MEMORANDUM
Plаintiffs, through their proposed Co-Lead Class Counsel, Class Counsel, and Subclass Counsel, and Defendants National Football League and NFL Properties LLC (collectively, the “NFL Parties”)
1. BACKGROUND
In July 2011, Retired NFL Football Players filed the first lawsuit against the NFL Parties alleging, inter alia, that the NFL Parties breached their duties to the players by failing to take reasonable actions to protect players from the chronic risks created by concussive and sub-concussive head injuries and that the NFL Parties concealed those risks. Since then, more than 4,500 former players have filed substantially similar lawsuits. These lawsuits have been consolidated before me as a multidistrict litigation (“MDL”), pursuant to 28 U.S.C. § 1407. See Panel on Multidistrict Litigation Transfer Order, Jan. 31, 2012, ECF No. 1,
On July 8, 2013,1 directed the parties to mediation before retired U.S. District Judge Layn Phillips. Order, July 8, 2013,
II. THE PROPOSED CLASS ACTION SETTLEMENT
A. The Proposed Settlement Class
The Settlement provides for a nationwide Settlement Class consisting of three types of claimants: (1) Retired NFL Football Players; (2) authorized representatives, ordered by a court or other official of competent jurisdiction, of deceased or legally incapacitated or incompetent Retired NFL Football Players (“Representative Claimants”); and (3) close family members of Retired NFL Football Players or any other persons who properly assert, under applicable state law, the right to sue by virtue of their relationship with the Retired NFL Football Player (“Derivative Claimants”). Based on the records of the NFL Parties, there are more than 20,000 Settlement Class Members. Pl. Mem. Law 41, Jan. 6, 2014, ECF No. 5634.
The Settlement Class consists of two Subclasses: Subclass 1 is dеfined as Retired NFL Football Players who were not diagnosed with a Qualifying Diagnosis pri- or to the date of the Preliminary Approval and Class Certification Order, and their Representative Claimants and Derivative Claimants; and Subclass 2 is defined as Retired NFL Football Players who were diagnosed with a Qualifying Diagnosis pri- or to the date of the Preliminary Approval and Class Certification Order and their Representative Claimаnts and Derivative Claimants, and the Representative Claimants of deceased Retired NFL Football Players who were diagnosed with a Qualifying Diagnosis prior to death or who died prior to the date of the Preliminary Approval and Class Certification Order and who received a post-mortem diagnosis of chronic traumatic encephalopathy (“CTE”). A Qualifying Diagnosis is defined as Level 1.5 Neurocognitive Impаirment (early Dementia), Level 2 Neurocognitive Impairment (moderate Dementia), Alzheimer’s Disease, Parkinson’s Disease, amyotropic lateral sclerosis (“ALS”), and/or Death with CTE.
B. The Proposed Settlement
As explained in the Plaintiffs’ Memorandum of Law accompanying the Motion, the NFL Parties will make payments totaling $760 million over a period of 20 years to create three potential sources of benefits for Settlement Class Members.
First, the Settlement provides for a $75 million Baseline Assessment Program (“BAP”) that will offer eligible Retired NFL Football Players baseline neuropsy
Second, the Settlement provides for a $675 million Monetary Award Fund that will award cash to Retired NFL Football Players who already have a Qualifying Diagnosis or receive one in the future.
Third, the Settlement establishes a $10 million Education Fund to fund education programs promoting safety and injury prevention with regard to football players, including safety-related initiatives in youth football. This Fund will also educate Retired NFL Football Players regarding the NFL’s medical and disability programs.
In addition, the NFL Parties will pay up to $4 million in notice expenses. The NFL Parties will also pay attorneys’ fees and costs, which Plaintiffs’ Co-Lead Counsel will seek in an amount not to exceed $112.5 million. These amounts are in addition to the $760 million for the BAP, the Monetary Award Fund, and the Education Fund.
The Settlement includes a complex system of administration to manage the distribution of benefits. A Special Master, appointed for a five-year term, will oversee the work of a BAP Administrator, a Claims Administrator, and other administrative staff. The NFL Parties have agreed to pay one-half of the compensation of the Special Master, which is capped at $200,000 per year. The BAP Fund will pay the compensation and reasonable costs and expenses of the BAP Administrator. The Monetary Award Fund will pay the compensation and reasonable costs and expenses of the Claims Administrator; the reasonable costs and expenses of the Special Master; and the other half of the Special Master’s compensation.
In exchange for the benefits provided in the Settlement, Settlement Class Members and their related parties will release all claims and dismiss with prejudice all actions against, and covenant not to sue, the NFL Parties and others in this litigation and all Related Lawsuits in this Court and other courts. Settlement Class Members who recеive Monetary Awards will also be required to dismiss pending and/or forebear from bringing litigation relating to cognitive injuries against the National Collegiate Athletic Association (“NCAA”) and any other collegiate, amateur, or youth football organizations and entities.
