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In re Lithium Ion Batteries Antitrust Litigation

United States District Court, N.D. California

March 20, 2017




         On May 26, 2016, the Court granted preliminary approval of the class action settlement between the Indirect Purchaser Plaintiffs (“IPPs”) and defendants Sony Corporation, Sony Energy Devices Corporation, and Sony Electronics Inc. (collectively “Sony” or “Sony Defendants”) and conditionally approved the certification of a two settlement classes; appointed class representatives and counsel; ordered procedures and forms for notice to members of the class; and set a Fairness Hearing for November 8, 2016. (Dkt. No. 1292.)

         On September 8, 2016, IPPs filed a Motion for Reimbursement of Certain Expenses in the amount of $3, 703, 305.74 for costs incurred for “(1) consultants and experts necessary to advance the interests of the proposed class, (2) document retrieval, hosting, and review platforms, and (3) translations of foreign language documents.” (Dkt. No. 1446.) Eleven objections were filed timely by eight objectors.[1] (Dkt. Nos. 1391, 1392, 1451, 1455, 1472, 1476, 1482, 1483, 1484, 1485, 1486.)

         On October 4, 2016, IPPs filed their Motion for Final Approval of Class Action Settlement with the Sony Defendants. (Dkt. No. 1504.) On November 8, 2016, the Court held a fairness hearing on the settlement. Objector Christopher Andrews appeared by phone and stated a summary of his written objections on the record.

         The Court has reviewed and considered the motions, the proposed settlement agreement between IPPs and Sony (“Sony Settlement” or “Settlement”), and the pleadings and other papers on file in this action, including: the objections filed by Christopher Andrews, Kenya Brading, Vincent Lucas, Timothy Madden, Gordon Morgan, Sam A. Miorelli, Glenn Greene, and Patrick Sweeney; IPPs' omnibus response to those objections; and the statements of at the fairness hearing. The Court has also considered IPPs' subsequent proposal to have the claims period for the settlement with the Sony Defendants occur simultaneously with the claims for period for the settlements with the LG Chem, Hitachi Maxell, and NEC defendants. Based upon the Court's review of those matters, and the record of the action herein, and for the reasons stated herein, the Court: (1) Grants the Motion for Final Approval; and (2) Denies without prejudice the Motion for Reimbursement of Certain Expenses.

         I. Motion for Reimbursement of Expenses

         Plaintiff's motion for reimbursement of certain expenses is Denied Without Prejudice. Plaintiffs seek to be paid reimbursement of expenses in a total of approximately $3.7 million based claimed costs that are unsubstantiated by any timely filed evidence, and which were incurred in the entire case to date. The motion suggests that the entire amount should be paid out of the Sony IPP settlement. No invoices, billing records, or other supporting documents were provided. While such expenses would not normally be recoverable until after entry of judgment, the Court recognizes it has discretion to award the same in this MDL. However, even in a normal case with a regular costs bill under Rule 54, an affidavit supporting each item of costs is required with appropriate documentation. See Civ. L.R. 54-1(a). Given the lack of evidentiary support for the request and the Court's inability to discern the impact if the recovery of expenses here relative to the ongoing litigation, the Court denies Plaintiffs' request.

         II. Final Approval of Settlement

         Under the notice plan approved by the Court, the class administrator: (1) sent the long form notice directly to over 15.8 million class members via email; (2) published the short form notice in Better Homes and Gardens, Parade and People; (3) caused a copy of the notices to be posted on the internet website, where 32, 528 people have now registered; (4) used banner and text ads to achieve over 273 million digital impressions; and (5) disseminated a news release via PR Newswire.

         The Court makes the following determinations:

         1. The Court has jurisdiction over the subject matter of this litigation, the Actions within this litigation, and over the parties to the Sony Settlement, including all members of the Settlement Classes and Sony.

         2. For purposes of this Order, except as otherwise stated, the Court adopts and incorporates the definitions contained in the Sony Settlement, attached hereto as Exhibit 1.

         3. Pursuant to Federal Rule of Civil Procedure (“FRCP”) Rule 23(g), Interim Co-Lead Counsel previously appointed by the Court-Cotchett, Pitre & McCarthy, LLP, Hagens Berman Sobol Shapiro LLP, and Lieff Cabraser Heimann & Bernstein, LLP-is also appointed as counsel for the Settlement Classes. Interim Co-Lead Counsel have fairly and competently represented the interests of these classes, and will continue to do so.

