Source: https://law.justia.com/cases/federal/appellate-courts/F2/561/434/419163/
Timestamp: 2020-07-10 07:51:29
Document Index: 532239100

Matched Legal Cases: ['§ 1292', '§ 1292', '§ 1', '§ 1', '§ 1292', '§ 1291', '§ 1', '§ 122', '§ 4', '§ 1', '§ 4', '§ 4', '§ 4', '§ 1', '§ 1', '§ 1']

Paul J. Bogosian, on Behalf of Himself and All Thosesimilarly Situated, Appellant, v. Gulf Oil Corporation, American Oil Company, Humble Oil &refining Company, Mobil Oil Company, Phillips Petroleumcompany, Shell Oil Company, Sun Oil Company, Texaco, Inc.,cities Service Oil Company, Atlantic Richfield Company,union Oil Company of California, Union 76 Division, Ameradahess Corp., Hess Oil and Petroleum Division, Getty Oilcompany, Standard Oil Company of Ohio, Standard Oil Companyof California.louis J. Parisi, on Behalf of Himself and All Otherssimilarly Situated, Appellant, v. Gulf Oil Corporation, American Oil Company, Exxoncorporation, Mobil Oil Company, Phillips Petroleum Company,shell Oil Company, Sun Oil Company, Texaco, Inc., Citiesservice Oil Company, Atlantic Richfield Company, Union Oilcompany of California, Union 76 Division, Amerada Hesscorp., Hess Oil and Petroleum Division, Getty Oil Company,standard Oil Company of Ohio, Standard Oil Company Ofcalifornia, Chevron Oil Co, 561 F.2d 434 (3d Cir. 1977) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1977 › Paul J. Bogosian, on Behalf of Himself and All Thosesimilarly Situated, Appellant, v. Gulf Oil Corpo...
Paul J. Bogosian, on Behalf of Himself and All Thosesimilarly Situated, Appellant, v. Gulf Oil Corporation, American Oil Company, Humble Oil &refining Company, Mobil Oil Company, Phillips Petroleumcompany, Shell Oil Company, Sun Oil Company, Texaco, Inc.,cities Service Oil Company, Atlantic Richfield Company,union Oil Company of California, Union 76 Division, Ameradahess Corp., Hess Oil and Petroleum Division, Getty Oilcompany, Standard Oil Company of Ohio, Standard Oil Companyof California.louis J. Parisi, on Behalf of Himself and All Otherssimilarly Situated, Appellant, v. Gulf Oil Corporation, American Oil Company, Exxoncorporation, Mobil Oil Company, Phillips Petroleum Company,shell Oil Company, Sun Oil Company, Texaco, Inc., Citiesservice Oil Company, Atlantic Richfield Company, Union Oilcompany of California, Union 76 Division, Amerada Hesscorp., Hess Oil and Petroleum Division, Getty Oil Company,standard Oil Company of Ohio, Standard Oil Company Ofcalifornia, Chevron Oil Co, 561 F.2d 434 (3d Cir. 1977)
US Court of Appeals for the Third Circuit - 561 F.2d 434 (3d Cir. 1977) Argued March 28, 1977. Decided July 21, 1977
After substantial discovery limited to the class action allegations, the district court refused to certify the class (62 F.R.D. 124, E.D. Pa. 1973), and under 28 U.S.C. § 1292(b) certified as immediately appealable its order denying class action status. This court refused petitioners' application to appeal pursuant to § 1292(b). (Misc. Record No. 76-8087, April 17, 1974). In April, June and July of 1975 the district court granted motions for summary judgment made by all moving defendants which had had no business dealings with the named plaintiffs (non-lessor defendants), but refused the motions as to the lessors of the named plaintiffs. 393 F. Supp. 1046 (E.D. Pa. 1975). Prior to the grant of the motions no discovery had been taken on the issue of concerted action. Although plaintiffs moved for discovery under Fed. R. Civ. P. 56(f),1 the court held that "(b)ecause the complaint fails, as a matter of law, to state a cause of action under the Sherman Act § 1 against (nonlessor defendants), summary judgment will be granted and plaintiffs' Rule 56(f) motion will be denied." (footnote omitted). The court granted the summary judgment motion because it concluded that the allegation of "interdependent consciously parallel action" in a complaint is an insufficient statement of the concerted action necessary to state a claim under § 1.
All of the orders granting summary judgment contained an express determination that, pursuant to Fed. R. Civ. P. 54(b), there is no just reason to delay and expressly directing entry of final judgment, although the actions were not wholly terminated by the orders. Subsequently, the district court filed a supplementary opinion expressing the reasons for its 54(b) determination. Plaintiffs timely appealed and defendants moved to dismiss the appeals contending that the entry of judgment was an abuse of discretion and should be vacated.
