Opposition Brief — Koerner v. Class Representatives

mt

Supreme Court, U.S,

FILED

DEC 12 1985

No. 85-712 JOSEPH F. SPANIOL, JR.

CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1985

JOHN E. KOERNER & Co., INC.

AND IMPERIAL PRODUCTS CORP.,

Petitioners,

VU.

PLAINTIFF CLASS REPRESENTATIVES AND

THE PLAINTIFF CLASS,

Respondents,

IN RE: CORN DERIVATIVES ANTITRUST LITIGATION

MDL 414

BRIEF IN OPPOSITION OF RESPONDENTS

David Berger Clive S. Cummis

BERGER & SILLS, BECK, CUMMIS,

MONTAGUE, P.C. ZUCKERMAN, RADIN,

1622 Locust Street TISCHMAN & EPSTEIN

Philadelphia, PA 19103 33 Washington Street

(215) 875-3030 Newark, NJ 07102-3179

Attorneys for Respondent, (201) 643-3232

Golden Quality Ice Attorneys for Respondent,

Cream Company Food Foundation, Inc.

(SEE INSIDE FRONT COVER FOR NAMES

OF ADDITIONAL RESPONDENTS)

BEST AVAILABLE COPY (amma

QUESTIONS PRESENTED FOR REVIEW

This Petition concerns the settlement of an antitrust

class action suit. Following notice to all class members of

the proposed settlement and hearing thereon, the district

court gave final approval to the settlement. The Court of

Appeals for the Third Circuit affirmed.

The Petition presents two questions for review. They

are as follows:

1. Did the district court abuse its discretion in

approving the settlement of this case?

2. Was the notice of proposed settlement

adequate?

STATEMENT REQUIRED BY RULE 28.1

Respondents are class representatives of the plaintiff

class, a class of purchasers of corn derivatives products,

and include the following class representatives:

Bear Stewart & Corp.

Bodines, Inc.

Cumberland Farms Dairy, Inc., whose parent

is Delaware Food Stores, Inc.

Consolidated Packaging Corp.

Eastern Candy Company, Inc.

Food Foundation, Inc.

Golden Quality Ice Cream Company

G. Heileman Brewing Company, Inc.

Health Care Industries, Inc.

Kalva Corp.

Korbro Oil Corp.

Land O’Lakes, Inc., whose partially owned

subsidiaries are Norris Creameries, Inc.;

Imperial Packaging, Inc.; Imperial, Inc.;

and Lakeside Dairy Company

Plantation Confection Company, Inc.

Virnelson Bakery, Inc.

il

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ...... ef

STATEMENT REQUIRED BY RULE 28.1....... ii

py Fe Sy fe | y 5 | hr iv

ty ee 8g ee ies. Se. Sea re 2

REASONS FOR DENYING THE WRIT......... 4

I. The Petition Raises No Important Unsettled

Question of Federal Law................... 4

II. No Conflict Among the Circuits Is Presented

ESI OTT RTT TC CTT EET TE 5

III. The Third Circuit Did Not Sanction A Depar-

ture From the Accepted and Usual Course of

ee 7

RS eee 8

TABLE OF AUTHORITIES

CASES:

In re Corrugated Container Antitrust Litigation,

643 F.2d 195 (Sth Cir. ) affd. 659 F.2d 1322 (Sth

Cir. 1981) cert. denied 456 U.S. 998 (1982)...

Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.

Sea ce wy ca eps Me 88 eee ED Ok GOR 4,<

Dimmitt Agri Industries, Inc. v. CPC International,

Inc., 679 F.2d 516 (Sth Cir. 1982)...........

In re General Motors Corp. Engine Interchange Lit-

igation, 594 F.2d 1106 (7th Cir.) cert. denied,

ae 0 Wk Seed CE wk a os adh eee ks oes

in re General Tire & Rubber Co. Securities Litiga-

tion, 726 F.2d 1075 (6th Cir. 1984).........

Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975) ....

