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In re Cathode Ray Tube Antitrust Litigation

United States District Court, N.D. California

July 7, 2016




         In this large antitrust multidistrict litigation case ("MDL"), Lead Counsel for one of three sets of plaintiffs - the Indirect Purchaser Plaintiffs ("IPPs") - moves for final approval of the settlements reached between the IPPs and various defendants. The settlement agreements resolve claims against six different corporate families. Also before the Court is the allocation of eight different settlement funds. The Court previously referred the settlements and allocation issues to Special Master Martin Quinn. ECF No. 4077. He recommended approval in a Report and Recommendation issued on January 28, 2016. ECF No. 4351 ("R&R"). Various parties then filed objections to the R&R, which this order resolves. The Special Master also recommended that Lead Counsel make certain adjustments to the distribution of the settlement reached with defendant Chunghwa; Lead Counsel did so, and the Special Master recommended that the Court approve that plan as well. ECF No. 4445 ("Supplemental R&R"). Objections were filed to the Supplemental R&R, which are also before the Court.

         The Court will overrule the objections to the six settlements, grant final approval of the six pending settlements, and approve the allocation with respect to all eight settlements. The Court will also adopt both the R&R and the Supplemental R&R, except as excluded here or as relates to those matters reserved for a future order. The Court reserves ruling on issues pertaining to attorneys' fees, expenses, and incentive awards, which will be the subject of a separate order.

         I. BACKGROUND

         The history of this case is well known to the parties, objectors, and interested states. By way of summation, this case is predicated upon an alleged conspiracy to price-fix cathode ray tubes ("CRTs"), a core component of tube-style screens for common devices including televisions and computer monitors.[1] This conspiracy ran from March 1, 1995 to November 25, 2007, involved many of the major companies that produced CRTs, and allegedly resulted in overcharges of millions, if not billions, of U.S. dollars to domestic companies that purchased and sold CRTs or finished products containing CRTs for purposes such as personal use. A civil suit was originally filed in 2007, ECF No. 1, consolidated by the Joint Panel on Multidistrict Litigation shortly thereafter, see ECF No. 122, assigned as an MDL to Judge Samuel Conti, see id., and ultimately transferred to the undersigned, see ECF No. 4162.

         Discovery leading up to the pending settlement agreements has been extensive, spanning millions of pages and hundreds of depositions taken over eight-plus years. Motion practice has been extensive and hard-fought. For example, the parties filed or responded in some way to 36 motions for summary judgment, ECF No. 4370 at 16, and 64 motions in limine, id. at 20.

         Before this large, comprehensive settlement, there were two smaller ones. The IPPs settled with Chunghwa for $10, 000, 000 in 2011, [2] and with LG for $25, 000, 000 in 2013.[3] Both the Chunghwa settlement and LG settlement postponed approval of the allocation of the settlement funds pending additional settlements with the remaining defendants.

         The Court originally set the case for trial in March 2015. As the trial date approached or shortly after it was continued, the IPPs reached settlement agreements with six groups of Defendants in the shadow of the pending motions. The settlements included agreements with Philips for $175, 000, 000, [4] Panasonic for $70, 000, 000, [5] Hitachi for $28, 000, 000, [6] Toshiba for $30, 000, 000, [7] Samsung SDI for $225, 000, 000, [8] and Thomson and TDA (jointly) for $13, 750, 000, [9] for a total of $541, 750, 000 . Including the prior Chunghwa and LG settlements, the total IPP settlement amount is $576, 750, 000.

         Except for the funds from the Chunghwa settlement (which the Court addresses later), the settlement agreements[10] propose to distribute the settlement funds on a pro-rata basis based on the number of claimants, with a proposed minimum recovery of $25 per person, [11] and a cap on recovery of treble the damages a claimant has actually suffered. See R&R at 56; ECF No. 4071 at 9. There will be no cy pres distribution, no coupons, and no reversion to any defendant. Money will be paid to those claimants in states where the law permits recovery by indirect purchasers[12] (so-called "repealer states"). The nationwide class - including both those in repealer states, as well as those in states whose laws do not provide for recovery to indirect purchasers ("non-repealer states") - would agree to release all present and future claims for injunctive relief. The Court previously granted preliminary approval of these settlements. ECF No. 3906.

