types of PBXs and key systems. Furthermore, AT & T was unable to produce any concrete evidence of harm to the network from any type or brand of terminal equipment. The contention that Glictronix's claims are atypical because of differences in harm to the system is belied by the general lack of evidence of harm, which is documented in AT & T's own internal papers.
In support of its argument, AT & T relies heavily on Am/Comm Systems, Inc. v. American Tel. & Tel. Co., 101 F.R.D. 317 (E.D.Pa.1984), discussed earlier in connection with Glictronix's motion for partial summary judgment. As Glictronix makes clear, the proposed product market in Am/Comm included a wide variety of products besides PBXs and key systems including burglar alarms, automatic dialers, and many others. Not surprisingly, the court found the claims of the class representative, which marketed only some of this diverse array of equipment not typical for Rule 23 analysis. The Am/Comm ruling therefore has little bearing on the question of typicality in this case.
Glictronix's claims are typical of those of the class.
B. Adequacy of Representation
The Rule 23(a)(4) requirement that a class representative "fairly and adequately protect the interests of the class," encompasses two inquiries: (1) whether plaintiff's counsel is competent and (2) whether the named plaintiff has "interests antagonistic to those of the class." Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239, 247 (3d Cir.), cert. denied, 421 U.S. 1011, 95 S. Ct. 2415, 44 L. Ed. 2d 679 (1975). Conceding the competence of plaintiff's counsel, AT & T contends that Glictronix has interests antagonistic to those of other class members.
The basis of Glictronix's claim in this case is that it was foreclosed from a share of the terminal equipment market by AT & T's allegedly illegal anticompetitive conduct. Proof of damages for such loss of a share of the market is measured by lost profits or sales. AT & T contends that where the proposed class members are competitors in the relevant market, the need to assess damages by lost sales or profits places class members in conflict with one another and makes it impossible for the representative plaintiff to adequately represent the other class members.
This was the holding in Am/Comm, where Judge Bechtle denied plaintiff's motion for class certification against AT & T. Am/Comm, supra, 101 F.R.D., at 321-322. Other cases in the Third Circuit consistently support the view that where the class members are competitors in a limited market, the named plaintiff's attempts to maximize its damage recovery will conflict with the interests of the other class members and class certification should be denied. Franklin Container Corp. v. International Paper Co., 1983-2 Trade Cas. P 65,727 at 69,722 (E.D.Pa.1982); Chestnut Fleet Rentals, Inc. v. Hertz Corp., 72 F.R.D. 541, 544-45 (E.D.Pa.1976).
Glictronix tries to distinguish Chestnut and Franklin Container on the ground that these cases involved "fixed" or "limited" markets which created conflicts among the class members which do not exist here. It implies that the market in this case is practically unlimited and that all the class members can show profits and sales lost to AT & T without anyone of the members ever claiming it would have made particular sales which another member also claims for itself.
There is no basis for Glictronix's attempted distinction between a limited and unlimited market here. The market for terminal equipment is limited just as were the markets in Franklin Container and Chestnut Fleet. See Am/Comm, supra, at 321-322.
Glictronix cites a number of cases in which it claims classes composed of competitors were certified. These cases do not support Glictronix contentions. In some, the fact that the class members were competitors was unrelated to the claims raised. Philadelphia Electric v. Anaconda American Brass, 43 F.R.D. 452, 463 (E.D.Pa.1968); Sunrise Toyota, Ltd. v. Toyota Motor Co., 55 F.R.D. 519 (S.D.N.Y.1972); Gold Strike Stamp Co. v. Christensen, 436 F.2d 791 (10th Cir.1970). In another, the plaintiff requested class certification only as to the allegations regarding which there was no conflict among the class members. Hawkins v. Holiday Inns Inc., 1975-1 Trade Cas. P 60,153 at 65,464 (W.D.Tenn.1975).
Finally, Glictronix invokes Siegel v. Chicken Delight, Inc., 271 F. Supp. 722 (N.D.Cal.1967), where the court stated that class members "whose interests are antagonistic to those of their brethren . . . may by order be excluded from the suit." Id. at 728. Siegel did not involve claims of lost profits from a lost share of the market. It is unclear from the opinion what type of antagonisms the court contemplated, but certainly they were not the pervasive conflicts which arise in the lost share of the market context. The fact that the court suggested that the antagonisms could be dealt with by excluding some class members indicates that relatively few conflicts were contemplated. This is very different from the lost profit context where one may anticipate that there may be conflicts among or between all of the class members.
At least one case in the Third Circuit suggests that a class representative may be adequate under rule 23(a)(4) in a case where class members' claims are based on business not done where there are "objective guidelines for apportioning individual damages among the class members." Al Barnett & Son v. Outboard Marine Corp., 64 F.R.D. 43, 50-51 (D.Del.1974), aff'd, 611 F.2d 32 (3d Cir.1979).
Glictronix claims its expert's methodology, based on the Competitive Activity Reports compiled by AT & T constitutes just such objective guidelines. While Glictronix's methodology may provide a relatively accurate formula for allocating damages, it certainly will not prevent all conflict among the class members.
The methodology only permits recovery based on applications by class member interconnect companies to AT & T for a PCA. Glictronix's theory is that the interconnect company which got far enough with a customer to request a PCA is the company which would have made the sale in the absence of AT & T's anticompetitive practices. But under this approach, as Glictronix admits, class members which dropped out of the market or delayed entering it because of AT & T's practices would be foreclosed from recovery. Certainly, they would dispute the allocation of damages which would result from Glictronix's methodology.
In addition, while it may be true in most cases that the company which requested a PCA would have made the sale, the theory ignores possible competition among rival interconnect companies which may have gone on prior to the request and which may have been affected by AT & T's anticompetitive practices.
Despite the existence of the Competitive Activity Reports, this remains a "lost profits" case in which class members' interests are adverse to one another. Glictronix cannot adequately represent its rivals in the interconnect business.
C. Predominance of Common Questions
In order to certify a class under Rule 23(b)(3), the court must find that common issues predominate over individual ones. In an action under Section 1 of the Sherman Act, a plaintiff must establish (1) an antitrust violation; (2) causation (that plaintiff suffered antitrust "impact" or "injury in fact"), and; (3) the amount of damages. American Bearing Co., Inc. v. Litton Industries, Inc., 729 F.2d 943, 948 (3d Cir.1984). In order for a class to be certified in an antitrust action under Rule 23(b)(3), plaintiff must demonstrate that both the violation and fact of injury can be proved for the entire class by common evidence. The amount of damages can be established individually for each class member. Bogosian v. Gulf Oil Co., 561 F.2d 434, 454-55 (3d Cir.1977), cert. denied, 434 U.S. 1086, 98 S. Ct. 1280, 55 L. Ed. 2d 791 (1978). AT & T contends that Glictronix cannot establish an antitrust violation or fact of injury by common evidence.
1. Antitrust Violation
Glictronix's complaint alleges antitrust violations under both Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Under Section 2, Glictronix alleges monopolization, attempted monopolization and conspiracy to monopolize. Under both Sections 1 and 2, it alleges a combination in restraint of trade among the defendants to institute an illegal tying arrangement. According to Glictronix:
By enforcing a "tie-in" between the use of telephone terminal equipment provided by Bell and the lack of a need to lease unnecessary and useless PCAs from Bell, defendants violated 15 U.S.C. Sec. 1.