United States District Court, Northern District of Illinois, E.D
April 25, 1969
STATE OF ILLINOIS, PLAINTIFF,
HARPER & ROW PUBLISHERS, INC., ET AL., DEFENDANTS (AND RELATED CASES).
The opinion of the court was delivered by: 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
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).*fn1 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.
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.*fn2 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 parties*fn3 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
In addition to these prerequisites, F.R.C.P. 23(b)(3) requires
"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."*fn4
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
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
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.*fn6
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.*fn7 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.*fn8 See Eisen v. Carlisle and Jacquelin,
391 F.2d 555, 565, 566 (2nd Cir.
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., Escort 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.*fn9
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
the concentration, class actions will promote desirable economies
of time, effort and expense. For example, plaintiffs will no
longer need to file new lawsuits,*fn10 most of which would
eventually be transferred here anyway. See Fischer v. Cletz, 41
F.R.D. 377, 385 (S.D.N.Y. 1966); Advisory Committee's Note, 39
F.R.D. 98, 102-103 (1966).
In response, defendants suggest that permissive intervention
and joinder is preferable. The recent history of this litigation
dramatically illustrates the impracticality of these
alternatives. In 1966 there was a single suit purporting to be a
class action. The entire litigation might have been concluded
without further complexity. But defendants successfully opposed
the class suit, with the result that lawsuits have blossomed
throughout the country.*fn11 Rather than the original handful of
attorneys, lawyers are now so plentiful that the entire courtroom
is filled at each pretrial conference. Section 1407 consolidation
became mandatory.*fn12 When returned for trial, the subsequently
filed cases will consume substantial amounts of the transferor
courts' time. The prospect of further intervention and joinder,
combined with the inevitable proliferation of lawsuits, is
inimicable to economical adjudication.
Fourth, the defendants enumerate the "insurmountable"
administrative difficulties*fn13 which may be encountered in
these class actions.*fn14 Settlement may become more difficult since
the expanded number of plaintiffs will each demand compensation.
Naturally, the publishers and wholesalers are reluctant to see
their liability increase. Even with thousands of class members,
however, the imaginative and resourceful attorneys handling these
cases can undoubtedly devise workable settlement procedures. For
example, a lump sum could be set aside for the plaintiffs in each
state; appropriate personnel might then apportion the fund among
class members who substantiate their damage claims.*fn15
Another practical difficulty might arise if the defendants
wanted to direct interrogatories and depositions to each class
member. But, no further discovery appears to be necessary. Since
defendants' records are relatively complete and accessible, they
can prepare full answers to exhibit C (transaction data).*fn16 Until
liability is established,*fn17 however, it would be wasteful for
thousands of plaintiffs to search their files for similar data.*fn18
To prove their damages, of course, individual class members will
eventually be required to establish their specific purchases.
See, e.g., Brennan v. Midwestern United Life Ins. Co.,
259 F. Supp. 673, 684 (N.D.Ind. 1966); Kronenberg v. Hotel Governor
Clinton, Inc., 41 F.R.D. 42, 45 (S.D.N.Y. 1966). Compare F.R.C.P.
23(c)(4) with Advisory Committee's Note, 39 F.R.D. 98, 106
Even though the class actions may expand administrative tasks,
the benefits to be secured will more than outweigh the additional
chores. As recently explained by Judge Becker in Technograph
Printed Circuits, Ltd. v. Methode Electronics, 285 F. Supp. 714,
724-725 (N.D.Ill. 1968):
"[T]he difficulties likely to be encountered in the
management of a class action are not important when
weighed against the benefits to the class * * * and
to the administration of justice. * * * To process
the pending litigation and most of the remaining
active, inactive and the potential litigation by a
large number of separate trials would `raise
administrative difficulties far exceeding those
present in this class action.'"
Most importantly, the fifth and final factor is the opportunity
that class actions will provide for the publishers and
wholesalers to receive a full and fair hearing on their defenses.
Assuming that they did not conspire to maintain non-competitive
prices, the defendants will not be subjected to the expensive
ordeal of repeatedly demonstrating their innocence at trial. Nor
will they be exposed to as great a threat that subsequent
litigation could produce inconsistent results. Furthermore, in
spurious class actions under old F.R.C.P. 23, class members could
intervene after a favorable decision on the merits without
risking the chance of an adverse judgment.*fn19
Defendants will not
be victimized by such one-sided intervention.
In conclusion, the four prerequisites of F.R.C.P. 23(a) are
satisfied by each of the state-wide class actions. Moreover,
common questions of law and fact overshadow the damage issue that
is peculiar to individual plaintiffs. Besides being the most
efficient way to resolve the plaintiffs' widespread claims, class
actions will protect the defendants' rights, guaranteeing that
they will not be subject to numerous inconsistent judgments
scattered throughout the nation.*fn20
II. National Class Action
The School District and City of Philadelphia filed the first
lawsuit protesting artificial book prices. Two classes of
plaintiffs are designated: (1) all public school systems in the
United States with an enrollment of 12,000 students or more, and
(2) all state and municipal agencies which maintain libraries for
the use of the general public, such libraries having annual book
funds in excess of $10,000. Totaling approximately 1324, the
class members are listed in an exhibit attached to the
complaint.*fn21 In April 1967 the Philadelphia transferor court
ruled that the class action was not proper at that time.*fn22
Plaintiffs now request reconsideration, maintaining that
subsequent developments have substantially altered the
desirability of a class action.
