IN RE: International House of Pancakes Franchise Litigation

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surURE THE JUDICLAL Phin _ _ SE :
PR ON ag TAL PANEL ON Lo Co .
MULTIDISTRICT LITIGATION HERE SLUTS	TIC Po
IN RE INTERNATIONAL HOUSE ) DOCKET THE 5 1371 E
OF PANCAKES FRANCHISE LITIGATION ) PATIL 1 20 ARD
CLERX OF THIvaieL - so TT
: OPINION AND ORDER : }
BEFORE ALFRED P. MURRAH, CHAIRMAN AND JOHN MINOR WISDOM*,
EDWARD WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER, JOSEPH be
S. LORD, III*, AND STANLEY A. WEIGEL, JUDGES OF THE PANEL k A Le
PER CURIAM g -
This multidistrict antitrust litigation encompasses nine i
actions pending in three different districts: four in the Western
District of Missouri, three in the Northern District of California, :
and two in the Eastern District of Pennsylvania.l/ See Appendix A. ; | Sh
All of these actions are brought by current or former franchisees Co :
of the International House of Pancakes claiming that the defendant ]
violated the antitrust laws through an "illegal tying arrangement." :
All parties wholeheartedly agree that these cases are :
appropriate for transfer to a single district for coordinated or :
consolidated pretrial proceedings under 28 U.S.C. §1407.2%/ These
* Although Judges Wisdom and Lord were not present at the hearing
they have, with the consent of all parties, participated in this : .
decision. RE
1/ The Erickson case was filed a day or two before the hearing and RE
was therefore not included on either the show cause order or the hear-
ing order. It is being included in this transfer order (rather than
being treated as a '"tag-along case") at the request of counsel for the
plaintiff and with the consent of all other parties.
2/ At one time the defendant opposed transfer of the Weth and Harvey oo
cases on the grounds that both presented "threshold issues" which could:
only be decided by the transferor court. The defendant has withdrawn
this objection and now favors the immediate transfer of all cases. Of
course, the transferee judge may consider any "threshold questions"
before proceeding with substantive discovery. See Manual for Complex
and Multidistrict Litigation, section 1.8.

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@ actions present virtually identical legal theories and involve
substantially identical questions of fact with regard to the
defendant's franchise agreements. In addition, at least four
of these actions are brought as class actions under Rule 23, F.R.
Civ. P. and present conflicting and overlapping class claims. There
can be little doubt that these cases are appropriate for transfer
under section 1407. a
The only point of controversy among the parties is the
selection of the transferee district. The defendant favors the
Central District of California where its main offices are located
and, as a second choice, suggests the Northern District of Califeor-
nia where three of these actions are now pending. The Northern
District of California is also, quite understandably, the choice
® of the plaintiffs in the cases in that district as well as the
plaintiffs in the two actions now pending in the Eastern District
of Pennsylvania. The plaintiffs in the four actions pending in
the Western District of Missouri, equally understandably, prefer
their own district. We find their arguments more persuasive than
those advanced by the other parties.
The primary reason for selecting the Western District of
Missouri is the fact that the Missouri cases are in a significantly
more advanced stage than are those in any other district. For
this reason, the judge to whom those cases are now assigned, Judge
William R. Collinson, has a greater degree of familiarity with
this litigation than do either of the other judges to whom these
«

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: | -3- oo
o cases are assigned. Although a relatively small amount of dis-
| ~ covery has taken place in these cases, a substantial amount of
| : discovery was conducted in the Western District of Missouri in Lo
| connection with a now dismissed case, >/ assertedly with an under-
| standing that the discovery in those cases would be available
to the plaintiff in the other cases pending in the Western Dis-
| ; trict of Missouri as well. The parties disagree on the complete-
| ness of the discovery but we cannot overlook the plaintiffs’
B statement that the completed discovery fulfills a large part
of their requirements. Certainly the previous involvement of
| oo Judge Collinson in that case has added to his familiarity with
| this litigation. Perhaps more important, however, is the fact
| ; that class action motions have been briefed and argued before
| ® Judge Collinson in the cases now pending in the Western District
| of Missouri and he is well aware of the existence of the other
J cases and the potential for conflicting class action determina-
tions. Since this is litigation involving a nationwide franchise
oo system, there is some further merit in conducting pretrial pro-
| ceedings from a centrally located metropolitan area such as |
| Kansas City, Missouri. For all of these reasons we are satis-| fied that the convenience of the parties and witnesses and the
: just and efficient conduct of this litigation will be promoted ~~
: by transferring all pending cases to the Western District of
Missouri and assigning them to Judge William R. Collinson.
3] Price v.International Industries, Ine., an action which was
Q brought on October 2, 1967 and dismissed on March 20, 1970. :
eer egeee +

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® IT IS THEREFORE ORDERED that all actions on the attached
Schedule A pending in other districts are hereby transferred to
! the Western District of Missouri and, with the consent of that
court, are hereby assigned to the Honorable William R. Collinson
. for coordinated or consolidated pretrial proceedings under 28
U.S.C. §1407.

