01-4049, 01-4050 Abbott Laboratories, et al. v. CVS Pharmacy, et al.

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The district court’s reservation of jurisdiction to enforce the settlement entitled it to adjudicate a dispute between Abbott and CVS Pharmacy, which was in the class at the time of the settlement. But it does not create jurisdiction of claims against Revco (now formally “CVS Revco D.S., Inc.”), which had opted out, or CVS Corp., a holding company that has never been in the pharmacy business and lacks any claim under the antitrust laws. As Peacock holds, a suit involving Party A does not permit a district court to enter a judgment against Party B, even when A and B are affiliated. In Peacock, A was a corporation and B its dominant shareholder. Here, A is a corporation that indirectly (through C) owns all of the shares in B. The principle is the same. Unless it is possible to collapse the legal identities of the parties – and Abbott does not contend that the requirements for “piercing the corporate veil” and treating all of the CVS entities as a single person have been satisfied – each litigant is entitled to separate handling. See Phillip I. Blumberg, The Law of Corporate Groups sec.8.03 (1987). Compare Sears, Roebuck & Co. v. CIR, 972 F.2d 858 (7th Cir. 1992), with NLRB v. International Measurement and Control Co., 978 F.2d 334 (7th Cir. 1992). That a judgment binds one corporation does not allow a court to adjudicate claims against its shareholders, subsidiaries, or other juridically distinct entities. See Holmes v. SIPC, 503 U.S. 258 (1992); Teamsters Health and Welfare Trust Fund v. Philip Morris Inc., 196 F.3d 818 (7th Cir. 1999); Mid-State Fertilizer Co. v. Exchange National Bank, 877 F.2d 1333 (7th Cir. 1989); Carter v. Berger, 777 F.2d 1173 (7th Cir. 1985). Each corporation’s interests are distinct, and its legal attributes do not leak to investors or subsidiaries. This norm applies fully to fraternal corporations in holding-company groups, as Blumberg’s treatise shows. The settlement and release binds CVS Pharmacy but not CVS Corp. or Revco, so the reservation of jurisdiction is limited to disputes involving CVS Pharmacy.”

Affirmed in part, and Vacated in part.

Appeals from the United States District Court for the Northern District of Illinois, Kocoras, J., Easterbrook, J.