One Store, One RPA Suit; and No RPA Class Actions

Many persons in the United States believe that class actions are the remedy for the wave of unlawful price discrimination which is sweeping the United States, but they are wrong. Class actions are not allowed in RPA lawsuits. At best, a trade association could file an action on behalf of its members and seek some future relief, such as an injunction against certain practices or a declaration that certain practices are illegal. [A list of RPA decisions during the past quarter century denying class action status in RPA actions, together with specific language used by the courts, is set forth at List of RPA Decisions Denying Class Action Status - with Relevant Quotations.]

But this will not result in any award to any of the association members for its past damages or for being put out of business. Incidentally, it should be said at this point that a business which has been put out of business through the unlawful price/ser vice discrimination activities of a defendant has a claim for damages even though it no longer is in business, but obviously the claim is a wasting claim in the sense that with every passing day the claim is reducing in value. At the end of four years from the date of cessation of the business there will no longer be a claim due to the 4-year statute of limitations applicable to antitrust claims.

Thus, an injured wholesaler or retailer should not be thinking about any trade association lawsuit but should be thinking instead about trying to recover the damages which the small business member has suffered.

There is no need to join with other businesses, which is difficult in many cases to do. Some of the smaller businesses may not be able to participate in the financing of the case because they have been injured so badly by this time. A small business may be afraid of angering its supplier(s) and run the risk of withdrawal of needed credit lines. A small business may not want to antagonize its large competitors for reasons which do not readily come to mind but could relate, for example, to the trade asso ciation leadership and succession, just to name one possibility.

Instead, an injured business should go forward, perhaps with 1-2 other small competitors in the area, to press their claims in court, without waiting for trade association support or approval, and without waiting for any class action to be brought (which would be dismissed, if it were brought to recover money for the members of the class).

The costs of litigation are such that 3 small businesses could easily afford to bring and maintain the action, provided the attorney is working essentially on a contingent-fee basis.

If an attorney is working on an hourly-rate basis, all bets are off. Very few businesses can afford to pay the reasonable costs of antitrust litigation. If the attorney puts 2,000 hours into the case (which number is neither low nor excessive), the atto rney would bill the plaintiff or plaintiffs $600,000 (at the rate of $300 per hour). Perhaps the rate of $300 per hour is excessive, but not if the attorney is highly experienced in antitrust litigation; the $300 would probably be a bargain in comparison to a rate of $125 per hour by an attorney who was unfamiliar with antitrust litigation, and would have a much greater prospect for losing the case due to inexperience in this tricky field.

The legal fees are such that the only practical way for most businesses to commence and maintain an RPA lawsuit is to hire counsel on a contingent-fee basis, which throws the risk of loss on the attorney instead of the plaintiff. Although, it should be noted that the plaintiff by bringing an antitrust suit against his supplier(s) may be incurring some risk of losing his source of supply or credit line.

Finally, the easiest way to go is to have One Store, One Lawsuit. The difficulties and delays involved in trying to get other plaintiffs to join together to bring suit outweigh the added cost and delays in filing the suit as a single plaintiff. It is possible that one or more other stores might want to join the suit once it is commenced, but this could happen only during a relatively short period of perhaps 1-3 months, before the progress in the first case made it impossible to join any other plaintiffs or to consolidate the first case with any later cases.

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Copyright © 1997 by Carl E. Person