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C DQCKET NO. 77 SHCEDULE A	Sa”
WESTERN DISTRICT OF MISSOURI
Robert J. Helfenbein & Circle Investments of Missouri, Civil Action
Inc. v. International Industries, Inc., et al. 17281-2
Robert J. Helfenbein & Crescent Investments of Iowa, Civil Action
* Inc. v. International Industries, Inc., et al. 17282-2
Joe Jimmie Reed v. International Industries, Inc. Civil Action
19231-2
Richard D. Harvey v. International Industries, Inc., Civil Action
et al. 19281-2
NORTHERN DISTRICT OF CALIFORNIA .
Terry W. Fairbanks v. International Industries, Inc. Civil Action
71~-653-0JC
William H. Webb v. International Industries, Inc. Civil Action
: 71-654-0JC [I
John N. Nenninger v. International Industries, Inc. Civil Action
® 71-655-0JC
: EASTERN DISTRICT OF PENNSYLVANIA .
[a
Rudolph Weth v. International Industries Civil Action
| 70-2256 Ll
[
Richard L. Erickson v. International Industries Civil Action
71-1874 i.
[|
k I

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. en .. | - |
eo DSA Pape be
HUTS ie EY Pine: LSAT i
BEFORE THE JUDICIAL PANEL ' ‘7.15 oH
ON HAY 30 io . - Co - . »	MULTIDISTRICT LITIGATION ~ in 2 Co
PATR:ICI	= oon :
CEs one Lo
IN RE INTERNATIONAL HOUSE OF PANCAKES ) Tr reieL
FRANCHISE LITIGATION ) i
)
Bernard A. Finch v. Master Hosts Inter- ) LY, My
national, Inc., N.D. Calif., Civil ) 5 :Action No. C-71-926-RFP ) DOCKET NO. 77 . A.
. John Rosser v. International Industries, ) « I. oo
Inc., et al., W.D. Missouri, Civil ) CT ER
Action No. 20037-4 )
Robert C. T. Huang v. International )
Industries, et al., W.D. Missouri, ) :
Civil Action No. 20036-4 ) 3
OPINION AND ORDER :
BEFORE ALFRED P. MURRAH, CHAIRMAN, JOHN MINOR WISDOM*, EDWARD © IES
WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER*, JOSEPH S. LORD, ‘ : } :
III, AND STANLEY A. WEIGEL, JUDGES OF THE PANEL ‘ : a.
PER CURIAM :
The Panel previously transferred nine antitrust actions ;
brought by current or former franchisees of the International :
House of Pancakes to the Western District of Missouri for pre-
trial purposes. In re International House of Pancakes Franchise
Litigation, 331 F. Supp. 556 (J.P.M.L. 1971). The principal
defendant in each of those actions is International Industries i
Co., franchisor of the International House of Pancakes restaurants.
It appears that at some point after 1960 International Industries
also purchased a group of Copper Penny restaurants and subsequently : :
began a franchising program under this name. This business was
* Judges Wisdom and Becker were not present at the hearing, but
they have, with the consent of all parties, participated in this
decision.

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® a
subsequently transferred to a subsidiary of International
Industries, Master Hosts International, Inc. Another corpora-
tion, E.H.R. Corp., which is allegedly a subsidiary of Master
Hosts, is also involved in the franchising of some of the
Copper Penny restaurants. |
Since the transfer of the actions against International
: Industries concerning the International House of Pancakes
franchise, three antitrust actions have been filed by fran-
chisees of the Copper Penny restaurants. Two of these actions
are pending in the Western District of Missouri and one in
the Northern District of California. Plaintiffs in these
® three suits, who are represented by the same counsel asseveral plaintiffs in the International House of Pancakes
litigation, ask the Panel to transfer their suits to the
Western District of Missouri for pretrial proceedings with
| the House of Pancakes litigation. Alternatively, they request
transfer to that district for separate pretrial proceedings
before Judge Collinson, transferee judge in the House of
Pancakes Litigation.’
The Copper Penny plaintiffs assert that their complaints
make allegations virtually identical to those in the House of
Pancakes complaints. In both groups of cases questions are
raised concerning vertical price-fixing, tying arrangements,
exclusive dealing contracts, horizontal price-fixing and
® I/	Plaintiffs also requested Judge Collinson to consolidatethe two Missouri Copper Penny actions with the House of Pancakes
Litigation. Judge Collinson declined to rule on that motion
in view of the present motion pending before the Panel.

