Kainz v. Anheuser-Busch, Inc.

Citation194 F.2d 737
Decision Date17 March 1952
Docket NumberNo. 10502.,10502.
PartiesKAINZ et al. v. ANHEUSER-BUSCH, Inc. et al.
CourtU.S. Court of Appeals — Seventh Circuit

Hirsch E. Soble, Leo E. Aronson and J. Henry Aronson, all of Chicago, Ill., for appellants.

Victor E. La Rue, Charles M. Price and Charles B. Mahin, all of Chicago, Ill. (MacLeish, Spray, Price & Underwood, Chicago, Ill., Shepley, Kroeger, Fisse & Ingamells, St. Louis, Mo., of counsel), for appellees.

Before MAJOR, Chief Judge, and LINDLEY and SWAIM, Circuit Judges.

LINDLEY, Circuit Judge.

Plaintiffs, constituting three partnerships and one individual separately engaged in operating retail liquor stores in Chicago and suburbs, brought this action in the District Court under Title 15 U.S.C.A. § 15, "as a class action for the benefit of the plaintiffs and all the parties named in plaintiffs' Exhibit 1 attached * * * in pursuance of the provisions of Rule 23(a) (3) of the Federal Rules of Procedure 28 U.S.C.A.," averring that all these parties and others not specifically named constitute a class so numerous as to make it impractical to bring all of them before the court; that all the persons mentioned in the exhibit have authorized institution and prosecution of the action in their behalf; that plaintiffs will fairly insure adequate representation of all members of the class; that the rights sought to be enforced are several but embrace common questions of law and fact, and that common relief is sought.

Plaintiffs charged further that Anheuser-Busch, Incorporated, designated as primary defendant, has been, for a long period of time, engaged in the production and wholesale distribution of Budweiser beer, which it has shipped from St. Louis, Missouri, to retailers in Illinois; that this product has great consumer appeal and is in wide demand; that the secondary defendants Meech, Jr. and Roselle were, prior to 1947, engaged in a retail beer distributing business in Chicago which they incorporated in May, 1947, under the name of Home Distributing, Incorporated, the remaining secondary defendant; that the secondary defendants have been in direct competition with plaintiffs in the sale of Budweiser beer to the purchasing public since 1939 until the present time; that, during all that period, the primary defendant has sold its beer at wholesale to plaintiffs, including those named in Exhibit 1, and to the secondary defendants, shipping it from St. Louis to the purchasers in Illinois.

Plaintiffs averred further, as facts sustaining their class action, that during all of the period mentioned the primary defendant has discriminated in prices between all members of plaintiffs' class on the one hand and the secondary defendants on the other in the sale of its beer at wholesale and has extended to the secondary defendants discriminatory services and facilities in connection with the sale of its beer not accorded to plaintiffs; that, as a result of the discriminations, the secondary defendants have been able to and did undersell members of the class; that the discriminations have substantially lessened competition, tend to create a monopoly in the line of commerce of primary defendant's beer and to injure, destroy or prevent competition of plaintiffs with the secondary defendants; that such discriminations have been reasonably likely to lessen, injure, destroy or prevent competition; that the secondary defendants have knowingly received the price and service discriminations aforesaid, all in violation of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13, and that, as a result of these practices, members of plaintiffs' class have been injured in their competition and in their respective businesses and damaged in the several sums shown after their names in Exhibit 1. Plaintiffs prayed that defendants be restrained and enjoined from continuing to violate the Act and that judgments enter in favor of the several plaintiffs, the total claims of the named members aggregating some $603,000.

On motion of defendants the court ordered that the complaint be stricken, with leave to one of the partnerships to file an amended complaint stating its claim in separate counts; that the class action be dismissed; that all other plaintiffs named in the complaint be dropped as plaintiffs in this cause but have leave to file separate amended complaints setting forth their separate claims, within 30 days. Thereupon plaintiffs elected not to proceed further but rather to stand upon the complaint as filed. The court then ordered the action dismissed for non-compliance with its order. This appeal followed.

Plaintiffs contend here that the court erred in granting the joint and several motions mentioned and in entering judgment of dismissal against them.

