The opinion of the court was delivered by: Legge, U.S. District Judge.
ORDER REGARDING PROPOSED PLAN OF DISTRIBUTION OF SETTLEMENT PROCEEDS TO
Plaintiffs' class counsel brings this motion for approval of a proposed
plan for the distribution of the proceeds of the class settlement. Certain
class members object to the plan, because the proposed method of
distribution would pay settlement proceeds calculated on purchases some
of the class members made from a non-settling defendant which was found
not to be liable. The motion has been briefed, argued and submitted for
decision. The court has reviewed the record of the case, the moving and
opposing papers on this motion, the arguments of counsel, and the
This antitrust action arises from an alleged conspiracy by certain
manufacturers, sellers and distributors to fix the prices of citric
acid. Numerous class actions were filed and were later transferred to
this court by the Judicial Panel on Multidistrict Litigation.
Class counsel then brought this motion for approval of a plan for the
distribution of the proceeds paid by the four settling defendants. The
plan proposes to allocate the settlement proceeds among all class members
pro rata. The problem is that the calculation of each class member's
share would be based upon the dollar amounts that each class member paid
for direct purchases of citric acid from all five defendants, including
Class members Van Waters & Rogers Inc. and Ashland Inc. (the
"objectors") oppose the plan of distribution because it allows class
members to recover based upon their purchases from Cargill. The objectors
argue that such a plan is legally improper, and that it is unfair because
it would materially decrease the shares of the class members who did not
purchase from Cargill. The dollar differences resulting from the two
methods of calculation are substantial.
Approval of a plan for the allocation of a class settlement fund is
governed by the same legal standards that are applicable to approval of
the settlement: the distribution plan must be "fair, reasonable and
adequate." In re Computron Software Inc., 6 F. Supp.2d 313, 321 (D.N.J.
1998) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1284-85
(9th Cir. 1992).) A plan of allocation that reimburses class members
based on the type and extent of their injuries is generally reasonable.
See id.; see also In re Ikon Office Solutions, Inc. Securities Litig.,
194 F.R.D. 166, 184 (E.D.Pa. 2000).
The issue here is whether it is "fair, reasonable and adequate" to
allocate settlement proceeds to class members based on their purchases
from Cargill, after it has been judicially determined that the class did
not have a valid claim against Cargill.
The court first looks at what the class members were told. Both parties
point to the class settlement notices and releases. Those documents,
however, do not resolve the present issue.
The class settlement notice stated that the settlement funds are "for
the benefit of the class." But the notice says nothing about the
allocation of the settlement proceeds. A supplemental notice of
settlement was later sent to all class members, but it was specifically
addressed to class members who purchased from the settling defendants
only. It excludes any mention of Cargill purchasers' stake in the
settlement proceeds. The language of the settlement notices is therefore
Addressing the releases obtained from the class in favor of the four
settling defendants, plaintiffs contend that they demonstrate that the
four defendants sought to "buy peace" with all class members, regardless
of who purchased from whom. Even if this argument is relevant, it is not
determinative. First, the Ninth Circuit has found that the mere fact of
signing a release does not, by itself, entitle a class member to
recover. In re Cement & Concrete Antitrust Litigation, 817 F.2d 1435,
1443-44 (9th Cir. 1987). Second, the releases state that they are not
dependent on how the settlement proceeds are allocated.
Instead, the releases expressly state that class members may not sue the
settling defendants even if the class members ...