reverse the district court's order and remand for further proceedings.

I. FACTS

This is a private antitrust class action brought under § 4 of the Clayton Act, 15 U.S.C. § 15, by the State of Alabama, its Superintendent of Education, and the Perry County (Alabama) Board of Education against six manufacturers of school bus bodies ¹ and seven Alabama distributors of those bus bodies. ² The amended complaint alleges two claims. Plaintiffs assert their first claim (the "state" claim) on behalf of a class of all governmental entities within the state of Alabama which purchase school bus bodies, and allege a conspiracy to fix prices on the part of these manufacturers and their Alabama distributors through a process of rotation of bids and accommodation bidding. ³ Plaintiffs' second claim (the "national" claim) is asserted on behalf of all governmental entities in the United States which purchase school bus bodies. ⁴ This national claim is only against the manufacturers, and it alleges, in addition to a price-fixing charge, a conspiracy to monopolize in violation of § 2 of the Sherman Act.

On July 15, 1976, District Judge Robert E. Varner entered the order forming the basis of this interlocutory appeal. ⁵ In that order, Judge Varner proposed a plan which he felt would allow this case to proceed as a class action. The plan consisted of bifurcating the trial between the liability and damage issues, ⁶ and, after a jury determination on the issue of liability of the nationwide defendants, severing the cases of class members by states and transferring the severed cases to the district courts in their respective states for the determination of the damage issues. ⁷ As to such transfers, Judge Varner relied upon 28 U.S.C. § 1404(a) which provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

Judge Varner, however, also pointed out in his July 15th order that he would not certify the national class if this Court were to determine that his plan to handle this litigation through bifurcation and transfer was improper. He reached this conclusion because in his opinion the national class "would so heavily burden this Court's docket as to paralyze the federal court system in this district, and because of the impropriety of requiring parties throughout the United States to try this cause of action in Alabama." App. 177.

A. The School Bus Industry

An analysis of the propriety of Judge Varner's order requires us to examine closely the school bus industry and to attempt to understand the product, the sellers and the buyers. ⁸ While an inquiry into the merits of a cause of action is never appropriate when making a class action determination, a full understanding of the underlying facts is usually essential if one hopes to correctly apply the requirements of Fed.R.Civ.P. 23.

School buses are comprised of two basic parts bodies and chassis which are separately manufactured. These bodies and chassis are sometimes sold as complete bus units and other times are sold separately. Plaintiffs brought this lawsuit only against the six manufacturers and seven Alabama distributors of school bus bodies and did not join as defendants other distributors throughout the country or the manufacturers of school bus chassis. The manufacturer defendants in this lawsuit are said to be the only manufacturers of school bus bodies in the United States, but there are approximately 400 local distributors of school buses across the country.

Each school bus body is a passenger coach for which the structure, configuration, and equipment are designed to meet an individual purchaser's specifications. The fifty states have varying and comprehensive school bus specifications. These specifications prescribe the physical configuration, materials, construction, and equipment for school buses used in that state. Also, many local governmental purchasers require even more stringent standards than those contained in the state specifications. In addition to the differences in school buses required by minimum state or local specifications, significant variations result from the particular needs of a purchaser. For example, special equipment and design must be utilized to accommodate the handicapped; the number of pupils that require carriage dictates size; engine size varies according to the terrain that must be traveled; and the climate determines the heating and cooling equipment to be installed. A. 243. Thus, a school bus is not a homogeneous product. Each bus must meet the individualized specifications of thousands of different public entities which purchase school buses each year. ⁹

There are also substantial differences in the ways in which public entities purchase school buses. Initially, it must be recognized that school buses are, for the most part, sold to the independent distributors in the various states who in turn resell them to their customers. ¹⁰ In all, the defendant manufacturers and their local distributors sell school bus bodies to more than 16,000 governmental entities nationwide. The authority for these governmental entities to purchase school buses is generally granted by a state statute, but in some instances local school systems may require buses to be purchased in a particular manner. Thus, state purchasing procedures may be governed by statute, by state-wide regulations, by rules of various purchasing entities, or by local customs and habits.

The most common purchasing practice utilized by the states is the solicitation of competitive bids and the awarding of the contract to the lowest responsible bidder. ¹¹ Several states maintain complex systems whereby the state government's purchasing department solicits competitive bids, ¹² and, based on such bids, establishes a maximum bid price for each basic type of school bus. Other public bodies or agencies authorized to make school bus purchases are then free to purchase buses at the maximum state bid price or to solicit bids on their own behalf and enter into purchase agreements with the lowest responsible bidders provided that these bids do not exceed the maximum state bid. Several other states have unique purchasing procedures. For example, the defendants point to Florida where the purchase prices may be negotiated rather than bid when it is determined to be in the best interest of the school district. App. 249. In Maine, there is no detailed statutory procedure governing purchases. Rather, Maine law gives local school superintendents broad discretion to purchase school buses "in the most economical manner that is consistent with the welfare and safety of pupils," subject only to approval by the State Commissioner of...