         On September 24, 2015, the Court appointed Special Master Martin Quinn to evaluate whether the IPP Settlements were fair and reasonable, and to "assist[] the Court with the approval of the pending settlements in the Indirect-Purchaser Cases, the determination of a fair, reasonable, and adequate aggregate award of attorneys' fees and the reimbursement of expenses to all plaintiffs' counsel, a fair and reasonable division of the aggregate award among plaintiffs' counsel, and service awards to the named plaintiffs, including any objections to these matters[.]" ECF No. 4077 at 3. Lead Counsel for the IPPs filed a motion for final approval of these settlements before the Special Master on November 19, 2015. ECF No. 4370.

         Special Master Quinn reviewed the proposed settlement, the moving papers filed in support, the objections filed in opposition, the applications for an award of attorneys' fees, certain records lodged in support of those fee applications, and other materials filed in support and opposition. See, e.g., ECF Nos. 4363-68, 4370-73. He recommended that the settlement be approved. R&R at 77.

         In his R&R, Special Master Quinn noted certain problems with the plan of distribution for the Chunghwa settlement, rejected the motion for approval of allocation of funds from that settlement as originally framed, and recommended that Lead Counsel modify the plan of distribution to address the Special Master's concerns. Lead Counsel made the requested changes, and the Special Master approved the modified plan. Supplemental R&R at 7-8.

         As the Ninth Circuit has summarized, the Supreme Court "barred indirect purchasers' suits, and left the field of private antitrust enforcement to the direct purchasers." Royal Printing Co. v. Kimberly Clark Corp., 621 F.2d 323, 325 (9th Cir. 1980). In response to the Illinois Brick decision, many states passed so-called "Illinois Brick repealer statutes, " which give indirect purchasers the right to sue when firms violate analogous state antitrust laws. See, e.g., Robert H. Lande, New Options for State Indirect Purchaser Legislation: Protecting the Real Victims of Antitrust Violations, 61 Ala.L.Rev. 447, 448 (2010). Such states are referred to a "repealer states." A state which has not enacted such a statute is referred to as a "non-repealer state." Several parties filed objections to Special Master Quinn's original R&R, [13] and certain states filed Statements of Interest, [14] all of which the Court now considers. Various parties also objected to the Supplemental R&R, [15] and the Court considers those objections here as well. The Court held two fairness hearings, on March 15, 2016 and April 19, 2016.[16] No member of the public appeared at either hearing.

         Because the Special Master has already opined regarding the fairness and adequacy of the settlements, this Court addresses only the objections to the R&R and the Supplemental R&R, and does not reach the panoply of other considerations that attend the approval of a class settlement ab initio.


         The Court has jurisdiction pursuant to 28 U.S.C. § 1332(d)(2).


         A. Legal Standard

         "The claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed.R.Civ.P. 23(e). Rule 23(e) "requires the district court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). To assess a settlement proposal, the district court must balance a number of factors:

(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement.

Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (citing Hanlon, 150 F.3d at 1026). While the Court considers each factor individually, "[i]t is the settlement taken as a whole, rather than the individual component parts, that must be examined for overall fairness . . . The settlement must stand or fall in its entirety." Hanlon, 150 F.3d at 1026 (citing Officers for Justice v. Civil Serv. Comm'n of City & Cty. of San Francisco, 688 F.2d 615, 628 (9th Cir. 1982)).

         When reviewing the R&R and the Supplemental R&R, the Court reviews the Special Master's findings of fact and conclusions of law de novo, and his rulings on procedural matters for abuse of discretion. Fed.R.Civ.P. 53(f); see also ECF No. 4077 at 7, amended by ECF No. 4298 at 3.

