De Facto Detrebling: the Rush to Settlement in Antitrust Class Action Litigation

Antitrust law provides that successful private plaintiffs are entitled to treble damages. Despite this, in antitrust class action litigation, courts have subtly dismantled the treble damage regime by manipulating the standard for reviewing proposed settlements. Federal law requires judicial approval of class action settlements in order to ensure that the class members’ interests are adequately protected. However, following the Second Circuit’s 1974 Grinnell opinion, federal courts decline to consider the trebling of damages when estimating the value of class claims extinguished by antitrust class action settlements. Despite its longevity, the Grinnell rule has received no academic attention. This is surprising because the Grinnell court based its decision on a misreading of its source material. More importantly, the Grinnell rule undermines both the compensatory and deterrent functions of antitrust law.