The UCL Practitioner

Third Circuit hands down long-awaited "diamonds" antitrust class settlement decision: Sullivan v. DB Investments, Inc.

Yesterday, the Third Circuit, sitting en banc, handed down its long-awaited decision in the "diamonds" antitrust class action, Sullivan v. DB Investments, Inc., ___ F.3d ___ (Dec. 20, 2011).

I have not yet had an opportunity to review the opinion, but evidently the court affirmed in full the district court's order granting final approval of the classwide settlement and certifying settlement classes, and in so doing, discussed Dukes v. Wal-Mart in depth.  There is a lengthy dissent.  Howard Bashman, author of How Appealing and counsel for one of the objectors, took pains to point out that the 90-day period to file a cert. petition with the U.S. Supreme Court begins to run today. 

In other another Sullivan case, the Ninth Circuit has handed down its opinion following the California Supreme Court's decision this past June in Sullivan v. Oracle Corp. (discussed here and here).  See Sullivan v. Oracle Corp., ___ F.3d ___ (Dec. 13, 2011). 

I am unlikely to be able to report further on these cases, or on any other new developments, until after the 1st of the year.  Please keep sending me new opinions, orders, briefs, news, etc., nonetheless.  Happy holidays, all. 

New Ninth Circuit class settlement decision: Nachshin v. AOL, LLC

In Nachshin v. AOL, LLC, ___ F.3d ___ (9th Cir. Nov. 21, 2011), the Ninth Circuit confirmed the propriety of cy pres distributions in class action settlements, but rejected the particular cy pres distribution plan before it:

The cy pres doctrine allows a court to distribute unclaimed or non-distributable portions of a class action settlement fund to the “next best” class of beneficiaries.  See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1307-08 (9th Cir. 1990).  Cy pres distributions must account for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, and the interests of the silent class members, including their geographic diversity.   See id.  The cy pres distributions here do not comport with our cy pres standards.  While the donations were made on behalf of a nationwide plaintiff class, they were distributed to geographically isolated and substantively unrelated charities.

Slip op. at 20288-89.  The Ninth Circuit remanded for the parties to propose and the district court to approve cy pres distributions to different charities.  See id. at 20295-97.

Recent decisions of interest from other Circuits

Here are a few recent decisions of interest from other U.S. Courts of Appeals:

Behrend v. Comcast Corp., ___ F.3d ___ (3d Cir. Aug. 23, 2011) (affirming class certification of antitrust claims; "The factual and legal underpinnings of Wal-Mart—which involved a massive discrimination class action and different sections of Rule 23—are clearly distinct from those of this case. Wal-Mart therefore neither guides nor governs the dispute before us.")

In re Aqua Dots Products Liability Litigation, ___ F.3d ___  (7th Cir. Aug. 17, 2011) (affirming denial of class certification for lack of adequacy; Judge Easterbrook essentially held that a manufacturer recall already remedied the problem and a parallel class action would gain nothing)

In re Literary Works in Electronic Databases Copyright Litigation, ___ F.3d ___ (2d Cir. Aug. 17, 2011) (reversing certification of settlement class for lack of adequacy, finding conflicts among subgroups of class members and remanding for creation of subclasses represented by separate counsel)

Cruz v. Cingular Wireless, LLC, ___ F.3d ___ (11th Cir. Aug. 10, 2011) (applying Concepcion and upholding a no-class-action arbitration clause)

Lawson v. Life of the South Ins. Co., ___ F.3d ___ (11th Cir. Aug. 10, 2011) (declining to enforce a no-class-action arbitration clause under third-party beneficiary or equitable estoppel theories; the defendant was not a party to the contract containing the clause and the claims did not arise under that contract (citing Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042 (9th Cir. 2009))

Millea v. Metro-North Rwy Co., ___F.3d ___ (2d Cir. Aug. 8, 2011) (reversing statutory attorneys' fees award and remanding for recalculation; "Especially for claims where the financial recovery is likely to be small, calculating attorneys’ fees as a proportion of damages runs directly contrary to the purpose of fee-shifting statutes: assuring that civil rights claims of modest cash value can attract competent counsel.  The whole purpose of fee-shifting statutes is to generate attorneys’ fees that are disproportionate to the plaintiff’s recovery.  Thus, the district court abused its discretion when it ignored the lodestar and calculated the attorneys’ fees as a proportion of the damages awarded.")

In re Zurn Pex Plumbing Products Liability Litigation, ___ F.3d ___ (8th Cir. Jul. 6, 2011) ("[Defendant]'s desire for an exhaustive and conclusive Daubert inquiry before the completion of merits discovery cannot be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings.  [¶]  The main purpose of Daubert exclusion is to protect juries from being swayed by dubious scientific testimony. That interest is not implicated at the class certification stage where the judge is the decision maker."; affirming class certification of warranty and negligence claims and distinguishing Dukes)

Jock v. Sterling Jewelers, Inc., ___ F.3d ___ (2d Cir. Jul. 1, 2011) (interpreting Stolt-Neilsen and class arbitration proceedings)

New Ninth Circuit class settlement decision: In re: Bluetooth Headset Products Liability Litig.

In In re: Bluetooth Headset Products Liability Litigation, ___ F.3d ___ (9th Cir. Aug. 19, 2011), the Ninth Circuit reversed a final approval order and remanded for the district court to make further findings regarding the fairness of the settlement terms and the attorneys' fees award.

Report on Third Circuit Sullivan argument

Barry Barnett, who either attended the Third Circuit's en banc oral argument on Feb. 23 or listened to the recording (large .wma file), provides a detailed report on his blog, Blawgletter. 

This case involves a nationwide settlement of price-fixing claims against the diamond industry.  Sullivan v. DB Investments, Inc., no. 08-2784 (3d Cir.).  The original three-judge panel reversed the final approval order.  Barry prognosticates that the en banc panel will affirm the final approval order, but may remand for some modifications to the plan of allocation. 

Recording of Third Circuit en banc argument in Sullivan available online

The Third Circuit, sitting en banc, heard oral argument last Tuesday, February 23, 2011, in Sullivan v. DB Investments, Inc., no. 08-2784.  The audio recording of the argument is available at this link (large .wma file). 

This is the case in which the original three-judge panel reversed the district court's order granting final approval of a nationwide class action settlement.  The case involves antitrust price-fixing claims against the diamond industry.  This is my original blog post on that decision. 