Behind Rule 54(b) is the recognition that with the liberal joinder of claims and parties now permitted by the federal rules, the policy against piecemeal review implicit in the "single judicial unit" rule must be weighed against the untoward effects which can occur when decisions final as to some claims and some parties cannot be entered until the litigation is final as to all claims and all parties. The district court is not empowered to enter judgment on a decision which is not final. However, by determining that a final decision which terminates the action as to one or more but fewer than all parties or as to one or more but fewer than all claims is an appropriate judicial unit, the court can dispatch for appeal decisions which otherwise would not then be appealable because of the "single judicial unit" rule. Wetzel v. Liberty Mutual Insurance Co., 424 U.S. 737, 96 S. Ct. 1202, 47 L. Ed. 2d 435 (1976); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 76 S. Ct. 895, 100 L. Ed. 1297 (1957). The threshold issue, therefore, is whether the order appealed from finally resolved at least one entire claim, leaving at least one separate claim unresolved or alternatively whether the order finally determined the rights and liabilities of at least one party leaving at least one other party whose rights or liability remains undetermined.
The district court granted summary judgment and directed the immediate entry of judgment for all moving defendants except Gulf and Atlantic Richfield in 393 F. Supp. 1046 (Bogosian) and to all moving defendants except Exxon and Atlantic Richfield in 393 F. Supp. 1046 (Parisi) ; the motions for summary judgment filed by Atlantic Richfield on August 6, 1975 were denied without prejudice because they were made after plaintiffs had filed their notices of appeal. Cities Service Oil Company, a defendant in both cases, has not moved for summary judgment. Therefore, Cities Service and Atlantic Richfield remain as defendants in both cases and are not before the court on appeal. In entering judgment in favor of those defendants on this appeal other than Gulf and Exxon, the court clearly acted within its power since those defendants have been wholly terminated from both actions.
On the other hand, although Gulf has been wholly terminated in Parisi, it remains as a defendant in Bogosian, while Exxon, which is no longer a defendant in Bogosian, remains as a defendant in Parisi. If the rights and liabilities of Gulf and Exxon have not been wholly terminated then, assuming arguendo that the complaint states a single claim, the district court properly could not enter judgment for them and plaintiffs could not maintain this appeal as to them. Compare Backus Plywood Corp. v. Commercial Decal, Inc., 317 F.2d 339 (2d Cir.), cert. denied, 375 U.S. 879, 84 S. Ct. 146, 11 L. Ed. 2d 110 (1963), with 6 Moore, supra, Para. 54.34 (2.-2) at 564.
Once it is determined that the district court was empowered to enter final judgment under 54(b), its decision to do so can be set aside only for an abuse of discretion. Mackey, supra, 351 U.S. at 437, 76 S. Ct. 895. We have previously indicated that " . . . ordinarily an application for a 54(b) order requires the trial judge to exercise considered discretion, weighing the overall policy against piecemeal appeals against whatever exigencies the case at hand may present. . . ." Panichella v. Pennsylvania RR., 252 F.2d 452, 455 (3d Cir. 1958).
Defendants' argument fails to take cognizance of Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239, 245 (3d Cir.), cert. denied, 421 U.S. 1011, 95 S. Ct. 2415, 44 L. Ed. 2d 679 (1975), which decided this precise issue. As Wetzel indicates, defendants' argument fails to note the distinction between 28 U.S.C. § 1292(b) and Rule 54(b). A district court is not empowered to certify issues for appeal under Rule 54(b) but only to enter judgment without delay on decisions which are final under 28 U.S.C. § 1291. It is axiomatic that an appeal taken from a judgment entered under 54(b) brings to the court of appeals all issues determined in the district court which would be reviewable on an appeal from any final judgment.
Plaintiffs contend that notwithstanding that the district court styled its order as one granting summary judgment, the order should be reviewed as one granting a 12(b) (6) motion to dismiss for failure to state a claim upon which relief can be granted. "It is a familiar principle that the label (which) a district court puts on its disposition of a case is not binding on a Court of Appeals." Tuley v. Heyd, 482 F.2d 590, 593 (5th Cir. 1973). We therefore look to the course of proceedings and basis for decision in the district court to evaluate plaintiffs' contention.
The district court held that "(because) the complaint fails, as a matter of law, to state a cause of action under Sherman Act § 1 against (the nonlessor defendants), summary judgment will be granted and plaintiffs' Rule 56(f) motion will be denied." 393 F. Supp. at 1049 (footnote omitted). The district court rejected the nonlessors' standing argument as a basis for summary judgment, ruling that plaintiffs' deposition testimony was inconclusive.
