The Recorder (California)

American Lawyer Media

(This article also appeared in:

The Fulton County Daily Report

The Legal Intelligencer

And on the website

By Jonathan Ringel

ATLANTA -- Farmers who won a major decision before the Eleventh Circuit U.S. Court of Appeals last week may never get to enjoy the fruits of victory.

The spoiler? A Tennessee state court which just a week before approved the settlement of a similar class action, resolving all state and federal claims.

At stake -- aside from antitrust claims potentially worth more than $100 million -- are constitutional questions about competing class action cases.

"It's one that could go all the way to the Supreme Court," says Atlanta lawyer Kenneth Canfield, one of a team of Alabama, Georgia and California lawyers for the federal plaintiffs.

Both cases are class actions and deal with farmers' antitrust claims against American Cyanamid Co. The farmers claim the company conspired to fix prices when they offered bonuses to herbicide dealers for selling Cyanamid products at or above wholesale prices.

American Cyanamid officials denied their sales program was anticompetitive and last year won a dismissal of the federal case, which was brought by Doug Lowell and four other farmers in Mobile, Ala.

There, U.S. District Judge Brevard Hand ruled a 1977 U.S. Supreme Court case, _Illinois Brick v. Illinois_, barred cases by "indirect purchasers" against sellers. To sue Cyanamid, Hand wrote, the farmers would have to sue 2,500 dealers as well, a prospect Canfield calls "a nightmarish situation."

Deal Reached in Tennessee

But while the federal case was on appeal at the Eleventh Circuit, Cyanamid and lawyers for James Fox and other Tennessee plaintiffs hammered out an agreement settling their case. The deal resolved all state and federal claims for $5.2 million, with a third going to the plaintiffs' lawyers. In April, lawyers from the federal case went to Union City, Tenn., to ask Obion County Chancery Court Judge W. Michael Maloan to postpone approving the settlement until the Eleventh Circuit ruled in the federal case.

If revived by the Eleventh Circuit, they argued, the federal case was worth at least $100 million, given six years of alleged price-fixing and treble damages awarded in antitrust cases.

"The _Lowell_ plaintiffs suspect, although American Cyanamid would never admit it, that American Cyanamid settled with the Fox plaintiffs because it fears that the Eleventh Circuit will rule against it," the federal plaintiffs wrote in briefs.

Cyanamid responded that it expected a victory in the Eleventh Circuit, but even if it lost, the Tennessee Court of Appeals could review the fairness of the deal. In the meantime, Maloan should approve the settlement so that payments could be made, the company wrote.

On June 2, Maloan did just that, approving the settlement as "fair, reasonable and adequate."

A week later, an Eleventh Circuit panel of Judges J.L. Edmonson, Susan Black and, sitting by designation, Judge Jane Restani of the U.S. Court of International Trade, ruled for the farmers.

Writing for the panel, Edmonson ruled the farmers were not indirect purchasers, who are barred from making antitrust claims under the Supreme Court's _Illinois Brick_ case. Instead, he wrote in _Lowell v. American Cyanamid Co._, 98-6194, the plaintiffs were "direct purchasers from a conspiring party."

While Edmonson wrote the decision "makes no new law, " others disagree.

Knoxville, Tenn., attorney Gordon Ball, a lawyer for the Tennessee plaintiffs, is among them.

"I think it changes things," he says of the Eleventh Circuit decision, certainly in his case.

Ball said he originally thought _Illinois Brick_ barred claims by indirect purchasers in federal courts, so he didn't think the federal plaintiffs' case was worth very much, if anything. That's why he had no trouble including their claims in the Tennessee settlement, he says.

Change Sought in Settlement

Now that the Eleventh Circuit -- which officially interprets law only in Alabama, Georgia and Florida -- has ruled _Illinois Brick_ does not apply in the Cyanamid cases, Ball says he'll tell Maloan the settlement "needs to be re-examined."

That's what the federal plaintiffs lawyers did June 11 in an emergency motion to reconsider the settlement approval, according to John Crowder of Mobile's Cunningham, Bounds, Yance, Crowder & Brown.

Meanwhile, A. Stephen Hut, a partner in Cyanamid's Washington, D.C., firm, Wilmer, Cutler & Pickering, says his client is considering its appeal options of the Eleventh Circuit decision.

The case officially has been remanded to the district court, and if it ends up there, Hut says he expects the Tennessee settlement "will have important implications."

Hut would not confirm this, but that presumably means Cyanamid would argue that the Tennessee court settlement bars the federal case.

Whether that issue comes before the Supreme Court is unclear, but it's not one unfamiliar to the justices.

In 1996, the high court ruled in _Matsushita Electric Industrial Co. v. Epstein_, 516 U.S. 367, that a Delaware court that approved a settlement releasing defendants from exclusively federal claims "was entitled to full faith and credit."