State of Illinois v. Harper & Row Publishers, Inc., No. 67 C 1899.

• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
• Writing for the Court: DECKER
• Citation: 301 F. Supp. 484
• Decision Date: 25 April 1969
• Docket Number: No. 67 C 1899.
• Parties: STATE OF ILLINOIS, Plaintiff, v. HARPER & ROW PUBLISHERS, INC., et al., Defendants (and related cases).

301 F. Supp. 484

STATE OF ILLINOIS, Plaintiff,
v.
HARPER & ROW PUBLISHERS, INC., et al., Defendants (and related cases).

No. 67 C 1899.

United States District Court N. D. Illinois, E. D.

April 25, 1969.

301 F. Supp. 485

COPYRIGHT MATERIAL OMITTED

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MEMORANDUM OPINION

DECKER, District Judge.

Pursuant to 28 U.S.C. § 1407, more than forty separate antitrust actions have been transferred to this court for consolidated discovery and pretrial proceedings. Originally instituted in eight judicial districts, the private treble damage suits seek compensation for alleged conspiracies which inflated the prices for children's editions of library books. The plaintiffs, who are largely state and local governments, claim to have been overcharged as a result of either (1) a horizontal agreement among the industry's book publishers, or (2) a series of vertical conspiracies between each publisher and its wholesalers.

Under F.R.C.P. 23(b) (3), the attorneys general for several states claim to represent the public libraries, school districts, and boards of education in their respective jurisdictions. Similarly, the School District and the City of Philadelphia purport to represent a class composed of the 1324 largest public libraries and school districts in the nation. Although most of the antitrust actions may be returned eventually to their transferor courts for trial, the Judicial Panel on Multidistrict Litigation has ruled that the transferee court should decide class action questions. In Re Plumbing Fixture Cases, D.C., 298 F.Supp. 484 (December 27, 1968).

The congruence of issues in each class action request is remarkable. The underlying conspiracies, the accused defendants, and the aggrieved plaintiffs stand in virtually identical positions. Therefore, except as otherwise indicated, the opinion will discuss all motions collectively.

Initially, a class action must satisfy the four prerequisites specified in F.R.Civ.P. 23(a).¹ First, since the class members number in the hundreds in each action, joinder is impracticable. See, e. g., Cypress v. Newport News G. & N. Hospital Ass'n, 375 F.2d 648 (4th Cir. 1967); Clemens v. Central R. Co.

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of N. J., 264 F.Supp. 551 (E.D.Pa.1967); Bowe v. Colgate-Palmolive Co., 272 F. Supp. 332 (S.D.Ind.1967). Second, questions of law and fact are common to the class because the alleged conspiracies inflated the prices charged all purchasers of library editions.² Third, the claims of the representative parties are typical of the claims of the class because, having identical interests, all plaintiffs will offer the same evidence to prove the illegal conspiracies. See, e. g., Booth v. General Dynamics Corp., 264 F.Supp. 465 (N.D.Ill.1967); Collins v. Bolton, 287 F.Supp. 393, 397 (N.D.Ill.1968). Compare City of Chicago v. Allen Bradley Co., 32 F.R.D. 448, 451 (N.D.Ill.1963)

Finally, the representative parties³ will fairly and adequately protect the interests of each class. Having purchased substantial quantities of library books, the named plaintiffs may be expected to pursue the case diligently and thoroughly. Defendants do not question the technical competence of plaintiffs' attorneys. See Siegel v. Chicken Delight, Inc., 271 F.Supp. 722, 727-728 (N.D.Cal.1967).

In addition to these prerequisites, F.R.C.P. 23(b) (3) requires that:

"questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy."⁴

Before analyzing these two factors, however, the opinion will describe more fully the litigation's factual setting. Then, detailed analyses of the common questions and of the superiority of the requested class actions will be made. The next section will consider the distinctive problems presented by the national suit. Finally, various administrative details will be explained.

I. State-Wide Class Actions

The children's books circulated by public libraries and schools receive harsh physical treatment, with the result that their bindings often deteriorate. In the late 1950's, the publishing industry therefore introduced a library edition with a reinforced binding specifically

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designed for use by these public institutions. According to the complaints, however, the defendants only quoted "net" prices for the library editions. Regardless of whether a publisher, a wholesaler, or a retail distributor sold the publications, the libraries and schools had no alternative but to pay the same "net" price.⁵

After a Senate investigation into this pricing system, the Justice Department instituted grand jury proceedings in 1966. Although the federal government decided not to seek criminal indictments, it obtained consent judgments in 1967 against eighteen separate publishers, each of whom agreed not to fix prices for the next five years.

