Grunin v. International House of Pancakes
United States Court of Appeals for the Eighth Circuit
513 F.2d 114 (1975)
IHOP franchisees (plaintiffs) brought a consolidated antitrust class action alleging IHOP tied leases and above-market equipment and supply purchases to its franchise agreements. After the trial judge rejected an initial $4,025,000 settlement for failing to address the challenged leases (while noting a large payout risked bankrupting IHOP), the parties reached a new settlement amending the lease terms, creating a $500,000 fund for former franchisees, and awarding $1,250,000 in attorneys' fees; the court found this settlement fair, reasonable, and adequate. Grunin (plaintiff) appealed both the adequacy of the class notice and the content of the settlement.
Whether a trial judge in a class action may reject or approve a settlement proposal, and what notice is required to bind absent class members.