A few months after rehearing was granted, the en banc panel requested further briefing on a long and interesting list of issues.

The objector is represented on appeal by Howard Bashman, author of How Appealing.  Professor Samuel Issacharoff of New York University School of Law argued for the settlement class.

"Getting your class settlement approved: Guidelines for motions for preliminary and final approval of class settlement"

Judge William Highberger and Judge Peter Lichtman of the Los Angeles County Superior Court had a great article on settlement approval motions in the January 2011 issue of Advocate, the monthly magazine of Consumer Attorneys Association of Los Angeles.

Unfortunately, the article is available online to CAALA members only.  

New opinion addresses class counsel conflicts of interest: Kullar v. Foot Locker Retail, Inc.

In Kullar v. Foot Locker Retail, Inc., ___ Cal.App.4th ___ (Jan. 18, 2011), the Court of Appeal (First Appelate District, Division Three) addressed conflict of interest issues arising in the context of a class action settlement with objectors.  Both The Complex Litigator and the Bailey Class Action Daily have more detailed posts on the opinion.

Six pending cases to watch in 2011

Here are six important cases to follow in the coming months (listed in no particular order):

1. Kwikset Corp. v. Superior Court (Benson), no. S171845 (Cal.).  This UCL case was argued in the California Supreme Court on November 3, 2010, which means that the opinion is due by Tuesday, February 1, 2010.  Because the Court hands down opinions on Mondays and Thursdays, we can expect the opinion no later than Monday, January 31, 2011 -- assuming former Chief Justice George sends his vote in from Antarctica!  In this case, the Supreme Court will be interpreting Prop. 64's "lost money or property" language. 
   
   
2. AT&T Mobility LLC v. Concepcion, no. 09-893 (U.S.).  This case was argued in the U.S. Supreme Court on November 9, 2010.  The issue is whether the FAA preempts state-law unconscionability principles as applied to no-class-action arbitration clauses in consumer contracts of adhesion, and the continuing vitality of our own Supreme Court's Discover Bank decision could be at stake.  The opinion will be filed by the end of the current Term, which means no later than June 27, 2011. 
   
3. Brinker Restaurant Corp. v. Superior Court (Hohnbaum), no. S166350 (Cal.).  This wage and hour case raises substantive questions relating to California's meal period and rest break laws, but could also be a significant class certification case.  The Supreme Court has not directly addressed core class certification issues since Sav-on in 2004.  The case is fully briefed, but has not yet been scheduled for oral argument.  It may or may not be set this year.  [Disclosure:  My firm is co-counsel for the workers in Brinker.]
   
   
4. Wal-Mart Stores, Inc. v. Dukes, no. 10-277 (U.S.).  The U.S. Supreme Court granted cert. in this case on December 6, 2010, and has scheduled oral argument for March 29, 2010. The opinion will be filed by the end of June 2011, when the current Term ends.  The district court granted class certification of certain employment discrimination claims under Rule 23(b)(2), and the Ninth Circuit, sitting en banc, affirmed in part. 
   
   
5. Mazza v. American Honda Motor Co., no. 09-55376 (9th Cir.).  In this auto defect case, the district court granted nationwide class certification of UCL and CLRA claims for recovery of economic losses.  Mazza v. American Honda Motor Co., 254 F.R.D. 610 (C.D. Cal. 2008).  The Ninth Circuit granted a Rule 23(f) petition for permission to appeal, and the case was argued on June 11, 2010.  One day after the Supreme Court granted cert. in Dukes, however, the Ninth Circuit issued a sua sponte order deferring submission of the action pending resolution of that case.
   
   
6. Sullivan v. DB Investments, Inc., no. 08-2784 (3d Cir.). In this antitrust case for price-fixing in the diamond industry, the Third Circuit reversed the district court's order granting final approval of a nationwide class action settlement.  Sullivan v. DB Investments, Inc., 613 F.3d 134 (3d Cir. 2010).  On August 27, 2010, en banc rehearing was granted, and the case has been scheduled for argument on February 23, 2011.  On November 10, 2010, the Court ordered supplemental briefing on some broad class-certification-related questions. 

New Fifth Circuit class action settlement decision: In re: Katrina Canal Breaches Litigation

In In re: Katrina Canal Breaches Litigation, ___ F.3d ___ (5th Cir. Dec. 16, 2010), the Fifth Circuit reversed an order granting final approval of a class action settlement.  The opinion discusses the "limited fund mandatory class," and summarizes the holding as follows:

Appellants, objecting members of a proposed settlement class of plaintiffs damaged or injured by Hurricanes Katrina or Rita, seek review of the district court’s certification of a limited fund mandatory class under Federal Rule of Civil Procedure 23(b)(1)(B) and its approval of a final class settlement. We hold that the Supreme Court’s opinion in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), requires decertification of the mandatory class because the settlement fails to provide a procedure for distribution of the settlement fund that treats class claimants equitably amongst themselves. We further hold that the settlement is not fair, reasonable and adequate because its proponents fail to show that the class members will receive some benefit in exchange for the divestment of their due process rights in a mandatory class settlement. We therefore reverse.

Slip op. at 5.  [Via How Appealing.]

This decision reminds me about the Third Circuit diamonds case, Sullivan v. DB Investments, which is scheduled for argument on February 23, 2011.  We'll all want to mark our calendars.  Also on the horizon is the U.S. Supreme Court's decision in AT&T Mobility LLC v. Concepcion, no. 09-893, which was argued on November 9, 2010. 

Third Circuit orders supplemental briefing in class settlement case: Sullivan v. DB Investments, Inc.

Yesterday, the en banc Third Circuit issued an order directing supplemental briefing in the diamonds antitrust case, Sullivan v. DB Investments, Inc. 

You may recall that en banc rehearing was granted in this case in August.  See this blog post for a discussion of the original three-judge panel decision from July, Sullivan v. DB Investments, Inc., 613 F.3d 134 (3d Cir. 2010), which vacated an order granting final approval of a nationwide settlement of direct and indirect purchaser claims for price-fixing in the diamond industry. 

