Funeral Consumers Alliance, Inc. v. Serv. Corp. Int'l

• Decision Date: 13 September 2012
• Docket Number: No. 10–20719.,10–20719.
• Citation: 695 F.3d 330
• Parties: FUNERAL CONSUMERS ALLIANCE, INC.; Gloria Jaccarino Bender; Anthony J. Jaccarino; John Clark; Maria Magsarili; Tony Magsarili; Frances H. Rocha; Marsha Berger; Sandra Gonzalez; Deborah Winch; Anna Kain; Gay Holtz, Plaintiffs–Appellants, v. SERVICE CORPORATION INTERNATIONAL; Alderwoods Group, Inc.; Hillenbrand Industries, Inc.; Batesville Casket Co., Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

695 F.3d 330

83 Fed.R.Serv.3d 890

FUNERAL CONSUMERS ALLIANCE, INC.; Gloria Jaccarino Bender; Anthony J. Jaccarino; John Clark; Maria Magsarili; Tony Magsarili; Frances H. Rocha; Marsha Berger; Sandra Gonzalez; Deborah Winch; Anna Kain; Gay Holtz, Plaintiffs–Appellants,

v.SERVICE CORPORATION INTERNATIONAL; Alderwoods Group, Inc.; Hillenbrand Industries, Inc.; Batesville Casket Co., Defendants–Appellees.

No. 10–20719.

United States Court of Appeals,Fifth Circuit.

Sept. 13, 2012.

Gordon Schnell (argued), Mathew L. Cantor (argued), Kerin E. Coughlin, Jean Kim, Constantine Cannon, L.L.P., New York City, Aundrea Kristine Gulley, Gibbs & Bruns, L.L.P., Houston, TX, for Plaintiffs–Appellants.

J. Clifford Gunter, III (argued), Gregg Lee Goldstein, Jeffrey L. Oldham, Bracewell & Giuliani, L.L.P., Houston, TX, Richard Bruce Drubel (argued), Boies, Schiller & Flexner, L.L.P., Hanover, NH, John F. Cove, Jr., Kieran P. Ringgenberg, Boies, Schiller & Flexner, L.L.P., Oakland, CA, for Defendants–Appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before DENNIS, CLEMENT and HIGGINSON, Circuit Judges.

HIGGINSON, Circuit Judge:

Plaintiffs–Appellants, the Funeral Consumers Alliance, Inc. (“FCA”) and eleven consumers (“Consumer Appellants”), brought a class action suit under § 4 of the Clayton Act, 15 U.S.C. § 15, against the largest United States casket manufacturer, Batesville Casket Company, and its owner Hillenbrand Industries, Inc. (collectively, “Batesville”); and against the three largest United States funeral home chains and distributors of Batesville caskets, Service Corporation International (“SCI”), Alderwoods Group, Inc. (“Alderwoods”),¹ and Stewart Enterprises, Inc. (“Stewart”). Plaintiff–Appellants alleged that Defendant–Appellees conspired to foreclose competition from independent casket discounters (“ICDs”) who sold caskets directly to consumers at discounted prices and maintained artificially high consumer casket prices in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, by engaging in a group boycott to prevent ICDs from selling Batesville caskets and dissuading consumers from purchasing caskets from ICDs. Plaintiff–Appellants also alleged that Defendant–Appellees used concerted efforts to restrict casket price competition, including coordinating prices, limiting the advertisement of pricing, and engaging in sham discounting. Plaintiff–Appellants sought damages to remedy the overpayment for Batesville caskets and sought to enjoin Defendants' allegedly anti-competitive conduct. The district court denied class certification and later, after Plaintiff–Appellants settled their claims with Stewart, dismissed Plaintiff–Appellants' action against the non-settling remaining Defendant–Appellees for lack of subject matter jurisdiction.

For the following reasons, we reverse and remand the dismissal of Plaintiff–Appellants' § 4 claims for lack of subject matter jurisdiction, affirm the dismissal of Consumer Appellants' and FCA's action for injunctive relief for lack of subject matter jurisdiction, and affirm the denial of class certification.

FACTS AND PROCEEDING

FCA is a non-profit consumer rights organization devoted to advocating consumers' right to choose a meaningful, dignified, and affordable funeral that claims 400,000 individuals as members of its national organization or its local affiliates. Consumer Appellants are eleven individuals who each purchased a Batesville casket from SCI, Alderwoods, or Stewart. No ICD is a party to this matter.

On November 24, 2008, Magistrate Judge Calvin Botley recommended that the Plaintiffs' Motion for Class Certification be denied in a 30–page Memorandum and Recommendation (“M&R”). On December 29, 2008, Plaintiffs filed objections to the M&R, attaching two additional expert reports from Dr. Gregory Vistnes.

On March 26, 2009, United States District Judge Kenneth Hoyt adopted the M&R denying class certification.