         4. Pursuant to FRCP 23, the Court determines that the following Settlement Classes are Certified:

a. All persons who, during the period from and including January 1, 2000 through May 31, 2011, purchased in the United States for their own use and not for resale from an entity other than an MDL Defendant a Lithium Ion Battery or Lithium Ion Battery Pack manufactured by an MDL Defendant or alleged co-conspirator, or a Finished Product containing a Lithium Ion Battery or Lithium Ion Battery Pack manufactured by an MDL Defendant or alleged co-conspirator.
Excluded from the Class are the MDL Defendants, their parents, subsidiaries and affiliates, and any judge, justice, or judicial officer presiding over this matter and the members of her or his immediate families and judicial staff.
b. All non-federal and non-state governmental entities in California that, during the period from January 1, 2000 through May 31, 2011, indirectly purchased for their own use and not for resale either a Lithium Ion Battery manufactured by a Defendant and/or a Lithium Ion Battery Product containing a Lithium Ion Battery manufactured by a Defendant or coconspirator.

         5. The Court further finds that the prerequisites for class certification under FRCP Rule 23 are satisfied for settlement purposes because: (a) there are many geographically dispersed class members, making joinder of all members impracticable; (b) there are questions of law and fact common to the classes that predominate over individual issues; (c) the claims or defenses of the class representatives are typical of the claims or defenses of the Settlement Classes; (d) the class representatives will fairly and adequately protect the interests of the classes, and have retained counsel experienced in antitrust class action litigation who have adequately represented the classes and will continue to do so; and (e) a class action is superior to individual actions.

         6. Those eighteen persons/entities identified in the list attached hereto as Exhibit 2 are validly excluded from the Settlement Classes. Such persons/entities are not entitled to any recovery of the settlement proceeds obtained in connection with the Sony Settlement.

         7. Eleven timely objections to the Settlement were filed by eight objectors: Christopher Andrews, Kenya Brading, Vincent Lucas, Timothy Madden, Gordon Morgan, Sam A. Miorelli, Glenn Green, and Patrick Sweeney. The objections are summarized as follows:

         Timothy Madden's objection (Dkt. No. 1391)[2] asserts that the value of the settlement, on a per class member basis, is low and that he does not believe he was harmed or treated unfairly.

         Glenn Greene's one-page objection (Dkt. No. 1485) contends that class members have yet to receive information on the gross settlement allocation.[3]

         Vincent Lucas (Dkt. No. 1484) objected that the details of the distribution plan, such as the formula for allocations, and the claims process were not provided, making it unfair for class members to be expected to decide whether to exclude themselves or object.

         The objections by Gordon Morgan (Dkt. No. 1472 and Dkt. No. 1482 [a duplicate of 1472]) contend that the settlement should not be approved because class counsel are not required to submit their attorneys' fees motion before the objection deadline, and that 30% of the gross fund would be excessive at any rate. It further contends that there is inadequate information from which to evaluate the benefits of the settlement and does not specify a cy pres beneficiary.

         Morgan objects that the time for submitting an attorneys' fee motion is not clear from the Court's preliminary order, so it is not clear whether class members are required to object prior to the fairness hearing in order to be heard. Finally, he also raises objections to the motion for reimbursement, questioning the support for the amounts requested.

         Kenya Brading (Dkt. No. 1476) objected that the class definition is overbroad and it is unclear how class membership will be determined. Brading further objects that, because membership in the class is unclear, there is a risk that people without valid antitrust injury and standing will make claims and dilute the benefits to true indirect purchasers, particularly by those who purchased used batteries or products with batteries. Because there is no claim form or process established, there is no way to know whether multiple class members would be recovering benefits for a single overcharge. Brading also objects that a cy pres recipient should have been established and that class members should have had a fair opportunity to respond to a fee motion and class member incentive payments, which were not disclosed before the deadline for objecting.

         Sam Miorelli (Dkt. No. 1483) objected on the grounds that: too many of the documents filed in the case were filed under seal or extensively redacted; and there is no explanation of the maximum value of the claims against Sony compared the result achieved. Miorelli also objects to the motion for reimbursement Patrick Sweeney (Dkt No. 1486) objected that: the claims administration process does not include a monitoring process and final approval should be withheld until the Court can discern whether it has been successfully concluded; the notice does not inform class members of the nature of the case; attorneys' fees are too high, disproportionate to relief, and not supported by documentation; no cy pres recipient or procedure is defined. Sweeney also objects to the request for reimbursement.

