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September 24, 1969

Philadelphia Housing Authority et al.
American Radiator & Standard Sanitary Corp. et al., State of Kansas ex rel. Robert C. Londerholm, Attorney General v. American-Standard, Inc., et al.; The State of California, et al. v. American Radiator & Standard Sanitary Corp., et al.

John W. Lord, Jr., Ch. J.

The opinion of the court was delivered by: LORD, JR.

JOHN W. LORD, JR., Ch. J.:

 Before the Court in two of the above-captioned cases are motions by plaintiff States to amend their complaints to allege a right to recover damages under the Clayton Act as "parens patriae" on behalf of individual consumers within these States. Wallace-Murray Corporation and certain other defendants have filed objections to these motions to amend.

 Plaintiffs Kansas and California, as well as certain other plaintiffs, were granted leave to file briefs on this question. Though the problem is not before the Court in some cases at present, all parties have cited numerous cases to the Court in order to show that the type of wrong involved in this case is one for which States have been allowed to sue as "parens patriae" in the past. Defendants spend a substantial portion of their argument in an attempt to establish the contrary. The Court does not deem it necessary nor does it intend to discuss the bulk of these cases here. In essence, they are cases which dealt, as defendants point out, only with the propriety of suits "parens patriae" for injunctive or other equitable relief. With the exception of some of the few cases dealt with below, none of the cases cited by plaintiffs in their briefs dealt with the right of a state to recover damages in a "parens patriae" capacity.

 The cases of State of Illinois v. Brunswick Corp., 32 F.R.D. 453 (N.D. Ill. 1963) and State of Minnesota v. United States Steel Corp., 44 F.R.D. 559 (D. Minn. 1968), cited by plaintiff California, did deal with the recovery of damages by States in treble damage antitrust suits. That factor about exhausts the similarity of the issues there involved to that involved here, however. Those suits had nothing whatsoever to do with the ability of a State to recover damages on behalf of individual citizens as "parens patriae". In the Illinois case, Illinois was asserting, aside from its own claim for damages in its immediate proprietary capacity, claims on behalf of certain of its school districts which had authorized it to do so, and as representative plaintiff for a class under Rule 23 of all similarly situated school districts. It was pointed out that the overcharges to the school districts were paid with state-appropriated funds. There was no attempt to collect damages on behalf of individual citizens nor any attempt to assert claims as "parens patriae" as opposed to ordinary class action claims. In the Minnesota case, the state of Minnesota sought to represent as a Rule 23 plaintiff certain governmental agencies. This too was a Rule 23 class claim, not a "parens patriae" suit, and a suit to recover on behalf of the above-mentioned governmental agencies, not on behalf of individual citizens. The issue involved in that case was simply whether the State of Minnesota or the City of St. Paul was the more appropriate representative of the class of governmental entities. In making that decision, the Court took into account the argument of defendants that allowing the Attorney General to bring suit on behalf of lesser governmental entities, when coupled with the notice requirements of Rule 23, might result in the possibility of improper solicitation of claims. The Court said at pages 576-577:

" . . . In this situation, the best resolution seems to be with permitting the Attorneys General to assume this task and to speak for and represent the class members in court; provided that any member of the class may be separately represented if it wishes and/or may elect to, and will be permitted as above stated and within the times hereinafter limited, join the Third Division cases. The Attorneys General act in parens patriae, as it were, and have a responsibility to the various lesser governmental entities which the City of St. Paul, for instance, does not have. Further it would be expected that Attorneys General will not charge the prospective class members a percentage of any recovery made as a fee for their representation."

 This is the only mention of "parens patriae" in the case and it is evident from the context that it represents merely a passing use of the phrase with no bearing on the issue now before this Court in the instant litigation.

 Nor do these cases support the position urged upon the Court that, "the power of the attorney general to sue for the State in its parens patriae capacity is an issue to be determined by state law". It was necessary in those cases to determine not only that the attorneys general were so authorized, but also that a proper class action was asserted. Likewise, it would be necessary in a "parens patriae" suit, even where equitable relief alone is sought, assuming such authorization were established under state law, to show that the requirements of a proper "parens patriae" action were met in addition. While these cases might indicate that a determination of authorization under state law is a necessary condition of proper assertion of "parens patriae" claims, they certainly do not indicate that, even aside from questions of standing under Section 4 of the Clayton Act, it would be a sufficient one. *fn1" Certainly if an explicit State Statute specifically giving the State Attorney General the authority he is asserting is insufficient to establish proper assertion of "parens patriae" claims, and it has been so held in Land O'Lakes Creameries, Inc. v. Louisiana State Board of Health, 160 F. Supp. 387 (E.D. La. 1958), then general common law powers can not be sufficient. And in the instant case not just equitable relief but damages as well are sought, and the right to assert this type of claim requires further support.

