The opinion of the court was delivered by: SHAPIRO
Plaintiffs brought this action individually and on behalf of a putative class of direct purchasers of copper water tubing from defendant Phelps Dodge Industries, Inc. ("Phelps Dodge"), during the period January 1, 1975 to November 30, 1982, for relief from defendants' alleged price-fixing in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Prior to class certification pursuant to Fed.R.Civ.P. 23(c), the parties filed an agreement of settlement and dismissal. A hearing was held on plaintiffs' motion to approve the proposed settlement pursuant to Fed.R.Civ.P. 23(e) following due notice to members of the proposed settlement class. No class member objected or asked to be heard. Upon full consideration of written submissions and oral arguments in support of the settlement, the court approves the settlement as fair, reasonable and adequate.
FACTS and PROCEDURAL HISTORY
A federal grand jury in the Eastern District of Pennsylvania began investigating alleged price-fixing in the copper water tubing industry in the summer of 1981. While the investigation was proceeding, Fisher Brothers filed a civil complaint against Cambridge-Lee Industries, Inc. ("Cambridge-Lee"), Cerro Copper Products, Inc. ("Cerro"), Halstead Industries, Inc. ("Halstead"), and Howell Metal Company, Inc. ("Howell") on November 5, 1982 (Civil Action No. 82-4921). The complaint alleged the defendants and their as yet unnamed
co-conspirators had engaged in a nationwide conspiracy to fix, raise, maintain or stabilize the price of copper water tubing, in violation of Section 1 of the Sherman Act. Plaintiffs also moved to certify the action as a class action. Shortly thereafter, a number of complaints with similar allegations were filed by other copper water tubing purchasers against these defendants.
On March 18, 1983, the Grand Jury returned an indictment against six corporate defendants, Cambridge-Lee, Cerro, Phelps Dodge, Reading, Revere Copper and Brass, Inc. and Revere Copper Products, Inc. (together known as the "Revere Companies") and six present or former employees of some of these companies. The indictment alleged that the corporate and individual defendants had engaged in an unlawful conspiracy to fix the prices of copper water tubing from at least 1975 until June, 1981. Subsequent to the indictment, plaintiffs and defendants Cambridge-Lee, Cerro, Halstead and Howell, stipulated to class certification and related matters in the pending civil litigation. The court, by order entered April 29, 1983, approved the stipulated class defined as follows:
Prior to the criminal trial, Fisher Brothers and a number of other plaintiffs filed this joint complaint (Civil Action No. 83-2457) against Phelps Dodge
on May 23, 1983, and moved for class certification in this action on June 20, 1983. Phelps Dodge opposed this motion on the ground that its activity in the copper water tubing industry was more limited in time and geographical area than that of the defendants in the cases consolidated at Civil Action No. 82-4921 (the Master File case). Before the court decided this motion, Phelps Dodge reached a settlement with plaintiffs; the Agreement of Settlement was executed on August 23, 1983.
This Agreement provided that Phelps Dodge would pay $2.5 million in escrow for the benefit of the settlement class designated as:
All individuals, proprietorships, partnerships, corporations and other business entities in the United States (excluding defendants, their parents, subsidiaries and affiliates, and their alleged co-conspirators) who have, during the time period January 1, 1975 through November 30, 1982 (the 'covered period '), purchased copper water tubing directly from one or more of the defendants (including defendants' parents, subsidiaries and affiliates) or their alleged co-conspirators.
This settlement amount would not affect any joint or several liability of any other defendant or alleged co-conspirator.
Under the terms of the Agreement, Phelps Dodge retained the right to withdraw from the settlement under certain conditions. First, Phelps Dodge could withdraw if, within twenty (20) days after the date by which class members had to act to exclude themselves from the class, Phelps Dodge in its sole judgment determined that class members requesting exclusion had made "substantial purchases" of copper water tubing from Phelps Dodge during the relevant time period.
Second, the Agreement contained a "most favored nations" clause giving Phelps Dodge the right to terminate the settlement or obtain more favorable terms if plaintiffs subsequently settled with a "similarly situated" defendant on more favorable terms unless the circumstances materially changed so that plaintiffs might reasonably conclude that the prospect or amount of ultimate recovery from an otherwise similarly situated defendant had been substantially reduced. (Favorability would be determined by comparing the ratio of amount of settlement to percentage of sales made during calendar years 1979-1982.)
Consideration of preliminary approval of this settlement was delayed to permit conclusion of the criminal trial of United States v. Cambridge-Lee Industries, Inc., et al., Criminal No. 83-107. After a nine-week trial before Judge Huyett, the remaining defendants,
including Phelps Dodge, were found not guilty on December 22, 1983.
A hearing to consider whether to send notice of the Phelps Dodge settlement to the settlement class pursuant to Rule 23 was held on January 25, 1984. But the court postponed notice of a hearing on final approval in order to consider whether: i) the settlement class in Civil Action No. 83-2457 should be the same as the stipulated class in the Master File case; ii) adequate notice could be sent to the settlement class if there were no provision in the Agreement for ascertaining the identity of purchasers from alleged co-conspirators; and iii) there was an adequate basis for determining the "present circumstances" of defendants, so that the court could interpret the effect of the "most favored nations" clause; Opinion of January 18, 1984.
During the spring of 1984, plaintiffs achieved separate settlements with Howell and Halstead and, in the fall of 1984, with the Revere Companies (which were then in bankruptcy proceedings). The court preliminarily approved the settlements with Phelps Dodge, Howell, Halstead and Revere Companies on October 29, 1984 and directed that notice of the proposed settlements be sent to the settlement class
and published twice in all regional editions of The Wall Street Journal. Pursuant to the court's Order, counsel for the class sent notice informing all class members that a court hearing to determine whether the proposed settlements were fair, reasonable and adequate would be held on January 11, 1985. The notice also stated that any member of the class could appear and be heard at the hearing to object to the settlements, that any member of the class could opt out, but that all class members not so excluded would be bound by the settlement if approved by the court. Proof ...