The opinion of the court was delivered by: HARVEY
In Mangano v. American Radiator & Standard Sanitary Corporation,
50 F.R.D. 13 (E.D. Pa. 1970), Chief Judge Lord in this same multidistrict litigation granted defendants' motion to dismiss the treble damage antitrust complaint filed by certain homeowners against the defendant manufacturers. Appeals are currently pending before the United States Court of Appeals for the Third Circuit in four separate cases dismissed by Chief Judge John Lord for reasons stated in that opinion.
Judge Lord held in Mangano that as a matter of law such homeowners were too remote in the chain of distribution to recover damages as a result of allegations that the prices of plumbing fixtures in their homes had been illegally fixed by the defendant manufacturers.
Presently before the Court are two motions filed by defendants which raise questions similar to those dealt with by Judge Lord in Mangano. In both of the cases in which these motions have been filed, the plaintiffs are public bodies which contracted to construct public buildings within their respective jurisdictions. The same questions therefore are raised in these motions as were before the Court in Mangano except that here public bodies instead of individual homeowners are involved and here the plumbing fixtures sold by the defendants through middlemen were eventually incorporated into public structures rather than into private homes.
The factual basis for Judge Lord's decision in Mangano was established as a result of his conclusion that the plaintiffs had failed to file full and complete answers to interrogatories. Invoking Rule 37(b)(2) (ii), F.R. Civ. P., Judge Lord, in reaching his ultimate conclusion that the plaintiffs' claims should be dismissed because of the applicable substantive law, presumed the following facts (50 F.R.D. at 19):
"(1) That each of the present plaintiffs bought a house containing plumbing fixtures rather than plumbing fixtures as such.
"(2) That the present plaintiffs did not make their purchases pursuant to a preexisting cost-plus contract or analogous fixed markup type of arrangement."
1. Whether Mangano should now be followed by this Court, and if so,
2. Whether the principles stated in that case should be applied not only to claims asserted by the owners of private homes containing plumbing fixtures manufactured by defendants, but also under the facts here to the claims of the owners of public buildings containing such fixtures.
The first question is readily susceptible of answer. As an earlier decision by this Court in this very same multidistrict litigation, Mangano establishes the law of this case. The rule of the law of the case is a rule of practice, based upon the sound policy that when an issue is once litigated and decided, that should be the end of the matter. United States v. U.S. Smelting Refining & Mining Co., 339 U.S. 186, 198, 94 L. Ed. 750, 70 S. Ct. 537 (1950); Insurance Group Committee v. Denver & Rio Grande W.R. Co., 329 U.S. 607, 612, 91 L. Ed. 547, 67 S. Ct. 583 (1947). This principle is particularly applicable to multidistrict litigation in which the presence of a large number of diverse parties might otherwise result in constant relitigation of the same legal issues. Nor is there any apparent reason why the rule of the law of the case should not be applied merely because a different judge has now been assigned to this litigation.
In his opinion, Judge Lord discussed comprehensively and carefully the principles which control the issues presently before the Court. He reviewed in detail the Supreme Court and other decisions leading up to the landmark case in this area of the law, namely, Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 20 L. Ed. 2d 1231, 88 S. Ct. 2224 (1968). After analyzing and quoting extensively from Hanover, Judge Lord concluded that the Hanover rationale applies not only when a manufacturer defendant asserts a pass-on defense to the claim of an initial purchaser but also to a claimant at the end of a chain of distribution who is faced with precisely the same problems of proof not by way of defense but as a part of its affirmative claim.
No good purpose would now be served if this Court were to undertake to re-examine the authorities and the arguments in support of and in opposition to Judge Lord's ruling. The Mangano decision is now on appeal before the Third Circuit Court of Appeals.
If the Third Circuit (or ultimately the Supreme Court) modifies or reverses Mangano, undoubtedly such decision will require revisions in this Court's present ruling, based as it is on the law established by the District Court opinion.
Moreover, there are no cases decided since Mangano which would suggest that this Court should now reach a different result. On the contrary, the opinions which have been filed since April 6, 1970, seem to have interpreted Hanover in a manner consistent with the views expressed by Judge Lord in Mangano. In United Egg Producers v. Bauer International Corp., 312 F. Supp. 319, 321 (S.D.N.Y., April 27, 1970), the Court, citing Hanover, held that ultimate consumers are not within the economic class with standing to sue in a treble damage action "where the direct injury, if any, falls on the primary buyer in the chain of distribution and cannot be passed on to the ultimate consumer." In West Virginia v. Chas. Pfizer & Co., Inc., 314 F. Supp. 710, 745-746 (S.D. N.Y., June 24, 1970), Judge Wyatt observed that it was highly doubtful whether wholesalers or retailers in that multidistrict case suffered any damage at all, because their purchases and sales were like the cost-plus contracts which were recognized as an exception to the Hanover rationale. This Court in Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corporation, 323 F. Supp. 364 (E.D. Pa., September 24, 1970), noted that Hanover as interpreted by subsequent decisions, was "an obstacle to plaintiffs in a treble damage action who are somewhere in the middle of a chain of distribution and who therefore must prove that an overcharge was passed on to them but not by them."
In asking this Court to decline to follow the Mangano decision, the plaintiffs rely on the following cases which were not cited or discussed in that opinion: State of Washington v. General Electric Co., 246 F. Supp. 960 (W.D. Wash. 1965); State of Missouri v. Stupp Bros. Bridge & Iron Co., 248 F. Supp. 169 (W.D. Mo. 1965); State of Washington v. American Pipe & Const. Co., 274 F. Supp. 961 (W.D. Wash. 1967); Armco Steel Corp. v. State of North Dakota, 376 F.2d 206 (8th Cir. 1967). Three of these cases involve facts which make them distinguishable from the cases presently before this Court. More importantly, however, all four of these cases were decided before Hanover. One cannot read the Hanover opinion without reaching the conclusion that it represents a careful exposition of principles of antitrust law which had not theretofore been clearly ...