Grunin v. International House of Pancakes, 513

F.2d 114 (8th Cir.) cert. denied, 423 U.S. 864

4 og) eee rer rr rarer cee e 4,

Officers for Justice v. Civil Service Commission, 688

Fo). Gi he : ) eee arenes -

Parker v. Anderson, 667 F.2d 1204 (5th Cir.

KN ake eek Sa Ww ROS Gee cae ww

Robertson v. National Basketball Association, 556

fe Eh Re Rg 4 Geena ta er

Saylor v. Lindsey, 456 F.2d 896 (2d Cir. 1972)...

TBK Partners, Ltd. v. Western Union Corp., 675

Pee ee Coe Gi BED bos ocak eek bane

Weinberger v. Kendrick, 698 F.2d 61 (2d Cir.

Ei asc aes ek wee he are

Page

4

6

TABLE OF AUTHORITIES—(Continued)

STATUTES:

Page

Oe & * ) Pere Vieeds eae anaes Mae 4,5

OTHER AUTHORITIES:

H. Newberg, Newberg on Class Actions (Second

Re: See, SEEM ees hike eee 6

No. 85-712

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1985

JOHN E. KOERNER & Co., INC.

AND IMPERIAL PRODUCTS CORP.,

Petitioners,

U.

PLAINTIFF CLASS REPRESENTATIVES AND

THE PLAINTIFF CLASS,

Respondents,

IN RE: CORN DERIVATIVES ANTITRUST LITIGATION

MIL 414

BRIEF IN OPPOSITION OF RESPONDENTS

Pursuant to Rule 27.2(b) of the rules of this Court,

RESPONDENTS, plaintiff class representatives and the

plaintiff class in the Court below, file this brief in oppo-

sition to the Petition for a Writ of Certiorari which seeks

to overturn a decision of the Court of Appeals for the

Third Circuit affirming the approval of a class action set-

tlement. It is respectfully requested that this Court deny

the Petition for Writ of Certiorari.

2

STATEMENT OF THE CASE

The Petition has been filed on behalf of two objectors

to a class action settlement approved by the District

Court and affirmed by the Court of Appeals.

These consolidated antitrust actions were com-

menced in late 1979 and 1980 by more than thirty direct

purchasers of corn derivative products on behalf of them-

selves and a class of more than 35,000 similarly situated

direct purchasers. The thrust of the actions was that the

twelve defendants, who refine corn into derivative prod-

ucts such as syrup, oil, dextrose and starch, allegedly

combined and conspired to fix, raise, maintain and sta-

bilize the prices of corn derivative products.

On March 28, 1980, all actions were transferred by

the Judicial Panel on Multidistrict Litigation to the Dis-

trict of New Jersey.

Large amounts of discovery materials relating to the

merits of Respondents’ claims were reviewed by Respon-

dents’ counsel, including voluminous documentary ma-

terials voluntarily produced by defendants. In addition,

Respondents’ counsel interviewed managerial pricing

personnel of various defendants and reviewed the record

and the extensive discovery developed in a related anti-

trust suit involving the corn derivatives industry, Dim-

mitt Agri Industries, Inc. v. CPC International Inc., 679

F.2d 516 (Sth Cir. 1982).

Concurrently with the document inspection and wit-

ness interviews, settlement negotiations were conducted

between counsel for the respective parties and proposed

settlements were reached. On April 12, 1983 a hearing

was held to determine whether the settlements appeared

to be sufficiently fair, reasonable and adequate to justify

sending notice thereof to class members and to set a

hearing for final approval of the proposed settlements.

On April 21, 1983 the court filed its Opinion and Order

3

establishing a setthkement class, preliminarily approving

the settlements, directing notice to the class, and setting

a hearing for final approval on June 30, 1983.

At the request of certain class members who ap-

peared at the June 30 hearing, the hearing on final ap-

proval was centinued by the Court to August 17, 1983.

During the interim, the Court afforded counsel for

Petitioners the opportunity to review the entire record

and the extensive discovery materials assembled by

counse! for Respondents. Counsel for Petitioners chose

io review only small portions of the material made avail-

able.

At the August 17 hearing only three of some 35,000

class members objected to the proposed settlement,

rather than exercise their right to opt-out. Two of them,

represented by the same counsel, have filed the instant

Petition.