In April 1967, discovery had only begun. The Justice
Department's civil actions had just been filed. Thus, one could
not determine whether common questions would predominate.
Similarly, no related litigation was then pending, and it was
impossible to predict whether other libraries and schools would
institute suit. Therefore, a class action did not seem to be the
superior means of adjudication.
In April 1969, however, the litigation's factual background is
more fully known. With the generous benefit of hindsight,
subsequent discovery, and the proliferation of lawsuits, the
identity and nature of all plaintiffs' claims have become
evident. Defendants concede the existence of the "net" pricing
system. Harper and Row Publishers responded to interrogatory
number 20 as follows:
"Library editions are sold at net price or at a
discount where the sale is to a
wholesaler. * * * This method of pricing appears to
be similar to the practice prevailing in the book
Although the national action has a broader geographical scope
than do the state classes, all of the considerations discussed in
the preceding section of this opinion apply fully to the School
District of Philadelphia. In fact, the wholesalers tacitly admit
that the state and the national actions are indistinguishable;
without differentiation, their brief considers both motions
together. Thus, in the national class, common questions
over individual issues,*fn23
and a class action is superior to other
alternatives for the fair and efficient resolution of the
plaintiffs' causes of action.
Nevertheless, the publishers highlight the selective
composition of the two national classes. Representing only the
largest purchasers, the School District and City of Philadelphia
provide no redress for the numerical bulk of the nation's
libraries and schools. The parties insinuate that the selection
of potential plaintiffs was motivated by the Philadelphia
The desertion of the smaller purchasers is unfortunate.
Therefore, if other plaintiffs had sought to represent all
aggrieved purchasers, such an action would presumably have
prevailed over the Philadelphia class. But this choice is not
To the extent that other class actions do not cover the members
of the national class, the Philadelphia suit may be the only
relief they can receive. Many claims are too small to justify
separate lawsuits, and 15 U.S.C. § 16(b)'s one-year suspension of
the statute of limitations has expired. Thus, the only issue is
whether the absent class members, allegedly the most seriously
overcharged plaintiffs, should be denied recovery merely because
smaller libraries and schools will not be compensated.*fn24 In the
interests of justice, the 1324 purchasers deserve a chance to
recover their excessive payments.
Moreover, other courts have sua sponte limited the size of
class actions by deleting the smaller, less aggrieved members.
See, e.g., Philadelphia Electric Co. v. Anaconda American Brass
Co., 43 F.R.D. 452, 462 (E.D.Pa. 1968):
"By analogy to concepts of diversity jurisdiction and
venue, * * * I consider it appropriate to limit the
definition of the class by setting up criteria of
size of population served, area, and proximity to
"* * * [T]hese actions may be maintained as class
actions on behalf of * * * (3) all cities in the
United States having a population * * * in excess of
50,000, and all school districts and public building
authorities within such cities."
Furthermore, the singular importance of private treble damage
actions in the antitrust field suggests that the size restriction
should not defeat the class action. As recently declared by the
Supreme Court in Minnesota Mining and Mfg. Co. v. New Jersey Wood
Finishing Co., 381 U.S. 311
, 318, 85 S.Ct. 1473, 14 L.Ed.2d 405
"Congress has expressed its belief that private
antitrust litigation is one of the surest weapons for
effective enforcement of the antitrust laws."
See generally Perma Life Mufflers, Inc. v. International Parts
Corp., 392 U.S. 134
, 139, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968);
Philadelphia Housing Authority v. American Radiator and Standard
Sanitary Corp., 269 F. Supp. 540, 542 (E.D.Pa. 1967). Upholding
the national class action will facilitate private antitrust
litigation and will discourage future conspiracy violations. See
v. Anderson, 43 F.R.D. 472 (E.D.N.Y. 1968).*fn25
In conclusion, the two national classes proposed by the School
District and City of Philadelphia meet all the criteria
established by F.R.C.P. 23(a) and (b)(3). The class action is
the superior method for the fair and efficient adjudication of
the controversy. Although the restriction on the classes' scope
appears arbitrary, the enumerated members should not be penalized
solely because the unrepresented libraries and schools will not
receive redress for their overpayments.
III. Administration of the Class Actions
Two administrative questions need to be resolved. The first is
how the class members will be notified of the actions. Despite
scattered contrary suggestions, most courts and commentators
agree that the court need not perform all tasks associated with
informing the absent parties.*fn26 The representative plaintiffs
will therefore prepare a mailing list of all members of their
classes. Along with the list, plaintiffs shall submit to the
court a draft notification letter. If possible, plaintiffs in the
various class actions should confer and submit a master letter
which can be adapted to the individual classes. Copies of the
draft notices shall be furnished to the defendants who will then
have ten days in which to make suggestions. To avoid the
appearance of claim solicitation,*fn27 the notices will be mailed by
the court on official stationery. Similarly, class members'
replies will be directed to the court.