         "There is a strong judicial policy that favors settlements, particularly where complex class action litigation is concerned." In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)). However, "settlement class actions present unique due process concerns for absent class members, and the district court has a fiduciary duty to look after the interests of those absent class members." Allen v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015) (internal quotations and citations omitted).

         The Ninth Circuit "usually impose[s] the burden on the party objecting to a class action settlement." See United States v. Oregon, 913 F.2d 576, 581 (9th Cir. 1990).

         B. Analysis

         In determining whether to approve a class action settlement, the Court's "threshold task is to ascertain whether the proposed settlement class satisfies the requirements of Rule 23(a) of the Federal Rules of Civil Procedure applicable to all class actions, namely: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation." Hanlon, 150 F.3d at 1019. The Court must also ensure that at least one of the three requirements of the Federal Rule of Civil Procedure 23(b) is met. Here, the Special Master found that the settlement meets each of the Rule 23(a) factors, and that the settlement class satisfies Rule 23(b)'s predominance requirement. See R&R at 17-21. No party objects to any of these findings except those related to adequacy of representation. The Court will discuss adequacy of representation at length in a later section related to allocation, and will there overrule the objections. The Court accordingly adopts the Special Master's Rule 23 analysis and incorporates it by reference as though fully set forth here (except as it relates to adequacy of representation). Accordingly, the Court finds that the settlement class meets the requirements for certification.

         C. Adequacy of Notice

         At the preliminary approval stage, the Court approved the parties' proposed plan for providing notice to the class. ECF No. 3906 ¶¶ 11-13, 15. Objectors now raise several issues with regard to the notice program, including notice to foreign residents. Hull Obj. at 3; Bonsignore Obj. at 8-11. "Adequate notice is critical to court approval of a class settlement under Rule 23(e)." Hanlon, 150 F.3d at 1025.

         Special Master Quinn described the notice to foreign residents who may have purchased a CRT in the United States, and his conclusions as to the adequacy of that notice, as follows:

Foreign residents who were in position to purchase CRT products in the United States during the Class Period fall squarely within the notice efforts. The Summary Notice was published as a press release in foreign-based media outlets in 15 countries, including Canada and Mexico. See Fisher Decl., ¶ 3. Nonresidents living in border regions - particularly those capable of entering the United States for purposes of purchasing a television or computer - are likely to use the internet just like everyone else; thus, they were subject to digital outreach. The impact of these efforts is demonstrated by the fact that claims have already been submitted in this Proposed Settlements by non-U.S. persons with addresses in numerous foreign countries including Canada, Costa Rica, Germany, Great Britain, Israel, Iceland and Spain. Id., ¶ 3(c).

         R&R at 45-56. Bonsignore objects that "there is insufficient evidence that the Notice reached foreign residents, " Bonsignore Obj. at 10, but does nothing to meet his burden of showing that notice was inadequate. Without knowing, for example, the percentage of foreign purchasers of CRTs compared to the percentage of claimants, it simply is not possible to give Bonsignore's objection any weight.

         Special Master Quinn described the extent of the notice program and resolved objections regarding (1) the age and income profile of recipients, (2) notice to foreign residents, (3) notice to non-English speakers, (4) the supposed need for televised notice, and (5) the terms of notice provided to the nationwide class. R&R 46-51. The Court adopts that discussion and reasserts it as though set forth fully here. Objectors now raise two areas of concern: whom the notice program targeted and how to properly calculate the reach of the notice program.

         As to whom was targeted, the Special Master's findings show that the notice program did target those in relevant demographics by age, income level, or location of residence. Objector Hull argues that foreign residents received inadequate notice. See Hull Obj. at 3. But Objector Hull does not explain why the Special Master's findings are wrong. See Hull Obj. at 3.[17]Objector Bonsignore suggests that the Special Master's findings inaccurately assume that the existence of claims filed by foreign residents constitutes dispositive evidence that notice reached a sizable segment of that population. See Bonsignore Obj. at 9-10. Yet Bonsignore offers no evidence or legal basis to conclude that the broadly published notice, which resulted in claims by foreign residents, is insufficient. The burden rests with Bonsignore, as an objector, to demonstrate that notice was inadequate. See Oregon, 913 F.2d at 581. This objection, and the remaining objections related to whether the notice adequately targeted various demographics, are overruled.