The district court could dismiss for failure to state a claim upon motion for summary judgment, but a motion so decided is functionally equivalent to a motion to dismiss. Schwartz v. Compagnie General Transatlantique, 405 F.2d 270, 273 (2d Cir. 1968); Moore, supra, Para. 56.02(3), at 2035. We therefore think it appropriate to review the order as we would one dismissing the complaint with prejudice for failure to state a claim. E. g. Tuley v. Heyd, supra, 482 F.2d at 593-94; Marvasi v. Shorty, 70 F.R.D. 14, 17 (E.D. Pa. 1976); see Grzelak v. Calumet Publishing Co., Inc., 543 F.2d 579, 583 (7th Cir. 1975).
The standards by which the orders must be tested is whether taking the allegations of the complaint as true, Cooper v. Pate, 378 U.S. 546, 84 S. Ct. 1733, 12 L. Ed. 2d 1030 (1964), and viewing them liberally giving plaintiffs the benefit of all inferences which fairly may be drawn therefrom, see Murray v. City of Milford, 380 F.2d 468, 470 (2d Cir. 1967), "it appears beyond doubt that the plaintiff(s) can prove no set of facts in support of (their) claim which would entitle (them) to relief." Hospital Building Co. v. Trustees of Rex College, 425 U.S. 738, 746, 96 S. Ct. 1848, 1853, 48 L. Ed. 2d 338 (1976).
The law is settled that proof of consciously parallel business behavior is circumstantial evidence from which an agreement, tacit or express, can be inferred but that such evidence, without more, is insufficient unless the circumstances under which it occurred make the inference of rational, independent choice less attractive than that of concerted action. Compare Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939), with First National Bank v. Cities Service Co., 391 U.S. 253, 274-88, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968). We recently articulated those circumstances in Venzie Corp. v. United States Mineral Products, Co., 521 F.2d 1309 (3d Cir. 1975):
Defendants argue nevertheless, and the district court held, that the failure to allege an agreement is fatal to plaintiffs' claim. We think that this position is based upon a misunderstanding of the limited role of the complaint in federal practice. It is not necessary to plead evidence, nor is it necessary to plead the facts upon which the claim is based. "To the contrary, all the Rules require is 'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957).
There is a lively debate, however, concerning the relationship of interdependence to collusion. On the one hand, Professor Posner, for example, has said that interdependence cannot occur without, and hence is a product of, collusion. See Posner, Oligopoly and the Antitrust Laws: A Suggested Approach, 21 Stan. L. Rev. 1562-76; 1591-92 (1969). On the other hand, Professor Sullivan has said that interdependence can exist apart from collusion, but that noncollusive interdependent activity can, under certain circumstances, amount to an unlawful combination. Sullivan, supra § 122; See Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal, 75 Harv. L. Rev. 655, 660-81 (1962).
If these theories are to be tested, it should be done on a fully developed factual record which probes the conflicting economic facts on which they are premised. The complaint is much too blunt an instrument with which to forge fundamental policies regarding the meaning of competition in concentrated industries. Cf. White Motor Co. v. United States, 372 U.S. 253, 83 S. Ct. 696, 9 L. Ed. 2d 738 (1963). We conclude that the ruling that the specific allegation of interdependent consciously parallel action made here fails to state a claim should be vacated so that the issue can be decided, if necessary, after the relevant facts are fully developed.
In their motions for summary judgment and on appeal, defendants argued that plaintiffs lacked standing under §§ 4 and 16 of the Clayton Act5 to challenge the practices of those defendants with whom they had no business dealings. Although the district court rejected this position, if we were to accept it, we would be required to affirm the grant of summary judgment.6 See California Bankers Association v. Shultz, 416 U.S. 21, 71, 94 S. Ct. 1494, 39 L. Ed. 2d 812 (1974); Jurinko v. Edwin L. Wiegand Co.,477 F.2d 1038, 1045 (3d Cir.), vacated on other grounds, 414 U.S. 970, 94 S. Ct. 293, 38 L. Ed. 2d 214 (1973).
The record indicates that the reason plaintiffs did not seek to purchase gasoline from other oil companies was not their lack of desire to do so, but that they feared termination of their leaseholds if such an attempt were made, or that such an attempt would be futile. We also reject the argument that an antitrust plaintiff's statement that he was not injured by alleged co-conspirators demonstrates his lack of standing as to them. As the district court noted, "plaintiffs would not be expected to understand the legal ramifications or even be aware of the activities of the defendants which may have injured them." 393 F. Supp. at 1050 n.7. Plaintiffs might not even be fully aware of the economic impact of a broad based conspiracy on the structure of the industry and of the complex of economic forces flowing from it which might adversely affect their businesses. We hold that the district court correctly concluded that there is no basis in this record for granting summary judgment on the ground of lack of standing.
Before certifying a class under Rule 23(b) (3), the district court must determine that the four prerequisites contained in 23(a) are satisfied, "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." Before making its finding on predominance, the court must, of course, identify the issues involved in the lawsuit and which are common, and before making its finding on the superiority of the class action device, it must apply the fairness and efficiency criteria contained in the rule.
