Antitrust Class Action Settlements

• Pages: 189-230

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CHAPTER VIII

ANTITRUST CLASS ACTION SETTLEMENTS

The vast majority of antitrust class action litigation ends by

settlement. Depending on the timing of the settlement, there are different

requirements for seeking and obtaining court approval. This chapter

explores the practical considerations counsel must consider in

determining whether to settle an antitrust class action. It also examines

the procedural requirements, particularly the requirements of preliminary

and final approval of class settlements, as well as class notice issues.

Finally, this chapter also considers the impact of an antitrust settlement

on non-settling defendants.

A. Settlements Prior to Class Certification

Class certification in antitrust cases remains somewhat

unpredictable, and contested class certification proceedings are

expensive and time consuming. Frequently, therefore, settling before the

issue of class certification is decided can be an attractive option. On the

one hand, from a defense perspective, settling before a class is certified

may be undesirable because victory at the class certification stage

generally substantially reduces exposure or eliminates exposure entirely

as a practical matter. On the other hand, the uncertainty attendant to class

certification often enables defendants to settle on more favorable terms

before, as opposed to after, a class is certified. Plaintiffs face a similar

dilemma. They risk the often impractical task of pursuing individual

actions if a class is not certified, yet may be able to recover more if they

are successful in having a class certified. The uncertainty on both sides

can, and often does, drive settlement discussions before the issue of class

certification is decided.

The mechanics of settlement before class certification largely mirror

those after class certification, with one important difference: the lack of a

contested certification process in order to bind class members to the

settlement terms. In pre-certification settlement scenarios, defendants

typically stipulate to class certification (or to not oppose certification) by

agreeing with plaintiffs that, as part of the settlement, plaintiffs will

move for certification of a settlement class.

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Neither route to certification of a settlement class makes class

certification automatic. The court to which the settlement is presented

must ultimately decide whether certification is appropriate under Rule

23. In Amchem Products, Inc. v. Windsor1 the Supreme Court held that a

district court reviewing a proposed settlement class must carefully weigh

the proposed settlement class against all of the requirements of Rule 23,

with the exception of trial manageability. Before Amchem, several courts

of appeals had held that the fact of settlement itself could be sufficient to

show predominance of common issues or adequacy of representation.2

The Supreme Court held, however, that although settlement may be

relevant to class certification, a court must look to factors beyond the

settlement to satisfy Rule 23. As to the proposed class of asbestos

claimants before it, the Court held that (1) common issues did not

predominate given the array of varied medical histories at issue; and

(2) already injured class members, with an interest in prompt payment,

could not adequately represent exposed-but-not-yet-symptomatic class

members interested in long-term preservation of the settlement fund.3

Following Amchem, most federal courts have rejected the suggestion

that class certification standards are relaxed in the context of a settlement

class.4 Nonetheless, many courts have certified settlement classes,

1. 521 U.S. 591, 620 (1997).

2. See, e.g., In re Asbestos Litig., 90 F.3d 963, 975 (5th Cir. 1996) (“[I]n

settlement class context, common issues arise fro m the settlement itself”

(citation and internal punctuation omitted)); White v. NFL, 41 F.3d 402,

408 (8th Cir. 1994) (“[A]dequacy of class representation . . . is ultimately

determined by the settlement itself”); In re A.H. Robins Co., 880 F.2d

709, 740 (4th Cir. 1989) (“If not a ground for certification per se,

certainly settlement should be a factor, and an important factor, to be

considered when determining certification”).

3. Amchem, 521 U.S. at 626-28.

4. See, e.g., Smith v. Sprint Commc’ns Co., 387 F.3d 612, 614 (7th Cir.

2004) (holding that because nationwide class could not be certified for

trial, class plaintiffs entered settlement negotiatio ns in a “disarmed” state

and were unable to represent interests of the parties); In re AT&T

Mobility Wireless Data Servs. Sales Litig., 270 F.R.D. 3 30, 340 (N.D. Ill.

2010) (“A court may not, however, abandon the Federal Rules merely

because a settlement seems fair, or even if the settlement is a ‘good

deal.’”); In re Ephedra Prods. Liab. Litig., 231 F.R.D. 167, 170-71

(S.D.N.Y. 2005) (rejecting invitation to relax Rule 23’s require ments for

purposes of settlement-only litigation); In re Relafen Antitrust Litig., 225

F.R.D. 14, 21 (D. Mass. 2004) (rejecting notion that courts don a

“different hat” at settlement).

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finding that the concerns expressed in Amchem were not present and that

the requirements of Rule 23 were met.5 Some courts have even suggested

that a settlement class may be certified where a litigation class could not

be.6 As a practical matter, despite Amchem, courts seem more willing to

certify an unopposed settlement class than a contested litigation class.7

In requiring settlement classes to meet most of the Rule 23

requirements, Amchem creates, at best, the theoretical risk that entering a

pre-certification settlement will impact the defendant’s ability to contest

class certification in later proceedings (for example if the settlement is

not approved or otherwise does not go forward). In part for that reason,

defendants often insist on language in the settlement agreement that

makes clear that they are stipulating to class certification (or to not

oppose certification) for settlement purposes only, nothing in the

settlement agreement can be used as evidence in later proceedings, and

they reserve the right to contest class certification should the settlement

not be finalized for any reason. That language, however, does not

entirely eliminate the risk

5. See, e.g., Strube v. Am. Equity Invest. Life Ins. Co., 226 F.R.D. 688, 696-

97 (M.D. Fla. 2005); In re Phenylpropanolamine (PPA) Prods. Liab.

Litig., 227 F.R.D. 553, 562-63 (W.D. Wa. 2004); Ingram v. T he Coca-

Cola Co., 200 F.R.D. 685, 700-01 (N.D. Ga. 2001).

6. See, e.g., Schneider v. Citicorp Mortgage, 324 F. Supp. 2d 372, 375

(E.D.N.Y. 2004) (“[I]t is the questionable availability of class action

relief, if the case is not settled . . . which is the pr ime reason behind the

settlement. That is, the risk that plaintiffs will not be able to establish the

predominance of law or fact common to the members of the class

sufficient to maintain a class action to judgment is t he very reason

justifying settlement at this time.”); Ramirez v. DeCoster, 20 3 F.R.D. 30,

35 (D. Me. 2001) (“Although the named plaintiffs could not proceed to

trial as class representatives on [their] claims, they can proceed to

settlement.”).

7. But see In re General Motors Corp. Pickup Truck Fuel Tank Prods. Liab.

Litig., 55 F.3d 768, 788 (3d Cir. 1995) (discussing possibility of a

“premature, even a collusive settleme nt” and noting tha t “[e]ven some

courts successfully using these devices to achieve settlements apparently

recognize these dangers since they certify these actions more cautiously

than ordinary classes”).