For example, a Jury finding that an overcharge had been passed-on, particularly by a party in contractual privity with the alleged antitrust violator, would preclude relitigation of the same issue by the "passing-on" party (e. g. the initial purchaser) who is higher up in the distributive chain. See, Blonder-Tongue Laboratories, Inc. v. University of Illinois [1971 TRADE CASES 1 73,565], 402 U. S. 313 (1971).

10 Not only were the consumer plaintiffs (intervenors) in Allis-Chalmers remote from the standpoint of damages (i. e., overcharges on electrical equipment would have had to have been converted to higher electricity costs to the consumers), but jurisdiction over utility rate matters lies with the Illinois Commerce Commission, which is where plaintiffs probably should have gone. See, Cummings v. Commonwealth Edison Co., 64 Ill. App. 2d 320 (1965).

"It is interesting to note that Judge Miles W. Lord, sitting by designation in the broad spectrum antibiotics antitrust litigation, rejected the claim by purchasers of finished animal feed products containing the antibiotic drug that they had standing to sue the drug manufacturers. Although the Philadelphia Housing Authority case is cited approvingly, the factors considered by Judge Miles Lord speak more to the issue of remoteness rather than "privity". He noted that the affidavits filed by plaintiffs did not:

refute the fact that the plaintiffs assertIng these claims did not purchase antitbiotic drugs in the form sold by the defendants nor do they tend to establish that the manufacturers and distributors of medicated animal feed containing antibiotic drugs 'passed along any Illegal 'overcharge in the cost of the terramycin ¶ 74,483

73 5-21-73

Housing Authority v. American Radiator and Standard Sanitary Corp. [1970 TRADE CASES 173,168], 50 F. R. D. 13 (E. D. Pa. 1970), affirmed sub nom, Mangano v. American Radiator and Standard Sanitary Corp. [1971 TRADE CASES 173,477], 438 F. 2d 1187 (3d Cir. 1971). Unlike the Manaano case, the 'fact-finder here would not be required to trace an overcharge from manufacturer to wholesaler to contractor to homebuilder to ultimate home purchaser (consumer). In this case, the product that leaves the manufacturer reaches the ultimate purchaser in the same form and not merely as a small component or derivative of something else. Hence, many of the economic conversion factors eschewed in Hanover Shoe are absent here and will not, therefore, render proot of damages, at least in each individual case, an "insurmountable task" It can also be argued that facts such as those presented here were contemplated to fall within the so-called "cost-plus" exception, although in that event the exception may be broader than the rule. But cf. City and County of Denver v. American Oil Company [1972 TRADE CASES 73,783], 53 F. R. D.. 620 (D. Colo. 1971). This court's disagreement with Mangano is not with the result reached but with the general rule stated in reaching the result. It is this court's by a pre-existing cost-plus contraet or other analogous fixed mark-up arrangement. Instead, the facts suggest that the antibiotic product, once incorporated in the finished feed. passed through a second market composed of apparently competitive sellers, obscuring any effect the alleged antibiotic drug conspiracy might have had on the price of finished feed. The difficulty of plaintiff's case is greatly increased by the problems of competition price deter mination advertising and merchandising in the finished feed market, all of which enter into any determmation of whether they felt the impact of the conspiracy.

The courts Conclusion concerning this aspect of the plaintiff's case is buttressed by the Sec ond Circuit's recent discussion of Hanover Shoe v. United Shoe Machinery Corp. [1968 TRADE CASES 172,490], 392 U. S. 481, 88 S. Ct. 2224. 20 L. Ed. 2d 1231 (1968), In the course of its affirmance of the settlement reached before Judge Inzer B. Wyatt in many of the broad spectrum antibiotic actions. West Virginia v. Chas. Pfizer & Co. [1971 TRADE CASES T73,540]. 440 F. 2d 1079 (2d Cir. 1971), affirming [1970 TRADE CASES 173,240]. 314 F. Supp. 710 (S. D. N. Y. 1970)."