In Katz v. Carte Blanche Corp., 496 F.2d 747, 756-57 (3d Cir. 1974) (in banc), we articulated the standard of review applicable to class action decisions. We must decide whether the 23(a) prerequisites have been met, whether the district court correctly identified the issues involved and which are common, and whether it properly identified the comparative fairness and efficiency criteria. If the court's analysis on these points is correct, then, "it is fair to say that we will ordinarily defer to its exercise of discretion" embodied in the findings on predominance and superiority. Id.
(1) Numerosity. Estimates of the number of class members have varied between 100,000 to 2 million, but it is conceded by all parties that the numerosity requirement has been met. (2) Common Questions. It is also clear that there are at least some issues of both fact and law which are common to the class as our discussion in the next section illustrates. (3) Representative claims typical. The claims pressed by the representatives are identical to those which they press on behalf of the class generally. Beyond this general observation there appears to be nothing which would fall under this rubric which is not also covered by one of the other subsections. See 3B J. Moore, Federal Practice, Para. 23.06-2 (2d ed. 1948). (4) Adequacy of Representation. This prerequisite embodies concerns which fall into two categories: that the representatives and their attorneys will competently, responsibly and vigorously prosecute the suit, and that the relationship of the representative parties' interests to those of the class are such that there is not likely to be divergence in viewpoint or goals in the conduct of the suit. See Mersay v. First Republic Corp. of America, 43 F.R.D. 465, 469 (S.D.N.Y. 1968); 3B Moore, supra Para. 23.07. We see no problem concerning the first aspect. The district court has described counsel for plaintiffs as "experienced and learned attorneys in the field of antitrust litigation." 393 F. Supp. at 1048 n. 5. With regard to the second, however, the district court was concerned that the potential may develop for a divergence of interests between former and present lessees. In that situation the adequacy of the representation of the named representatives, neither of whom is a former lessee of a defendant who is not also a present lessee of a defendant, might be questioned.7 Nevertheless, as the district court recognized, it is equipped by Rule 23(d) to deal with this situation by a variety of means, including certification of subclasses, if and when its concerns ripen. In short, on this record, there is no basis to deny class certification on the basis of inadequacy of representation.
* The elements of a Sherman Act § 1 tying violation are well settled. As we indicated in Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211 (3d Cir. 1976), a per se violation is established when plaintiff proves three elements: the existence of a tie, "that the seller has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product," and "that a 'not insubstantial amount of interstate commerce is affected.' "8 Id. at 1223-24 quoting Northern Pacific Ry. v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958).
Relying upon Ungar, defendants appear to argue that coercion is a requirement of proof in all tying cases. Neither Ungar nor any other case has so held. Rather, Ungar affirmed that under a long line of Supreme Court precedents a tying claim consists solely of the three elements quoted above. Assuming economic power over the tying product and a not insubstantial amount of commerce, the plaintiff need only show that a seller conditioned the sale of one product (the tying product) on the purchase of another product (the tied product). It has never been an element of plaintiff's case to disprove, nor even a permitted defense, that the tied product is superior to others available on the market, or that even without the tie requirement plaintiff would have purchased the tied product. The short answer to defendants' contention is, and has always been, that without a tie requirement, "(i)f the manufacturer's brand of the tied product is in fact superior to that of competitors the buyer will presumably choose it anyway." Standard Oil Co. v. United States, 337 U.S. 293, 306, 69 S. Ct. 1051, 1058, 93 L. Ed. 1371 (1949). Cf. United States Shoe Machinery Corp. v. United States, 258 U.S. 451, 462, 42 S. Ct. 363, 66 L. Ed. 708 (1922).
The rule for which defendants contend would be analogous to a rule in price-fixing cases either requiring plaintiffs or permitting defendants to prove that the market set prices would have been no lower than the fixed prices a proposition long since put to rest. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 222-23, 229, 60 S. Ct. 811, 84 L. Ed. 1129 (1940); United States v. Trenton Potteries Co., 273 U.S. 392, 396-401, 47 S. Ct. 377, 71 L. Ed. 700 (1927). We therefore conclude that once a plaintiff proves that a defendant has conditioned the sale of one product upon the purchase of another there is no requirement that he prove that his purchase was coerced by the seller's requirement.
A number of cases have recognized, however, that an illegal tie-in may exist even when the seller has not expressly conditioned the sale of one product upon purchase of another, if the existence of a tie-in can otherwise be established from business conduct. E. g., Advance Business Systems & Supply Co. v. SCM Corp., 415 F.2d 55, 64 (4th Cir. 1969), cert. denied, 397 U.S. 920, 90 S. Ct. 928, 25 L. Ed. 2d 101 (1970). In many situations in which the existence of a tie-in is proven on the basis of business conduct, a dominant party, such as a franchisor, suggests, persuades or requests that the economically dependent party, such as a franchisee, purchase certain products in conjunction with other products which the franchisee sought to buy. The claim is that there is more in this seemingly innocent conduct than meets the eye. The franchisee claims that the franchisor has created an economic arrangement in which the perceived threat of termination buttresses the franchisor's salesmanship. We considered this type of claim in the context of a class action certification in Ungar, supra.
