Posts belonging to Category Settlements

The Third Circuit Court of Appeals has taken a moderate approach to the predominance analysis required by the U.S. Supreme Court’s ruling in Dukes v. Wal-Mart, 131 S. Ct. 2541 (2011).  See Sullivan v. DB Investments, No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification for settlement purposes) (available here).  In an en banc decision, the Sullivan majority interpreted Dukes as holding that “the focus is on whether the defendant’s conduct was common as to all of the class members, not on whether each plaintiff has a ‘colorable’ claim.”  Id. at 42. 

Two of the panel’s nine judges dissented, arguing that the majority’s relaxed commonality standard resulted in the improper certification of a nationwide class that “includes people who have no legal claim whatsoever.”  Id. at 1 (Jordan, J., dissenting).  The dissenters claim that Dukes expressly requires classwide common questions and answers, which necessarily entail a finding that each class member has a colorable legal claim.  Id. at 10 (Jordan, J., dissenting) (discussing Dukes, 131 S. Ct. 2551).  However, the dissenters do not acknowledge or confront the fact that class members who are ultimately found to lack a viable claim may nevertheless share common questions with the rest of the class. 

The majority addressed the dissent’s contentions and affirmed its holding as consistent with Dukes:

In Dukes, the Court held that commonality and predominance are defeated when it cannot be said that there was a common course of conduct in which the defendant engaged with respect to each individual.  But commonality is satisfied where common questions generate common answers “apt to drive the resolution of the litigation.”  Dukes, 131 S. Ct. at 2551.  That is exactly what is presented here, for the answers to questions about De Beers’s alleged misconduct and the harm it caused would be common as to all of the class members, and would thus inform the resolution of the litigation if it were not being settled.

 Id. at 42.

Because the disagreement between the majority and dissent is likely to play out in other trial and appellate courts, practitioners would do well to anticipate the dissent’s position and to note the majority’s compelling reasoning in response.

An en banc Court of Appeals panel has affirmed the certification and settlement of a nationwide class action alleging monopolistic conduct by the South African diamond distributor De Beers.  See Sullivan v. DB Investments, Inc., No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification).  The decision is notable for its holding that potential recovery under different states’ antitrust laws does not preclude certification.  Additionally, the Third Circuit rejected arguments to the effect that certification requires a showing that each member of a prospective class has a “colorable claim.”

This ruling suggests a moderate approach to the predominance analysis required by Dukes v. Wal-Mart, 131 S. Ct. 2541, 2555-56 (2011).  Sullivan interpreted Dukes to stand for the proposition that “the focus is on whether the defendant’s conduct was common as to all of the class members, not on whether each plaintiff has a ‘colorable’ claim.”  See Sullivan v. DB Investments, Inc., No. 08-2784 (3rd Cir. Dec. 20, 2011) (order affirming class certification) at 42.  The majority found that the plaintiffs satisfied the predominance requirement by establishing that the putative class members shared common legal and factual questions arising from De Beers’ alleged anticompetitive conduct.  Id. at 44.

The Sullivan panel also identified three “guideposts” that direct a trial court’s predominance inquiry.  Id. at 37.  First, the decision holds that “commonality is informed by the defendant’s conduct as to all class members and any resulting injuries common to all class members.”  Id. at 37-38.  Second, “variations in state law do not necessarily defeat predominance.”  Id.  And, third, “concerns regarding variations in state law largely dissipate when a court is considering the certification of a settlement class.”  Id.

Owing to its closely reasoned analysis, Sullivan v. De Beers is likely to figure prominently in class certification briefing in state and federal courts throughout the country. 

After the Supreme Court’s AT&T v. Concepcion decision, it is hardly surprising to see courts enforcing arbitration clauses between plaintiffs and banks, employers, or retailers.  However, novel methods to avoid arbitration clauses and class action waivers are also emerging.  As part of a recent settlement between the San Francisco City Attorney and a Bank of America subsidiary, the financial institution agreed not to insert mandatory class action waivers into consumer contracts for credit cards.  See Settlement Agreement, People v. Nat’l Arbitration Forum, No. 473-569 (S.F. Super. Ct. Aug. 18, 2011).  Further, FIA Card Services agreed to not arbitrate collections disputes with California consumers for two years, and to stop using the notoriously anti-consumer National Arbitration Forum for five years.  The settlement also secures $5 million for San Francisco city taxpayers.

A Los Angeles Superior Court judge has granted preliminary approval of a settlement worth up to $265 million between Ticketmaster and customers who alleged that Ticketmaster should have but did not refund order processing fees and UPS shipping costs when customers cancelled ticket orders.  See Schlesinger v. Ticketmaster, No. BC 304565 (L.A. Super. Ct. Nov. 2, 2011) (order granting preliminary approval) (available here).

The settlement provides for discounts on future ticket purchases by class members, defined as those who did not receive a full refund on transactions made through the Ticketmaster website between October 21, 1999 and October 19, 2011.  See Settlement Agreement, Schlesinger v. Ticketmaster, No. BC 304565 (L.A. Super. Ct. Nov. 2, 2011) (available here).  Lead class counsel stand to receive up to $16.5 million in attorneys’ fees and costs.  Id.  The final approval hearing is set for May 29, 2012.