         Objectors also ask the Court to reject the Special Master's conclusion that the notice program's reach was sufficiently broad. With regard to the digital media campaign, they ask the Court to appoint an expert to (1) separately evaluate the reach of that campaign and (2) assist in the creation of a more robust notice plan. See C-S Obj. at 9-10; Bonsignore Obj. at 9-11. The Court concludes these steps are unnecessary. The evidence before the Special Master, and now before this Court, included a report by claims administrator Joseph Fisher showing that the print media campaign reached 57% of the targeted demographic and the digital media campaign reached 61%. See R&R at 49. When these rates are combined and filtered for overlap, they provide for an overall reach of 83%. Id. The Court credits these conclusions, which are supported by the strong response rate to the notices.

         As previously noted, the Ninth Circuit "usually impose[s] the burden on the party objecting to a class action settlement." Oregon, 913 F.2d at 581. The Court will not indulge an effort to attempt to create the evidence that objectors themselves did not provide.

         Accordingly, the Court overrules these objections and concludes that the parties have provided the best practicable notice to class members.

         D. Fairness, Adequacy, and Reasonableness

         1. Strength of Plaintiffs' case

         Approval of a class settlement is appropriate when plaintiffs must overcome significant barriers to make their case. Chun-Hoon v. McKee Foods Corp., 716 F.Supp.2d 848, 851 (N.D. Cal. 2010). Special Master Quinn recounts several hurdles IPPs would face absent a settlement, and concludes that this factor "weighs strongly in favor of approving the Proposed Settlements." R&R at 22. Hearing no objection to this conclusion and good cause appearing, the Court adopts the Special Master's analysis.

         2. Risk of continued litigation

         Difficulties and risks in litigating weigh in favor of approving a class settlement. See Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 966 (9th Cir. 2009). Special Master Quinn finds this factor weighs in favor of settlement, as there was "great risk" to IPPs in continuing to pursue litigation, including both uncertainty over the results of pending motions and challenges (and delay) in collecting any winnings. See R&R at 22-24. The Court further notes that its analysis of this factor with respect to the DPPs' case applies here with equal force. See ECF No. 4260 at 6-7. Hearing no objection and good cause appearing, the Court adopts the Special Master's analysis.

         3. Settlement amount

         "In assessing the consideration obtained by the class members in a class action settlement, ‘it is the complete package taken as a whole, rather than the individual component parts, that must be examined for overall fairness.'" Nat'l Rural Telecomms. Cooperative v. DIRECTV, Inc., 221 F.R.D. 523, 527 (C.D. Cal. 2004) (quoting Officers for Justice, 688 F.2d at 628.) "In this regard, it is well-settled law that a proposed settlement may be acceptable even though it amounts to only a fraction of the potential recovery that might be available to the class members at trial. Id. (citing Linney v. Cellular Alaska Partnership, 151 F.3d 1234, 1242 (9th Cir. 1998)).

         In assessing such a large settlement, it is tempting to evaluate its merits based on its size alone - and without a doubt, $576, 750, 000 is a significant amount of money. The IPPs and Special Master Quinn make much of the fact that this is the "second largest cash recovery ever obtained on behalf of indirect purchasers." R&R at 24, 56; accord ECF No. 4370 at 1 (touting the settlement as "one of the largest recoveries ever on behalf of indirect purchaser plaintiffs"). As the Court has observed in reviewing other settlements, however, the relevant question is not how large the total dollar amount of the settlement is, but how great a percentage of the potential recovery it represents.[18]

         The reason the settlement here is so large is not because - or at least not only because - the settlement represents an "exceptional result for the class, " as IPPs would have it, ECF No. 4071 at 11, but rather because the injury suffered by the class was even larger. The alleged injury in the case was $2.78 billion, see R&R at 56; the settlement represents 20% of that amount, without accounting for the possibility of treble damages under the antitrust laws. In the LCD case, by contrast, the settlement returned 50% of the potential recovery. In re TFT-LCD (Flat Panel) Antitrust Litig., No. M 07-1827 SI, 2013 WL 1365900, at *7 (N.D. Cal. Apr. 3, 2013).