Take a look at the supplemental briefing order.  The questions presented for further briefing are quite interesting.  An excerpt:

(1) The parties are directed to address the following assertions:

(a) the predominance inquiry requires that each potential class member share at least one identical claim;

(b) predominance is satisfied if class members have different claims as long as each contains elements requiring resolution of common issues of fact;

(c) predominance is satisfied if class members have related, but different, claims that all arise out of the same course of conduct on the part of the defendant;

(d) predominance does not examine the ‘claims,’ as such, of all potential plaintiffs, but focuses on the ‘predominance’ of common, versus individualized, issues of fact or law that will be presented by a certain class action, as framed in the complaint, and as anticipated to be tried. 

[Via How Appealing.]

Federal developments of interest: Philip Morris USA Inc. v. Scott; Sullivan v. DB Investments, Inc.; Wal-Mart Stores, Inc. v. Dukes

On Friday, September 24, 2010, U.S. Supreme Court Justice Antonin Scalia entered an order staying enforcement of a $240 million judgment entered in Louisiana state court in a class action against the tobacco industry.  The order states that the Supreme Court is likely to grant the anticipated petition for a writ of certiorari to review the defendants' federal due process arguments, which appear to attack many aspects of class procedure.  Philip Morris USA Inc. et al. v. Scott, no. 10A273.  See this post at SCOTUSblog for a more detailed discussion of the order.  SCOTUSblog also has links to the stay application (a large file), the opposition, and the reply.

A month ago today, the Third Circuit granted en banc rehearing in Sullivan v. DB Investments, Inc., 613 F.3d 134 (3d Cir. 2010), the class action settlement case discussed in this blog post.  See Sullivan v. DB Investments, Inc., ___ F.3d ___, 2010 WL 3374167 (3rd Cir. Aug 27, 2010) (granting rehearing and vacating the panel opinion).  Sullivan is an antitrust class action for price-fixing in the diamond industry. 

In Wal-Mart Stores, Inc. v. Dukes, no. 10-277, the response to the cert. petition will be due on October 25, 2010, according to the docket.  Both sides have submitted consents to the filing of amicus briefs, and three amicus briefs supporting Wal-Mart have been filed so far. 

New class settlement decision: In re Cellphone Fee Termination Cases

Yesterday, the Court of Appeal (First Appellate District, Division Five) certified for partial publication its opinion in In re Cellphone Fee Termination Cases, ___ Cal.App.4th ___ (Jun. 28, 2010; pub. ord. July 27, 2010).  The opinion affirms an order granting final approval to a class action settlement (including $10,000 incentive awards to the named class representatives). 

This was my publication request on behalf of CAOC in this case.

Third Circuit class settlement opinion: Sullivan v. DB Investments, Inc.

In Sullivan v. DB Investments, Inc., ___ F.3d ___, 2010 WL 2736947 (3d Cir. Jul. 13, 2010), the Third Circuit (with one judge concurring only in the disposition) reversed an order granting final approval of a nationwide settlement in an antitrust class action.  The majority's quarrel was with certification of the settlement class under the standards set forth in In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316 (3d Cir. 2008), and in particular with certification of a nationwide class of indirect purchaser plaintiffs for settlement purposes:

In short, this is not a case in which a class of plaintiffs possesses numerous disparate claims but shares an overriding common cause of action under a common body of law. Instead, all parties agree that the claims within the indirect purchaser class implicate the law in every jurisdiction in the nation and that no jurisdiction provides a claim shared by all, or even by a majority, of the class members. These variations in state antitrust law are not trivial. They represent fundamental policy differences among the several states, and they are in consequence as different as it is possible to be, with some states giving substantive antitrust rights to indirect purchasers, other states giving more limited rights, and others denying such rights altogether.

....  The natural result of those differences is that there can be no certification of a nationwide class of state indirect purchaser plaintiffs because there is no common question of law or material fact.

Slip op. at 31-33 (footnote omitted). 

Notwithstanding that language, the majority offers a caveat: "Our holding today is not a repudiation of all nationwide class actions based upon state law." Id. at 41.  Later in the opinion, the majority suggests that the antitrust and consumer protection statutes in a more limited number of states [may be] sufficiently similar that common issues of law or fact would predominate with respect to plaintiffs in those jurisdictions."  Id. at 47.  The opinion also reverses certification of a nationwide settlement class for injunctive relief under Rule 23(b)(2), holding that the indirect purchasers lacked standing to seek an injunction because they faced no threat of future harm.  See id. at 50-55.

The decision has garnered a fair amount of press coverage.  The National Law Journal reported on July 14, 2010 that "3rd Circuit Tosses $275 Million Antitrust Deal in De Beers Case." 

I wonder, though, what the objector has really accomplished here.  The majority opinion contains a lengthy footnote suggesting that it could be difficult to attain class certification of any indirect purchaser claims, either for litigation or settlement purposes, in this particular case.  Slip. op. at 45-47 n.17.  If the settlement is scuttled, or if class certification is ultimately denied, then thanks to the objector, no indirect purchasers—even those in states whose laws permit them to recover—will gain anything (unless they file thousands of individual actions).  So the objector has done those purchasers more harm than good.  What's more, no settlement fund or fees award will be created from which to compensate the objector's counsel if this happens. 

Objectors can and should challenge inadequate settlements and attempt to enhance the class members' recovery in appropriate cases.  But attacking the certification component of the final approval order is not a productive way to do that because of the risks of such a line of attack, which this case exemplifies.  It would make sense only if the objector thinks that no possible settlement or judgment could appropriately compensate the class.  In other words, objectors (and perhaps more importantly, their counsel) should be careful what they wish for. 

New class settlement decision: Munoz v. BCI Coca-Cola Bottling Co.

In Munoz v. BCI Coca-Cola Bottling Co., ___ Cal.App.4th ___ (Jun. 10, 2010; pub. ord. Jul. 2, 2010), the Court of Appeal (Second Appellate District, Division Eight) affirmed an order granting final approval of a class action settlement of wage and hour claims. The opinion's discussion of Kullar is of interest.

