GRUNIN V. INTERNATIONAL HOUSE OF PANCAKES
513 F.2d 114, cert. denied, 423 U.S. 864 (8th Cir. 1975)
NATURE OF THE CASE: This was a dispute over a proposed settlement.
FACTS: This was a class action against IHOP (D) in that the franchise agreements and
equipment leases executed between D and its franchisees violated the Sherman Act.; D
illegally tied the franchise agreement to the lease or purchase of a wide variety of
essential products and services from D or a D approved supplier. P also claimed that these
mandatory services and equipment purchases had been supplied as prices greatly in excess of
fair market value. Settlement was offered for $4.025 million but that settlement did not
amend the leases in any material aspect. The court rejected the proposed settlement. Another
settlement proposal was submitted that allowed each class member to purchase his own
equipment or to continue to lease at a reduced rate from D; the only required purchase was
of pancake flour and coffee. Other concession were granted and a fund of $500,000 for the
subclass of former franchisees was set up and attorney fees were paid; $1.25 million. Gurnin
(P) voiced his objections to the agreement but the district court approved the settlement. P
claimed that the notice sent to the classes involved was so inadequate that it violated Rule
23. P appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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