168 F. Supp. 3d 985
N.D. Ohio2016Background
- Multidistrict antitrust litigation alleging decade-long price-fixing in the polyurethane foam market; certified classes for Direct Purchaser Plaintiffs (DPPs) and Indirect Purchaser Plaintiffs (IPPs).
- IPPs reached nine sequential settlements with a potential combined value of $151,250,000 (various portions already deposited, others deferred/contingent).
- Court preliminarily approved the settlements, notice plan, claim forms, and plan of allocation; final approval hearing followed with several objectors (including CCAF and pro se objectors).
- Plan of allocation: funds divided into bedding (36.93%), carpet padding (30.70%), furniture (32.37%); category weightings applied to purchase price (bedding 80%, carpet 90%, furniture 75%); paid pro rata within sub-funds.
- Claims filed as of Dec 23, 2015 exceeded available funds by a large margin, indicating pro rata payouts likely substantially below claimed amounts (likely <20%).
- Court reviewed objections (notice, cy pres, allocation, administration, incentive awards, and attorney fees) and granted final approval of settlements; awarded attorney fees and expenses in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Final approval — fairness, adequacy, absence of collusion | IPPs: settlements are fair, result from extensive discovery/negotiation, provide substantial recovery relative to risks | Objectors: settlements are inadequate or the result of collusion or unfair compromises | Court: Approved — UAW/Vassalle factors favor settlement; no evidence of fraud/collusion; settlements “fair, reasonable, adequate.” |
| Notice & undisclosed contingent/deferred funds | IPPs: notice directed class to full agreements online; contingencies/deferred payments are minor and disclosed as part of total | Objectors (CCAF): notice insufficient for failing to specify contingent $ and cy pres recipients | Court: Notice adequate under Vassalle/Mullane; contingencies de minimis relative to fund; but ordered lead counsel to propose cy pres recipients within 30 days to enhance transparency. |
| Cy pres — permissibility and identification | IPPs: cy pres only for de minimis residuals after economically infeasible further distributions; identities can be proposed later | Objectors: cy pres should be identified at settlement and large cy pres amounts are improper | Court: Cy pres permissible only if further pro rata distribution is not feasible; here any cy pres is expected to be de minimis; ordered identification of proposed recipients for court approval. |
| Plan of Allocation (weightings, minimum distributions) | IPPs: weighting reflects foam proportion in products; no minimum distribution threshold appropriate | Objectors: weightings cap recovery improperly; propose minimum distributions to avoid inefficient tiny checks | Court: Weightings are reasonable proxies for pass-through; no minimum required — de minimis checks acceptable; pro rata within sub-funds appropriate. |
| Incentive awards to class representatives | IPPs: modest awards ($10k for individuals, $35k for companies) reflect participation | Objectors: awards create unfair disparity | Court: Awards appropriate and within typical ranges; total $200,000 is <0.2% of fund and not unfair. |
| Attorney fees — method, percentage, gross v. net, timing, lodestar cross-check | IPPs: request 30% of gross ($45,375,000) plus $5.12M expenses; prefer percentage-of-fund and payments as funds are deposited | Objectors: percentage too high; fee should be applied to net (after costs/incentives); challenge lodestar and billing entries; request deferral until funds actually distributed | Court: Uses percentage-of-fund with lodestar cross-check; rejects net-only denominator requirement; reduces award to 24% of gross, payable proportionally as funds deposited; authorizes reimbursement of $5,115,811.72. |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (class certification standards and settlement-class considerations)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (due-process notice standard)
- UAW v. General Motors Corp., 497 F.3d 615 (6th Cir.) (seven-factor fairness test for class settlements)
- Vassalle v. Midland Funding LLC, 708 F.3d 747 (6th Cir.) (notice adequacy and pref. treatment of named plaintiffs)
- Klier v. Elf Atochem N. Am., 658 F.3d 468 (5th Cir.) (cy pres only when further distributions are not feasible)
- Dennis v. Kellogg Co., 697 F.3d 858 (9th Cir.) (reversing settlement for unspecified cy pres recipients unrelated to suit)
- In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir.) (cy pres disclosure and magnitude concerns)
- BankAmerica Corp. Sec. Litig., 775 F.3d 1060 (8th Cir.) (require public proposal for non-de minimis cy pres distributions)
- Rawlings v. Prudential-Bache Props., Inc., 9 F.3d 513 (6th Cir.) (percentage vs. lodestar methods; district court discretion)
- Bowling v. Pfizer, Inc., 102 F.3d 777 (6th Cir.) (district court may award lump-sum fee and permit counsel to allocate among themselves)