317 F.R.D. 426
S.D.N.Y.2016Background
- Plaintiffs (large consumer packaged-goods companies) brought a certified class action alleging News Corp. monopolized the in-store promotion (ISP) services market; intensive discovery and motion practice preceded trial.
- Parties reached a settlement during the first day of jury selection: News Corp. agreed to a $244 million common fund (pro rata distribution by ISP purchases) plus five years of structural relief limiting certain exclusive/renewal and confidentiality contract practices.
- Settlement contains ADR provisions: mediation then binding arbitration for disputes arising after approval (with an exception for structural-relief compliance claims more than three years after approval). No cy pres; unclaimed funds remain within class distributions.
- Notices were mailed; roughly 328 claims were filed representing a large share of purchases; court ordered additional targeted notice with a late-claim deadline.
- Counsel sought 30% of the fund ($73.2M) in fees (lodestar ~$36.4M, multiplier ~2.01), $7.51M in expenses, and $50,000 each for six class representatives; court found settlement procedurally and substantively fair but reduced fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Final approval of settlement fairness | Settlement yields substantial cash ($244M), structural relief, and avoided trial risks; negotiations were arm’s-length by experienced counsel | Settlement acceptable given litigation risks; defended arbitration clause as necessary to secure deal | Court approved settlement as fair, adequate, and reasonable after weighing Grinnell factors; ordered supplemental notice to potential claimants |
| Validity of ADR/arbitration clause in class settlement | ADR is a reasonable compromise; class members are sophisticated businesses able to arbitrate | Defendants insisted on arbitration; clause necessary to secure settlement | Court expressed concern about ceding judicial authority but concluded ADR clause is a permissible "fair proxy" here given sophistication of class and lack of objections |
| Attorneys’ fees: amount and method (percentage vs. lodestar) | Counsel requested 30% of fund ( ~$73.2M ), supported by lodestar and multiplier for risk and work performed | Defendants/observing class members argued 30% is high for a mega-fund and counsels’ billing showed duplication | Court reduced fee to $48,825,000 (20% of fund) after finding duplicative staffing, applying across‑the‑board lodestar reductions and lowering multiplier to 1.75 |
| Expenses and incentive awards | Requested $7.51M expenses (experts, contract review attorneys treated as expenses) and $50,000 each for six class reps | No substantial objections presented to expenses or incentive amounts | Court awarded full expenses ($7,512,915.12) and approved $50,000 incentive payments to each named representative |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir.) (standards for assessing class settlement and percentage method commentary)
- Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir.) (factors for awarding attorneys’ fees and lodestar cross-check)
- City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.) (Grinnell factors for substantive fairness of class settlements)
- In re Currency Conversion Fee Antitrust Litig., 263 F.R.D. 110 (S.D.N.Y.) (procedural fairness and courts’ role in settlement approval)
- Meredith Corp. v. SESAC, LLC, 87 F. Supp. 3d 650 (S.D.N.Y.) (upholding arbitration in a class settlement as a permissible proxy for judicial review)