Following the hearing, the District Court entered an

Order and Judgment finding the settlements fair, rea-

sonable and adequate. The District Court made detailed

findings on all the criteria applicable to the question of

whether to approve a proposed class action settlement.

The three objectors appealed the District Court's ap-

proval of the setthement. By opinion dated August 26,

1985 the Third Circuit affirmed the Order of the District

Court.

4

REASONS FOR DENYING THE WRIT

Nothing in the petition supports the granting of a

Writ of Certiorari, and none of the points raised by Pe-

titioners is worthy of review. Far from attempting to de-

lineate the issues that make this case one of

jurisprudential importance, the Petition simply reiterates

the arguments raised by Petitioners below concerning

the merits of the district court’s approval of the settle-

ment.

First, the Petition raises no important, unsettled

question of federal law. The standards for approval of

class action settlements and the requisites of Rule 23(e)

notice have been the subject of considerable scrutiny at

all Jevels of the federal court system.

Second, no conflict among the Circuit Courts of Ap-

peals is presented by the Decision of the Third Circuit.

There is agreement in the courts as to the criteria for

settlement approval and notice of proposed settlement.

Finally, this case clearly is not one in which the

Court of Appeals sanctioned a departure from the ac-

cepted and usual course of judicial proceedings, and

therefore the exercise of the Supreme Court’s supervi-

sory power is unwarranted.

I. The Petition Raises No Important Unsettled Question

of Federal Law.

The general criteria for the approval of class action

settlements have been enunciated frequently by the fed-

eral courts. See, e.g., Detroit v. Grinnell Corp., 495 F.2d

448 (2d Cir. 1975); Girsh v. Jepson, 521 F.2d 153 (3d

Cir. 1975); Grunin v. International House of Pancakes,

513 F.2d 114 (8th Cir.), cert. denied, 423 U.S. 864

(1975); In re Corrugated Container Antitrust Litiga-

tion, 643 F.2d 195 (5th Cir.), aff’d, 659 F.2d 1322 (Sth

Cir. 1981); cert. denied, 456 U.S. 998 (1982). The re-

quirement of F.R. Civ. P. 23(e) that the district court

approve every proposed settlement quite naturally has

5

resulted in a proliferation of opinions concerning the req-

uisites for approval.

Every factor raised by Petitioners — the adequacy of

discovery for objectors; the need for an evidentiary hear-

ing; the adequacy of notice of the proposed settlement;

the balancing of the settlement figure against the ulti-

mate likelihood of obtaining a higher figure — has been

the subject of extensive discussion in the courts. See,

e.g., In re General Motors Corp. Engine Interchange Lit-

igation, 594 F.2d 1106 (7th Cir. ), cert. denied, 444 U.S.

870 (1979) (discovery); Saylor v. Lindsey, 456 F.2d 896

(2d Cir. 1972) (discovery, evidentiary hearing);

Robertson v. National Basketball Association, 556 F.2d

682 (2d Cir. 1977) (discovery concerning settlement pro-

cess); Officers for Justice v. Civil Service Commission,

688 F.2d 615 (9th Cir. 1982) (notice); Grunin supra (no-

tice); Plummer v. Chemical Bank, 668 F.2d 654 (2d Cir.

1982) (balancing settlement offer against strength of

case); Grinnell Corp., supra (balancing).

Furthermore, the standard of appellate review of a

trial court’s approval of settlement has been addressed

repeatedly by the Courts of Appeals. See, e.g., Grinnell

Corp., supra (abuse of discretion).

Accordingly, the Petition presents no important un-

settled questions of federal law. Indeed, in Respondents’

view, the Petition presents no questions of law whatso-

ever, but merely seeks a reapplication of settled princi-

ples of law to the circumstances of the instant case.

II. No Conflict Among the Circuits Is Presented By the

Petition.

The Petition is totally lacking in any demonstration

that the Third Circuit’s affirmance of the settlement in

this case presents a conflict with the views of any other

Circuit. There is no conflict among the Circuits.