All but one of the cases which we have found discussing coercion as an element of proof in a tying claim have application to the situation in which the existence of a tie-in is sought to be proved on the basis of a request or suggestion coupled with pressure, intimidation, in short coercion.10 In American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., 446 F.2d 1131 (2d Cir. 1971), cert. denied, 404 U.S. 1063, 92 S. Ct. 737, 30 L. Ed. 2d 752 (1972), for example, an insurance company developed an advertising program which called for sponsoring the Evening Report over a number of local stations. During negotiations with ABC, the company was able to add at least some of the 28 stations it particularly desired to the 99 station lineup originally offered. It later contended that the lineup included 32 unwanted stations which were allegedly tied to the desirable stations. The Second Circuit affirmed the finding of the district court that the company had not proven that it was coerced to accept the lineup agreed upon. Coercion was an essential element of proof in that case because the existence of two separate products necessary to establish a tie could not be determined without reference to the buyer's state of mind, since advertising on one configuration of stations as opposed to another cannot be differentiated apart from the particular advertiser's wants. See also Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1326-1331 (5th Cir. 1976) (coercion required when lease agreement specifies that franchisee free to obtain putative tied product from any source); Davis v. Marathon Oil Co., 528 F.2d 395 (6th Cir. 1975), cert. denied, 429 U.S. 823, 97 S. Ct. 75, 50 L. Ed. 2d 85 (1976) (claim of tie-in of TBA to gasoline rejected when lease did not require purchases and evidence did not show coercion); Belliston v. Texaco, Inc., 455 F.2d 175 (10th Cir.), cert. denied, 408 U.S. 928, 92 S. Ct. 2494, 33 L. Ed. 2d 341 (1972) (coercion required when putative tie based upon request to purchase TBA rather than requirement to do so).
There have been several cases in which the claim that actual coercion was necessary to prove the existence of a tie-in has been rejected because the seller expressly conditioned sale of one product upon purchase of another. E. g., Hill v. A-T-O, Inc., supra; Aamco Automatic Transmissions, Inc. v. Tayloe, 407 F. Supp. 430 (E.D. Pa. 1976); Esposito v. Mister Softee, Inc., 1976-1 Trade Cas. Para 60,887 (E.D.N.Y. 1976).
We cannot agree with the district court that proof of coercion is necessary to the existence of a tie-in on the theory under which the lease claim is brought. Plaintiffs do not contend that defendants pressured them into refraining from selling competing brands, but that the lease contracts themselves precluded them from doing so. Defendants acknowledge that the only way a lessee could sell other brands under the lease agreements would to be install his own pumps and tanks. Whether such a course is realistically open to a short term lessee is a common question of fact which can be developed by expert testimony concerning the relative costs and benefits of making such installations. Similarly, a lease provision which permits termination of the lease when a stated quantity of gasoline is not purchased from the lessor hardly leaves the lessee open to reject some or all of the lessor's gas in favor of that of a competitor. If plaintiffs are able to show that the lease agreements in use by all defendants have similar clauses which have the practical economic effect of precluding sale of other than the lessor's gasoline, they will have shown that the purchase of gasoline was tied in to the lease of the service station. Under these circumstances the lease agreement itself conditions the sale of one product (here a lease) upon purchase of another, and as we indicated in part III B 1 a, supra, proof of coercion is not a required element of plaintiffs' case.11 Thus, this case differs from Ungar in which plaintiffs' proof of the existence of a tie-in focused not on the terms of the agreement but on proof of salesmanship accompanied by threats of termination.12 (ii) Variety of Contractual Forms
Plaintiffs contend that all gasoline of the same octane rating is fungible, that defendants, in fact, exchange their gasolines when convenient, and, citing Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955, 92 S. Ct. 1172, 31 L. Ed. 2d 232 (1972), that defendants' trademarks should therefore be regarded as warranting only the quality rather than the source of the gasoline. The district court noted:
We think that these statements indicate that the trademark claim presents a uniform question of law common to the class. Fairly read, plaintiffs' contention is that the trademark protection clauses, both singly and in conjunction with other clauses evidence an antitrust violation. Even assuming that the court were correct in its conclusion that the lease claim is not appropriate for class determination, it nevertheless should have considered certification of the trademark claim under Rule 23(c) (4) (A).
