Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Michael L. Igoe, Judge.
Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.
This is a civil, statutory*fn1 action to recover treble damages for injuries caused by an unlawful combination violative of the Anti-Trust Laws,*fn2 and is an aftermath of a criminal prosecution therefor.*fn3
Plaintiffs are two Illinois jobbers of gasoline. They sue on their own behalf, and as representatives of a class of approximately 900 Illinois jobbers. The nineteen defendants are oil companies which were charged by indictments, with violating the Sherman Act.
The gist of the alleged conspiracy and injury is that defendants, in 1934, 1935, and 1936, lessened the jobbers' margin of profit, from 7 1/2 to 5 per gallon. This illegal object was achieved by defendants' combining to raise and fix the spot tank car market price of gasoline, which price was, in the contracts between the respective plaintiffs and defendants, made the basis of the jobbers' cost price.
Motions to strike, and to quash, and to dismiss, were made by the defendants, and the District Court dismissed the complaint and dissolved the temporary restraining order which it had theretofore entered enjoining other jobbers in Illinois from instituting similar suits. The bases for the dismissal order were: (1) the plaintiffs do not constitute a "class" within Rule 23, of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, because they do not seek a "common relief." (2) The plaintiffs do not insure the adequate representation of all members of the class. (3) The plaintiff have no cause of action in equity.
Plaintiff Weeks, a former jobber at Wilmington, Illinois, claims specific damages to himself of $11,937.30 (to be trebled) incurred in the sale of 477,492 gallons in said three years. Plaintiff Sterling Corporation, a jobber at Chicago, handled 2,515,197 gallons in the same period, with a damage of $62,879.92 (untrebled).The 900 jobbers are alleged to have suffered $37,500,000 damages (2 1/2 on 1,500,000,000 gallons).*fn4
The first sharply controverted issue is the propriety of this class action, instituted by two jobbers on behalf of nine hundred others.
The affidavits of the various defendants, supporting their motions to dismiss, disclose: (1) Several defendants are not residents of the district where the suit was brought. These defendants argue that, as to them, service should be quashed. (2) Several of the defendants were acquitted in the so-called "Madison No. 1" criminal trial, which is particularly described in the complaint, and some defendants pleaded nolo contendere, before any evidence as to them was presented. Upon these facts the contention is made that they should not be tried with the other defendants in this civil suit. (3) Some Illinois jobbers held contracts for the purchase of gas from a single defendant, and some of such contracts permitted the jobbers to purchase at will from other sources. The contracts vary as to the standard provided for determination of cost price to the jobber, and only a few of them provided the measure asserted in the complaint.
The District Court dismissed the suit for these reasons: (a) The persons whom plaintiffs seek to represent do not properly constitute a "class" as no "common relief" is sought. (b) This action by plaintiffs does not insure an adequate representation of all members of the alleged class. (c) This is not a proper equitable proceeding.
(a) Propriety of Class Suit to Enforce a Civil Cause of Action for Conspiracy. The Federal Rules of Civil Procedure specifically authorize class actions. Rule 23 reads:
"If persons consituting a class are so numerous as to make it impracticable to bring them all before the court, such of them, one or more, as will fairly insure the adequate representation of all may, on behalf of all, sue or be sued, when the character of the right sought to be enforced for or against the class is * * * (3) several, and there is a common question of law or fact affecting the several rights and a common relief is sought."
Strong and persuasive reasons favor the extension of the class suit theory to include a suit to vindicate the rights of several persons contemporaneously injured by a criminal conspiracy effectuated by the same conspirators and directed against a specific class of individuals. Among such reasons, are
(1) The statutory tort, incident to a criminal conspiracy, is a single thing, a single wrong, and though a compound of many acts and persons, it has a singleness of object, an integral core.
(2) The illegal conspiracy gives rise to one statutory cause of action for damages incident to the violation of law. Many persons may have the identical cause of action, arising from the same wrong, but varying in scope of damage to each, depending upon the effect of the illegal act upon the individual.
(3) Rule 23, by its broad language, permits a class suit in cases like the one before us, provided other necessary facts essential to class suits are present. In the instant action, we have a class composed of so many claimants that it is impracticable to join them as parties; there is a common question of fact - the existence of an alleged conspiracy to injure the jobbers. The same relief, namely damages, is sought, although the amount of the recovery varies.
The history of class suit litigation, its development over a century of growth, the origin and status of present Rule 23 of the Federal Rules of Civil Procedure, are all persuasive of the necessity of a liberal construction of this Rule 23, and its application to this class of litigation. It should be construed to permit a class suit where several persons jointly act to the injury of many persons so numerous that their voluntarily, unanimously joining in a suit is concededly improbable and impracticable. Under such circumstances, injured parties who are so minded, may present the grievance to a court on behalf of all, and the remaining members of the class may join as they see fit. Authorities are cited below.*fn5
There are, it seems, more than the usual or ordinary reasons for permitting a class action here.
The difficulties inherent in the obtaining and presentation of proof by individual small jobbers, as contrasted by able, financially powerful companies, must be considered and appreciated. If there be a single conspiracy between all the codefendants here charged, and said single conspiracy were directed at all jobbers, a single trial would obviously expedite and simplify the achievement of justice. Each jobber should not be put to the tremendous task of ferreting out the evidence indicative of the existence of the alleged conspiracy. In all probability, the individual jobber could not do so. But, through a joinder of forces they might, between them, uncover such evidence as may lead to the proof of the conspiracy, if there be such proof. Nor is the financial aspect to be overlooked - that is, the plaintiffs' and defendants' relative financial ability. The relative financial interest in the outcome of this litigation is such, that greater parity of ability is obtained by a joinder of plaintiffs.
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. Like many another practice, necessity was its mother. Its correct limitations must be ascertained by the experiences which brought it into existence.
Defendant would probably not suffer from such a joinder assuming they must stand suit. In fact, it should be beneficial to them - they have but one suit to meet, instead of innumerable ones. At least it would be advantageous if trial be had, instead of a contest where the defense is to avoid trial. If the defense is to create barriers, and to make litigation expensive, so as to avoid trial, the opposition by defendants to a single trial can better be understood and appreciated. Such a ...