2010 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-9-2010 

# In Re: Ins urance B rok

e rage P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 09-3521

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2010

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2010 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " In Re: In s ur anc e B r o ke r ag e " (2010). 2010 D e cisio n s . P ape r 1759. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2010/1759H onor abl e Paul S. D i amond, U ni t ed St at es D i s tr i ctJ udge forthe East ern D i s tr i ct * of Penns y l vani a, s i t t i ng bydes i gnat i on. NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

____________ N o. 09- 3521

____________ I N R E : I N SU R A N C E B R O K E R A G E A N T I T R U ST L I T I G A T I O N ( M D L 1663) M a rs h & M c C le n n a n C o m p a n ie s ; M a rs h , In c .; M a rs h U S A , In c .;

M a rs h U S A , In c . (C o n n e c tic u t) ; M e rc e r, I n c .; M e r c e rHu ma n Re s o u r c e Co n s u l t i n g LL C; M e rc e r H u m a n R e s o u rc e C o n s u ltin g o f T e x a s , In c .; S e a b u ry & S m ith , In c ., A p p e llan ts

____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt

forthe D i s tr i ctof N ew J er s ey ( D . C . N o. 04- cv- 05184) D istri ct Ju d g e: H o n o rab le G arrettE . B row n , Jr.

____________ Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

J anuary28, 2010 B e f o re : F U E N T E S a n d F IS H E R , C i r cui tJudges , a n d DI AM OND, D is tr i ct Judge . * ( Fi l ed: M ar ch 9, 2010)

____________ OPI NI ON O F THE COURT

____________2

F IS H E R , C i r cui tJudge . A p p e lla n ts M a rs h & M c L e n n a n C o m p a n ie s , In c ., M a rs h , In c ., M a rs h U S A In c ., M a r s h USA I n c . ( Co n n e c t i c u t ) , M e r c e r , I n c . , M e r c e rHu ma n Re s o u r c e Co n s u l t i n g LL C, M e rc e r H u m a n R e so u rc e C o n su lti n g o f T e x a s, In c ., S e a b u ry& S m ith , In c . (co llec tiv e ly “M ar s h”) appea l fr om the fi nal or derand mem or andum opi ni on of U ni t ed St at es D i s t r i ct C our tforthe D i s tr i ctof N ew J er s eydeny i ng M ar s h’ s m ot i on fora perm anenti nj unct i on a n d g ra n tin g A p p e lle e s ’, O f f ic e D e p o t, I n c . (“ O f

f ic e D e p o t” ), a n d E p ix H o ld in g s C o rp ., E p ix I, In c ., a n d E p ix II, In c . (co llec tiv e ly“ E p ix ” ), m o tio n s to e x ten d a c las s a c tio n “ o p tout ” dea dl i ne and t o al t era j udgm entt o excl ude A ppel l ees fr om the s ett l ementcl as s . For th e r e a s o n s s t a t e d h e r e i n , we wi l l a f f i r m. I. W e w r i t e exc l us i vel yforthe part i es w ho ar e fa m i l i arw i th the fa ctual cont extand the l egal hi s t oryof the ca s e. T her efor e, w e w i l l s etfor th onl ythos e fa ct s nece s s aryt o our analy si s. I n 2004, s ever al cl as s act i on s ui t s w er e fi l ed aga i ns tM ar s h, otheri ns ur ance b rok ers, an d insu rers fo r th eir pa rt ici p ati o n in an all eg ed co n sp ir ac ythat inv o lved b rok ers bi d r i ggi ng fori ns ur ance carr i er s i n excha nge for“cont i ngentcomm i s s i ons , ” or ki ckbac ks . T he cl as s act i on s ui t s w er e eve ntual l ycons ol i dat ed i nt o tw o docket s ; the do cket ati ssue i n thi s appea l i s I n r e I ns ur ance Broker age Ant i tr us tLi t igat i on , N o . 0 4 -51 8 4 (D . N . J. O ct. 3 , 2 0 0 6 ) (“M D L 1 6 6 3 ”).3

In M D L 1 6 6 3 , the D istric t C o u rt a p p ro v e d a c las s-w id e se ttl e m e n t p u rsu a n t to F e d e ra l R u le o f