Following the denial of class certification, Plaintiffs settled their claims against Stewart on June 15, 2010 (the “Stewart settlement”). In response, Defendants filed an expedited motion to strike Plaintiffs' jury demand, which was denied by Judge Hoyt on July 13, 2010. Two days later, Plaintiffs filed an expedited motion to dismiss for lack of subject matter jurisdiction. After briefing and oral argument on August 2, 2010, the district court granted Plaintiffs' motion on September 27, 2010. The district court determined that because of the settlement with Stewart, Plaintiffs had lost standing to continue to sue the remaining Defendants.

DISCUSSION

A. Subject Matter Jurisdiction

When reviewing a dismissal for lack of subject matter jurisdiction, we review factual findings for clear error and legal conclusions de novo. Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir.2005).

Article III standing requires: (1) that Appellants have suffered an injury-in-fact; (2) a causal connection between the injury-in-fact and Appellees' conduct; and (3) that it is likely, not merely speculative, that a favorable decision will redress the injury-in-fact. James v. City of Dallas, 254 F.3d 551, 563 (5th Cir.2001) (internal citations omitted).

1. Damages claims

The record is clear that Appellants are not seeking compensatory damages beyond those agreed to in the Stewart settlement. Appellants argue, nonetheless, that the Stewart settlement did not cover the attorneys' fees and costs available to them under § 4 of the Clayton Act in this ongoing suit against multiple Defendants other than Stewart. Appellants seek to proceed with this cause of action to prove that the remaining Defendants, Appellees herein, violated federal antitrust laws triggering Appellants' statutory right to attorneys' fees and costs whether or not the Consumer Appellants seek further compensatory damages. The district court held that Appellants did not have standing to recover such attorneys' fees and costs because:

Here, the consumer plaintiffs alleged overcharges by the defendants in an amount less than $22,000 each. They settled their suit for an amount far greater than each could recover were the case successfully tried to conclusion. Hence, there are no damages that the consumer plaintiffs could recover against the remaining defendant [sic]. And, because the consumer plaintiffs' damages are quantifiable, as evidenced by their settlement, no irreparable injury is articulated even if a Clayton Act violation occurred .... The result is that the consumer plaintiffs' claim for actual injury under the Clayton Act is rendered moot by their settlement ....

Under our precedent, however, Consumer Appellants have standing to resolve § 4 antitrust claims to decide entitlement to attorneys' fees and costs even if a settlement with one defendant means that no additional compensatory damages will be assessed.

The Clayton Act provides any successful plaintiff a mandatory award of costs and attorneys' fees. 15 U.S.C. § 15(a). Section 4 of the Clayton Act states that, “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor ... and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.” Id.

The plaintiffs have a right under § 4 to sue for the statutorily mandated costs and reasonable attorneys' fees even if a settlement with one defendant means that no additional compensatory damages actually will be recovered. The plaintiffs' right to recover attorneys' fees from the defendants depends on whether the plaintiffs can succeed in “demonstrating that the defendant[s] violated the antitrust laws and can establish the fact of damage.” Sciambra v. Graham News ( Sciambra II), 892 F.2d 411, 415 (5th Cir.1990). The plaintiffs' settlement with one defendant does not prevent them from recovering costs and attorneys' fees to which they may be entitled from the remaining defendants because, by entering into a settlement agreement, “a party releases only those other parties whom he intends to release.” Zenith Radio Corp., 395 U.S. at 130–31, 89 S.Ct. 1562;see also Sciambra v. Graham News ( Sciambra I), 841 F.2d 651, 656 (5th Cir.1988). This court has held that plaintiffs have standing under analogous circumstances, “recogniz [ing] that ... the actual recovery of compensatory damages [is] irrelevant to the recoverability of attorneys' fees,” Sciambra II, 892 F.2d at 413–17, and this court and other courts have recognized that a plaintiff's right to attorneys' fees under the Clayton Act “is accorded to the injured party, not his counsel.” Carpa, Inc. v. Ward Foods, Inc., 536 F.2d 39, 52 (5th Cir.1976); accord First Iowa Hydro Elec. Coop. v. Iowa–Illinois Gas & Elec. Co., 245 F.2d 630, 632 (8th Cir.1957); Farmington Dowel Prods. Co. v. Forster Mfg. Co., 421 F.2d 61, 88 (1st Cir.1970). Thus, the plaintiffs have standing to seek costs and reasonable attorneys' fees from the remaining defendants.

We addressed whether actual recovery of compensatory damages is required for a plaintiff to recover attorneys' fees and costs in Sciambra II, 892 F.2d at 413–14.² As in the present case, the issue before us in Sciambra II was whether an antitrust plaintiff was no longer entitled to attorneys' fees and costs after one defendant settled with the plaintiff for an amount greater than the maximum amount of compensatory damages being sought. Id. Sciambra brought an antitrust action against Graham News (“Graham”) and A.R.A. Services, Inc. (“ARA”). Id. at 413. Sciambra settled his claims against Graham but continued his suit against ARA. Id. Before trial, the district court held that ARA had abused the discovery process, entered a default judgment against ARA, ordered ARA to pay Sciambra's attorneys' fees and costs, and awarded damages. Id. This court rejected the district court's method of calculating damages and remanded on the issue of damages. Sciambra I, 841 F.2d...