While Rule 23(e) is silent with regard to the stan-

dards by which a proposed class action settlement is to be

6

evaluated, the courts have all started with the basic

premise that the settlement must be fair, adequate, and

reasonable under all the circumstances. See, e.g., Offic-

ers for Justice, supra; Parker v. Anderson, 667 F.2d

1204 (5th Cir. 1982); Girsh, supra; TBK Partners, Ltd.

v. Western Union Corp., 675 F.2d 456 (2d Cir. 1982). In

assessing what is fair, adequate, and reasonable, the

courts have considered a mix of factors. No single factor

is necessarily determinative, as each case is unique.

Among the factors which all the circuits agree should be

taken into consideration are the following: (1) the com-

plexity, expense, and likely duration of the litigation; (2)

the reaction of the class to the settlement; (3) the stage

of the proceeéings and the amount of discovery com-

pleted; (4) the risks of establishing liability; (5) the risks

of establishing damages; (6) the risks of maintaining the

class action through trial; (7) the ability of the defen-

dants to withstand a greater judgment; (8) the range of

reasonabieness of the settlement fund in light of the best

possible recovery; and (9) the range of reasonableness of

the settlement fund to a possible recovery in light of all

the attendant risks of litigation. See, e.g., Girsh, supra;

Grinnell Corp., supra; Parker, supra; Grunin, supra.

Each of these factors has been applied quite flexibly. See

also H. Newberg, Newberg on Class Actions (Second

Edition, 1985), §11.42.

There is no conflict among the circuits as to the ob-

ligation of the district court to review these various fac-

tors. Settlement approval is a matter left to the sound

discretion of the trial court, and the trial court must

weigh and evaluate these factors as is appropriate in the

circumstances of the particular case.

The Courts of Appeals are also in agreement as to the

requisites of an adequate notice to class members. The

notice must be reasonably calculated to apprise inter-

ested parties of the pendency of the actions, inform them

of their opportunity to object and must generally de-

scribe the terms of the setthkement. The notice must be

ri

scrupulously neutral. See, e.g., In re General Tire and

Rubber Co. Securities Litigation, 726 F.2d 1075 (6th

Cir. 1984); Weinberger v. Kendrick, 698 F.2d 61 (2d Cir.

1981); Grunin, supra. The Third Circuit decision in this

case is completely consistent with the standards enun-

ciated by all other circuits.

Accordingly, the Petition presents no conflict be-

tween the Circuits requiring a resolution.

III. The Third Circuit Did Not Sanction A Departure

From the Accepted and Usual Course of Judicial

Proceedings.

No exercise of this Court’s supervisory powers is

called for in this case because, as the Third Circuit rec-

ognized, the district court treated the settlement of this

case in a thorough and altogether appropriate manner.

Respondents believe that the district court properly

approved the proposed settlement. Petitioners disagree.

However, Petitioners’ reargument in this Court of the

merits of approval can in no way cast suspicion on the

district court’s conduct of the settlkement process or its

ultimate decision regarding settlement.

The proposed settlement was the subject of lengthy

briefing and argument before the district court. The Pe-

titioners were allowed a full opportunity to make their

objections known. Following hearing, the district court

wrote a lengthy opinion discussing and weighing all the

factors relevant to the approval or disapproval of setile-

ment. The length and comprehensiveness of the district

court’s opinion make frivolous any accusation of insuf-

ficient attention to the case or failure of the district court

to act in the best interests of class members. The Court

of Appeals could find no basis for disturbing the judg-

ment of the trial court.

CONCLUSION

Petitioners have failed to demonstrate an important

issue of unsettled federal law, a conflict between the Cir-

cuits, or a departure from the acce~*ed and usual course

of judicial proceedings. Accordingly, for the reasons set

forth above, the Petition for Writ of Certiorari should be

denied.

Respectfully submitted,

DATED: December 13, 1985

David Berger

BERGER &

MONTAGUE, P.C.

1622 Locust Street

Philadelphia, PA 19103

(215) 875-3030

Attorneys for Respondent,

Golden Quality Ice

Cream Company

Michael H. King

ROSS & HARDIES

150 N. Michigan Avenue

Suite 2500

Chicago, IL 60601

(312) 558-1000

Attorneys jor Respondent,

Consolidated Packaging

Corp.