         Objector Christopher Andrews filed three separate objections within the required time period. (Dkt. Nos. 1392, 1451, 1455.) In his objections, he raises a number of issues:

• the notices, claims procedures, and class definition are so ambiguous as to violate Rule 23 and to be legally invalid;
• notices were not provided in Spanish
• the settlement approval hearing precedes any claim form or requirements, statement of estimated class size, determination of the amount of attorneys' fees sought, or disclosure of incentive payments to named class members, making it unfair to approve the settlement at this juncture;
• the class action website was missing documents or had documents posted without new notification to him;
• there is no statement of the total damages estimated or how they were calculated;
• there is no explanation of the expert consultant fees and other expenses sought
• attorneys' fees are excessive and unsupported
• costs sought in the reimbursement motion are unsubstantiated

         On October 4, 2016, IPPs filed a Response to the objections. (Dkt. No. 1508.)

         The Court Overrules the Objections. First, class members were, in fact, provided with information about how the settlement amount compares to a projected recovery against Sony in connection with the motion for preliminary approval. (Dkt. No. 1209 at 12 [“[b]ased on work done in support of class certification, IPPs estimate that the settlement represents 11.2% of the single damages attributable to Sony sales, and 2.2% of total single damages that the proposed nationwide class would be entitled to if it prevailed on all claims.”].) The possibility that a settlement could have been greater does not mean that it is not fair and reasonable, in light of the countervailing litigation risks present here.

         Second, the objection that the details of the settlement's notice and allocation plan were not disclosed is likewise unsupported, since it is available on the PACER docket and on the website (See Motion for Preliminary Approval, Dkt. No. 1209 at 8-9.)

         Third, the objections that the class definition is unclear or too broad are also insubstantial. The class and the parties are clearly and objectively defined, and the class definition excludes persons and entities that were purchased for resale.

         Fourth, the contention that documents were excessively sealed, while it might be true as a general matter as to documents submitted in connection with the separate class certification motions, the documents pertinent to plaintiffs' settlement with the Sony defendants, motion for approval, and motion for reimbursement of costs were all readily available, as was the operative complaint. Thus, objectors were able to access all the information relevant to the settlement here.

         Fifth, the fact that no cy pres beneficiary was specified, and no class notice was provided in Spanish, are not reason enough to find that the settlement here was not fair or reasonable. Neither is required under the circumstances.

         Sixth, and most significantly, the argument that the deadline to object should not have been set before plaintiffs' attorneys' fee motion is without merit. IPPs are not seeking attorneys' fees at this time and have represented that class members will have the opportunity to object to attorneys' fees if they make a request in connection with future settlements or recoveries at trial. (Response to Objections at Dkt. No. 1508 at 14:13-18.) Similarly, IPPs did not propose class representatives incentive awards in connection with final approval. The Court notes that, while the short and long form notices here indicated that class counsel may seek attorneys' fees up to 30% of the $19.5 million settlement fund (Long Form at ¶16; Short Form at p. 2), the settlement agreement itself made no mention of an amount or percentage of attorneys' fees. (See Agreement at Section F, ¶¶ 24-27.) Because neither attorneys' fees nor incentive payments are sought in connection with this settlement approval, there is no substantial basis for the objections.[4]

         8. Any member of the Settlement Classes who failed to timely and validly request to be excluded from the classes shall be subject to, and bound by, the provisions of the Sony Settlement, the Released Claims contained therein, and this Order, regardless of whether such class members seek or obtain any distribution from the Gross Settlement Fund or the Net Settlement Fund.

         9. IPPs' notice of the Sony Settlement to the Settlement Classes was the best notice practicable under the circumstances. This notice satisfied due process and provided adequate information to the Settlement Classes of all matters relating to the Sony Settlement, and fully satisfied the requirements of FRCP Rule 23(c)(2) and (e)(1).

         10. The claims period for IPPs' settlement with the Sony Defendants shall occur simultaneously with the claims period for the IPPs' settlements with the LG Chem, Hitachi Maxell, and NEC defendants, to maximize the effectiveness of the campaign and to promote efficiency in claims processing. The claims period herein shall begin on April 11, 2017, and shall continue through and including Wednesday, September 30, 2017. The parties are ordered to provide notice of the claims process and deadlines to all class members on or before April 11, 2017.

         11. The Court hereby Grants final approval of the Sony Settlement, and finds the Settlement is, in all respects, fair, reasonable and adequate to the Settlement Classes pursuant to FRCP Rule 23.