Recent Court of Appeal opinions of interest

Several new decisions of interest were handed down during my blogging hiatus (and before Dukes v. Wal-Mart):

• Arenas v. El Torito Restaurants, Inc., ___ Cal.App.4th ___ (Mar. 15, 2010; pub. ord. Apr. 6, 2010) (Second Appellate District, Division Five) (affirming order denying class certification of certain wage and hour claims)
  
• McGuigan v. City of San Diego, ___ Cal.App.4th ___ (Apr. 6, 2010) (modified Apr. 27, 2010) (Fourth Appellate District, Division One) (construcing Code of Civil Procedure section 1021.5; denying further award of attorneys' fees incurred preserving a class action settlement against objectors' appeal because defendant was no longer an "opposing" party)
  
• Salenga v. Mitsubishi Motors Credit of America, Inc., ___ Cal.App.4th ___ (Apr. 9, 2010) (modified Apr. 26, 2010) (Fourth Appellate District, Division One) (addressing statute of limitations in UCL case)
  
• Wallace v. Geico General Ins. Co., ___ Cal.App.4th ___ (Apr. 19, 2010) (Fourth Appellate District, Division One) (holding that "pick-off" rule applies in UCL cases)
  
• Durell v. Sharp Healthcare, ___ Cal.App.4th ___ (Apr. 19, 2010) (Fourth Appellate District, Division One) (construing Tobacco II and the "unfair" prong at the pleading stage)
  
• Hale v. Sharp Healthcare, ___ Cal.App.4th ___ (Apr. 19, 2010) (Fourth Appellate District, Division One) (construing Tobacco II at the pleading stage)

Currently, I have more material to post on than days in the week, which is not a bad position for a blogger to be in.  I will try to write more on some or all of these cases in later posts. 

New Ninth Circuit class action settlement opinion opinion: Narouz v. Charter Communications

The Ninth Circuit's opinion in Narouz v. Charter Communications, LLC, ___ F.3d ___ (Jan. 15, 2010), begins:

This case presents the question of whether the settlement and voluntary dismissal by a class representative of his personal claims in a putative class action lawsuit renders moot his appeal of the denial of class certification. We hold that under the circumstances of this case, the appeal is not rendered moot.

Slip op. at 1172.  The 2-1 opinion also reverses the district court's order denying certification of a settlement class and denying preliminary approval. 

Three recent decisions of interest

The decisions below are on my "to blog" list: 

• United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers International Union, AFL-CIO, Inc. v. ConocoPhillips Co., ___ F.3d ___ (9th Cir. Jan. 6, 2010) (reversing order denying class certification of meal period claims)
  
• Rodriguez v. Hayes, ___ F.3d ___ (9th Cir. Jan. 4, 2010) (order denying panel rehearing and en banc rehearing) (amended opinion reversing order denying class certification of claims brought in habeas corpus proceeding; see this prior blog post on original Rodriguez opinion) 
  
• Cellphone Termination Fee Cases, ___ Cal.App.4th ___ (Dec. 31, 2009) (First Appellate District, Division Five) (affirming final approval of class action settlement and attorneys' fees award)

New class settlement objector opinion: Cho v. Seagate Technology Holdings, Inc.

In Cho v. Seagate Technology Holdings, Inc., 177 Cal.App.4th 734 (Sept. 15, 2009) (which was handed down while I was away on vacation), the Court of Appeal overruled objections to a classwide settlement, but reversed the final judgment and remanded for notice to be re-given with an amended class definition.  This was necessary so that people could more precisely determine whether or not they were members of the settlement class:

A class definition that is ambiguous presents a problem of class ascertainability that “ ‘goes to the heart of the question of class certification, which requires a class definition that is “precise, objective and presently ascertainable.” ’ ” (Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 858.) In the absence of an ascertainable class, “ ‘it is not possible to give adequate notice to class members or to determine after the litigation has concluded who is barred from relitigating.’ ” (Ibid.) The goal in defining the class is to use terminology that will convey sufficient meaning to enable persons hearing it to determine whether they are members of the class plaintiff wishes to represent.

....  the error we identify arises from the ambiguity in the class notice because it creates a real possibility that indirect purchasers who erroneously conclude they are not members of the plaintiff class may never be heard from and the judgment will be res judicata on their claims. (See Global Minerals & Metals Corp. v. Superior Court, supra, 113 Cal.App.4th at p. 858; Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 914.)

....

We vacate the orders of the trial court and remand for further proceedings to correct the class definition to unambiguously state that indirect purchasers of new Seagate disc drives are members of the plaintiff class and to renotice the settlement in order to give adequate notice to all class members, and allow for additional claims, objections or opt outs.

Slip op. at 12, 13, 15-16 (emphasis added).   Scott Leviant has a more detailed discussion of Cho at The Complex Litigator.

Two new opinions on class settlement objections: Consumer Privacy Cases and Clark v. American Residential Services LLC

Two new opinions on class action settlement objections have been handed down in the past two weeks:

• In Consumer Privacy Cases, ___ Cal.App.4th ___ (Jun. 30, 2009), the Court of Appeal (First Appellate District, Division Five) affirmed the final approval order, rejecting arguments that "class members were not given adequate notice of the settlement, that the settlement was not fair, reasonable and adequate, and that the court erred in approving attorneys’ fees to class counsel."
  
• In Clark v. American Residential Services LLC, ___ Cal.App.4th ___ (Jul. 6, 2009), the Court of Appeal (Second Appellate District, Division Eight) vacated the final approval order "because the trial court lacked sufficient information to make an informed evaluation of the fairness of the settlement."  The decision contains an interesting discussion of Kullar v. Foot Locker Retail, Inc., 168 Cal.App.4th 116 (2008).  The Complex Litigator has a more detailed post on it.

Recent Ninth Circuit class-action-related decisions: Chalk v. T-Mobile USA, Inc., Hunt v. Imperial Merchant Services, Inc., Rodriguez v. West Publishing Corp., and Hatfield v. Halifax PLC

The Ninth Circuit has handed down a number of interesting opinions relating to class actions in recent months:

• In Chalk v. T-Mobile USA, Inc., 560 F.3d 1087 (Mar. 27, 2009), the court struck down an arbitration clause with a class action ban as unconscionable under Oregon law.
  
  
• In Hunt v. Imperial Merchant Servs., Inc., 560 F.3d 1137 (Mar. 31, 2009), the court held, apparently for the first time, that "a district court has the discretion to require a class action defendant to pay the costs of class notification when the court has already determined that the defendant is liable on the merits." Slip op. at 3885.
  
  
• In Rodriguez v. West Publishing Corp., 563 F.3d 948 (Apr. 23, 2009), the court affirmed an order granting final approval of a class action settlement, although it disapproved of certain "ex ante incentive agreements" between some (but not all) of the class representatives and class counsel.
  
