Petruzzi's, Inc. v. Darling-Delaware Co., Inc.

• Decision Date: 15 February 1995
• Docket Number: Civ. A. No. 86-0386.
• Parties: PETRUZZI'S, INC., formerly known as Petruzzi's IGA Supermarkets, Inc., Plaintiff, v. DARLING-DELAWARE COMPANY, INC. and Moyer Packing Company, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

880 F. Supp. 292

PETRUZZI'S, INC., formerly known as Petruzzi's IGA Supermarkets, Inc., Plaintiff, v. DARLING-DELAWARE COMPANY, INC. and Moyer Packing Company, Defendants.

Civ. A. No. 86-0386.

United States District Court, M.D. Pennsylvania.

February 15, 1995.

Richard A. Russo, Rosenn Jenkins & Greenwald, Donald H. Brobst, Larry S. Keiser, Chariton & Keiser, Wilkes-Barre, PA, Warren Rubin, Bernard M. Gross, Philadelphia, PA, for plaintiff.

Thomas R. Bearrows, Caryn S. Mohan, Winston & Strawn, Chicago, IL, David Acker, Williams Bay, WI, for Darling Delaware Co. Inc.

Philip Salkin, Pearlstine, Salkin, Hardman & Robinson, Lansdale, PA, David H. Marion, Gilbert F. Casellas, Francis P. Newell, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, for Moyer Packing Co.

Ted Wells, Lowenstein & Sadler, Roseland, NJ, for Standard Tallow Corp.

David E. Koff, Koff, Wendolowski, Ferguson & Mangan, P.C., Wilkes Barre, PA, for Ralph Ebersole.

Patrick J. O'Connor, Douglas B. Lang, Cozen & O'Connor, Philadelphia, PA, for Robzens' Inc.

MEMORANDUM

VANASKIE, District Judge.

Petruzzi's, Inc., the named plaintiff in the above-captioned anti-trust class action, has moved for approval of a proposed partial settlement involving only one of the two remaining defendants in this protracted litigation. The proposed settlement purports to extinguish the potential liability of Moyer Packing Company ("Moyer" or the "Settling Defendant") for all claims "arising out of, relating to or in any way connected with or based upon any act(s), failure(s) to act, transaction(s), practice(s), or conduct which was or could have been described in or made the subject of this litigation." (Settlement Agreement with Moyer at 6 Ex. "B" to the Memorandum in Support of Plaintiff's Motion for Final Approval of Class Action Settlement (Dkt. Entry 349).) The Settlement Agreement provides that the class members whose claims against Moyer will be discharged include all individuals, partnerships, corporations and other entities who, during the period January 1, 1977 to December 31, 1985, sold "inedible fats, bones, suet or meat trimmings" not only to Moyer, but also to co-defendant Darling-Delaware, Inc. ("Darling"). (Id. at 3.) In consideration of the release of all claims, Moyer has agreed to provide up to $2 million in "premium certificates" which are to "be claimed by class members based on the dollar value of their sale of raw materials to Moyer within the relevant geographic area in up to five of the nine calendar years 1977 through 1985, for eleven (11%) percent of the dollar value of such sales to Moyer." (Id. at 4.)

Robzens' Inc., ("Robzens"), a member of the class who sold raw materials to Darling, has objected to the proposed partial settlement, asserting, inter alia, that the more than 600 class members who sold only to Darling are unfairly excluded from participating in the settlement distribution and receive no consideration in return for their full and complete release of Moyer. Although Robzens is the only member of a class comprised of more than 1,200 members to object to the proposed settlement, its challenge is indeed formidable. After careful consideration of the parties' written submissions as well as their oral arguments presented on December 28, 1994, I am constrained to concluded that the proponents of the partial settlement have not discharged their burden of establishing that, with respect to the class as a whole, the settlement is "fair, adequate and reasonable." Stoetzner v. U.S. Steel Corp., 897 F.2d 115, 118 (3rd Cir.1990). Accordingly, the proposed settlement will not be approved and Plaintiff's "Motion for Judgment of Dismissal with Prejudice of Claims of Plaintiff Class as to Defendant Moyer Packing Co." (Dkt.Entry 348) will be denied.¹

BACKGROUND

On March 14, 1986, Petruzzi's, Inc., formerly known as Petruzzi's IGA Supermarkets, Inc. (hereinafter referred to as "plaintiff" or "Petruzzi's"), commenced this class action against Darling, Moyer, Standard Tallow Corp. ("Standard Tallow"), and Herman Isacs, Inc.² The complaint alleged that the defendants had conspired to allocate customers in the fat and bone rendering industry in violation of section 1 of the Sherman Act, 15 U.S.C. § 1.