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® CL
monopolization of the captive franchisee market. The explana-
tion for the identical allegations, the plaintiffs suggest, is
the near identity of the franchise agreements used in the
Copper Penny and House of Pancakes operations. They place
particular emphasis on those portions of the agreements
relating to services of the franchisor and duties of the
franchisee.
International Industries, Master Hosts International
and E.H.R. Corp. oppose transfer of the three Copper Penny
actions to the Western District of Missouri for pretrial pro-
ceedings. They contend that, in spite of the common ownership
® of the operations, there will be no issues of fact common to
both the Copper Penny and House of Pancakes cases. It is
asserted that these two franchise systems were operated
| separately and that only a few employees worked with both
franchises. In addition, defendants urge that there is a
great dissimilarity in the relevant geographical markets for
the two franchises -- the House of Pancakes operation con-
sisting of 300 franchisees in almost every state while the
Copper Penny operation has only 29 franchisees, 23 of which
are in California. Finally, it is argued that venue is
improper in the two Missouri Copper Penny actions and that
these actions should be transferred to the Northern District
of California pursuant to 28 U.S.C. §1406(a). Defendants
® have filed a motion to this effect in the Western District

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of Missouri and urge that the granting of that motion would
place all three Copper Penny cases in one district where they
could be consolidated for pretrial and trial.
The fact that defendants have moved for a change in
venue under Section 1406 does not preclude transfer under
Section 1407. As we stated in the In re Kauffman Mutual Fund
Actions, 337 F. Supp. 1337 (J.P.M.L. 1972), "the Panel's dis-
cretion under Section 1407 is not limited by venue considera-
tions" but turns on the existence of common questions of fact
and questions concerning the convenience of the parties and
witnesses and the just and efficient conduct of the actions.
After a thorough consideration of the briefs and arguments,
® we have concluded that the requirements of Section 1407 are
satisfied and that the Copper Penny actions must be transferred
to Judge Collinson in the Western District of Missouri for
pretrial proceedings with the House of Pancakes litigation.2/
Although two different franchises are involved, the common
defendants, the similarity of operating procedures and the
possible overlap in defendants' supervisory personnel are
certain to produce at least some common areas of discovery
which would benefit from assignment to a single judge.
Transfer need not unduly prolong pretrial proceedings for
the transferee judge, who is most familiar with the facts
of this litigation, may set the bounds of common discovery
® to be completed before any remand.
2/ By so ruling we do not intend to indicate any views on the
merits of defendants' motion for change of venue. This is a
matter committed to the discretion of the district judge.

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® .
IT IS THEREFORE ORDERED that the above-captioned
actions be, and the same hereby are, transferred to the
Western District of Missouri and, with the prior consent of
that court, assigned to the Honorable William J. Collinson
for coordinated or consolidated pretrial proceedings pur-
suant to 28 U.S.C. §1407 with the actions listed on Sche-
dule A pending in that district.
J
®

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SCHEDULE A DOCKET NO. 77
WESTERN DISTRICT OF MISSOURI
Robert J. Helfenbein & Circle Investments Civil Action
of Missouri, Inc. v. International Industries, No. 17281-2
Inc., et al.
Robert J. Helfenbein & Crescent Investments Civil Action
of Iowa, Inc. v. International Industries, No. 17282-2
Inc., et al.
Joe Jimmie Reed v. International Industries, Civil Action
Inc. No. 19231-2
Richard D. Harvey v. International Industries, Civil Action
Inc., et al. No. 19281-2
Terry W. Fairbanks v. International Industries, Civil Action
Inc. (N.D, Calif.,, No. 71-653-0JC) No. 19662-2
William H. Webb v. International Industries, Civil Action
® Inc. (N.D. Calif., No. 71-654-0JC) No. 19663-2John N. Nenninger v. International Industries, Civil Action
Inc. (N.D. Calif., No. 71-655-0JC) No. 19664-2
Rudolf Weth v. International Industries Civil Action
(E.D. Pa., No. 70-2256) No. 19665-2
Richard L. Erickson v. International Industries, Civil Action
Inc. (E.D. Pa., No. 71-1874) No. 19666-2