Philadelphia Housing Auth. v. American R. & S. San. Corp.

• Decision Date: 24 September 1970
• Docket Number: CIV. A. No. 41773.
• Parties: The PHILADELPHIA HOUSING AUTHORITY, et al., v. AMERICAN RADIATOR & STANDARD SANITARY CORPORATION, et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

323 F. Supp. 364

The PHILADELPHIA HOUSING AUTHORITY, et al., v. AMERICAN RADIATOR & STANDARD SANITARY CORPORATION, et al.

CIV. A. No. 41773.

United States District Court, E. D. Pennsylvania.

September 24, 1970.

Morton I. Hamburg and Moore, Berson, Hamburg & Bernstein, New York City, Duke W. Thomas and Vorys, Sater, Seymour & Pease, Columbus, Ohio, C. Carleton Frederici and Thoma, Schoenthal, Davis, Hockenberg & Wine, Des Moines, Iowa, Thomas Elke and Farella, Braun & Martel, San Francisco, Cal., Peter A. Loutos and Ansani & Loutos, Lawrence Walner, Chicago, Ill., Jack D. Most, and Most & Bertram, Los Angeles, Cal., for nonsettling plaintiffs.

James O. Sullivan and Sullivan, Marinos, Augustine & Delafield, San Diego, Cal., for settling plaintiffs.

William E. Willis and Sullivan & Cromwell, New York City, for defendants.

CIV. A. No. 41773 (and 40 other cases)^* (THE PLUMBING FIXTURE CASES)

OPINION AND ORDER

HARVEY, District Judge:

Presently before the Court in this multidistrict litigation is a motion filed by certain plaintiffs seeking to set aside an interlocutory order recently entered herein relating to a proposed settlement of certain claims. All of these civil actions seek the recovery of treble damages from various defendants for alleged antitrust violations in the manufacture and sale of certain plumbing fixtures.¹

There are at the present time over 300 of these actions pending before this Court, either commenced in this District or transferred here by the Judicial Panel on Multidistrict Litigation for coordinated or consolidated pre-trial proceedings under 28 U.S.C. § 1407. Substantially all of these cases have been transferred here by the Panel from other Districts throughout the United States.²

No extended discussion of the general background of this litigation is required for the purposes of the present matter. Reference is made to the opinions cited in footnotes 1 and 2 for general information concerning the history of the litigation to date. These cases were originally assigned to Chief Judge John W. Lord, Jr., who has heretofore been conducting pre-trial proceedings in these cases including the adoption of a comprehensive discovery schedule. The undersigned judge of the District of Maryland was designated and assigned for service in the Eastern District of Pennsylvania commencing June 22, 1970, and by Order of the Panel dated June 26, 1970, these cases were reassigned to the undersigned judge for further proceedings under 28 U.S.C. § 1407.

Included among the plaintiffs and intervening plaintiffs in these actions are builder-owners, states, cities and other public bodies, wholesalers, retailers, and plumbing and general contractors.³ Many of the pending suits have been filed as class actions, in which the plaintiffs claim representation of a national or territorial class. Two separate conspiracies have been generally alleged, one allegedly occurring between 1962 and 1966 and involving the so-called "full-line" defendants (8 in all), and the other allegedly occurring between 1960 and 1962 and involving (in addition to some of the same full-line defendants) the so-called "short-line" defendants (7 in number).⁴

On April 10, 1970, a settlement agreement was reached between counsel for various wholesaler plaintiffs and counsel for seven of the eight major manufacturers and the trade association, such agreement being subject to various conditions including submission to and approval by this Court. Under such agreement, these defendants undertook to contribute to a settlement fund of one million dollars to be distributed to claimants within a proposed national class of wholesalers in accordance with procedures prescribed in the agreement. Thereafter, a proposed Settlement Order No. 1 was submitted to Chief Judge Lord together with an affidavit dated June 11, 1970, of Edward Brodsky, Esq., of the firm of Goldstein, Gurfein, Shames and Hyde, who represented certain wholesaler plaintiffs. Judge Lord signed Settlement Order No. 1 on June 15, 1970, without a hearing. Such Order provided for the establishment of a temporary national class of wholesalers having claims against the settling defendants. Provision was made for the publication and sending of notices to prospective members of the temporary settlement class who were given the right to either accept the proposed settlement or to exclude themselves therefrom and proceed with the prosecution of any claims they might have against the defendant manufacturers. The Order scheduled a hearing for December 22, 1970, to determine, inter alia, whether the temporary settlement class should be determined and ordered to be a final and permanent class under Rule 23, F.R.Civ.P., and whether final judgment should be entered against those plaintiffs who had not excluded themselves as permitted in the proposed settlement agreement.

