Bennett v. Behring Corp.

• Citation: 737 F.2d 982
• Decision Date: 30 July 1984
• Docket Number: Nos. 82-5438,83-5096,s. 82-5438
• Parties: , 1984-2 Trade Cases 66,126 William R. BENNETT, et al., Plaintiffs Appellees, Sophie A. O'Brien, etc., Veronica Woodall, John J. Dunne, Mary Dunne, the Tamarac Homeowners Assn., Charles and Ida Diamond, Plaintiffs-Appellants, v. BEHRING CORPORATION, et al., Defendants-Appellees. William R. BENNETT, et al., Plaintiffs, The Tamarac Homeowners Association, Charles and Ida Diamond, et al., Plaintiffs-Appellants, v. BEHRING CORP., et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 982

737 F.2d 982

39 Fed.R.Serv.2d 995, 1984-2 Trade Cases 66,126

William R. BENNETT, et al., Plaintiffs Appellees, Sophie A.

O'Brien, etc., Veronica Woodall, John J. Dunne,

Mary Dunne, the Tamarac Homeowners

Assn., Charles and Ida

Diamond, Plaintiffs-Appellants, v. BEHRING CORPORATION, et al., Defendants-Appellees.

William R. BENNETT, et al., Plaintiffs, The Tamarac Homeowners Association, Charles and Ida Diamond, et al., Plaintiffs-Appellants, v. BEHRING CORP., et al., Defendants-Appellees.

Nos. 82-5438, 83-5096.

United States Court of Appeals,

Eleventh Circuit.

July 30, 1984.

Joseph A. Fitzsimmons, Fort Lauderdale, for O'Brien et al.

Arthur W. Tifford, Miami, Fla., for Tamarac and Diamonds.

Max Blumberg, pro se.

John P. Freeman, Harry A. Swagart, III, Columbia, S.C., Jon E. Krupnick, Fort Lauderdale, Fla., for Bennett, et al.

Michael Krul, Fort Lauderdale, Fla., for Bessemer, et al.

Gilbert A. Haddad, Coral Gables, Fla., for Behring Corp., Leadership Housing, Inc. and Cerromarmon Corp.

Andrew T. Lavin, Abrams, Anton, Robbins, Ressnick, Schneider & Mager, Hollywood, Fla., for Schechter, et al.

George I. Platt, Schwartz & Nash, Fort Lauderdale, Fla., for Homeowner's Assoc. & Mainlands Seven Maintenance.

Harry A. Swagart, III, Columbia, S.C., for members of class, other than those joined in the appeal.

Joseph Easthope, Faircloth, Easthope & Traver, Fort Lauderdale, Fla., for Lutz.

Appeals from the United States District Court for the Southern District of Florida.

Before FAY and ANDERSON, Circuit Judges, and MARKEY ^*, Chief Judge of the Federal Circuit.

FAY, Circuit Judge:

We review in this appeal an order from the United States District Court for the Southern District of Florida approving an antitrust class action settlement between plaintiff-class representatives and thirty-one of thirty-five defendants. The appellants in this appeal include several groups of dissident plaintiffs who argue that the settlement agreement is invalid in that it perpetuates a violation of the Sherman Antitrust Act; they also maintain that even if the agreement is valid, the number and substance of objections warrant this court's disapproval of the settlement. Plaintiffs additionally ask us to void those parts of the settlement which allegedly sanction real estate development schemes violative of state law. After carefully reviewing the record in light of these objections, we are not persuaded that the settlement must be set aside or modified. To the contrary, we find no abuse of discretion by the district court in its conclusion that the terms of the settlement, and the plan to distribute the settlement proceeds to class members, are fair, reasonable and adequate. We accordingly affirm the district court's approval of the settlement proposal.

I. THE FACTS

This lawsuit's massive history began on June 6, 1972, when homeowners in the City of Tamarac, Florida, filed a six-count complaint in the United States District Court for the Southern District of Florida against the Behring Corporation, the original developer of Tamarac. The complaint sought to relieve the homeowners from deed restrictions, filed by Behring, requiring the payment of monthly fees for use and maintenance of the recreational facilities within thirty-one Tamarac subdivisions. ¹ The original complaint, filed as a class action under Fed.R.Civ.P. 23, alleged various state law claims and violations of the Interstate Land Sales Act, 15 U.S.C. Sec. 1701 et seq. (1980). In October, 1973, the Interstate Land Sales Act claims were dismissed, and in July, 1974, the court granted class certification except as to plaintiffs' fraud claims. ² Defendant, Behring Corp., then appealed the class certification order to the Fifth Circuit; the Fifth Circuit held that the district court action was not a final appealable order and thus dismissed for lack of jurisdiction. Bennett v. Behring Corp., 525 F.2d 1202 (5th Cir.), cert. denied, 425 U.S. 975, 96 S.Ct. 2175, 48 L.Ed.2d 798 (1976).