C iv il P ro c e d u re 2 3 (b )(3 ). In c o n ju n c tio n w ith th e se ttl e m e n t ap p ro v a l, M ars h w as r equ i red t o send “op t -out ” no t i ces t o all po t enti al cl ass m em bers. T hese not i ces pr ovi ded thatpot ent i al cl as s m ember s w oul d be i ncl uded i n the cl as s act i on s ett l ementunl es s theyopt ed outof the cl as s bythe “opt - out ” dea dl i ne. B oth O ffi ce D epotand Epi x fai l ed t o opt - outof the cl as s pr i ort o the dea dl i ne. O n February17, 2009, the D i s tr i ctC our ti s s ued a f i nal j udgm entand or der app rovi ng the clas s- w i de set t l em ent. P ursuantt o thi s order , al l m em bers of t he clas s r el eas ed anyand al l cl ai m s agai ns tM ar s h thatcoul d have be en r ai s ed i n the cl as s act i on su it. A s s u c h , M a rsh f

iled m o tio n s to e n

jo in O f f ice D e p o t an d E p ix f

ro m p u rsu in g th e ir s t at e courtact i ons agai ns tM ar s h. I n r es pons e t o M ar s h’ s m ot i ons t o enj oi n, O ffi ce D epot and Epi x fi l ed mot i ons i n t he di s tr i ctcourtt o ext end the “opt - out ” dea dl i ne and t o m odi fy th e se ttl e m e n t cla ss so th a t ea c h c o u ld e lec t to b e e x c lu d e d f ro m th e c las s s e ttl e m e n t. T he D i s tr i ctC our tconcl uded thatO ffi ce D epot ’ s and Epi x’ s fai l ur e t o m eetthe “opt - out ” dea dl i ne w as “exc us abl e negl ect . ” The C our tgr ant ed A ppel l ees ’ m ot i ons for an ex tens ion o f th e d ea d li n e a n d m o d ifi ca ti o n o f th e se tt lem en t cl ass a n d d en ied M arsh ’s m ot i on t o enj oi n A ppel l ees ’ s t at e courtact i ons . T hi s t i m el yappea l fol l ow ed. II. T he D i s tr i ctC our thad j ur i s di ct i on overM D L 1663 pur s uantt o 28 U . S. C . §§ 1331, 13 67 . W e hav e j uri sdi ct i on pu rs uan tt o 2 8 U . S . C . §§ 12 91 , 12 92 . T his cou rtrevi ew s a4

“D i s tr i ctC our t ’ s m odi fi cat i on of i t s ow n or deres t abl i s hi ng a dea dl i ne forabus e of di s cr et i on. ” I

n r e C endant

C or p. P r i des Li t ig. , 2 3 3 F . 3 d 1 8 8 , 1 9 2 ( 3 d C i r . 2 0 0 0 ) . “ We w i l l notdi s turb an exe r ci s e of di s cr et i on ‘ unl es s ther e i s a def i ni t e and f

i r m convi ct i on thatthe court. . . comm i t t ed a c l earerr orof j udgm enti n the conc l us i on i tr eac hed upon w ei ghi ng of the r el evantfac t or s . ’ ” I d. ( quot i ng H

a n o v e r P o ta to P ro d

s., In c . v. Sh a la la , 9 8 9 F . 2 d 1 2 3 , 1 2 7 (3d C ir . 1 9 9 3 )). III . T h e S u p rem e C o u rth as re co g n ized that, in ce rt ain c ir cu m stan ce s, a p arty ’s fa il u re t o compl yw i th a fi l i ng deadl i ne maybe “e xcus abl e negl ect . ” P i oneerI nv. Ser vs . C o. v. B ru n sw ickA ss o c . L td . P ’sh ip , 5 0 7 U .S . 3 8 0 , 3 9 5 (1 9 9 3 ). In a ss e ss in g w h a t n e g lec t is e x c u sa b le, w e a re d ire c ted to c o n sid e r f o u r re lev a n t f

a c to rs: (1 ) th e d a n g e r o f p re ju d ice to the n on m ov ant; (2) the lengt h o f t he d el ayand i t s potent i al effect on j ud i ci al proceed i ng s; ( 3) the r eas on forthe del ay , i ncl udi ng w hetheri tw as w i thi n the r eas onabl e contr ol of the m ovant ; and ( 4) w hetherthe movantact ed i n good fai th. ” I d. ; se e a lso In re O rth o