 Plaintiffs place principal reliance in support of their position that a State is entitled to recover damages on behalf of its individual citizens on the case of Georgia v. Pennsylvania Railroad, 324 U.S. 439, 89 L. Ed. 1051, 65 S. Ct. 716 (1945) and the very recent decision of Chief Judge Martin Pence of the District Court of Hawaii which they have called to the Court's attention interpreting that case. State of Hawaii v. Standard Oil Co. of California et al., 301 F. Supp. 982 (1969). The Georgia case was the only case presented to Chief Judge Pence by either counsel or which was uncovered by that court after extensive briefing and research which could be argued to lend precedential support for a claim to recover treble damages in an antitrust action under a "parens patriae" claim. The same can be said of the cases presented to this Court after very extensive briefing (aside from Chief Judge Pence's decision itself).

 In the Georgia case, supra, the State of Georgia sought to amend its complaint to bring, in the Supreme Court of the United States, an antitrust action against the defendant railroads, alleging that these railroads conspired to fix rates in such a way as to "prefer" the ports of other states over the ports of Georgia and to discriminate against Georgia, and to seek relief both in its proprietary capacity and in its capacity as "parens patriae". The Supreme Court pointed out that the dispute involved in the case was of the type ordinarily settled by the sovereign by diplomacy or war, and that original jurisdiction in the Supreme Court had been provided by the framers of the Constitution to allow the peaceful settlement of just such situations. The Court pointed out further that the wrong there alleged was one, which, if proven, would demonstrate a shackling of Georgia's industries, a retardation of Georgia's economic growth, and a relegation of the state of Georgia to an inferior economic position among her sister States. Georgia v. Pennsylvania Railroad, supra at 450. The Court therefore concluded that the subject matter of the suit was of a type of grave public concern to Georgia's interest entirely above and apart from that of particular individuals within the state who might be affected. The Court therefore allowed Georgia to amend its complaint to assert the claims discussed above.

 The Court ruled, however, that Georgia would not be permitted to recover damages. Several arguments had been made against the propriety of allowing a recovery of damages. One of these arguments rested on the prior case of Keogh v. Chicago & N.W.R. Co., 260 U.S. 156, 67 L. Ed. 183, 43 S. Ct. 47 (1922). In that case the Supreme Court had held that where rates fixed were found reasonable and nondiscriminatory by the Interstate Commerce Commission, no damages could be recovered under Section 7 of the Sherman Act by shippers even if a conspiracy to set the rates could be established. The theory of this decision was that if a shipper could recover damages under Section 7 of the Sherman Act for such a violation, on the basis that a higher rate resulted from the conspiracy than would otherwise have prevailed, then the amount recovered would operate like a rebate to give the recovering shipper a preference over his competitors and thereby defeat the purpose of Congress in preventing unjust discrimination. The Court in the Georgia case, supra, accepted this argument, and ruled that the Keogh case was sufficient in itself, even aside from any other argument against a damage recovery, to block the recovery of damages.

 It is not necessary, however, for the Court in the instant case to resolve this dispute. For even if this Court were to accept the interpretation placed on the Georgia case by plaintiffs and by Chief Judge Pence in the Hawaii case, and to determine in addition that the factual circumstances of this case, like those in the Hawaii case, established damage to the economy of the states as a whole, such a decision would not support the type of damage recovery sought by plaintiffs here. For in the instant case the plaintiff States are seeking to recover as "parens patriae" treble damage claims on behalf of individual consumers who are citizens of those states. *fn2" The decision in the Hawaii case, supra, to which plaintiffs call the Court's attention, can not possibly be construed to justify such a recovery. In the decision in that case, Chief Judge Pence very specifically stated:

"An analysis of the above cases indicates that if a state is to maintain an action in its parens patriae capacity, initially the facts must show that the state has an interest 'independent of and behind the titles of its citizens', Georgia v. Tennessee Copper Co., supra, 'has an interest apart from that of the individuals affected', Pennsylvania v. West Virginia, supra, 'must show a direct interest of its own and not merely seek recovery for the benefit of individuals who are the real parties in interest', Oklahoma v. Cook, supra, '[it] must appear that the controversy to be determined is . . . not a controversy in the vindication of grievances of particular individuals', Louisiana v. Texas, supra. Thus the state's parens patriae claim cannot be a disguised attempt to recover damages on behalf of the state's individual citizen-claimants. It is not a substitute for a class action under Rule 23, Fed. R. Civ. P. The two theories for recovery of damages are separate and distinct. (At this stage, we do not concern ...

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