  
• In Hatfield v. Halifax PLC, ___ F.3d ___, 2009 WL 1259380 (May 3, 2009), the Ninth Circuit held that California courts would recognize American Pipe tolling, at least as to California class members. The opinion discusses American Pipe tolling in detail. [Via The Complex Litigator.]

We are still waiting for the Ninth Circuit to hand down its en banc opinion in Dukes v. Wal-Mart, Inc., nos. 04-16688 & 04-16720, which was argued on March 24, 2009.

Judge Brick's "Guidelines on Preliminary Approval of Class Action Settlements"

This blog post mentioned that Alameda County Superior Court Judge Steven A. Brick has a handout on preliminary approval motions, including compliance with the Court of Appeal's recent decision in Kullar v. Foot Locker Retail, Inc., 168 Cal.App.4th 116 (2008). 

Many thanks to Mr. Obbard for forwarding Judge Brick's "Guidelines on Preliminary Approval of Class Action Settlements" (Feb. 18, 2009).  Mr. Obbard indicates that the guidelines are "based on similar checklists used by Judge Carl West and other Judges in the complex departments in Los Angeles." 

If anyone has copies of other judges' preliminary approval checklists, please forward them ([email protected]) and I will post them here. 

Supreme Court activity this week: Harper v. 24 Hour Fitness and Kullar v. Foot Locker Retail

This week, the Supreme Court took action in two cases involving class certification issues.  In both cases, it allowed the Court of Appeal opinions to stand:

• The Court denied review in Harper v. 24 Hour Fitness, Inc., 167 Cal.App.4th 966 (2008).  In Harper, the Court of Appeal (Second Appellate District, Division Seven, with one justice dissenting) reversed an order decertifying UCL and FAL claims for class treatment. Here is my original blog post on Harper.
  
• The Court denied a depublication request in Kullar v. Foot Locker Retail, Inc., 168 Cal.App.4th 116 (2008).  There, the Court of Appeal reversed an order granting final approval of a class action settlement, holding that the trial court's factual findings were insufficient respecting the proposed settlement's value, and hence its fairness and adequacy. Here is my original blog post on Kullar.

I have been told that Alameda County Superior Court Judge Steven A. Brick has a handout for litigants on complying with Kullar when filing final approval motions.

"Class Action Settlement Tossed Out"

Yesterday's Daily Journal had an article (subscription) on the Court of Appeal's decision last Friday to publish its opinion in Kullar v. Foot Locker Retail, Inc., ___ Cal.App.4th ___ (Oct. 14, 2008; pub. ord. Nov. 7, 2008).   In Kullar, the Court of Appeal reversed an order granting final approval of a class action settlement, holding that the record did not reflect whether the trial court considered evidence of the potential value of the claims being compromised. 

Here is my blog post on Kullar, and here is an excerpt from the Daily Journal piece, which reports that a depublication request is anticipated:

Class counsel Scott E. Cole of Scott Cole & Associates in Oakland said the next version of the settlement will contain more information. He also said he is seeking depublication of the opinion because it does not create or modify law.

"Notoriety in my cases is something that attorneys generally want, but I'm a little surprised that the court thought this was worthy of going into the books ... just because it's such a fact-intensive situation that we had," Cole said.

....

Mediator Mariam Zadeh of First Mediation Corp. in Encino said the case could change the way parties treat class action mediations, which sometimes happen early in the cases before discovery has been conducted on all of the claims.

"What you might end up seeing is parties coming to mediation in class action suits a little bit further down the discovery road," she said.

New class action objector decision: Kullar v. Foot Locker Retail, Inc.

In Kullar v. Foot Locker Retail, Inc., ___ Cal.App.4th ___ (Oct. 14, 2008; pub. ord. Nov. 7, 2008), the Court of Appeal (First Appellate District, Division Three) reversed an order granting final approval of a class action settlement, holding that the trial court "erred by finding the terms of the settlement to be fair, reasonable and adequate without any evidence of the amount to which class members would be entitled if they prevailed in the litigation, and without any basis to evaluate the reasonableness of the agreed recovery." Slip op. at 1. The appellate panel took pains to observe that it was entirely possible that the trial court had been presented with, and had considered, such evidence, but that if so, the record on appeal did not reflect it. Id. at 2, 13.

The panel summarized the trial court's duties in determining whether a proposed class action settlement is fair, reasonable and adequate:  

More fundamentally, neither Dunk, 7-Eleven, nor any other case suggests that the court may determine the adequacy of a class action settlement without independently satisfying itself that the consideration being received for the release of the class members’ claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation. The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. “The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.” (4 Newberg on Class Actions, supra, § 11.41 at p. 118; 7-Eleven, supra, 85 Cal.App.4th at p. 1151.) “The courts are supposed to be the guardians of the class.” (Dickerson, Class Actions: The Law of 50 States (2008 ed.) § 9.02[2], p. 9-6.)

Id. at 13 (citing 7-Eleven Owners for Fair Franchising v. Southland Corp., 85 Cal.App.4th 1135 (2000); Dunk v. Ford Motor Co., 48 Cal.App.4th 1794 (1996)).

The Court also observed that comments in the record suggested that data on the scope of the defendant's potential liability was exchanged during mediation, but disagreed with the trial court's conclusion that such data should be treated as confidential under Evidence Code section 1119:  

Here, the trial court acknowledged that “in logic” it would have been preferable for it to have been presented with data permitting it to review class counsel’s evaluation of the sufficiency of the settlement, but felt that this was precluded because the supporting information was exchanged in the course of mediation. We disagree with this conclusion for two reasons. First, the fact that the settlement was reached during mediation to which Evidence Code section 1119 applies does not eliminate the court’s obligation to evaluate the terms of the settlement and to ensure that they are fair, adequate and reasonable. If some relevant information is subject to a privilege that the court must respect, other data must be provided that will enable the court to make an independent assessment of the adequacy of the settlement terms. Secondly, the fact that communications were made during the mediation and writings prepared for use in the mediation that are inadmissible and not subject to compulsory production does not mean that the underlying data, not otherwise privileged, is also immune from production. (Evid. Code, § 1120 [“Evidence otherwise admissible or subject to discovery outside of a mediation . . . shall not be or become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation . . .]; Rojas v. Superior Court (2004) 33 Cal.4th 407, 417; Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137, 157-158.) Foot Locker’s payroll records, for example, if relevant to the quantification of the claims being settled, are subject to discovery and may be introduced in opposition to the settlement even if they were disclosed to class counsel during the mediation, and even if class counsel was shown only a summary or analysis of those records that is not itself subject to production because prepared for use in the mediation.

