607 F.2d 167 (5th Cir. 1979), 78-3345, In re Beef Industry Antitrust Litigation

Docket Nº:78-3345, 78-3346 and 79-1010.
Citation:607 F.2d 167
Party Name:In re BEEF INDUSTRY ANTITRUST LITIGATION, M. D. L. Docket No. 248. MEAT PRICE INVESTIGATORS ASSOCIATION et al., Plaintiffs-Appellees, v. IOWA BEEF PROCESSORS, INC., and Farr Farms Company and Farr Feeders, Inc., Defendants-Appellants. Darrell CAMERON et al., Plaintiffs-Appellees, v. IOWA BEEF PROCESSORS, INC., and Farr Farms Company and Farr Feeder
Case Date:November 26, 1979
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 167

607 F.2d 167 (5th Cir. 1979)

In re BEEF INDUSTRY ANTITRUST LITIGATION, M. D. L. Docket No. 248.

MEAT PRICE INVESTIGATORS ASSOCIATION et al., Plaintiffs-Appellees,

v.

IOWA BEEF PROCESSORS, INC., and Farr Farms Company and Farr

Feeders, Inc., Defendants-Appellants.

Darrell CAMERON et al., Plaintiffs-Appellees,

v.

IOWA BEEF PROCESSORS, INC., and Farr Farms Company and Farr

Feeders, Inc., Defendants-Appellants.

Don LUDVIGSON et al., Plaintiffs-Appellees,

v.

IOWA BEEF PROCESSORS, INC., and Farr Farms Company and Farr

Feeders, Inc., Defendants-Appellants.

In re BEEF INDUSTRY ANTITRUST LITIGATION, M. D. L. No. 248.

MEAT PRICE INVESTIGATORS ASSOCIATION et al., Plaintiffs,

v.

IOWA BEEF PROCESSORS, INC., Defendant-Appellant,

v.

SPENCER FOODS, INC., Defendant-Appellee.

Darrell CAMERON et al., Plaintiffs,

v.

IOWA BEEF PROCESSORS, INC., Defendant-Appellant,

v.

SPENCER FOODS, INC., Defendant-Appellee.

Don LUDVIGSON et al., Plaintiffs,

v.

IOWA BEEF PROCESSORS, INC., Defendant-Appellant,

v.

SPENCER FOODS, INC., Defendant-Appellee.

In re BEEF INDUSTRY ANTITRUST LITIGATION, M. D. L. No. 248.

Don LUDVIGSON et al., Plaintiffs-Appellees,

v.

IOWA BEEF PROCESSORS, INC. and MBPXL Corporation,

Defendants-Appellants.

Nos. 78-3345, 78-3346 and 79-1010.

United States Court of Appeals, Fifth Circuit

November 26, 1979

Rehearing and Rehearing En Banc Denied Dec. 21, 1979.

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Page 169

Witherspoon, Aikin & Langley, Donald L. Davis, James W. Witherspoon, Hereford, Tex., for plaintiffs-appellees in No. 78-3345.

Charles T. Newton, Jr., Houston, Tex., for Farr Farms Co., et al.

Briggs & Morgan, Edward C. Stringer, Peter W. Sipkins, St. Paul, Minn., for defendant-appellee in No. 78-3346.

Stephen D. Susman, Houston, Tex., amicus curiae, for plaintiffs in In re Corrugated Container Antitrust Litigation, MDL No. 310.

R. Clifford Potter, Chicago, Ill., amicus curiae, for Boise Cascade Corp.

Leslie H. Arps, New York City, amicus curiae, for Westvaco.

Freeman, Rothe, Freeman & Salzman, Chicago, Ill., for defendant-appellant in No. 79-1010.

Edward W. Rothe, James T. Malysiak, Chicago, Ill., for defendants-appellants in all cases.

Shook, Hardy & Bacon, John C. Dods, James T. Newsom, Kansas City, Mo., for MBPXL Corp.

Hawkins & Norris, Des Moines, Iowa for plaintiff-appellee in No. 79-1010.

Glenn L. Norris, Des Moines, Iowa, Cochrane & Bresnahan, John A. Cochrane, St. Paul, Minn., for plaintiffs-appellees in Nos. 78-3345 and 79-1010.

Page 170

Debevoise, Plimpton, Lyons & Gates, Robert J. Geniesse, Roger E. Podesta, New York City, for Flavorland Ind., Inc.

Appeals from the United States District Court for the Northern District of Texas.

Before WISDOM, AINSWORTH and RONEY, Circuit Judges.

WISDOM, Circuit Judge:

These three appeals involve the "packer" side of the Beef Industry Antitrust Litigation; that is, they are appeals in suits by cattlemen against beef processors. 1 The Judicial Panel on Multidistrict Litigation assigned these three cases to the Northern District of Texas for consolidated or coordinated pretrial proceedings with the "retailer" cases. In re Beef Industry Antitrust Litigation, 1977, 432 F.Supp. 211. This Court consolidated for argument the appeals in Nos. 78-3345, 78-3346, and 79-1010.