The district court recognized that strategic land sites can be used as a tying product, but thought that in order to maintain a class action it would be necessary to determine that every oil company-leased station in the country was so strategically located as to be able to restrain competition in the tied product. we agree with plaintiffs that market power can be demonstrated without examining whether each gas station is strategically located. Plaintiffs could show, for example, that the defendants controlled a majority of existing service stations and that because zoning restrictions and high capital costs make development of new stations difficult, the defendants have sufficient market dominance over existing stations to impose a tie-in. We find unpersuasive defendants' efforts to distinguish Northern Pacific Ry. v. United States, 356 U.S. 1, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958). See generally United States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 97 S. Ct. 861, 51 L. Ed. 2d 80 (1977); Fortner Enterprises v. United States Steel Corp., 394 U.S. 495, 89 S. Ct. 1252, 22 L. Ed. 2d 495 (1969).
There are two distinct aspects to what in antitrust literature has come to be known as a requirement of fact of damage in private suits under § 4 of the Clayton Act. See Pollock, The "Injury" & "Causation" Elements of a Treble-Damage Antitrust Action, 57 Nw.L.Rev. 691 (1962). One of these is founded upon the recognition that some limitation must be placed upon liability stemming from violations which may have a widespread and unforeseeable ripple effect throughout the economy. Thus, notwithstanding the language of § 4 that "(a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . ., " as a matter of policy, courts have uniformly limited the private action to those plaintiffs whose injury is not too indirect, remote or incidental a consequence of a violation. This policy has been expressed under the rubric of "standing" and implemented under a "target area" test, see, e. g., Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183 (2d Cir. 1970), cert. denied, 401 U.S. 923, 91 S. Ct. 877, 27 L. Ed. 2d 826 (1971), or by a more detailed, functional inquiry. See Cromar Co. v. Nuclear Material Equipment Corp., 543 F.2d 501, 506 (3d Cir. 1976). We have addressed this aspect, supra and will not refer to it again.
The second aspect is comprised of two elements that plaintiff suffered some loss in his business or property and that there is a causal relationship between the violation and the loss. Fact of damage in this sense is purely factual and does not involve questions of policy in its routine application. It advances no policy apart from the simple concept of causation that plaintiff has suffered loss as a consequence of the violation. See Bigelow v. United States, 327 U.S. 251, 257-60, 66 S. Ct. 574, 90 L. Ed. 652 (1946).
Our conclusion is not at variance with recent cases in other circuits indicating that fact of damage could not be proven on a class basis, since those cases turned upon their individual facts, rather than upon a rule of law precluding common proof of fact of damage. See, e. g., Shumate & Co., Inc. v. National Association of Securities Dealers, Inc., 509 F.2d 147, 155 (5th Cir.) cert. denied, 423 U.S. 868, 96 S. Ct. 131, 46 L. Ed. 2d 97 (1975); In Re Hotel Telephone Charges, 500 F.2d 86, 89 (9th Cir. 1974). On the other hand, it has been recognized that fact of damage can be proven on a common basis. See, e. g., City of Philadelphia v. American Oil Co., 53 F.R.D. 45, 60, 67-68 (D.N.J. 1971); In Re Antibiotic Antitrust Actions, 333 F. Supp. 278, 281, 287 (S.D.N.Y. 1971); Developments, Class Actions, 89 Harv. L. Rev. 1318, 1513 n. 301. See generally Wall Products Co. v. National Gypsum Co., 326 F. Supp. 295, 327 (N.D. Cal. 1971).
The method by which loss will be proven may depend upon the type of violation involved and its impact on plaintiff's business or property. For example, if anticompetitive practices result in the destruction of plaintiff's business, he may recover as damages lost profits or the going concern value of the business. See Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S. Ct. 1562, 23 L. Ed. 2d 129 (1969). If, however, defendants supply an article at supracompetitive prices, plaintiff may recover the amount of the illegal overcharge. See Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 487-90, 88 S. Ct. 2224, 20 L. Ed. 2d 1231 (1968). When plaintiff elects to prove damages on the basis of lost profits or going concern value, it would seem that his proof necessarily would focus on the operation of his business. But, if plaintiff seeks to establish payment of an illegal overcharge, the nature of proof may well be different.
If, in this case, a nationwide conspiracy is proven, the result of which was to increase prices to a class of plaintiffs beyond the prices which would obtain in a competitive regime, an individual plaintiff could prove fact of damage simply by proving that the free market prices would be lower than the prices paid and that he made some purchases at the higher price. If the price structure in the industry is such that nationwide the conspiratorially affected prices at the wholesale level fluctuated within a range which, though different in different regions, was higher in all regions than the range which would have existed in all regions under competitive conditions, it would be clear that all members of the class suffered some damage, notwithstanding that there would be variations among all dealers as to the extent of their damage. "(The) burden of proving the fact of damage under § 4 of the Clayton Act is satisfied by . . . proof of some damage flowing from the unlawful conspiracy . . . ." Zenith Radio, supra, 395 U.S. at 114, 89 S. Ct. at 1571 n. 9. Under these circumstances, proof on a common basis would be appropriate. Even if the variation in price dynamics among regions or marketing areas were such that in certain areas the free market price would be no lower than the conspiratorially affected price, it might be possible to designate subclasses to conform with these variations. See In Re Antibiotic Antitrust Actions, supra, 333 F. Supp. at 281.