Id. at 15-16.  The Court assumed, for purposes of its opinion, that section 1119 would "preclude compulsory disclosure of [mediation] communications to objecting class members," even though class counsel were acting partly on their behalf during the mediation.  Id. at 16 n.12.  Finally, the opinion contains an interesting discussion of the scope of discovery to which class action settlement objectors are entitled. Id. at 17.

The Complex Litigator has more on Kullar in this post.

New class action settlement decision: Cundiff v. Verizon California, Inc.

In Cundiff v. Verizon California, Inc., ___ Cal.App.4th ___ (Oct. 16, 2008), the Court of Appeal (Second Appellate District, Division Three) construed Code of Civil Procedure section 384, which addresses "unpaid residuals in class action litigation." In Cundiff, the parties agreed to a "claims-made" settlement, but some of the checks were returned as undeliverable and some were never cashed. As a result, the settlement administrator held over $400,000 in unpaid settlement proceeds. The defendant argued that this sum should revert to it, but the plaintiffs argued that, under section 384, the fund should be paid to "nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons." Slip op. at 2, 6-7.

The Court of Appeal held that "in the absence of a reversion provision in the settlement agreement, section 384 has eliminated the prospect of reversion of unpaid residue to a defendant in that it requires payment of such residue to nonprofit organizations." Id. at 11. The Court rejected the defendant's argument that section 384 applies only in cases involving "fluid recovery," and not to claims-made settlements, finding no "legislative intent to limit application of that provision to fluid recovery cases or cases in which the defendant has paid into a common fund for the benefit of a class. Indeed, the legislative history suggests the enactors intended a broad application. [¶] Here, no fund was established at the time final judgment was entered. However, after the claims were administered and Verizon deposited the money necessary to pay the claims, a fund was created. The unclaimed funds at issue are the 'unpaid residue' of that fund" for purposes of section 384. Id. at 14.

New Ninth Circuit class action decision: Negrete v. Allianz Life Insurance Co.

In Negrete v. Allianz Life Insurance Co., ___ F.3d ___ (9th Cir. Apr. 29, 2008), the Ninth Circuit invalidated a district court order that would have prohibited the defendant from settling similar class actions pending in other jurisdictions without the participation of plaintiff's co-lead counsel in the certified nationwide class action case before it. The concluding paragraphs of the opinion read:

The district court was troubled by the fact that settlements in other courts might draw the fangs from at least a portion of the class action case that it was then considering. Perhaps they will. But in this instance it was improper for the district court to react by issuing an injunction against other federal and state court proceedings.

Rather, the district court must live with the vicissitudes and consequences of our elegantly messy federal system. The restrictions inherent in the All Writs Act and explicit in the Anti-Injunction Act have helped to concinnate the elements of our national polity; this is not the time to disrupt the harmony.

Slip op. at 4594. There's no "harmony" when someone else files on top of you and then tries to settle your case out from under you — especially if the district court can do nothing to prevent it. However, the Ninth Circuit was concerned about a different kind of "harmony." This morning's Daily Journal reports that "Panel Finds Judge's Order Went Too Far" (subscription).

[Vocabulary word of the day: Concinnate. Verb, tr. "To place fitly together; to adapt; to clear."]

New class action objector opinion: Chavez v. Netflix, Inc.

In Chavez v. Netflix, Inc., ___ Cal.App.4th ___ (Apr. 21, 2008), the Court of Appeal (First Appellate District, Division One) rejected the objectors' challenges to a class action settlement and attorneys' fees award. The case challenged Netflix's DVD rental practices, which allegedly reduced the number of DVDs "that high-consuming members would receive ... per month." Slip op. at 3. The settlement was tailored to the alleged violation, providing class members with a month of free DVD rentals. Id. at 1, 5. The benefits of the settlement were valued at $4.29 million. Id. at 6. The attorneys' fees award was $2,040,000, which constitutes about a 2.5 multiplier and amounts to 21.8% of $4.29 million. Id. at 6, 26-27.

The settlement agreement appears to have been extensively negotiated. In fact, the Federal Trade Commission filed an amicus brief objecting to one of the terms of a prior settlement. Id. at 5. That term would have allowed Netflix to automatically renew the accounts of those class members who chose to take part in the settlement. Id. at 4-5. The parties went back to the negotiating table and eventually agreed to simply eliminate that objectionable settlement term. Id. at 5. The FTC and 428 other objectors then formally withdrew their objections. Id. Four objectors remained to pursue an appeal. Id. at 6.

The Court of Appeal rejected all of the objectors' challenges to the settlement and the notice provided to class members. Id. at 8-18. The opinion is noteworthy for its discussion of coupon settlements. The Court took pains to explain that the settlement before it was not a pure coupon settlement and, what's more, it was fair, adequate and reasonable:

Only one objector, Ellis, continues to argue that the settlement is unreasonable. Ellis makes no claim that any of the factors supporting a presumption of fairness is not present in this case. Instead, Ellis bases her entire argument on the premise that this is a coupon settlement and that such settlements are, in general, inherently suspect and improper. In fact, these premises are neither entirely accurate nor particularly useful for evaluating the fairness of the specific settlement terms before us. Although the settlement reached in this case may be classified as a variant of the coupon settlement, it does not in fact share all of the attributes of the category. In a pure coupon settlement, the class members would receive a coupon, voucher, or discount that would partly defray the cost of making a new purchase of goods or services from the defendant. In many cases, the coupon might induce the member to make a purchase he or she would not otherwise have made, which may actually produce a net benefit for the defendant. That is not the case here. The Netflix class members are not being offered a discount that requires them to make new purchases. They are being offered an opportunity to obtain a limited number of rentals at no charge. While it is possible that some existing customers might be induced by the free rentals to purchase a higher level of service and some past customers might be induced to resume their lapsed subscriptions, the potential for Netflix to actually benefit financially from the settlement is much reduced compared to a pure coupon discount program. Ellis’s generic discussion of the evils of coupon settlements completely ignores the distinguishing features of this settlement.