In July, 1976, the plaintiffs moved to amend the complaint to add Count VII, an antitrust "tie-in" claim. Plaintiffs specifically contended in Count VII that the Tamarac development scheme amounts to a per se illegal tying agreement in that a recreational facilities maintenance lease is tied to the purchase of each home in violation of section one of the Sherman Act, 15 U.S.C. Sec. 1 (1980). ³ The motion to add Count VII was granted, as was plaintiff's motion to join thirty-four additional defendants as to Count VII. ⁴ In early 1979, a class action notice was disseminated; soon thereafter, over 2,000 class members opted out of the lawsuit. Also in 1979, Behring Corporation's motion for summary judgment as to the state law class action claims was granted, Bennett v. Behring Corp., 466 F.Supp. 689 (S.D.Fla.1979), and the individual fraud claims of the class representatives were settled and dismissed.

Throughout 1979 and early 1980, settlement negotiations and discovery were conducted as to the antitrust tie-in claim. In June, 1980, the court was notified that a proposed settlement had been agreed upon and on July 1, 1980, Judge Jose A. Gonzalez, Jr. held a hearing on the proposed settlement. At the hearing, both proponents of the settlement and its objectors extensively voiced their opinions. The essence of the settlement first proposed, an agreement substantially identical to that under consideration before us, is that it provides class members with a minimum of $675,000 in cash plus the opportunity to secure potential reductions in the recreation fees assessed against class members. The agreement also provides a vehicle whereby individual subdivisions, acting through their representative homeowners' associations, could negotiate separate agreements providing for the purchase of the recreational facilities and termination of the lease agreements from the defendants-owners. During late 1980, buy-outs of the recreational facilities by civic associations fostered by the agreement were voted on and overwhelmingly approved in ten of the subdivisions at issue. Those buy-outs were then incorporated into the modified agreement as it was presented to the court for preliminary approval on April 3, 1981.

On July 10, 1981, the court ordered preliminary approval of the settlement, at which time more than 6,000 individual class notices of the agreement were sent to Tamarac lot owners, the full text of the settlement notice was published in a newspaper of general circulation in the Tamarac area, and the agreement was displayed in the clubhouses of each of the thirty-one affected subdivisions. The court received general responses and objections to the proposed settlement throughout August and September, 1981. On September 25, 1981, Judge Gonzalez presided over a hearing as to whether final approval should be given to the settlement. At this hearing, the objections to the settlement raised at the preliminary approval stage were renewed. Additionally, new objections were raised. Finally, on March 15, 1982, Judge Gonzalez issued an order approving settlement as to the thirty-one settling defendants. ⁵ Bennett v. Behring Corp., 1982-2 Trade Cas. (CCH) Sec. 164,825 (S.D.Fla.1982). The objectors then appealed to this court.

II. THE OBJECTIONS

Rule 23(e) of the Federal Rules of Civil Procedure requires that a settlement or compromise of a class action be approved by the district court. The court found the settlement involved in this appeal to be fair, reasonable and adequate and, therefore, approved it. Three categories of plaintiffs, each constituting a subclass of the homeowner class, contend before this court that the district court's findings and its concomitant approval of the settlements were erroneous. We are, accordingly, asked to set aside the court's approval.

The objecting plaintiff groups advance three reasons why the district court should not have given this settlement its imprimatur. Specifically, plaintiffs contend that the settlement should be set aside because it perpetuates a violation of the Sherman Antitrust Act by tying in separate recreational and maintenance leases to the purchase of a single family home. The plaintiffs also contend that the number and substance of objections to the settlement warrant its disapproval. The plaintiffs' third objection is predicated upon the contention that the land development release in Tamarac violates state law; any settlement which sanctions the scheme, plaintiffs argue, is thus illegal. We hold that none of the grounds advanced provides an adequate legal basis for reversing the district court's approval.

Rule 23(e) requires judicial approval of any class action settlement, ⁶ but does not provide any standards for such approval. It is now abundantly clear, however, that in order to approve a settlement, the district court must find that it "is fair, adequate and reasonable and is not the product of collusion between the parties." Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.1977). ⁷ Determining the fairness of the settlement is left to the sound discretion of the trial court and we will not overturn the court's decision absent a clear showing of abuse of that discretion. See In re Chicken Antitrust Litigation American Poultry, 669 F.2d 228, 238 (5th Cir. Unit B 1982); ⁸ In re Corrugated Container Antitrust Litigation (Container II), 643 F.2d 195, 207 (5th Cir. Unit B 1981), cert denied sub nom., CFS Continental, Inc. v. Adams Extract Company, 456 U.S. 998, 102 S.Ct. 2283, 73 L.Ed.2d 1294 (1982). 456 U.S. 998 (1981). In addition, our judgment is informed by the strong judicial policy favoring settlement as well as by the realization that compromise is the essence of settlement. See United States v. City of Miami, 614 F.2d 1322, 1344 (5th Cir.1980).

Our review of the district court's order reveals that in approving the subject settlement, the court carefully identified the guidelines established by this court governing approval of class...