III. DISCUSSION
A. Nature of a Class Action
Plaintiffs have chosen to structure this case as a class action. “Class actions are a form of representative litigation. One or more class representatives litigate on be
Despite the potential benefits of class actions, their binding effect on absentee parties remains a significant concern. In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Products Liab. Litig.,
Accordingly, under Federal Rule of Civil Procedure 23, the court must assure “to the greatest extent possible, that the actions are prosecuted on behalf of the actual class members in a way that makes it fair to bind their interests.” General Motors,
B. Preliminary Approval of the Proposed Settlement
Under Fedеral Rule of Civil Procedure 23(e), the settlement of a class action requires court approval, which may issue only “on finding that [the settlement] is fair, reasonable, and adequate.” Fed. R.Civ.P. 23(e)(2). Review of a proposed class action settlement typically proceeds in two stages. At the first stage, the
a. Standard of Review
At the preliminary approval stage, the bar to mеet the “fair, reasonable and adequate” standard is lowered, and the court is required to determine whether “the proposed settlement discloses grounds to doubt its fairness or other obvious deficiencies such as unduly preferential treatment of class representatives or segments of the class, or excessive compensation of attorneys, and whether it appears to fall within the rangе of possible approval.” Thomas v. NCO Fin. Sys., No. 00-5118,
That said, preliminary approval is not simply a judicial “rubber stamp” of the parties’ agreement. In re Inter-Op Hip Prosthesis Liab. Litig.,
Even though the preliminary approval analysis set forth by the Third Circuit in General Motors is not rigorous, there is no bar to conducting a more thorough analysis at the preliminary approval stage. Motions for preliminary approval of a class action settlement, especially before the class is certified pursuant to Fed.R.Civ.P. 23, are not perfunctory. If a proposed settlement appears obviously deficient, the ruling should be issued before rather than after the parties incur the administrative expense to publish notice to the class and handle any objections.
Zimmerman v. Zwicker & Assocs., P.C., No. 09-3905,
b. Analysis
Counsel for the Plaintiffs and the NFL Parties have made a commendable effort to reach a negotiated resolution to this dispute. There is nothing to indicate that the Settlement is not the result of good faith, arm’s-length negotiations between adversaries. Nonethelеss, on the basis of the present record, I am not yet satisfied that the Settlement “has no obvious deficiencies, grants no preferential treatment to segments of the class, and falls within the range of possible approval.” Cordy v. USS-Posco Indus., No. 12-553,
I am primarily concerned that not all Retired NFL Football Players who ultimately receive a Qualifying Diagnosis or their related claimants will be paid.
The parties are responsible for supplementing the record to provide the court with the information needed to evaluate the fairness or adequacy of a proposed settlement. MCL at § 21.632. See Martin v. Cargill, Inc.,
The current record does not sufficiently address my concerns. The Declaration from Judge Phillips refers to “analyses conducted by the independent economists or actuaries retained by the parties” to justify his belief that the $760 million to be paid by the NFL Parties “is fair and reasonable and will be sufficient to fund the benefits to which the parties have agreed.” PI. Mot. Ex. D, Phillips Decl. ¶ 20, Jan. 6, 2014, ECF No. 5634. Plaintiffs allege that thеir economists conducted analyses to ensure that there would be sufficient funding to provide benefits to all eligible Class Members given the size of the Settlement Class and projected incidence rates, and Plaintiffs’ counsel “believe” that the aggregate sum is sufficient to compensate all Retired NFL Football Players who may receive Qualifying Diagnoses. PI. Mem. Law 22, Jan. 6, 2014, ECF No. 5634. Unfortunately, no such analyses were рrovided to me in support of the Plaintiffs’ Motion. In the absence of additional supporting evidence, I have concerns about the fairness, reasonableness, and adequacy of the Settlement.
IV. CONCLUSION
I will deny the Motion for Preliminary Approval and Class Certification without prejudice. As a first step toward preliminary approval, I will order the parties to share the documentation referred to in their submissiоns with the Court through the Special Master.
Notes
. Plaintiffs have also sued Riddell, Inc., Rid-dell Sports Group Inc., All American Sports Corporation, Easton-Bell Sports, Inc., EB Sports Corp., Easton-Bell Sports, LLC, and RBG Holdings Corp. (collectively, the "Rid-dell Defendants”). The Riddell Defendants are not a party to the proposed Settlement.
. Except where otherwise noted, the capitalized terms in this Memorandum are taken from, and have the same meaning as those in, the Settlement Agreement. PL Mot. Ex. B, Jan. 6, 2014, ECF No. 5634.
. The Settlement further provides that in the event of a funding shortfall, the NFL Parties will contribute up to an additional $37.5 million to the Monetary Award Fund.
. Where, as here, the Court has not already certified a class, the Court must also determine whether the proposed settlement class satisfies the requirements of Rule 23. Amchemv. Windsor,
. At thе final approval stage, the fairness, reasonableness and adequacy of the settlement are assessed by considering the following factors: (1) The complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintаining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Girsh,
. I have additional concerns including, but not limited to, the adequacy of the BAP Fund and the release of the NCAA and other amateur football organizations. These concerns will also have to be addressed.