There are three antitrust actions against beef packers: (1) Price Investigators Association (MPIA) et al v. Iowa Beef Processors, Inc. (IBP), filed by the MPIA, an unincorporated association having about 450 cattle raisers as members; (2) Cameron et al v. IBP, in which the plaintiffs are Texas cattle raisers; (3) and, Ludvigson et al v. IBP, in which four named plaintiffs seek to represent a nation-wide class consisting of sellers of fat cattle. The defendants common to the cases are four beef packers: IBP, MBPXL Corporation (MBPXL); Spencer Foods, Inc. (Spencer); and Flavorland Industries, Inc. (Flavorland). Each of the complaints alleges price-fixing and monopolization in violation of the federal antitrust laws, Sherman Antitrust Act, §§ 1 & 2, 15 U.S.C. §§ 1 & 2, particularly through the alleged manipulation of beef prices reported in the "Yellow Sheet", published by the National Provisioner, Inc., the leading meat price reporter. Each complaint alleges that there are other co-conspirators. The Ludvigson suit names two additional defendants: the Estate of Currier J. Holman, credited with masterminding IBP's phenomenal growth; and the National Provisioner, Inc., publisher of the Yellow Sheet. The three complaints state virtually the same operative facts and charges against the defendants.

No. 78-3345

This appeal involves the efforts of one of the four defendants, Spencer, to settle its liability in all three cases. In September 1977, the named plaintiffs in Ludvigson moved for certification of a class consisting of all persons engaged in the business of raising what is known in the cattle business as fat cattle and who have within the four years immediately preceding the filing of this action sold more than 100 head of fat cattle in any one year. Before the court ruled on that motion, the plaintiffs in all three cases, after lengthy negotiations, made a settlement with Spencer. Negotiations began in February 1978. They were at arms-length and hotly contested. No other defendant was a part of the negotiations. The settlement agreement in substance provided that: (1) in return for a lump sum of $425,000, the plaintiffs' claims against Spencer in all three cases would be dismissed; and (2) Spencer would allow the plaintiffs access to its records and employees for discovery purposes.

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On May 25, 1978, the trial judge met with counsel for the named parties to the settlement. Upon joint motion and stipulation by the plaintiffs and Spencer, he entered an order, "Order Conditionally Determining a Temporary Settlement Class and Tentatively Approving Proposed Settlement". The notice went to those persons whom the settling defendant, Spencer, agreed were the appropriate parties to receive notice.

The order created a temporary settlement class in Ludvigson "for purposes of this settlement" consisting of

All persons, except defendants, who are engaged in the business of raising what is commonly known in the cattle business as fat cattle and who have in the period in question sold more than 100 head of fat cattle per annum in any year since January 1, 1968, including all persons who have sold fat cattle to the defendants and their suppliers.

The order provided for notice to be sent to all members of this temporary class and fixed a hearing for August 11, 1978. The order also approved the form of notice drafted by the settling parties. The notice informed the class in detail of the terms of the settlement. It also stated that the $425,000 would be used to reimburse class and non-class plaintiffs for past and future litigation expenses and that therefore it was unlikely that any funds would be available for distribution to the class. On June 8 the district judge denied motions by the non-settling defendants seeking reconsideration of this order and seeking an opportunity to present evidence tending to show that the order was improper.

On August 11 the district judge held an extensive evidentiary hearing on the proposed settlement. The proponents presented evidence showing that (1) 54,800 notices had been sent; (2) about two percent of the class had opted out of the temporary settlement class and most of these were in other cases in the Beef Industry Litigation; (3) almost no class members had filed objections; and (4) Spencer was a relatively small firm 2 in bad financial shape and had received a takeover offer from a healthy company, Land O' Lakes Cooperative, conditioned on settlement of these three antitrust actions. W. D. Farr of Farr Farms Co. and Farm Feeders, Inc., affected class members, appeared and filed an objection. In addition, the non-settling defendants filed objections.

The trial court judicially noticed the evidence already before it concerning the propriety of class certification in Becker v. Safeway Stores, Inc., the "retailer" cases. 3 The court took evidence from objectors Farr and IBP, through its general counsel, and from the settling defendant, Spencer, through its counsel. The court also heard from all counsel of record in attendance.

On August 21, 1978, the district judge determined the existence of a permanent settlement class and approved the proposed settlement. The court took judicial notice of the propriety of the similar class certification in Becker v. Safeway Stores. He found these factors favoring settlement: the uncertainty of trial of a complex matter-

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; the continued denial of liability by the settling defendant; the substantial benefit to class members; the fact that other, more substantial defendants remained in the litigation; and the uncertain financial condition of the settling defendant. Those factors outweighed the argument against settlement. Accordingly, the court entered judgment on August 25. The non-settling defendant IBP appeals this judgment. So too do Farr Farms and Farr Feeders. MBPXL did not appeal.

I.

Standing and Unappealability of Order

A. As a non-settling defendant, IBP is not prejudiced by the settlement and therefore has no standing to complain about the settlement. In re Nissan Motor Corp. Antitrust Litigation, 5 Cir. 1977, 552 F.2d 1088. In Nissan purchasers of Datsun automobiles brought an antitrust action against Datsun dealers, Nissan Motor Corporation, and its Japanese parent, Nissan Motor Company, Ltd. The dealers and the plaintiffs agreed to an early settlement which the trial court, after a hearing, approved. Non-settling defendants were not present at the hearing. This Court noted: "Counsel for Nissan...

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