         Nonetheless, while the settlement might not be as exceptional or extraordinary as its proponents claim, the proposed aggregate settlement here is without question a good recovery and firmly in line with the recoveries in other cases.[19]

         Objectors Cooper and Scarpulla note that the IPPs do not include the "likely recovery per plaintiff under the terms of the settlement and the potential recovery if plaintiffs were to prevail on each of their claims, " as required by this judicial district's Procedural Guidance for Class Action Settlements. C-S Obj. at 14. Special Master Quinn did not address this requirement. The IPPs contend that the procedural guidance "is just that -- guidance for evaluating whether a settlement is fair, reasonable, and adequate." See IPP Resp. at 28.

         The Court agrees with IPP Counsel. The Northern District of California's Procedural Guidance provides a useful checklist for attorneys and the Court, and this Court has previously relied upon it in evaluating proposed settlements. Smith v. Am. Greetings Corp., No. 14-CV-02577-JST, 2015 WL 4498571, at *10 (N.D. Cal. July 23, 2015). However, it is intended, as both its title and the Court's introductory language[20] make clear, simply as guidance. In the end, what is required is sufficient information for the Court to confidently determine that a settlement "taken as a whole is fair, reasonable, and adequate." In re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (citing Fed.R.Civ.P. 23(e)(2)).

         While additional information on average recoveries might be helpful, the nature of a pro rata distribution makes such estimates difficult where the claims deadline is not yet passed for all potential claimants. See ECF No. 4339 at 5. The information the IPPs have provided regarding potential recovery, even though stated in the aggregate, is sufficient to permit the Court to review the proposed settlement for fairness, reasonableness, and adequacy, when combined with the plan of allocation that describes the minimum and maximum that can be recovered by each class member. Accordingly, the Court overrules the objection.[21]

         The Court agrees with the Special Master that this factor favors approval of the settlement.

         4. Extent of discovery

         "In the context of class action settlements, formal discovery is not a necessary ticket to the bargaining table where the parties have sufficient information to make an informed decision about settlement." In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000) (citation omitted). However, the extent of discovery completed supports approval of a proposed settlement, especially when litigation has "proceeded to a point at which both plaintiffs and defendants ha[ve] a clear view of the strengths and weaknesses of their cases." McKee Foods, 716 F.Supp.2d 851-52 (internal quotation marks omitted). In this case, the Special Master summarized the parties' discovery efforts as follows:

[S]ignificant discovery was already completed by the time the parties reached their settlement agreements. [The] IPPs and their experts had already searched, reviewed and analyzed millions of pages of documents and voluminous data sets produced by defendants, the DAPs and third parties, and various parties to the litigation had already taken over 250 depositions. In addition, the parties had already exchanged expert reports on liability and damages, including opening, opposition, rebuttal and sur-rebuttal reports from 17 expert witnesses, all of whom were deposed, often multiple times, regarding the reports that they had prepared.

R&R at 25. He further noted, "the parties had also exchanged trial exhibit lists, witness lists, deposition designations, jury instructions and special verdict forms. They had also filed motions in limine and other pretrial motions." Id. No party quarrels with the Special Master's finding that the parties were thoroughly prepared for trial and that this factor weighs in favor of settlement, and the Court adopts that finding.