The district court also thought that plaintiffs' proof of damages would be subject to the defense that, due to competition at the retail level, any lower wholesale price which would have obtained under a competitive wholesale market would be passed on to the consumer, leaving the dealer no better off. This fact, it thought, would require complicated and varying proof of local market conditions to prove loss of profit. The court is indeed correct that such an inquiry would be enormously complicated, posing a tremendous burden on the presentation of plaintiffs' case. But it is precisely for this reason that the Supreme Court eliminated the "passing-on defense" in Hanover Shoe, Inc., supra, 392 U.S. at 491-494, 88 S. Ct. 2224, a holding which it reaffirmed recently in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977).
With respect to the calculation of the amounts of damages, it would be necessary for each member of the class individually to prove the quantity of gasoline purchased at supracompetitive prices and the price paid. Nevertheless, it has been commonly recognized that the necessity for calculation of damages on an individual basis should not preclude class determination when the common issues which determine liability predominate. E. g., Philadelphia Electric Co. v. Anaconda American Brass Co., 43 F.R.D. 452, 457 (E.D. Pa. 1968); Dolgow v. Anderson, 43 F.R.D. 472, 490-91 (E.D.N.Y. 1968). If for any reason the district court were to conclude that there would be problems involved in proving damages which would outweigh the advantages of class certification, it should give appropriate consideration to certification of a class limited to the determination of liability. See Rule 23(c) (4) (A).
With respect to former lessees, however, plaintiffs proposed notice by publication in trade journals. If the names and addresses may be ascertained through reasonable effort, regardless of expense, plaintiffs must bear the cost of individual notice to every proposed member of the class. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974). If plaintiffs indicate that they are unable or unwilling to bear this expense, the class certification, if granted, must be limited to current lessees. But even if the former lessees are retained in the class, we do not, at this point, perceive that the mechanics of providing notice will present insuperable management problems for the court. The court, may, we think, direct and supervise the mechanics of providing notice without directly performing them. See 3B Moore supra at Paras. 23.45(4.-4), 23.55.
Federal procedure relies on notice pleading rather than fact pleading, but at a minimum, as explained by the Advisory Committee on Civil Rules in October, 1955, the pleader is required "to disclose adequate information as the basis of his claim for relief". 2A J. Moore, Federal Practice P 8.01(3) (2d ed. 1974). Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957), teaches that "the defendant (be given) fair notice of what the plaintiff's claim is and the grounds upon which it rests," (emphasis supplied), and we have recently reiterated that the defendant is entitled to "fair notice of the claim asserted." Joiner Systems, Inc. v. AVM Corp., 517 F.2d 45, 47 (3d Cir. 1975).
My reading of the complaint differs from the majority's. After two or three amendments by skilled counsel, I think it is time to take the words of the complaint for what they actually say. By amendment to their complaint and pursuant to what the district court termed a "deliberately employed strategy", 393 F. Supp. 1046, 1048 n.5, plaintiffs' counsel deleted their allegations of conspiracy and substituted allegations of "interdependent consciously parallel action". As the majority correctly notes, plaintiffs were not required to plead evidence. They did not do so. They did not allege that a contract, combination or conspiracy existed and that it would be proven by evidence of interdependent consciously parallel action. Rather, they alleged that defendants had engaged in interdependent consciously parallel action in violation of § 1 of the Sherman Act. Even construing paragraphs 13, 14, 16, 17 and 18 of the second amended complaint most favorably to the plaintiffs, it alleges that interdependent consciously parallel action is a "combination" for Sherman Act purposes. And that is just not so.
It is well settled, and indeed it is not here disputed, that conscious parallelism is not a violation of § 1 of the Sherman Act. Theater Enterprises, Inc. v. Paramount Film Distributing Corp., 346 U.S. 537, 74 S. Ct. 257, 98 L. Ed. 273 (1954); Klein v. American Luggage Works, Inc., 323 F.2d 787 (3d Cir. 1963); Delaware Valley Marine Supply Co. v. American Tobacco Co., 297 F.2d 199 (3d Cir. 1961), cert. denied, 369 U.S. 839, 82 S. Ct. 867, 7 L. Ed. 2d 843 (1962). The leading case, Theater Enterprises, explains:
The crucial question is whether respondents' conduct toward petitioner stemmed from independent decision or from an agreement, tacit or express. To be sure, business behavior is admissible circumstantial evidence from which the fact finder may infer agreement. Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S. Ct. 467, 83 L. Ed. 610 (1939); United States v. Masonite Corp., 316 U.S. 265, 62 S. Ct. 1070, 86 L. Ed. 1461 (1942); United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 64 S. Ct. 805, 88 L. Ed. 1024 (1944); American Tobacco Co. v. United States, 328 U.S. 781, 66 S. Ct. 1125, 90 L. Ed. 1575 (1946); United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S. Ct. 915, 92 L. Ed. 1260 (1948). But this Court has never held that proof of parallel business behavior conclusively establishes agreement or, phrased differently, that such behavior itself constitutes a Sherman Act offense.