On June 11, 1970, a similar settlement agreement was reached between counsel for certain plumbing and general contractors and counsel for the same defendants who had entered into the wholesalers' settlement. The fund to be paid by the settling defendants in this instance was $2,000,000, and the proposed settlement was subject to similar conditions as provided in the wholesalers' agreement.⁵ The defendants and the settling plaintiffs were given the right under certain conditions and after considering requested exclusions by prospective class members to withdraw from the settlement program. The same procedure for securing court approval of this conditional settlement was then followed by the interested parties. An affidavit of James O. Sullivan, Esq., of the firm of Sullivan, Marinos, Augustine and Delafield, San Diego, Cal., dated July 9, 1970 (on behalf of the settling plaintiffs), a supporting letter dated July 15, 1970, from William E. Willis, Esq. (on behalf of the defendants), and a proposed Settlement Order No. 2 were all submitted to the undersigned judge. On July 16, 1970, Settlement Order No. 2 was signed without a prior hearing having been held.⁶

Unlike the wholesalers' proposed settlement, disapproval of the amount of the proposed contractors' settlement had been expressed by some of the parties to this litigation, in particular by several attorneys representing certain plumbing contractors. Foremost among such counsel was Morton I. Hamburg, Esq., of the firm of Moore, Berson, Hamburg & Bernstein, New York City, who represented plumbing contractors in two cases. In signing and entering Settlement Order No. 2, this Court said the following in a letter dated July 16, 1970, to Mr. Willis advising him that the Order had been signed (copies of such letter being sent to other interested counsel including Mr. Hamburg):

"I have reviewed the proposed Order and Mr. Sullivan's affidavit and after comparing same with Settlement Order No. 1, which was approved by Chief Judge Lord on June 15, 1970, I have today signed and forwarded to the Clerk for filing the Order in question. I am sending to the Clerk in Philadelphia two executed copies for filing in Nos. 41,773 and 69-1256. If it is necessary that additional copies be filed in the other contractors' cases, I would presume that your office can arrange with the Clerk to have the necessary copies filed in the other cases. I have retained one complete set of these papers for my files.

"Before signing the Order, due consideration was given by me to Mr. Hamburg's letter to you of June 25, 1970. I have concluded that no hearing is necessary for the protection of Mr. Hamburg's clients or other interested parties who do not approve of the proposed settlement, and it is for this reason that I have signed and filed the Order today. Presumably, the dates included in the Order need not now be changed, and as you have pointed out, the final hearings on both Settlement Order No. 1 and Settlement Order No. 2 are now scheduled for the same day, December 22, 1970. It is expected that the place of the hearing will be changed to Baltimore, Md., but I will take this question up at the hearing scheduled for July 30, 1970."

On July 15, 1970, Mr. Hamburg wrote a letter to the Court specifically objecting to the proposed Settlement Order No. 2 and requesting that a hearing be held before the Order was signed. This letter was not received by the Court until July 17, and on that same day the Court replied to Mr. Hamburg as follows:

"On July 16, 1970, I signed and filed Settlement Order No. 2. A copy of my letter of July 16 advising Mr. Willis and other counsel of this action was sent to you.

"At the time that I signed such Order, I did not have before me your letter of July 15, but I had considered similar arguments in opposition to the proposed settlement contained in your letter to Mr. Willis of June 25.

"After a careful reading of your letter of July 15 and of the affidavit you filed on July 6 in opposition to a motion in Civil No. 69-2693, I am of the opinion that Settlement Order No. 2 was properly signed and filed yesterday without the necessity of a prior hearing. Before this proposed settlement is finally approved, you will be given ample opportunity to be heard in connection with your contention that Mr. Sullivan and the attorneys who have joined with him are totally unrepresentative of the class of plumbing contractors. If you wish to specifically attack the affidavit of Mr. Sullivan filed in support of Settlement Order No. 2, you should file a pleading to this effect so that Mr. Sullivan and other interested parties may formally reply. A hearing can then be scheduled well in advance of the December 22 date. Meanwhile, all of the provisions of Settlement Order No. 2 will remain in full force and effect and should be carried out by all parties."

Thereafter, Mr. Hamburg requested a conference with the Court. A conference was held in Baltimore, Md., on the afternoon of July 21, 1970, before steps could be taken to implement the Order. In attendance were Mr. Hamburg, Mr. Sullivan, William R....