The claim that coupon settlements are inherently suspect or improper is also not persuasive. Ellis relies on a law review article and a handful of cases not decided under California law.[fn2] She also asserts that the federal Class Action Fairness Act of 2005 (CAFA) (28 U.S.C. § 1712), although inapplicable to this proceeding, is “highly suspicious” of coupon settlements because it requires the court to hold a special hearing to determine their value. But while the valuation of coupon settlements may pose special challenges, neither CAFA nor any of the authorities Ellis cites hold that coupon settlements are per se improper. Notably, Ellis does not discuss or distinguish California cases in which coupon settlements have been found to be fair and reasonable. (See, e.g., In re Microsoft I–V Cases, supra, 135 Cal.App.4th at pp. 711–713; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 247; Dunk, supra, 48 Cal.App.4th at pp. 1804–1805.)

Most importantly, Ellis failed to perform any analysis of the settlement terms to try to overcome the presumption of fairness to which they are entitled. Ellis cites one of the federal cases she relies on for the proposition that the most important factor in evaluating the fairness of a settlement is the strength of the plaintiff’s case weighed against the amount of the settlement. (See Synfuel Technologies, Inc. v. DHL Express (USA), supra, 463 F.3d at p. 653.) Nowhere in her 14-page discussion of coupon settlements, does Ellis attempt such a comparative analysis. In fact, the benefit provided by the settlement—free DVD rentals worth $6 to current subscribers and $16.99 to former subscribers—directly addresses the harm alleged in the complaint, which was Netflix’s alleged failure to deliver as many DVD’s as promised. While the dollar value of the settlement per class member is small, it must be remembered that the damages allegedly caused by Netflix’s allocation and delivery policies were hardly unlimited either, and plaintiffs would have encountered considerable difficulties in trying to prove their amount.

Other than suggesting that a cash settlement would have had more value to class members and more deterrent value, Ellis fails to explain why the settlement terms are not fair and reasonable in relation to the range of possible results further litigation might have produced, including no class certification and/or zero or minimal recovery of damages by class members. The issue before the trial court was not whether the settlement agreement was the best one that class members could have possibly obtained, but whether it is “fair, adequate, and reasonable.” (Dunk, supra, 48 Cal.App.4th at p. 1801.) On that question, we find nothing in Ellis’s arguments to overcome the presumption of fairness that applies in this case.

[fn2] The cases Ellis cites are not particularly germane on their facts. (See Acosta v. Trans Union, LLC (C.D.Cal. 2007) 240 F.R.D. 564 [free credit report as part of settlement had little or no value because consumers are entitled to one free credit report per agency per year and few take advantage of that right]; Bloyed v. General Motors Corp. (Tex.Ct.App. 1994) 881 S.W.2d 422 [$1,000 coupon toward purchase of new van or truck within 15 months]; Synfuel Technologies, Inc. v. DHL Express (USA) (7th Cir. 2006) 463 F.3d 646 [in-kind compensation worth less than cash since some goods or services offered will not be used and will have no cost for defendant].) The law review article is Leslie, A Market-Based Approach to Coupon Settlements in Antitrust and Consumer Class Action Litigation (2002) 49 UCLA L.Rev. 991 (hereafter Leslie), which argues that coupon settlements will be overused as long as class counsel are compensated in cash.

Id. at 10-12 (emphasis added).

A couple of things are noteworthy in the opinion's discussion of the class notice. First, the Court of Appeal held that a class notice need not specify the amount originally sought in damages or compare that sum to the settlement amount actually achieved:

Ellis’s claim that the notices were deficient for failing to provide a dollar estimate of the overall value of the settlement in relation to the damages sought by plaintiffs is also without merit. Ellis cites no authority requiring that such notice be given. The notice gave sufficient information to allow each class member to decide whether to accept the benefit he or she would receive under the settlement, or to opt out and pursue his or her own claim. (See Oswald v. McGarr (7th Cir. 1980) 620 F.2d 1190, 1197 [notice should contain sufficient information to enable a class member to determine whether to accept the offer to settle, the effects of settling, and the available avenues for pursuing his claim if he does not settle].) No more than that was required. The class-wide damages claimed by one side in the litigation, which the opposing party hotly contests, does not in any event provide very useful information for evaluating the fairness of the overall settlement, much less for enabling an individual class member to decide whether to opt out.

Id. at 13-14 (emphasis added).

Also worthy of note, the Court of Appeal approved the use of emailed summary notice coupled with an online long-form notice and an online claims submission process:

The summary notice and long-form notice together provided all of the detail required by statute or court rule, in a highly accessible form. The fact that not all of the information was contained in a single e-mail or mailing is immaterial. The manner of giving notice is subject to the trial court’s virtually complete discretion. Using a summary notice that directed the class member wanting more information to a Web site containing a more detailed notice, and provided hyperlinks to that Web site, was a perfectly acceptable manner of giving notice in this case. (See Browning v. Yahoo! Inc. (N.D.Cal. 2006) 2006 WL 3826714 at *8–9 [approving two-tiered notice system using summary e-mail and long-form notice posted on Web site].) The class members conducted business with defendant over the Internet, and can be assumed to know how to navigate between the summary notice and the Web site. Using the capability of the Internet in that fashion was a sensible and efficient way of providing notice, especially compared to the alternative Vogel apparently preferred—mailing out a lengthy legalistic document that few class members would have been able to plow through. We find no abuse of discretion or deprivation of due process in the trial court’s approval of the form and content of the notice given in this case.

Id. at 16 (emphasis in original).

Finally, in approving the attorneys' fees award, the Court of Appeal held (among other things) that the trial court appropriately considered the fee award as part of the benefit achieved for the class when conducting its percentage-of-the-benefit analysis:

To establish a benchmark for determining the enhanced lodestar amount, the court used the percentages that a hypothetical enhanced fee would represent of the sum of the fee plus the aggregate value of the benefits claimed by class members under the Original Agreement ($4.29 million). It viewed the resulting number as being equivalent to a contingency fee percentage that might be specified in the typical contingent fee contract. For illustrative purposes using the $4.29 million figure, the court plugged different hypothetical fee amounts into this formula that would translate into contingency fee percentages of 20, 25, and 40 percent, which the court believed encompassed the 20 to 40 percent range of contingency fee contracts found in the marketplace. It established class counsel’s initial award in an amount ($1.3 million) that would translate into a contingency fee percentage, approximately 23 percent, that was close to the low end of the 20 to 40 percent range. ....