346 U.S. at 540-41, 74 S. Ct. at 259. From this, it is clear to me that consciously parallel behavior is admissible as circumstantial evidence of a properly pleaded contract, combination or conspiracy. That is the point that was implicated in Venzie Corp. v. United States Mineral Products Co., 521 F.2d 1309 (3d Cir. 1975). In Venzie, we specifically noted that the plaintiffs "relied on . . . circumstantial evidence . . . as proof of agreement. Their evidence does not, however, include two elements generally considered critical in establishing conspiracy from evidence of parallel business behavior . . .". Id. at 1314. Venzie was an appeal from an order granting a defendants' motion for judgment n. o. v. As such, it was our obligation to review the plaintiffs' evidence, and we concluded that they had not met their burden of proving conspiracy. This, however, is not an appeal from a judgment n. o. v., it is an appeal from a summary judgment for failure to state a claim. We are faced not with a question of evidence, but with a question of pleading.
If there is anything in this case that hearkens back to "magic words", it is not, as the majority suggests, the requirement that a Sherman Act complaint allege concerted action of some kind. It is rather, the asserted power of the word "interdependent" to breathe vitality into a lifeless theory of recovery. Nowhere has the talismanic character of that word been explained to my satisfaction. Indeed, it seems to me that interdependence is implicit in the notion of conscious parallelism and that the added word is hardly more than a redundancy. In the usual situation of parallel business behavior, a businessman is conscious of what his competitor is doing and his action, or inaction, depends on what the competitor does. This is not a violation of the antitrust laws; it is, in fact, the essence of the competitive behavior that those laws seek to promote. Because his competitor takes the same attitude toward him, the two businessmen are mutually conscious of each other and their actions are "interdependent". In a concentrated industry, such mutually conscious and interdependent conduct by several competitors may have anti-competitive effects. But it is not necessarily collusive, and I cannot understand how a proliferation of descriptive words changes the legal status of the conduct. Until there is a contract, combination or conspiracy, in restraint of trade, there is no § 1 violation. As the Supreme Court observed in Theater Enterprises: "Circumstantial evidence of consciously parallel behavior may have made heavy inroads into the traditional judicial attitude toward conspiracy; but 'conscious parallelism' has not yet read conspiracy out of the Sherman Act entirely." 346 U.S. at 541, 74 S. Ct. at 259 (footnote omitted).
In their brief in this court, plaintiffs rely primarily on Wall Products Co. v. National Gypsum Co., 326 F. Supp. 295 (N.D. Cal. 1971), and Modern Home Institute, Inc. v. Hartford Accident and Indemnity Co., 513 F.2d 102 (2d Cir. 1975). Based on these decisions, they say "it is clear that (the courts) have uniformly held that proof of interdependent conscious parallel action, while not conclusive proof of a Section 1 Sherman Act violation, is sufficient to support a finding of violation." Appellants' Brief at 21. In my view, it is not necessary to agree or disagree with that reading of the cases in order to affirm the summary judgment here.
The majority has concluded that the district court erred when it found that common questions would not predominate over individual ones, as required by Rule 23(b) (3). I disagree. Rather than paraphrasing, I prefer the exact language concerning our review of a predominance finding as stated in Katz :
Katz v. Carte Blanche Corp., 496 F.2d 747, 756 (3d Cir.), cert. denied, 419 U.S. 885, 95 S. Ct. 152, 42 L. Ed. 2d 125 (1974). The majority's analysis, in my opinion, pays no more than lip service to the discretion which a district court must have in evaluating the propriety of class certification in such a massive proceeding as this.
Since the nonlessor defendants are not parties in the claim pending in the district court, mutuality is lacking. Nevertheless, we have indicated that a lack of mutuality will not preclude defensive use of collateral estoppel at least absent special circumstances indicating unfairness. Provident Tradesmen's Bank & Trust Co. v. Lumbermen's Mutual Cas. Co., 411 F.2d 88, 92-94 (3d Cir. 1969). See also Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S. Ct. 1434, 28 L. Ed. 2d 788 (1971)
One case, Hehir v. Shell Oil, 72 F.R.D. 18 (D. Mass. 1976), reached a contrary result on what appear to be identical facts. The court did not explain why it regarded coercion as a required element of proof, however, and the case, therefore, does not persuade us
If plaintiffs had direct evidence of conspiracy, it would be unnecessary to prove that each defendant actually imposed the tie-in upon its lessees, only that each agreed to do so. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224-226 n. 59, 60 S. Ct. 811, 84 L. Ed. 1129 (1940)