The settlement referred to by Judge Lord involved retail consumers of the antibiotic drugs and the drug companies. At both the trial court and the appellate court levels, various wholesalers and retailers objected to the allocation of or the participation in the settlement by consumers. Both courts rejected the notion that Hanover Shoe precluded consumers from recovery on the basis of lack of standing, although both courts intimated that even if the decision established such a rule, the situation

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opinion that a general rule denying standing to indirect purchasers purely on the basis of "privity" would emasculate § 4 of the Clayton Act because those in privity with an alleged antitrust violator are often neither motivated nor in a financial or strategic position to maintain a private antitrust action. It is apparent from the language in Hawaii v. Standard Oil, supra, that the Supreme Court never intended to deprive private citizens of their "right" to sue for their own injuries from antitrust violations. As pointed out by Justice Marshall:

"... the conclusion is nearly inescapable that §4... does not authorize recovery for economic injuries to the sovereign interests of a State.

"We note in passing the State's claim that the costs and other burdens of protracted litigation render private citizens impotent to bring treble-damage actions, and thus that denying Hawaii the right to sue for injury to her quasi-sovereign interests will allow antitrust violations to go virtually unremedied. Private citizens are not as powerless, however, as the State suggests.

"Congress has given private citizens rights of action for injunctive relief and damages for antitrust violations without regard to the amount in controversy. 28 U. S. C. § 1337; 15 U. S. C. § 15. Rule 23 of the Federal Rules of Civil Procedure provides for class actions which may enhance the efficacy of private actions by permitting citizens to combine their limited resources to achieve a more powerful litigation posture. The District Court dismissed Hawaii's class action only because it was unwieldy; it did not hold that a State could never bring a class action on behalf of some or all of its consumer citizens." 405 U. S. at 265-66.

In permitting the plaintiff-purchasers the necessary standing to bring this action to was probably covered by the 'cost-plus' exception. See, State of West Virginia v. Chas. Pfizer & Co., supra, at 1088, where the court stated:

"In Hanover Shoe Itself Justice White placed strong emphasis on the Court's desire to encourage private treble damage actions.

"These ultimate consumers. in today's case the buyers of single pairs of shoes, would have only a tiny stake in a lawsuit and little interest in attempting a class action. In conse quence, those who violate the antitrust laws by price fixing or monopolizing would retain the fruits of their illegality because no one was available who would bring suit against them. Treble-damage actions, the Importance of which the Court has many times emphasized, would be substantially reduced in effectiveness [392 U. S. at 494, 88 S. Ct. at 2232].

"Keeping these comments in mind, there are then several obvious distinctions between the Trade Regulation Reports

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determine whether they have, in fact, suffered any injury as a result of any antitrust violation on the part of the defendant, this court's intent is to follow both the letter and the spirit of $4 of the Clayton Act.

Accordingly, defendant's motion to dismiss for lack of standing is hereby denied.

The question remains whether this particular suit can be maintained as a class action.

II.

Plaintiffs have moved for entry of an order that this action be certified as a class action under Rule 23 of the Federal Rules of Civil Procedure. The requirements of the rule are well known and have been stated innumerable times in contexts similar to the case at bar. It can be said at the outset that the allegations of the complaint are sufficient to satisfy the requirements of Rule 23(a). There is no significant dispute that the size of the alleged class, the general allegations of antitrust violations, and the claims of individual plaintiffs satisfy the general requirements of Rule 23(a). However, the requirements of subsection (b) of Rule 23 must also be satisfied if a class action is to be maintained. The parties are in sharp disagreement as to whether the alleged class is maintainable under Rule 23(b).

First, this court does not agree with plaintiffs' assertion that all of the subsections of Rule 23(b) are applicable in this case. It does not deserve extended discussion to state that in an action for damages, such as the present lawsuit, subsections (1) and (2) are not applicable. Eisen v. Carlisle & Jacquelin [1968 TRADE CASES ¶72,381]. 391 F. 2d 555, 564 (2d Cir. 1968); Research Corp. v. Pfister Associated Growers, Inc. [1969 TRADE CASES 72,971], 301 F. Supp. 497 (N. D. III. 1969).

principles laid down in Hanover Shoe and the present case. First, the passing-on doctrine is not here being used as a defense to permit the defendants to escape liability, but rather as an attempt to award damages, insofar as is possible, to those who ultimately paid higher prices as a result of the collusive pricing, and to avoid giving a windfall gain to those who rather clearly were not injured. Secondly, to permit the use of the doctrine in the present circumstances will not act to limit or frustrate private treble-damage claims, but will, if anything, do the opposite."