p e d ic B one Scr ew P r ods . Li abi l i t y Li t ig. , 2 4 6 F . 3 d 3 1 5 , 3 2 2 - 2 3 ( 3 d Ci r . 2 0 0 1 ) . As th e S u p r e me C our tnot ed i n P i oneer , “ [ i n ] d e t e r mi n i n g wh a ts o r t s o f n e g l e c twi l l b e e x c u s a b l e , we concl ude thatthe det erm i nat i on i s atthe bott om an equi t abl e one[ . ] ” 507 U . S. at395. M a rsh c o n ten d s th a t th e D istric t C o u rt e rre d in f in d in g th a t A p p e llee s’ f a ilu re to m eetthe “opt - out ” dea dl i ne w as “exc us abl e negl ect . ” Speci fi cal l y , M ar s h ar gues thatt he5

D istri ct C o u rterred b yn o t giving d ispo sit ive w eigh t t o the s u p p o sed ly“c ri ti ca l” th ir d fac t or– the r eas on fordel ay . W e di s agr ee.

“ In c las s a c tio n s, c o u rts h a v e e q u itab le p o w e rs to m a n a g e th e lit ig a tio n in o rd e r to pr om ot e j udi ci al economyand fa i r nes s t o l i t i gant s . ” D e Asce nci o v. Tys on Foods , I nc. , 342 F. 3d 301, 313 ( 3d C i r . 2003) . W her e thos e equi t abl e pow er s ar e exe r ci s ed i n the f o rm o f c a se m a n a g e m e n t d e c isio n s in a c o m p lex c las s a c tio n , “d istric t co u rt d isc re tio n is ati t s gr eat es t . ” I

n r e Vi tam i ns A nt i tr us tC las s A ct i ons , 3 2 7 F . 3 d 1 2 0 7 , 1 2 1 0 (D . C . C ir . 2003) . I n l i ghtof thi s defe r ence t o the D i s tr i ctC our t ’ s di s cr et i on, w e bel i eve thatthe D i s tr i ctC our tfai r l yand appr opr i at el ycons i der ed the r el evantequi t abl e fa ct or s . T he C our tnot ed thatthe pr ej udi ce t o t he nonmovantpartyw as “mi ni m al , ” ( D i s t . C t . Sl i p O p. at7) ; that“gr ant i ng E pi x and O ffi ce D epot ’ s m ot i ons w i l l have l i t t l e orno i m pacton futur e pr ocee di ngs i n M D L 1663[, ] ” ( i d. a t 8 ); th a t E p ix a n d O f f ice D e p o t f

iled th e ir m ot i ons “w i th al l pos s i bl e has t e af t err ece i vi ng actual not i ce of the Sett l ement A gr eement [, ] ” ( i d. at9) ; and thatthe movant s act ed i n good fai th ( i d. ) . C ons i der at i on of thes e fa ct or s i s pr oper l yan ac tof bal anci ng; acc or di ngl y , w e r ej ectM ar s h’ s ar gum entt hat a n yo n e f

a c to r i s p re e m in e n t o v e r t h e o th e rs . See I n r e O ’ B r i en Envt l . E ner

gy, I nc. , 118 F. 3d 116, 125 ( 3d C i r . 1999) ( “[T] he [ P i oneer ] C our texpl i ci t l yr ej ect ed the ar gum entt hat excus abl e negl ectappl i es onl yt o t hos e s i tuat i ons w her e the fa i l ur e t o compl yi s a r es ul tof circu m stan ce s b ey o n d the [ lat e f il er]’s co n tr o l. ”).6

W e th e re f

o re h o ld th a t th e D istric t C o u rt e x e rc ise d re a so n a b le d isc re tio n in ext endi ng the “opt - out ” dea dl i ne s o thatO ffi ce D epotand Epi x coul d be exc l uded fr om the cl as s s ett l ementand thus pur s ue thei rs t at e courtl i t i gat i on. I n l i ghtof the dea dl i ne ext ens i on, and the s ubs equentr emoval of O ffi ce D epotand Epi x fr om the s ett l ement cl as s , the D i s tr i ctC our tcorr ect l ydeni ed M ar s h’ s m ot i on fora perm anenti nj unct i on barr i ng O ffi ce D epot ’ s and Epi x’ s s t at e courtl i t i gat i on. I V. F o r th e f o re g o in g re a so n s, w e w ill a f f irm th e o rd e r o f

th e D istric t C o u rt.