A. Common Questions

The single most important issue is whether the defendants' conspiratorial agreements actually existed. Offering the same facts, all class members will strive to establish a national conspiracy among the publishers.⁶

The Justice Department's civil actions only charged vertical conspiracies. The defendants therefore prophesy that the libraries and schools can only prove conspiracies between each publisher and its wholesalers. Nevertheless, a common core of questions will persist. Having purchased titles from most of the publishers, each class member will need to establish all of these conspiracies in order to be fully compensated. Regardless of which plaintiff presents the evidence, the same facts will establish the defendants' liability.⁷ The thousands of purchasers will then be able to recover from whichever publisher-wholesaler combination handled the particular titles that were bought.

Besides the overriding conspiracy question, each class member stands in an identical position with respect to the following issues: (1) whether prices were actually inflated, (2) whether the higher prices resulted from the illegal agreements, (3) whether defendants fraudulently concealed the conspiracies, thus tolling the statute of limitations, and (4) whether library books are "unique" products.⁸ See Eisen v. Carlisle and Jacquelin, 391 F.2d 555, 565, 566 (2nd Cir.

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1968); Philadelphia Electric Co. v. Anaconda American Brass Co., 43 F.R.D. 452, 458 (E.D.Pa.1968)

The predominance of common questions contrasts sharply with the limited individual issues. Depending on the volume of purchases, each class member will need to establish his own damages. But, as stated in Dolgow v. Anderson, 43 F.R.D. 472, 490 (E.D.N.Y.1968): "The common issues need not be dispositive of the entire litigation." See, e. g., Kronenberg v. Hotel Governor Clinton, Inc., 41 F.R.D. 42, 45 (S.D.N.Y.1966); Brennan v. Midwestern United Life Ins. Co., 259 F.Supp. 673, 684 (N.D.Ind. 1966). Compare Zeigler v. Gibralter Life Ins. Co., 43 F.R.D. 169 (D.S.D. 1967); Iowa v. Union Asphalt and Roadoils, Inc., 281 F.Supp. 391, 402 (S.D. Iowa 1968).

If illegal conspiracies raised prices to noncompetitive levels, the purchasers were affected in the same manner and to the same extent. The common resolution of the preceding pervasive issues may therefore avoid the necessity for the parties' continual relitigation of the questions. Challenged by identical evidence, the defendants need not be subject to judgments which may vary according to the forum in which suit was instituted.

B. Fair and Efficient Adjudication

Though common questions overshadow individual issues, F.R.C.P. 23(b) (3) requires that a class action also be the superior means of litigation. Since each controversy involves a common core of identical questions, the efficiency of a class action is apparent. See Hohmann v. Packard Instrument Co., 399 F.2d 711, 715 (7th Cir. 1968). In addition, five mutually reinforcing factors demonstrate the superiority of class actions.

First, since many plaintiffs only purchased small quantities of the reinforced editions, most individual class members have little incentive to sue alone. Their financial claims do not justify the expense of complex antitrust litigation, especially in light of the defendants' persistent efforts to prevent document discovery. In Weeks v. Bareco Oil Co., 125 F.2d 84, 90 (7th Cir. 1941), the Seventh Circuit explained:

"To permit the defendants to contest liability with each claimant in a single, separate suit, would, in many cases give defendants an advantage which would be almost equivalent to closing the door of justice to all small claimants. This is what we think the class suit practice was to prevent."

Only when the purchases are combined in a class action is the potential damage recovery sufficiently large to warrant litigation. See, e. g., Escott v. Barchris Const. Corp., 340 F.2d 731, 733 (2d Cir. 1965); Advisory Committee's Note, 39 F.R.D. 98, 104 (1966). Compare Gas Service Co. v. Coburn, 389 F.2d 831, 833 (10th Cir. 1968); Kainz v. Anheuser-Busch, Inc., 194 F.2d 737 (7th Cir. 1952).

Second, all class members have had ample opportunity to control their own litigation. Many libraries and schools have commenced individual actions. Moreover, some suits have been pending for over two years, allowing numerous plaintiffs to intervene.⁹

Third, the extensive litigation already commenced illustrates the widespread, but diffuse nature of the injury inflicted upon the public libraries and schools. Recognizing the desirability of concentrating this interwoven, far-flung litigation in a single forum, the Judicial Panel transferred all cases to this Court for consolidated pretrial proceedings. Intensifying

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the concentration, class actions will promote desirable economies of time, effort and expense. For example, plaintiffs will no longer need to file new lawsuits,¹⁰ most of which would eventually be transferred here...