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OFFICE OF ATTORNEY GENERAL
ANTITRUST
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA'.
COMMONWEALTH OF PENNSYLVANIA,
Plaintiff,
:
V.
Civil Action No . 88-1542
Judge Kosik
NEW BALANCE ATHLETIC SHOE, INC .,
et al .,
Defendants .
ORDER
Upon consideration of the proposed Settlement Agreement
between the Commonwealth of Pennsylvania and Defendants New
Balance Athletic Shoe,
Inc . and James Davis, and having
reviewed all other documents and briefs submitted by the
parties in support of the settlement, it is hereby :
ORDERED that the propose& Settlement Agreement between the
parties herein is finally approved, and the parties shall
comply with the terms thereof as they relate to obligations to
be undertaken subsequent to final approv
Dated :
f the settlement .
SETTLEMENT AGREEMENT BETWEEN
THE COMMONWEALTH OF PENNSYLVANIA AND
NEW BALANCE ATHLETIC SHOE INC AND TAME . DAVIS
This Settlement Agreement is entered into March
21 , 1989,
between the Commonwealth of Pennsylvania ("Commonwealth") and
New Balance Athletic Shoe, Inc . and James Davis ("Settling
Defendants") .
1 . As used in this Settlement Agreement :
a . "New Balance athletic shoes" means any athletic
shoe manufactured by or sold under the label of New Balance
Athletic Shoe, Inc .
b . "Purchaser" means any natural person residing in
Pennsylvania who purchased New Balance athletic shoes from Mail
Runners Shop, Inc ., a now-defunct mail order and discount
sporting goods store located in Scranton, Pennsylvania, from
September 16, 1984, until Mail Runners Shop, Inc . went out of
business, and who is represented by the Commonwealth as
parens
patriae in this action .
c . "Settlement Fund" means the interest-bearing
escrow account established by the Commonwealth for the purpose
of maintaining, and thereafter distributing, the amount
received in settlement of this litigation .
d . "Settlement Amount" means the total amount of
principal paid in settlement by Settling Defendants .
2 . The undersigned and their counsel agree to cooperate
in seeking preliminary and final court approval of this
Settlement Agreement in accordance with 15 U .S .C . § 15c(c) and
to undertake their best efforts, including all steps and
efforts contemplated by this Settlement Agreement, and any
other steps and efforts which are reasonably necessary, whether
by Order of the Court or otherwise, to carry out the Settlement
Agreement .
3 . The parties agree, subject to the approval of the
Court, to compromise, settle and resolve fully and finally any
and all claims, actions or causes of action arising under
federal or state antitrust laws concerning the retail sale of
New Balance athletic shoes by Mail Runners Shop, Inc ., which
the Commonwealth, in its own behalf and as oarens patriae, had,
now has, or may have, whether or not heretofore known or
asserted in Commonwealth of Pennsylvania v . New Balance
Athletic Shoes, Inc . . et al ., Civil Action No . 88-1542 (M .D .
Pa ., filed September 16, 1988), against Settling Defendants as
of the date of this Settlement Agreement .
4 . In complete, total and final settlement and
satisfaction of the antitrust claims released by this
Settlement Agreement, which the Commonwealth, in its own behalf
and as parens patriae, has against Settling Defendants under
federal or state law, Settling Defendants agree to pay
Seventy-Five Thousand Dollars ($75,000 .00) on or before
April 30, 1989 . The check should be made payable to
"Pennsylvania Office of Attorney General ."
This Settlement Amount and any interest accruing on it
shall be maintained in the Settlement Fund by the Commonwealth
for eventual distribution to Purchasers or, if it is
impractical or economically infeasible to pay such Purchasers,
or if individual amounts are so small that individual
distributions are not meaningful relative to the benefit
derived from use of the Settlement Fund in an aggregate amount
or amounts, the Settlement Fund may be distributed in
accordance with an alternative plan of distribution proposed by
the Commonwealth to the extent that such alternative plan is
permitted by law .
Such distribution shall be subject to the
Court's approval and shall not occur until all claims the
Commonwealth has against Settling Defendants in Commonwealth of
Pennsylvania v,NewBalanceAthleticShoe,
Action No . 88-1542 (M .D . Pa .,
Inc ., et al ., Civil
filed September 16,
1988), have
been finally resolved .
5.
The parties shall apply to the Court for preliminary
approval of this Settlement Agreement as soon as practicable
after the execution of the Settlement Agreement .
