Case ID: f-appx_448/html/0085-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re SONY CORP. SXRD. Michael Ouellette, on behalf of himself and all others similarly situated, et al., Plaintiffs-Appellants, v. Sabrina Cardenas, Plaintiff-Appellee, and Sony Corporation et al., Defendants-Appellees.
    Nos. 10-3806-cv(L), 10-3814-cv(con), 10-3824-cv(con), 10-3829-cv(con), 10-3871-cv(con), 10-3873-cv(con), 10-3874-cv(con), 10-3888-cv(con).
    United States Court of Appeals, Second Circuit.
    Sept. 23, 2011.
    
      Arthur R. Miller (Sanford P. Dumain, Milberg LLP, Robert I. Lax, Lax LLP, Joseph J.M. Lange, Jeffrey A. Koncius, Lange & Koncius, LLP, on the brief), New York, NY, for Plaintiffs-Appellants.
    William B. Federman, Federman & Sherwood, Oklahoma City, OK, for Plaintiff-Appellee.
    John S. Purcell (Richard I. Werder, Jr., on the brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Defendants-Appellees.
    Gregory P. Joseph (Mara Leventhal, Maura Eileen O’Connor, on the brief), Gregory P. Joseph Law Offices LLC, New York, NY, for Appellants.
    PRESENT: GUIDO CALABRESI, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.
   SUMMARY ORDER

1. Approval of the Settlement

Rule 23(e) of the Federal Rules of Civil Procedure provides that the settlement of a class action must be approved by the district court. Fed.R.Civ.P. 23(e). A district court may approve a settlement of a class action only if it determines that the settlement is “fair, adequate, and reasonable, and not a product of collusion.” Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir.2000). This analysis requires the court to consider both “the settlement’s terms and the negotiating process leading to settlement.” Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir.2005) (citation omitted). “A ‘presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm’s-length negotiations between experienced, capable counsel after meaningful discovery.’ ” Id. (quoting Manual for Complex Litigation (Third) § 30.42 (1995)).

In making this determination, courts consider what are commonly referred to as the Grinnell factors: (1) the complexity, expense, and likely duration of the litigation; (2) the reaction of the class; (3) the stage of the proceedings and discovery completed; (4) the risks of establishing liability; (5) the risks of proving damages; (6) the risks of maintaining a class action through trial; (7) the ability of defendants to -withstand 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 in light of the attendant risks of litigation. City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir.1974), abrogated on other grounds, Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir.2000); see also Wal-Mart, 396 F.3d at 117-19 (applying Grinnell factors).

Public policy favors settlement. Wal-Mart, 396 F.3d at 116-17; accord Williams v. First Nat’l Bank, 216 U.S. 582, 595, 30 S.Ct. 441, 54 L.Ed. 625 (1910) (“Compromises of disputed claims are favored by the courts....”); TBK Partners, Ltd. v. W. Union Corp., 675 F.2d 456, 461 (2d Cir.1982) (noting “the paramount policy of encouraging settlements”). Consequently, when evaluating a settlement agreement, the court is not to substitute its judgment for that of the parties, nor is it to turn consideration of the adequacy of the settlement “into a trial or a rehearsal of the trial.” Grinnell, 495 F.2d at 462.

We review a district court’s determination that a settlement is “fair, reasonable, and adequate” for abuse of discretion. McReynolds v. Richards-Cantave, 588 F.3d 790, 800 (2d Cir.2009). The district court’s factual findings relating to the settlement are reviewed for clear error, while its rulings of law are reviewed de novo. Id.

Here, we conclude that the district court did not abuse its discretion in approving the settlement of the consolidated class actions relating to the second generation SXRD rear projection televisions (the “Settlement”). The district court carefully and thoroughly considered both the terms of the Settlement and the negotiation process that led to it. Indeed, in connection with the approval of the Settlement, the district court required extensive briefing, conducted hearings over five days, and subjected the parties and their attorneys to a searching inquiry. The terms of the Settlement were similar to — if not better than — the terms of the court-approved settlement of the class actions relating to the first generation SXRD televisions, where the class was represented by some of the same counsel now representing the parties claiming the Settlement is inadequate.

As the district court found, plaintiffs’ counsel here took extensive confirmatory discovery, and the Settlement was reached only after extensive negotiations and with the assistance of a mediator (a retired judge who assisted in resolving the issue of attorneys’ fees). The district court specifically considered the issue of collusion and found none, and plaintiffs-appellants’ counsel conceded at oral argument that, indeed, the record contains no evidence of collusion. Moreover, in a class of over 352,000 members, only eighty-three opted out and only twenty objected.

We have considered appellants’ other arguments with respect to the approval of the Settlement and have found them to be without merit. We are satisfied, based on our review of the record, that the district court’s findings were well-supported by the record, that it gave due consideration to the Grinnell factors, and that it did not abuse its discretion in approving the Settlement.

2. The Sanctions Order

We vacate the district court’s sanctions order. We understand why the district court felt the need to impose sanctions; we agree, for example, that (1) the Meserole plaintiffs’ counsel did not have evidentiary support for certain of the assertions in the second amended complaint, (2) they took a statement attributable to a former Sony employee out of context, thereby making it misleading in terms of time, and (3) they filed motion papers supporting the confidential source allegations even after defendants had served the Rule 11 motion. We agree with the district court that we expect counsel to do better.

Nonetheless, we conclude that the district court’s order imposing sanctions against the Meserole plaintiffs’ counsel should be vacated. Counsel did eventually withdraw the offending allegations (albeit after the safe-harbor period had expired), the district court found that counsel did not act in bad faith, and the district court’s order to show cause did not give specific notice of the second basis for the imposition of sanctions (the delay in striking the contested allegations).

CONCLUSION

Accordingly, the judgment of the district court is AFFIRMED, except that its order imposing Rule 11 sanctions against appellants is VACATED.