The second administrative question concerns the overlap between
various class actions. Both the national suit and several state
actions include some of the same libraries and schools.
Presumably, class members situated in a given state would prefer
to be represented by the attorney general of that jurisdiction.*fn28
One may also assume that named plaintiffs who have instituted
their own suits do not want to participate in a larger class
suit.*fn29 Accordingly, notice in the national class action will not
be sent to any named plaintiffs nor to any members of other class
actions. Unless they voluntarily notify the court to the
contrary, these members will not be represented by Philadelphia.
As explained in State of Minnesota v. United States Steel Corp.,
44 F.R.D. 559, 576 (D.Minn. 1968):
"This over-lap in the court's judgment is best
resolved by permitting the maintenance of
the * * * [national] suits as class suits only to the
extent that absent class members may request entrance
to the class if so desired, within the time
hereinafter prescribed by the court without, however,
there being any notice on behalf of these plaintiffs
sent from this court or otherwise * * *"
In New York and Minnesota, both the state's attorney general
and a competing plaintiff seek to represent all the libraries
and schools in the state. All of the potential representative
plaintiffs meet the criteria established by F.R.C.P. 23.*fn30
choose between the suits, one might use a first to file rule
which would sanction a race to the courthouse. On the other hand,
it seems preferable to consider which of the representative
parties will most effectively serve the class members.
Unlike private attorneys, the state attorneys general will
apparently not charge a fee. Moreover, the state officials are
responsible for protecting their jurisdictions and its
subdivisions from fraudulent overcharges.*fn31 Accordingly, although
all of the requested class actions may be so maintained, the
absent class members will only be notified of the actions brought
by the attorneys general (68 C 2041 and 69 C 48).*fn32 If class
members desire to be represented by Hempstead School District, 68
C 2259, the City of St. Paul, 68 C 2040, or School District #625,
69 C 797, they should so inform the court within the period
specified for class members to respond to notices.
F.R.C.P. 23(a) specifies four prerequisites for a class action,
each of which is easily satisfied. The contentions of the
representative plaintiffs are typical of the claims of the
numerous class members. Since all purchasers of library editions
share an identical position with respect to the crucial issues in
the cases, the named plaintiffs will adequately protect the
In both the state-wide and the national class actions,
questions of law and fact common to the members of the group
predominate over any issues affecting only individual purchasers.
Identical facts and evidence will be required to establish the
existence and the effect of the alleged price fixing
conspiracies. In contrast, the claimants' damage determinations
may be easily computed.
Superior to other available means for just and economical
resolution of the controversies, class actions will minimize the
proliferation of lawsuits which would otherwise result from the
alleged pervasive conspiracies. They will also diminish the
duplication of judicial effort and attorneys' expense.
Furthermore, class actions will relieve the defendants from the
burden of defending numerous scattered cases and will reduce the
likelihood of inconsistent judgments. Although including only the
larger libraries and schools, the national class action provides
both a fair and an efficient form of redress for its members.
Finally, the administration of these actions will not pose
insurmountable difficulties. In situations where classes overlap,
notice will only be sent to the members of one class, thus
avoiding the confusion of having duplicate, conflicting
communications. After plaintiffs prepare a mailing list and a
draft letter, the court will direct individual notice to all
members of the various classes who can be identified and located.
Accordingly, I have entered an order today allowing the
following plaintiffs to maintain the specified class actions.
Case No. Plaintiff Class
67 C 1899 Illinois Chicago Board of Education and
approximately 1,338 public school
districts in Illinois.
68 C 1835 Texas Approximately 1,232 public school
districts and 354 tax supported
libraries in Texas.
68 C 1999 Kansas Approximately 330 public school
districts and 272 tax supported
libraries in Kansas.
68 C 2014 Wisconsin Approximately 572 public school
districts and 320 tax supported
libraries in Wisconsin.
68 C 2041 Minnesota Approximately 500 public school
districts and tax supported
libraries in Minnesota.
68 C 2144 School District Two national classes: (1) public
and City of school systems, and (2) public
Philadelphia libraries See "Amendment to
paragraph 4 of the amended
complaint," filed 3/6/67.
68 C 2257 Indiana Approximately 354 public school
corporations and 242 tax supported
libraries in Indiana.
68 C 2258 Ohio Approximately 656 public school
districts and 258 tax supported
libraries in Ohio.
68 C 2302 City of Chicago Chicago Public Library and
approximately 498 tax supported
libraries in Illinois.
68 C 2303 Archbishop and Approximately 776 diocesan and
Bishops of non-diocesan Catholic schools in
69 C 48 New York Public school districts and tax
supported libraries in New York.
68 C 2259 Hempstead Named plaintiffs and public
School District purcahsers in New York who request
68 C 2040 City of St. Public and private purchasers in
Paul Minnesota who request inclusion.
69 C 797 School District Public purchasers in Minnesota
# 625 who request inclusion.