Thereafter,
the parties shall submit to the Court for approval a proposed
Form of Notice to be mailed to Purchasers, if they can be
identified and if mailing is practicable, considering,
among
other things, the cost of such mailing informing them of the
proposed settlement and of a hearing thereon .
Whether or not
notice is given by mailing, the Commonwealth will give notice
of this settlement by publication in such form and manner as
agreed to by the parties and approved by the Court .
Upon
application to the Court, and subject to the Court's approval,
the cost of preparing and mailing the above Notice and the cost
of the notice by publication may be paid out of the Settlement
Fund as these costs are incurred .
6 . Following the court-approved mailing of the Notice
and/or publication, a hearing as the Court may direct will take
place to determine whether the proposed settlement is fair,
reasonable, and adequate and should therefore be approved . At
this hearing, the parties shall request the Court to enter an
Order finally approving the Settlement Agreement and providing
for a complete dismissal on the merits with prejudice in
accordance with 15 U .S .C . § 15c(c) .
7 . Within ten (10) days after final Court approval of
this Settlement Agreement and entry of a final, nonappealable
judgment dismissing with prejudice this action against Settling
Defendants, the Commonwealth shall release Settling Defendants
from all claims arising out of the facts alleged in the
Complaint under any federal or state antitrust law . The
Release will be in the form attached hereto as Exhibit A .
8 . The Settlement Fund shall be managed by the
Commonwealth National Bank as Trustee . The Trustee shall be
responsible for investing, maintaining, administering and
distributing the monies of the Settlement Fund, pursuant to the
terms of this Agreement and any additional instructions agreed
to in writing by the Commonwealth and the Settling Defendants .
The Trustee shall invest the Settlement Fund in money market
accounts or in obligations of, or guaranteed by, the United
States of America or any of its departments or agencies to
obtain the highest available return on investment . Subject to
the approval of the parties to this Agreement, the Trustee may
make other investments offering a higher return with similar
security . The Trustee shall not act in a manner contrary to
the terms of this Agreement .
9 . Except as otherwise expressly provided below, the
Settlement Amount, including any interest thereon, shall be
held without disbursement in the Settlement Fund until each of
the following conditions has been met :
a . This Settlement Agreement is finally approved in
all respects by the Court ;
b . The time for appeal from any available judicial
action described in this paragraph shall have expired, or the
final order of the Court approving this Settlement Agreement
and authorizing distribution of the Settlement Fund has been
finally affirmed in all respects on appeal if an appeal is
taken ; and
c . Settling Defendants have been dismissed with
prejudice from this litigation .
Disbursement of the Settlement Fund shall be made only in
accordance with the direction and order of the Court .
If it is
judicially determined by a final, nonappealable decision of a
court having jurisdiction of this matter that the settlement
cannot be approved, the Settlement Amount, together with all
interest earned and accrued thereon, less expenses of
administration and costs of notice, shall be returned to
Settling Defendants .
10 .
If a plan of distribution other than individual
distribution is approved by the Court, the Commonwealth shall
distribute the Settlement Fund in accordance with such plan .
If individual distributions are to be made, then within
forty-five (45) days after final approval of this Settlement
Aqreement, the Commonwealth shall mail a check in an amount
approved by the Court to every Purchaser who submits proof of
claim in a manner approved by the Court . Checks not cashed by
Purchasers shall become void at midnight
six months after the
date of the checks .
11 . Settling Defendants agree to waive any and all
claims, including claims for attorneys' fees and costs which it
might assert under 15 U .S .C . § 15c(d)(2), or any other cause of
action which it might bring against the Commonwealth or its
aqents arising from this litigation . Settling Defendants agree
not to oppose the Commonwealth's petition for costs and
attorneys' fees (excluding settlement administration costs and
expenses) to be paid out of the Settlement Fund in the amount
of Twenty-Five Thousand Dollars ($25,000 .00) to be used for
future antitrust enforcement purposes . In addition, the
Commonwealth may petition the Court for reimbursement of all
settlement administration costs and expenses (which shall
include, but not be limited to, costs of printing and mailing
checks and notices as provided in Paragraphs 5 and 10 above,
publication of notice, attorney and clerical time to administer
the settlement, Trustee's fees and other expenses incurred by
the Commonwealth in administering the settlement which shall be
set forth in a written accounting by the Commonwealth) .
Settling . Defendants shall not be liable for any administration
costs and expenses, but all such administration costs and
expenses approved by the Court may be paid out of the
Settlement Fund .