We find no error or abuse of discretion in the court’s methodology. If a contingency fee contract provides that the attorneys are to receive, for example, 25 percent of the plaintiff’s recovery, the plaintiff who recovers $100,000 keeps $75,000 and pays $25,000 to his attorneys. If we did not already know the contingency fee percentage set by the parties’ fee contract, that number could be calculated by dividing the amount received by the attorney ($25,000) by the sum of the amount received by the client and the amount received by the attorney ($100,000). That is the same formula the court used to calculate a benchmark for enhancing the lodestar amount in this case.

Vogel appears to be arguing that it was error for the court not to use the exact same percentage-of-the-benefit method discussed in Lealao, supra, 82 Cal.App.4th at pages 25–36, which would typically look at the straight ratio of proposed fees to class benefits and compare that to the percentage of fees awarded in common fund cases. (See Lealao, at p. 36.) In our view, the Lealao court did not purport to mandate the use of one particular formula in class action cases. The method the trial court used here and that discussed in Lealao are merely different ways of using the same data—the amount of the proposed award and the monetized value of the class benefits—to accomplish the same purpose: to cross-check the fee award against an estimate of what the market would pay for comparable litigation services rendered pursuant to a fee agreement. (See Lealao, at pp. 47–50.) It is not an abuse of discretion to choose one method over another as long as the method chosen is applied consistently using percentage figures that accurately reflect the marketplace.[fn11]

[fn11] Using the percentage of the benefits to class claimants as a benchmark, class counsel’s initial award was 30.3 percent of the benefits, and the final fee award was 27.9 percent of the benefits. This is not out of line with class action fee awards calculated using the percentage-of-the-benefit method: “Empirical studies show that, regardless whether the percentage method or the lodestar method is used, fee awards in class actions average around one-third of the recovery.” (Shaw v. Toshiba America Information Systems, Inc. (E.D.Tex. 2000) 91 F.Supp.2d 942, 972.)

Id. at 24-25.

New 9th Circuit opinion on class action settlements: In re Syncor ERISA Litigation

In In re Syncor ERISA Litigation, ___ F.3d ___ (9th Cir. Feb. 17, 2008), the Ninth Circuit held that the district court abused its discretion by refusing to conduct a Rule 23(e)(2) preliminary approval hearing after the parties notified the court that they had reached a settlement. Instead of enforcing the parties' settlement, the district court went ahead and granted the defendant's pending summary judgment motion, which had previously been argued and submitted for decision. The district court also denied the plaintiffs' motion to set aside the judgment based on the formation of a binding settlement that preceded the summary judgment ruling. This, the Ninth Circuit determined, was error:

The parties agree that they had reached an enforceable settlement agreement subject to court approval. Our court has previously held that the requirement that the district court approve a class action settlement does not affect the binding nature of the parties’ agreement. See Collins v. Thompson, 679 F.2d 168, 172 (9th Cir. 1982) (“Judicial approval of a [class action settlement] is clearly a condition subsequent, and should not affect the legality of the formation of the proposed [settlement] as between the negotiating parties.”) At the time of the settlement, Defendants knew they had dispositive motions pending and chose the certainty of settlement rather than the gamble of a ruling on their motions. Thus, Defendants chose to forego the chance that the district court would grant summary judgment in their favor. Because the parties bound themselves to a settlement agreement subject only to court approval (which they had agreed to seek) and gave the required notice of the agreement, the district court should not have (1) filed its order granting the motions for summary judgment and (2) entered final judgments against the Class.

Slip op. at 1440-41. The Ninth Circuit further noted the important function of the settlement process, especially in class actions:

Additionally, there is a strong judicial policy that favors settlements, particularly where complex class action litigation is concerned. See Class Plaintiffs, 955 F.2d at 1276. In Officers for Justice v. Civil Service Comm’n of the City and County of San Francisco, 688 F.2d 615 (9th Cir. 1982), we specifically stated that, “it must not be overlooked that voluntary conciliation and settlement are the preferred means of dispute resolution. This is especially true in complex class action litigation ....” Id. at 625. This policy is also evident in the Federal Rules of Civil Procedure and the Local Rules of the United States District Court, Central District of California, which encourage facilitating the settlement of cases. See Fed. R. Civ. P. 16(a)(5) (one of the five purposes of a pretrial conference is to facilitate settlement); L.R. 16-2.9 (requiring parties to exhaust all possibilities of settlement); L.R. 16-15 to 15.9 (setting forth policies and procedures for settlement including encouraging disposition of civil litigation by settlement by any reasonable means). The record demonstrates that the Class complied with the local rules by reporting the settlement immediately to the trial judge’s courtroom deputy clerk and timely memorializing the settlement. See L.R. 16-15.7. The district court, nevertheless, refused to vacate the summary judgment order and subsequent final judgments even though the parties had entered a binding settlement agreement subject only to the district court’s approval pursuant to Rule 23(e).

Slip op. at 1441-42. The opinion illustrates the importance of immediately notifying the court when a settlement is reached, especially if dispositive motions are pending:

Because the parties provided appropriate notice to the district court of the settlement agreement, the court should never have filed its order or entered the final judgments. The parties informed the district court that they had entered a binding settlement agreement the day before the district court entered its summary judgment order and two days before the district court entered the final judgments. The district court thus should have reviewed the settlement document as required under Fed. R. Civ. P. 23(e). The district court’s management of its docket must not undercut a valid settlement agreement between the parties that is appropriately provided to the district court for review.

That the district court had already drafted a summary judgment order is not justification for refusing to approve an otherwise enforceable settlement agreement between the parties. The district court is not a party to the settlement. The court’s role in the class action settlement process is to protect the right of those not involved in negotiating the settlement, generally the unnamed class members. Officers for Justice, 688 F.2d at 624 (stating the primary concern of section 23(e) is the protection of those class members, whose rights may not have been given due regard by the negotiating parties).

Slip op. at 1442-43. [Hat tip: California Appellate Report]

Recent unpublished class action settlement/objector opinion: Vroegh v. Eastman Kodak Co.

In an unpublished opinion, Vroegh v. Eastman Kodak Co., 2007 WL 4217144 (Nov. 30, 2007), the Court of Appeal (First Appellate District, Division Five) affirmed the trial court's order approving a class action settlement, including an attorneys' fees award, and rejected all of the objectors' fairness arguments. According to the docket, on December 12 and 18, 2007, rehearing petitions were filed by two of the objectors.