Grunin v. International House Of Pancakes

513 F.2d 114, cert. denied, 423 U.S. 864 (8th Cir. 1975)


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 concessions 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.