Shane Group, Inc. v. Blue Cross Blue Shield of Mich.
825 F.3d 299
| 6th Cir. | 2016Background
- Blue Cross Blue Shield of Michigan (BCBSM) held >60% of Michigan commercial insurance market and allegedly used that market power from ~2007 to obtain "most-favored-nation" (MFN) and "MFN-plus" clauses from hospitals that raised rates for other commercial insurers.
- DOJ sued Blue Cross in 2010; private plaintiffs later filed consolidated putative class actions adopting many DOJ allegations. The amended complaint sought >$13.7 billion and treble damages under the Sherman Act.
- Extensive discovery produced an expert report by Dr. Jeffrey Leitzinger estimating class-wide damages (~$118 million) and numerous exhibits; parties largely filed their class-certification papers, the expert report, and related submissions under seal.
- The parties reached a settlement in June 2014: Blue Cross to pay just under $30 million into a fund; anticipated attorney fees, expenses, and incentive awards would consume a large portion, leaving ~$14.66 million (about 12% of Leitzinger’s estimate; ~4% of potential treble damages) for 3–7 million class members.
- The district court preliminarily approved the settlement, certified the class, and then granted final approval after a fairness hearing—while most substantive filings and 194 exhibits (including Leitzinger’s report) remained sealed—prompting objections and this appeal.
Issues
| Issue | Plaintiffs' Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly sealed most substantive filings and exhibits | Sealing was justified by protective orders and confidentiality designations for discovery materials and third-party data | Sealing necessary to protect competitively sensitive financial, negotiating, and patient information; some materials covered by protective order | Abuse of discretion: sealing standards for judicial records were not applied; nearly all sealed documents (including expert report) were improperly sealed and orders vacated |
| Whether court adequately evaluated fairness of settlement under Rule 23(e) | Settlement is fair given litigation risk and expert damage analysis; parties negotiated reasonable compromise | Settlement amount and allocation appropriate in light of uncertainty and costs of continued litigation | Vacated: district court failed to meaningfully analyze likelihood of success vs. relief, creating an analytical gap; must reassess fairness with open record |
| Whether fee award and lodestar support were reasonable | Lodestar and requested fees reflect market rates and work performed | High hourly rates and lack of detailed time records justify scrutiny but do not preclude fee award | Error: district court relied on lodestar without adequate justification; counsel provided insufficient backup for high rates/hours—district court must reassess and explain |
| Whether incentive awards and claims process were proper | Incentive awards compensate named plaintiffs for time and effort; claims process manageable | Awards risk creating bounty; claims process unduly burdensome for class members | Vacated approval: court must require specific documentation of time for incentive awards and address objections about claims process on remand |
Key Cases Cited
- Baxter Int’l, Inc. v. Abbott Labs., 297 F.3d 544 (7th Cir. 2002) (distinguishes protective-order secrecy in discovery from presumptive public access to judicial records)
- Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165 (6th Cir. 1983) (strong presumption of public access; public interest in litigation details, especially in antitrust cases)
- In re Cendant Corp., 260 F.3d 183 (3d Cir. 2001) (burden on proponent of sealing; apply strict standards and narrow tailoring)
- In re Knoxville News-Sentinel Co., 723 F.2d 470 (6th Cir. 1983) (orders to seal must be narrowly tailored and supported on the record)
- Press-Enter. Co. v. Superior Court, 464 U.S. 501 (1984) (public and press right of access to certain judicial proceedings; specificity required for closure)
- Joy v. North, 692 F.2d 880 (2d Cir. 1982) (secrecy appropriate in discovery but not at adjudicative stage; trade-secret and similar protections are limited)
- United States v. Amodeo, 71 F.3d 1044 (2d Cir. 1995) (privacy interests of third parties weigh heavily but must be balanced and narrowly protected)
- In re Dry Max Pampers Litig., 724 F.3d 713 (6th Cir. 2013) (district courts must carefully scrutinize class settlements for adequacy and potential conflicts)
- Int’l Union, UAW v. Gen. Motors Corp., 497 F.3d 615 (6th Cir. 2007) (fairness inquiry requires weighing likelihood of success against settlement relief)
- Hadix v. Johnson, 322 F.3d 895 (6th Cir. 2003) (caution on incentive awards; risk that awards may induce named plaintiffs to put personal gain over class interests)