Appeal from an order of the United States District Court for the Southern District of New York, Richard Owen, Judge, disapproving a proposed settlement agreement between the State of New York and Dairylea Cooperative Inc. (and its employee Sal Fasulo) arising out of an antitrust suit brought by New York against various milk distributers. Appeal dismissed.
Feinberg, Chief Judge, Kaufman, and Cardamone, Circuit Judges.
This appeal from Judge Owen's order, 547 F. Supp. 306, refusing to sanction a proposed settlement agreement between the State of New York and Dairylea Cooperative Inc.*fn1 presents an issue of first impression in this Circuit. We are called upon to decide whether parties settling litigation may appeal, pursuant to 28 U.S.C. § 1292(a) (1),*fn2 from a district court's disapproval of their proffered resolution of an antitrust dispute. Although this question is novel, controversy over the appealability of decisions reached during the course of litigation has occupied substantial amounts of this court's time.*fn3 Our decisions involving the appeals taken from interlocutory orders have necessarily commenced by recognizing the fundamental principle of finality as a condition of review. Indeed, the strong federal policy against piecemeal appeals is basic to our jurisprudence. See Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 99 L. Ed. 233, 75 S. Ct. 249 (1955). Since we find the important purposes behind this policy would be frustrated by allowing an appeal under the circumstances presented here, and because we find the State of New York has failed to demonstrate that Judge Owen's order falls within the congressional exception to the finality requirement, we hold the challenged order not appealable.
In light of our disposition, the facts underlying this dispute and the details of the settlement may be recounted briefly. We need, of course, express no views on the merits of Judge Owen's order rejecting the negotiated agreement.
On April 1, 1981, the State of New York ("NY") commenced this civil antitrust action against twelve milk distributers, including Dairylea and Dellwood Foods, and twenty-one individuals,*fn4 alleging they had conspired to fix milk prices and allocate milk customers among themselves within an eleven-county area in New York State.*fn5 Charging violations of § 1 of the Sherman Act, 15 U.S.C. § 1, and the Donnelly Act, N.Y. Gen. Bus. Law § 345 (McKinney 1968), NY brought suit on its own behalf as a purchaser of milk, as a representative of a class of governmental entities purchasing milk, and as parens patriae, pursuant to 15 U.S.C. § 15c, on behalf of all natural persons who purchased milk distributed by defendants.*fn6
Negotiations between NY and Dairylea began almost immediately following the filing of the complaint, and on May 28, 1981 the parties entered into the challenged settlement agreement. The agreement provided that Dairylea would contribute a total of $250,000 to a Milk Antitrust Settlement Fund to be distributed by April 30, 1986 among the governmental milk purchasing entities. The settlement further established a coupon program by which Dairylea would compensate consumers for the purported overcharges to which they had been subject as a result of the alleged price-fixing agreement.*fn7 This coupon program would require Dairylea to place coupons on the side of its half gallon and quart containers of milk which would be redeemable for 10 cents off the price of the next purchase of Dairylea milk or 15 cents off the price of another Dairylea product.*fn8 In addition, one portion of the proposed consent decree, clearly marked "IV Injunction", would enjoin Dairylea from participating in any agreement to fix the price of milk or allocate customers during the next six years. Finally, Dairylea agreed to allow New York access to its books, records and personnel and to publicize, among its employees, the terms of the arrangement for the purpose of ensuring Dairylea's compliance with the decree's provisions.
NY and Dairylea then submitted their proposed settlement agreement to Judge Owen for approval as required by 15 U.S.C. § 15c(c). The other defendants,*fn9 including appellee Dellwood Foods, objected to the proposed agreement, claiming it would have an anti-competitive impact on the market for milk. Specifically, Dellwood argued that Dairylea's freedom to use coupons as an effective price cut in markets of its choice would unjustly benefit Dairylea.
Judge Owen upheld Dellwood's position. He reasoned both that the coupon program would provide Dairylea with unfair marketing advantages and that consumers previously harmed by overcharges would not be adequately compensated by a mere payout to future milk drinkers. Accordingly, the district court refused to approve the proposed settlement. On June 18, 1982, NY, acting for itself and Dairylea, filed this appeal.
The firm federal policy against piecemeal litigation can be traced to the Judiciary Act of 1789. Appeals taken before final judgments have been reached frequently serve to impede the effective administration of justice, producing needless delay and unnecessary expense. Federal law, therefore, generally permits appeals only from final decisions of the district courts, 28 U.S.C. § 1291. It is undisputed, however, that Judge Owen's order disapproving the proposed settlement is not a final decision within the literal meaning of § 1291 since it did not result in a judgment terminating the proceeding. Catlin v. United States, 324 U.S. 229, 89 L. Ed. 911, 65 S. Ct. 631 (1945). Accordingly, NY must demonstrate that Judge Owen's ruling falls within a recognized exception to the so-called final judgment rule.
Appellant relies on 28 U.S.C. § 1292(a), which affords the right to appeal from interlocutory orders of district judges which "grant, continue, modify, reluse, or dissolve injunctions" (emphasis added).*fn10 Specifically, NY argues that because the proposed settlement would enjoin Dairylea from participating in any conspiracy to fix prices or allocate customers, Judge Owen's order disapproving the settlement is in effect the denial of an injunction. Taken to its extreme, however, this argument would render the disapproval of every proposed settlement appealable. It would be a simple matter for the settling parties to include in the agreement an injunctive provision forbidding one party from violating the law. The mere existence of an injunctive clause, therefore, cannot be sufficient to render the disapproval of a proposed settlement agreement appealable.
Carson v. American Brands, Inc., 450 U.S. 79, 67 L. Ed. 2d 59, 101 S. Ct. 993 (1981) (" Carson "), does not support a contrary result. As set forth in Carson, the rationale for permitting appeals from denials of settlement agreements which have the "practical effect of denying an injunction" is to allow appellate review only of orders which might result in serious, irreparable harm to the party to whom injunctive relief is denied. NY and Dairylea have failed to make such a showing. The parties remain free to return to the bargaining table to devise a settlement which would respond to Judge Owen's objections. Indeed, the district court opinion explicitly expresses a ...