Under Title 15, 15 U.S.C.A. § 15 any person injured in his business or property by reason of anything forbidden in the anti-trust laws may sue and recover three-fold actual damages sustained. Under this section it is obviously the duty of the plaintiff to aver and prove that he has been injured in his business or property and that this injury was caused by acts forbidden by the anti-trust laws. In the present case plaintiffs, recognizing this burden, averred that they had been injured in their respective businesses by violations of three provisions of Section 13: 1) discrimination in prices between them and other purchasers from the primary defendant, the effect of which was to lessen, injure or prevent competition; 2) discrimination in favor of other purchasers as against plaintiffs in furnishing services or facilities connected with the sale of the commodity purchased upon terms not accorded to plaintiff on proportionately equal terms; 3) as against the secondary defendants, that they knowingly induced or received discriminations in price from the primary defendant. Thus the averments cover the specific elements which the statute prescribes as essentials of the cause of action. Beegle v. Thomson, 7 Cir., 138 F.2d 875.

We are concerned here, however, only with procedural questions. Federal Civil Procedure Rule 23(a), after providing that, if persons constituting a class are so numerous as to make it impractical to bring them all before the court, such of them as will fairly insure the adequate representation of all may sue on behalf of all, proceeds to define three species of class actions. Subparagraph (1) includes actions where the right sought to be enforced is joint or common or derivative, in the sense that the owner of a primary right refuses to enforce the right and a member of the class thereby becomes entitled to enforce it, actions commonly spoken of as true class actions. The second species, (subparagraph (2)) commonly known as a hybrid class action includes suits where the rights sought to be enforced are several and the object is to adjudicate separate claims against specific property. The third species, (subparagraph (3)) frequently spoken of as a spurious class action, includes suits where the rights sought to be enforced are several and there is a common question of law or fact affecting such several rights and a common relief is sought. It is obvious, therefore, that the requisites to the maintenance of any such suit include these factors: 1), the parties must be so numerous as to make it impractical to bring them all before the court; 2), the plaintiffs must adequately represent the class, and 3), there must be some community of interest. The true class action, invented in equity, includes cases where the right to enforce is joint, common or derivative. Pentland v. Dravo Corp., 3 Cir., 152 F.2d 851. Typical examples are Gibbs v. Buck, 307 U.S. 66, 59 S.Ct. 725, 83 L.Ed. 1111; Buck v. Gallagher, 307 U.S. 95, 59 S.Ct. 740, 83 L.Ed. 1128; Tunstall v. Brotherhood of Locomotive Firemen and Enginemen, 4 Cir., 148 F. 2d 403; Steele v. Louisville & N. R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173; Boesenberg v. Chicago Title & Trust Co., 7 Cir., 128 F.2d 245, 141 A.L.R. 565. From the wording of the rule itself and repeated judicial pronouncements concerning it, it is obvious that the present suit is not one wherein the rights sought to be enforced are joint, common or derivative. Equally as obviously, we think, the action is not one in which the object is the adjudication of several claims affecting specific property, i. e., the hybrid class action.

The only possible category in which the present suit may be placed is that of a "spurious" class action, that is, one where the rights sought to be enforced are several and there exists a common question of law or fact affecting the several rights and common relief is sought. As this court said in Weeks v. Bareco Oil Co., 7 Cir., 125 F.2d 84, the rule permitting such class actions applies where the defendants jointly act to the injury of persons so numerous that their voluntary unanimous joinder is improbable and impracticable and, though the judgments will be several, a common determination is desired. The thought back of the rule creating this sort of class action is that its recognition will avoid a multiplicity of suits. Knowles v. War Damage Corp., 83 U.S.App.D.C. 388, 171 F.2d 15, certiorari denied 336 U.S. 914, 69 S.Ct. 604, 93 L.Ed. 1077.

The specific question presented to us, then, is whether the present cause comes within the class of spurious class actions defined by the rule. The action is clearly one in which the rights sought to be enforced are several. Such class actions have been approved where separate employees join to recover compensation under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., provided a common question of law or practice is involved; where property owners complain severally of one injury committed by a railroad; where stockholders seek to recover separate damages for fraudulent stock sales; where investors seek to recover the several considerations paid for securities, and other similar ca...

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