         5. Counsel's experience

         "The recommendations of plaintiffs' counsel should be given a presumption of reasonableness." See In re Omnivision, 559 F.Supp.2d 1036, 1043 (N.D. Cal. 2007) (citation omitted). As the Special Master notes, counsel for the IPPs has had a long and very successful career as an antitrust lawyer. See R&R at 25-26. No party having objected, the Court adopts the Special Master's finding that this factor favors settlement.[22]

         6.Government Participation

         The Class Action Fairness Act ("CAFA") requires notice of a settlement be given to affected states with time to comment prior to final approval of the settlement. See 28 U.S.C. § 1715(b). This allows the appropriate state or federal official the chance to "voice concerns if they believe that the class action is not in the best interest of their citizens." Non-Repealer State SOI at 3 (quoting S. REP. 109-14, 5, 2005 U.S.C.C.A.N. 3, 6). The notification procedure serves as a "check against inequitable settlements" and "deter[s] collusion between class counsel and defendants to craft settlements that do not benefit the injured parties." See id. (quoting S. REP. 109-14, 14-20, 28, 32-33, 35; 2005 U.S.C.C.A.N. 3, 17-21, 28, 31-32, 34).

         Three Statements of Interest have been filed in total. The first, by the State of California, was filed in time for the Special Master's review. In response to that Statement of Interest, the Special Master recommended extending the claims deadline for California natural persons, ECF No. 4281, which the Court subsequently adopted as its order, ECF No. 4339. Otherwise, the Special Master overruled the State of California's objections. R&R at 26-28. No one objects to the Special Master's analysis - not even the State of California - and the Court need not address that Statement of Interest further. The Court adopts the R&R at 26:10-19, 26:24-28:5.

         The second and third Statements of Interest are from thirteen non-repealer states and two omitted repealer states, respectively. Both Statements raise questions concerning the adequacy of representation based on a lack of consideration provided in exchange for the release of certain injunctive relief claims.[23] For reasons set forth later in this order, the Court will overrule the objections contained in these two Statements of Interest. Nevertheless, putting the specific objections to one side, the mere fact that the Attorneys General of 16 states[24] oppose the settlement in its current form weighs against its approval. Cf. In re Linkedin User Privacy Litig., 309 F.R.D. 573, 589 (N.D. Cal. Sept. 15, 2015) (finding that this factor favored settlement where no government official appeared).

         7. Reaction of the Class

         Class members' positive reaction to a settlement weighs in favor of settlement approval; "the absence of a large number of objections to a proposed class action settlement raises a strong presumption that the terms of a proposed class settlement [] are favorable to the class members." In re Omnivision, 559 F.Supp.2d at 1043. "A low number of opt-outs and objections in comparison to class size is typically a factor that supports settlement approval." In re Linkedin, 309 F.R.D. at 589 (citing Hanlon, 150 F.3d at 1027).

         The Special Master summarized the reaction of the class as follows:

IPP's Notice Program reached millions of consumers who purchased CRT televisions and computers. Only 11 objections (with a total of 22 individual objectors) and five requests for exclusion were received. Two objections have since been withdrawn, and two of the requests for exclusion were by DAPs that are already pursuing their own cases. Moreover, two of the objections - those from Paul Palmer (which was withdrawn) and Douglas St. John - are directed at fees only; they do not challenge the sufficiency of the settlement.

R&R at 28. This Court has received nine timely objections to the R&R, two Statements of Interest, and one letter from a class member. See generally ECF No. 4484 (objecting to the amount of incentive awards). Given that the class consists of millions of indirect purchasers - and even giving the Statements of Interest greater weight relative to other objections - this level of objection can fairly be described as enthusiastic approval. See, e.g., Churchill Village LLC v. Gen. Elec., 361 F.3d 566, 577 (9th Cir. 2004) (affirming settlement with 45 objections out of 90, 000 notices sent); In re Linkedin, 309 F.R.D. at 589 (finding "an overall positive reaction" by the class where only 57 class members opted out and six objected out of a class of 798, 000); Schuchardt v. Law Office of Rory W. Clark, No. 15-CV-01329-JSC, F.R.D., 2016 WL 1701349, at *11 (N.D. Cal. Apr. 28, 2016) (finding that "the reaction of the Class strongly supports final approval" where 3% of the class opted out and no class member objected). The Court finds that this factor weighs in favor of approval.

         8. ...

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