Clive S. Cummis

SILLS, BECK, CUMMIS,

ZUCKERMAN, RADIN,

TISCHMAN & EPSTEIN

33 Washington Street

Newark, NJ 07102-3179

(201) 643-3232

Attorneys for Respondent,

Food Foundation, Inc.

Harold E. Kohn

Dianne M. Nast

KOHN, SAVETT, MARION

& GRAF, P.C.

One Reading Center,

24th Floor

1101 Market *treet

Philadelphia, PA 19107

(215) 238-1700

Attorneys for Respondents,

Bodines, Inc. and

Cumberland Farms

Dairy, Inc.

Joel C. Meredith Douglas V. Rigler

MEREDITH & COHEN KAPLAN RUSSIN

117 S. 17th Street, & VECCHI

22nd Floor . 1218 Sixteenth Street, NW

Philadelphia, PA 19103 Washington, D.C. 20036

(215) 564-5182 (202) 638-0060

Attorneys for Respondent, Attorneys for Respondent,

Eastern Candy Company, G. Heileman Brewing

Inc. Company, Inc.

Guido Saveri Robert A. Skirnick

SAVERI & SAVERI WOLF, POPPER, ROSS,

111 Sutter Street, Suite 2140 WOLF & JONES

San Francisco, CA 94104 845 Third Avenue

(415) 391-0300 New York, NY 10022

Attorneys for Respondents, (212) 759-4600

Bear Stewart & Corp., Attorneys for Respondents,

Easterr: Candy Company, Eastern Candy Company

Inc., Health Care Inc., Korbro Oil Corp.,

Industries, Inc.. Plantation Confection

G. Heilman Brewing Company, Inc.

Company, Inc., Kalva Corp.,

Korbro Oil Corp.,

Virnelson Bakery, Inc.

Eugene M. Warlich

DOHERTY, RUMBLE &

BUTLER

1500 First National

Bank Building

St. Paul, MN 55101

(612) 291-9270

Attorneys for Respondent,

Land O'Lakes, Inc.

Michael H. King

ROSS & HARDIES

150 N. Michigan Avenue

Suite 2500

Chicago, IL 60601

(312) 558-1000

Attorneys for Respondent,

Consolidated Packaging

Corp.

Joel C. Meredith

MEREDITH & COHEN

117 S. 17th Street,

22nd Floor

Philadelphia, PA 19103

(215) 564-5182

Attorneys for Respondent,

Eastern Candy Company,

Inc.

Guido Saveri

SAVERI & SAVERI

111 Sutter Street, Suite 2140

San Francisco, CA 94104

(415) 391-0300

Attorneys for Respondents,

Bear Stewart & Corp.,

Eastern Candy Company,

Inc., Health Care

Industries, Inc.,

G. Heilman Brewing

Company, Inc., Kalva Corp.,

Korbro Oil Corp.,

Virnelson Bakery, Inc.

Eugene M. Warlich

DOHERTY, RUMBLE &

BUTLER

1500 First National

Bank Building

St. Paul, MN 55101

(612) 291-9270

Attorneys for Respondent,

Land O’Lakes, Inc.

Harold E. Kohn

Dianne M. Nast

KOHN, SAVETT, MARION

& GRAF, P.C.

One Reading Center,

24th Floor

1101 Market Street

Philadeiphia, PA 19107

(215) 238-1700

Attorneys fer Respondents,

Bodines, Inc. and

Cumberland Farms

Dairy, Inc.

Douglas V. Rigler

KAPLAN RUSSIN

& VECCHI

1218 Sixteenth Street, NW

Washington, D.C. 20036

(202) 638-0060

Attorneys for Respondent,

G. Heileman Brewing

Company, Inc.

Robert A. Skirnick

WOLF, POPPER, ROSS,

WOLF & JONES

845 Third Avenue

New York, NY 10022

(212) 759-4600

Attorneys for Respondents,

Eastern Candy Company

Inc., Korbro Oil Corp.,

Plantation Confection

Company, Inc.