         12. This Court hereby Dismisses IPPs' claims against Sony with prejudice, with each party to bear their own costs and attorneys' fees, except as provided in the Sony Settlement.

         13. IPPs' plan of distribution is, in all respects, fair, adequate, and reasonable, and is hereby Approved.

         14. The Sony Releasees are hereby and forever released from all Released Claims as defined in the Sony Settlement.

         15. Without affecting the finality of the Judgment in any way, this Court retains continuing jurisdiction over: (a) implementation of the Sony Settlement and any distribution to Settlement Classes pursuant to further orders of this Court; (b) disposition of the Gross Settlement Fund; (c) hearing and determining applications by IPPs for attorneys' fees, costs, expenses, and interest; (d) the Actions, until the Final Judgment has become effective, and every act agreed to be performed by the parties pursuant to the Sony Settlement has been performed; (e) hearing and ruling on any matters relating to the plan of distribution of settlement proceeds; and (f) the parties to the Sony Settlement for the purpose of enforcing and administering its terms and the mutual releases contemplated by, or executed in connection with, those terms.

         16. In the event that the Settlement does not become effective, then the Judgment shall be rendered null and void and shall be vacated. If such an event occurs, all Orders entered and Releases delivered in connection with the Sony Settlement shall be null and void and the parties shall be returned to their respective positions ex ante.

         17. The IPPs' claims against the Sony defendants are Dismissed with prejudice, and IPPs' plan of distribution is Approved.

         The Court finds, pursuant to FRCP Rule 54(a) and (b), that Final Judgment should be entered as to the parties to the Sony Settlement, and further finds that there is no just reason for delay in the entry of this Judgment. Accordingly, the Clerk is hereby directed to enter judgment forthwith for Sony.

         It Is So Ordered.

         This order terminates Dkt. Nos. 1446 and 1504.

         EXHIBIT 1

         MDL No. 2420


         This Settlement Agreement (hereinafter. "Agreement") is made and entered into as of the 17th day of November, 2015, by and between Defendants Sony Corporation, Sony Energy Devices Corporation and Sony Electronics Inc. (collectively "Sony"), and Indirect Purchaser Plaintiffs, both individually and on behalf of Classes in the above-captioned class action. This Agreement is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released Claims, upon and subject to the terms and conditions hereof.


         WHEREAS, Indirect Purchaser Plaintiffs are prosecuting the above-captioned litigation on their own behalf and on behalf of Classes against, among others, Sony;

         WHEREAS, Indirect Purchaser Plaintiffs allege, among other things, that Sony violated the antitrust laws by conspiring to fix, raise, maintain or stabilize the prices of Lithium Ion Batteries, and these acts caused the Classes to incur significant damages;

         WHEREAS, Sony has denied and continues to deny each and all of the claims and allegations of wrongdoing made by the Indirect Purchaser Plaintiffs in the Actions; all charges of wrongdoing or liability against it arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Actions; and the allegations that the Indirect Purchaser Plaintiffs or any member of Classes were harmed by any conduct by Sony alleged in the Actions or otherwise;

         WHEREAS, Indirect Purchaser Plaintiffs and Sony agree that neither this Agreement nor any statement made in the negotiation thereof shall be deemed or construed to be an admission or evidence of any violation of any statute or law, or of any liability or wrongdoing by Sony or of the truth of any of the claims or allegations alleged in the Actions;

         WHEREAS, arm's length settlement negotiations have taken place between Sony and Indirect Purchaser Plaintiffs' Class Counsel, including negotiations conducted pursuant to mediation with Judge Vaughn R. Walker (ret.), and this Agreement, which embodies all of the terms and conditions of the Settlement between the Settling Parties, has been reached (subject to the approval of the Court) as provided herein and is intended to supersede any prior agreements between the Settling Parties;

         WHEREAS, Indirect Purchaser Plaintiffs' Class Counsel have concluded, after due investigation and after carefully considering the relevant circumstances, including, without limitation, the claims asserted in the Indirect Purchaser Plaintiffs' Third Consolidated Amended Class Action Complaint filed in MDL Docket No. 2420, the legal and factual defenses thereto and the applicable law, that it is in the best interests of the Indirect Purchaser Plaintiffs and the Classes to enter into this Agreement to avoid the uncertainties of litigation and to assure that the benefits reflected herein are obtained for the Indirect Purchaser Plaintiffs and the Classes, and, further, that Indirect Purchaser ...

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