12 . If this Settlement Agreement is not finally approved
as provided herein and a final, nonappealable judgment entered
as contemplated by Paragraph 6 herein, this Settlement
Agreement shall be of no force or effect whatsoever, and it and
-all negotiations and proceedings connected with it shall be
without prejudice to the rights of any person . Nothing
contained in this Settlement Agreement may be used or construed
by any person as an admission of liability by Settling
Defendants in any manner or amount whatsoever, and this
Settlement Agreement shall not be offered or received in
evidence in any action or proceeding in any court as an
admission of liability or wrongdoing of any nature on the part
of Settling Defendants .
13 . It is expressly agreed that the Settlement Amount
does not contain any amount that is a penalty, fine, punitive
recovery or forfeiture or similar item, or item in lieu
thereof, and that all payments hereunder are incurred to
compromise and settle disputed claims, the liability for which
Settling Defendants have expressly denied .
14 . Settling Defendants agree to cooperate fully in
identifying Purchasers, if individual distributions are to be
made, by providing all information known to them regarding the
sale of New Balance athletic shoes by Mail Runners Shop, Inc .
from September 16, 1984, until Mail Runners Shop, Inc . went out
of business .
15 . New Balance Athletic Shoe, Inc . agrees that, for a
period of five (5) years from the date of this Agreement, it
will not, in violation of the antitrust laws, enter into any
contract, combination, conspiracy, agreement or arrangement
with any Pennsylvania retailer, dealer or distributor to fix,
raise, maintain or stabilize the retail prices at which New
Balance products are sold to the public .
16 . New Balance Athletic Shoe, Inc . agrees that, for a
period of five (5) years from the date of this Agreement, it
will not take any action (such as, but not limited to, failure
to fill orders) in order to coerce any Pennsylvania retailer,
dealer or distributor of New Balance products to adhere to any
of New Balance's suggested retail prices in circumstances in
which such action would constitute a violation of the antitrust
laws .
17 . This Agreement shall not be construed in any way to
limit the right of New Balance Athletic Shoe, Inc . to suggest
to its Pennsylvania retailers, dealers or distributors retail
prices for New Balance products, or to engage in any other
behavior that is otherwise permitted by the antitrust laws .
18 . The undersigned represent that they are fully
authorized to enter into the terms and conditions of, and to
execute, the Settlement Agreement .
19 .
This Settlement Agreement cannot be changed or
terminated orally and merges all prior understandings,
representations and undertakings between the parties .
Dated : March 21, 1989
NEW BALANCE ATHLETIC
SHOE, INC .
ERNEST D . PREATE, JR .
Attorney enera
By :
Eugene0'7F . Waye, Esquire
Chief Deputy Attorney General
Antitrust Section
C
Carl S . Hisiro
Deputy Attorney General
Antitrust Section
Bruce C . ohnson
Deputy A orney General
Antitrust Section
Fred Spea er, Esquire
Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
Attorneys for Defendants
New Balance Athletic Shoe, Inc .
and James Davis
Office of Attorney General
1435 Strawberry Square
Harrisburg, PA 17120
Attorneys for the
Commonwealth of Pennsylvania
EXHIBIT A
RELEASE OF NEW BALANCE ATHLETIC SHOE
INC
AND JAMES DAVIS
The Commonwealth of Pennsylvania, in its own behalf and as
parens patriae, for and in consideration of the promises and
covenants set forth in the Settlement Agreement between the
Commonwealth of Pennsylvania and defendants New Balance
Athletic Shoe, Inc . and James Davis, to
which this Release is
attached as Exhibit A, and other good and valuable
consideration, the receipt and adequacy of
which are hereby
acknowledged, and intending to be legally bound, does hereby
release, acquit, exonerate and forever discharge the above
defendants and New Balance Athletic Shoe, Inc .'s present and
former officers, directors, agents, employees, and successors
and assigns, of and from any and all claims, actions or causes
of action arising under the antitrust laws concerning the
retail sale of New Balance athletic shoes by Mail Runners Shop,
Inc .,
which the Commonwealth had, now has, or may have, whether
or not heretofore known or asserted, against the above
defendants as of the date of this Settlement Agreement .
Signed and delivered thisday of 1989 .
ERNEST D . PREATE, JR .
Attorney General
By :
Eugene F . Waye
Chief Deputy Attorney General
Antitrust Section
Carl S . Hisiro
Senior Deputy Attorney General
Antitrust Section
Bruce C . Johnson
Deputy Attorney General
Antitrust Section
Office of Attorney General
1435 Strawberry Square
Harrisburg, PA 17120
(717) 787-4530
Attorneys for the Commonwealth
of Pennsylvania
5929K