The same argument was similarly rejected when raised in a motion for judgment n. o. v. following a finding of liability for antitrust violations by a jury. Leland Portland Cement Company, et al. v. City of North Bay Village. No. Misc. 2364 (S. D. Fla.), interlocutory appeal denied (5th Cir., April 6, 1972).

¶ 74,483

[Manageability of Class]

The substantial question raised by plaintiffs' motion concerns subsection (b)(3). Of course, in deciding whether common issues of fact and law predominate over individual issues, there is no longer much doubt that questions of liability can be separated from individual questions of damages. State of Illinois v. Harper & Row Publishers [1969 TRADE CASES ¶ 72,784], 301 F. Supp. 484 (N. D. III. 1969); City of Philadelphia v. American Oil Company [1971 TRADE CASES 173,625], 53 F. R. D. 45, 67 (D. N. J. 1971). However, the inquiry does not end there. In fact, in cases such as the present one, it only begins at that point because even if common questions predominate, a class action may not be a superior or, to be more exact, a feasible method of adjudication because the "class" is simply unmanageable. It is the opinion of this court that the proposed class falls into the latter category.

[Size]

Although size, in and of itself, will not generally be enough to make a class unmanageable, this court is unaware of any case that certified a class of the potential size proposed in this case. The figures are nothing less than staggering. The complaint alleges that for the years 1965-1968 alone, the purchasers of more than 17 million automobiles became members of the proposed class by reason of their purchase of a GM automobile. Furthermore, the complaint alleges continuing violations, and the class would presumably cover all purchasers of GM automobiles from 1965 until at least the date of certification of the class. A conservative estimate would put the number of class members somewhere between 30 and 40 million, although the exact number is difficult to calculate because many customers are repeat purchasers. These purchasers would be located in every state of the United States and, unless limited, in a number of foreign countries.

It would place an impossible burden upon any court to provide adequate notice to a proposed class of this size and thereafter to attempt to assemble and classify the transactional material required to identify the particular interest of millions of purchasers over this span of years. The mere prospect of these clerical and administrative problems would be enough to justify a determination of unmanageability. Philadel phia Electric Co. v. Anaconda American Brass Co. [1968 TRAde Cases ¶ 72,359], 43 F. R. D. 452, 461-62 (E. D. Pa. 1968); Reinisch v. ¶ 74,483

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However, there are further reasons for denying the class action. Although plaintiffs might prove monopolization and pricefixing, they must also prove that they suffered damages and, with some reasonable degree of certainty, the extent of the damages. Gottesman v. General Motors [1971 TRADE CASES 73,432], 436 F. 2d 1205 (2d Cir. 1971); Blaski v. Inland Steel Co., 271 F. 2d 853 (7th Cir. 1959). As Judge Angelli stated in City of Philadelphia v. American Oil Company, supra, at 72, wherein a consumer class of gasoline purchasers in a twostate area was denied:

"It is readily apparent that no matter how easy it is to establish damages on a class level, if it is extremely difficult or almost impossible to distribute these sums to their rightful recipients, the class is unmanageable."

Apart from the difficulties of notice and individual proof inherent to a class of the proof of damages in this case are oversize proposed, the complexities of individual whelming.

While this court disagreed with defendant that proof of damage on an individual basis was not sufficient to defeat plaintiffs' standing to sue, that determination should not be confused with the question of whether individual questions of damage are so numerous and complex among class members that the class is unmanageable. This case graphically illustrates that distinction. Although, for reasons noted above, any individual is not too remote to have standing before this court to plead and prove his damages, similarly, defendant is entitled to an adequate opportunity to raise defenses.

