893 F.3d 980
7th Cir.2018Background
- Plaintiff Pearson sued manufacturers of glucosamine on behalf of a consumer class; an initial class settlement was vacated on appeal for privileging attorneys’ fees (Pearson v. NBTY).
- Parties reached a revised settlement approved by the district court on August 25, 2016; the court entered a “Settlement Judgment” dismissing the action "without prejudice" and retaining jurisdiction to supervise implementation.
- Three unnamed class members (Buckley, Sweeney, Nunez) objected and appealed, then voluntarily dismissed their appeals before briefing; the district court later entered a separate “Post‑Appeal Judgment” dismissing the action with prejudice and without effectuating the settlement terms.
- Objector Theodore Frank sought to intervene and to disgorge any side payments the objectors received; the district court declined jurisdiction and denied relief, treating the Post‑Appeal Judgment as terminating court supervision.
- Frank moved under Fed. R. Civ. P. 60(b) to vacate the Post‑Appeal Judgment and restore the Settlement Judgment so the court could address potential side‑settlements; the district court denied the motion and Frank appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an absent class member may bring a Rule 60(b) motion | Frank: his prior objection and appeal participation make him a party for Rule 60(b) purposes | Appellees: absent class members generally are not parties and cannot invoke Rule 60(b) | Court: Frank qualifies to bring Rule 60(b) relief given his participation; Devlin supports limited party status |
| Whether district court should have considered Rule 60(b)(6) in addition to 60(b)(1) | Frank: 60(b)(6) is appropriate to address possible class sellouts and loss of court supervision after the Post‑Appeal Judgment | Court below: focused only on 60(b)(1) and treated the stipulation as dispositive | Court: District court abused its discretion by failing to consider 60(b)(6) equitable relief |
| Whether the Post‑Appeal Judgment improperly altered retained jurisdiction and disadvantaged the class | Frank: the Post‑Appeal Judgment supplanted the Settlement Judgment’s retained jurisdiction, removing court supervision and possible enforcement of injunctive and distribution terms | Appellees: dismissal was stipulated and final; strategic litigation choice | Court: vacatur proper under 60(b)(6) because replacing the Settlement Judgment changed settlement enforcement without notice or Rule 23(e) procedures |
| Whether relief should be granted or the case remanded for factual development | Frank: limited relief (vacatur) to permit inquiry into possible side payments and to restore ancillary jurisdiction for enforcement | Appellees: finality and stipulated dismissal weigh against reopening | Court: reversed and remanded for proceedings consistent with opinion; did not decide merits of any disgorgement remedy |
Key Cases Cited
- Devlin v. Scardelletti, 536 U.S. 1 (U.S. 2002) (absent class members may be "parties" for some procedural purposes)
- In re Four Seasons Sec. Litig., 525 F.2d 500 (10th Cir. 1975) (unnamed class members generally lack party status for Rule 60(b) absent participation)
- Safeco Ins. Co. of Am. v. Am. Int'l Grp., 710 F.3d 754 (7th Cir. 2013) (post‑appeal side settlements may be challenged via Rule 60(b))
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (U.S. 1994) (ancillary enforcement jurisdiction for settlement terms embodied in a court order)
- Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir. 2014) (prior reversal of the original settlement for excessive attorneys’ fees)
- Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014) (class‑action judges cannot be passive; extra scrutiny of settlements may be required)
- In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) (material alterations to class settlements generally require new notice and Rule 23(e) review)