Members of the putative class were butcher shops, supermarkets, restaurants, hotels, etc. that sold inedible fats, bones, suet, and meat trimmings ("raw material") to the defendants in the pertinent geographic area during calendar years 1977 through 1985.³ Petruzzi's contended that although the defendants competed for new raw material accounts, they had agreed to refrain from soliciting accounts that had been secured or "loaded" by another defendant.

Following extensive discovery, the defendants moved for summary judgment. In a lengthy opinion issued on July 31, 1992, the Honorable James F. McClure of this Court granted summary judgment in favor of each of the defendants. In an opinion filed on July 13, 1993, the United States Court of Appeals for the Third Circuit reversed the Order of July 31, 1992 insofar as it had granted summary judgment to Moyer and Darling. 998 F.2d 1224. As to Standard Tallow, however, our Court of Appeals concluded that plaintiff had failed to present evidence sufficient to withstand its summary judgment motion. Id. at 1241. On November 29, 1993, the Supreme Court denied the Petition for Writ of Certiorari filed on behalf of Moyer and Darling. ___ U.S. ___, 114 S.Ct. 554, 126 L.Ed.2d 455 (1993).⁴

On remand, plaintiff was authorized to provide notice to members of a class certified under Federal Rule of Civil Procedure 23(b)(3).⁵ The notice approved by Order dated January 12, 1994 informed members of the class of their right to "opt out" of the class. Of the approximately 1,250 class members, only 21 elected to be excluded from the class. According to the representations of counsel, approximately 50% of the class members did not sell raw materials to Moyer during the relevant period.

On March 2, 1994, this case was reassigned to me. Trial was scheduled for October, 1994. During the intervening period the parties were to complete expert witness discovery and file motions in limine.

A court-conducted settlement conference was convened on June 6, 1994. Negotiations between plaintiff and Moyer continued after that date. In September, Plaintiff and Moyer indicated that a settlement between them was likely. The final Settlement Agreement was executed by counsel for Plaintiff and Moyer on September 29, 1994.

In pertinent part, the Settlement Agreement provides:

a. Moyer will make up to $2 million in premium certificates available for the benefit of the plaintiff and the plaintiff class. Premium certificates may be claimed and redeemed as follows:

(1) Certificates may be claimed by class members based on the dollar value of their sales of raw materials to Moyer within the geographic area in up to five of the nine calendar years 1977 through 1985, for eleven (11%) percent of the dollar value of such sales to Moyer. Verification of all claims shall be furnished by each class member upon request.

(2) Certificates will be issued to claimants in six equal amounts, each worth one-sixth of the total value due to the claimant. These six equal amounts will be redeemable in six successive six-month periods. Each of these six equal amounts will be redeemable only in its respective six-month period; the first one-sixth of the certificates will be redeemable only in the first six-month period, and so forth.

(3) Certificates may be redeemed during the specified six-month period for a premium payment on new sales of raw materials to Moyer, up to 20% of the actual dollar value of such sales of raw materials.

(4) Certificates may be transferred, but may only be redeemed for premium payments on new sales of raw material to Moyer within the specified time period and within the geographic area.

b. Moyer will pay up to $1 million in cash for attorneys' fees, as approved by the Court, in six equal installments, each of which will be due on the first date of each six-month period on which certificates may be redeemed.

c. Moyer will pay up to an additional $200,000 for expenses as approved by the Court, also in six equal installments....

In consideration of the foregoing, each member of the class is to release Moyer from all liability relating to this litigation. A condition precedent to the settlement is entry of an order that, inter alia, permanently bars and enjoins all persons and entities, including Darling, from filing or prosecuting any claim for contribution or indemnity.⁶ The Settlement Agreement also contains a "most favored nations" clause, which provides that "no settlement will be entered into with the non-settling defendant, Darling, on terms more favorable to Darling than the terms set forth in this Agreement, without also making the terms of such proposed settlement available to Moyer."

By Order dated November 1, 1994, preliminary approval was granted to the Moyer Settlement Agreement. (Dkt.Entry 339.) The November 1st Order also approved the form of a "Notice of Hearing on Proposed Partial Settlement and Procedure for Filing Claims." The Notice, inter alia, informed class members that (a) "the settlement with Moyer will resolve all claims by class members against Moyer ..."; (b) "the claims against Darling will continue to be prepared for trial regardless of whether the settlement with Moyer is approved"; and (c) "if the settlement is approved, Moyer will no longer be a defendant, and the amount paid by Moyer will be credited against any recovery obtained in the proceedings from the remaining defendant." The Notice set December 12, 1994 as the deadline for filing objections to the proposed settlement, and scheduled a hearing on the proposed settlement for December 28, 1994.

As noted above, Robzens was the only class member to file objections to the proposed partial settlement. (Dkt.Entry 359.) Both plaintiff and...