As defendant pointed out in its motion to dismiss, and in its response to plaintiffs' class action motion, several important factors might either mitigate or eliminate a damage claim of any individual plaintiff. For example, even if monopolization and price-fixing resulting in "excess profits" for GM were proven, plaintiffs would still haye to prove that retail dealers passed on the "overcharge" to them. Although on an individual basis the foregoing would not be impossible, it would be an endless task on a class-wide basis. Both parties admit that the retail automobile business is notorious for its haggling, and buyers "shop around" to get the best price. Competition among

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dealers in the same brand of automobile, in the same "price-range" or "class" of automobile manufactured by other companies, and within the overall automobile market varies considerably from one locale to another. Furthermore, each brand of GM automobile offers a number of models, each available with a wide range of optional equipment. Prices vary even among identical automobiles sold by different dealers. Prices vary considerably among the various makes, for example, Chevrolet and Cadillac. Hence, there does not appear to be any way to rationally and fairly distribute any damage "fund", assuming a violation by GM could be proved.

No workable formula has been suggested. See, Eisen v. Carlisle & Jacquelin, supra, at 567; cf. State of Illinois v. Harper & Row Publishers, supra, which involved "net prices". Amendment No. 1 complicates matters further because proof of liability, i. e., that the GM financed dealers would have charged less but for the repayment obligation, would involve questions relating to the competitive market position of 500 different dealers."

It may be that denial of the class may effectively foreclose the opportunity of GM purchasers to come into court and prove any damages they have sustained. However,

"Rule 23 does not require or contemplate that courts will hear causes of action as class actions merely because they will not get to hear the case any other way." Eisen v. Carlisle & Jacquelin, supra, at 572. (Lumbard, Chief J., dissenting.)

Again, as Judge Angelli explained:

"The argument that defendants should not be permitted to profit by the enormity as well as the magnitude of their conspiracy has been carefully considered. Assuming that there was a price-fixing conspiracy which affected all ultimate users of gasoline, this Court is well aware of the consequences of not certifying as a class the motorists who purchased from retail stations. These particular individuals purchased more gasoline than all other ultimate users put together. Not being able to sue as a class, their interests in maintaining an antitrust action are so minimal that no action will probably ever be commenced. Hence, the bulk of the illgotten gains reaped by defendants through their assumed conspiracy will remain untouched within their corporate coffers. Although this Court recognizes the importance of private antitrust actions

"Presumably all of the GM financed dealers would be involved because at least some memTrade Regulation Reports

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to help enforce the antitrust laws, Hanover Shoe, Inc. v. United Shoe Machinery Corp. 11968 TRADE CASES 172,4901, 392 U. S. 481, 88 S. Ct. 2224, 20 L. Ed. 2d 1231 (1968), it is not believed that Rule 23 was intended to permit a redress for all wrongs committed under the antitrust laws. This Court is cognizant of the complexities involved in suing on behalf of such large groups of people and entities as well as the laudable purpose sought to be achieved by class representation. However, the basic requirements of Rule 23 must be established before there can be class certification. It is unfortunate that many potential recipients of treble damage awards may not be able to recover because the Court has found their purported class to be unmanageable.

"... Despite the commendable ends sought to be achieved by these and other cases to reach millions of ultimate consumers of a variety of products by the technique of class representation, this Court believes that the line must be drawn somewhere in those cases involving untold numbers of members of the general public. The manageability requirement of Rule 23 is a significant factor that must be given due weight in reaching a determination on the propriety of class representation in any given case.. This is not to say that guilty conspirators should not be compelled to disgorge their ill-gotten gains. The solution of the problem, however, lies not in imposing an increased burden on the federal courts over and above that which may or should normally be expected of judges in the discharge of their judicial duties, but rather in having the antitrust laws or rules amended to alleviate the problem of manageability inherent in class actions wherein millions of members of the consuming public are involved." 53 F. R. D. at 73, 74. In this court's view, at least until some action is taken to permit a parens patriae type of suit to be maintained for the benefit of a broad class of consumers, the public must continue to rely on the Government to i vindicate the purposes of the antitrust laws and protest the interests of the consumers in the position of these plaintiffs.

Having reached the conclusion that a class action in this case would be unwieldy and unmanageable, there is no need to consider the further question whether these five individuals could properly represent the class in a suit of this magnitude.

Accordingly, plaintiffs' motion that this case be maintained as a class action is hereby denied.

bers of the class would have purchased from them.

¶ 74,483