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Keywords

settlementplaintiffdefendantdamageslitigationdiscoveryappealtrialtrustantitrustobjectiongrand jurytreble damages
settlementdefendantdamageslitigationappealtrialtrustleaseantitrustobjectiongrand jurytreble damages

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In re Corrugated Container Antitrust Litigation, 643 F.2d 195, 31 Fed.R.Serv.2d 632, 1981-1 Trade Cases P 63,966

Facts

In 1976, a grand jury investigated potential antitrust violations in the corrugated container industry, leading to several treble damages actions against thirty-seven defendants. These cases were consolidated in the Southern District of Texas, where a plaintiffs' steering committee was formed to manage the litigation. The committee negotiated settlements with various defendants, despite having limited discovery due to ongoing criminal proceedings. Objectors later challenged the adequacy of these settlements and the representation of subclasses.

In 1976, the government convened a grand jury to investigate possible criminal antitrust violations occurring in the corrugated container industry. Several purchasers of corrugated containers and corrugated sheets subsequently filed treble damages actions against thirty-seven defendants under section 4 of the Clayton Act, 15 U.S.C. s 15 (1976).

Issue

Did the district court abuse its discretion in approving the settlements, given the alleged conflicts of interest among plaintiff negotiators and the lack of presettlement discovery?

We hold that neither of these objections provides grounds for reversing the district court's approval.

Rule

The court must find that a settlement is fair, adequate, and reasonable, and approval should not be upset unless the trial court clearly abused its discretion.

In determining whether to approve a proposed settlement, the cardinal rule is that the District Court must find that the settlement is fair, adequate and reasonable….

Analysis

The court found that the interests of the subclasses were not inherently antagonistic, as both aimed for maximum recovery from the defendants. The objectors' claims of inadequate representation due to conflicts of interest were dismissed, as the court determined that the negotiations were conducted adequately. Furthermore, the court noted that the lack of extensive discovery did not automatically render the settlements invalid, as the negotiators had access to sufficient information to make informed decisions.

We think it clear that the primary settlement goal of each class was to cause defendants to agree to pay substantial compensation in exchange for the most limited possible release from their obligations and potential liabilities as parties to the litigation.

Conclusion

The Court of Appeals upheld the district court's approval of the settlements, remanding the case for more detailed findings but affirming that the settlements were within the range of possible approval.

We are, however, in agreement with certain objectors that the district court's findings are insufficiently detailed to allow us to determine whether the district court abused its discretion in concluding that the terms of the settlements, and the plan to distribute the settlement proceeds to class members, are fair, reasonable and adequate.

Who won?

The prevailing party was the plaintiff class, as the court upheld the settlements despite the objections raised by dissident plaintiffs.

The district court below, in its 31st pretrial order, found the twenty-four settlements involved in this appeal to be fair, reasonable and adequate and, therefore, approved them.

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