14-4649(L), 14-4710(Con) In Re: Elec. Books Antitrust Litig.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT



### SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 1 SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY 2 FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. 3 WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY 4 MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE 5 NOTATION “SUMMARY ORDER”). A PARTY CI TING TO A SUMMARY ORDER MUST SERVE A 6 COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 7

At a stated term of the United States Court of Appeals for the Seco nd Circuit, held at 8 the Thurgood Marshall United States Courthou se, 40 Foley Square, in the City of New York, 9 on the 17 th day of February, two thousand sixteen. 10
11 PRESENT: 12 P IERRE N. L EVAL , 13 B ARRINGTON D. P ARKER , 14 S USAN L. C ARNEY , 15 Circuit Judges

. 16

_____________ _______________ _____________ 17 18 I N R E : E LECTRONIC B OOKS A NTITRUST L ITIGATION * 19 20 Nos. 14-4649(L), 21 14-4710(Con) 22

_____________ _______________ _____________ 23 24 FOR OBJECTOR-APPELLANT JOHN S TEVE A. M ILLER , Denver, CO. 25 BRADLEY: 26
27 FOR PLAINTIFFS-APPELLEES STATE G ARY M. B ECKER , Assistant Attorney 28 OF ARIZONA, THE STATE OF General, for George Jepsen, Attorney 29 ALASKA, THE STATE OF ARKANSAS, General of Connecticut; (Charles E. Roy, 30 STATE OF COLORADO, THE STATE Firs t Assistant Attorney General; Eric 31 OF DELAWARE, THE DISTRICT OF Li pman, Assistant Attorney General; 32 COLUMBIA, STATE OF IDAHO, James E. Davis, Deputy Attorney General; 33 STATE OF INDIANA, THE STATE Scott A. Keller, Solicitor General; J. 34 OF KANSAS, STATE OF LOUISIANA, Campbell Barker, Deputy Solicitor 35

* The Clerk of Court is respectfully directed to amend the official caption in this case to conform to the caption above.2 STATE OF MARYLAND, THE General, for Ken Paxton, Attorney General 1 COMMONWEALTH OF MASS ACHUSETTS, of Texas, on the brief ); (Andrew W. Amend, 2 STATE OF MICHIGAN, STATE OF Assistant Solicitor General, for Eric T. 3 MISSOURI, THE STATE OF NEBRASKA, Schneiderman, Attorney General of New 4 THE STATE OF NEW MEXICO, THE York, on the brief ). 5 STATE OF NORTH DAKOTA, STATE OF 6 CALIFORNIA, STATE OF WISCONSIN, 7 THE COMMONWEALTH OF VIRGINIA, 8 STATE OF TEXAS, STATE OF ILLINOIS, 9 STATE OF IOWA, STATE OF VERMONT, 10 STATE OF TENNESSEE, STATE OF 11 SOUTH DAKOTA, COMMONWEALTH 12 OF PUERTO RICO, COMMONWEALTH 13 OF PENNSYLVANIA, STATE OF OHIO, 14 STATE OF WEST VIRGINIA, STATE OF 15 CONNECTICUT, THE STATE OF 16 ALABAMA, STATE OF NEW YORK, THE 17 STATE OF UTAH: 18 19 FOR PLAINTIFFS-APPELLEES SHILPA S TEVE W. B ERMAN (Jeff D. Friedman, 20 GROVER, FREDRIC A. PRESS, Shana Scarlett, on the brief ), Hagens Berman 21 ANTHONY PETRU, JEFFREY EVANS, Sobol Shapiro LLP, Seattle, WA, Berkeley, 22 ON BEHALF OF HIMSELF AND ALL CA; (Kit A. Pierson, Jeffrey Dubner, 23 OTHERS SIMILARLY SITUATED, Douglas Richards, on the brief , Cohen 24 CLARISSA WEISS, ON BEHALF OF M ilstein Sellers & Toll PLLC, New York, 25 HERSELF AND ALL OTHERS NY, Washington, D.C.). 26 SIMILARLY SITUATED, RHONDA 27 BURSTEIN, JUAN SOTOMAYOR, 28 ROBERT CHEATHAM, JOHN T. MEYER, 29 ON BEHALF OF HIMSELF AND ALL 30 OTHERS SIMILARLY SITUATED, PAUL 31 MEYER, PAUL J. MEYER, ON BEHALF 32 OF ALL OTHERS SIMILARLY SITUATED, 33 LIANA LINGOFELT, MARCIA GREENE, 34 ON BEHALF OF THEMSELVES AND ALL 35 OTHERS SIMILARLY SITUATED, AUBRIE 36 ANN JONES, ON BEHALF OF THEMSELVES 37 AND ALL OTHERS SIMILARLY SITUATED, 38 DAVID YASTRAB, ON BEHALF OF 39 HIMSELF AND ALL OTHERS SIMILIARLY 40 SITUATED, CYRUS JOUBIN, ON BEHALF 41 OF HIMSELF AND ALL OTHERS 42 SIMILARLY SITUATED, BRIAN BROWN, 43 ON BEHALF OF HIMSELF AND ALL 443 OTHERS SIMILARLY SITUATED, 1 HARRISON GOLDMAN, ON BEHALF 2 OF HIMSELF AND ALL OTHERS 3 SIMILARLY SITUATED, KEVIN 4 RADER-RHODENBAUGH, BRIAN MCGEE, 5 ON BEHALF OF HIMSELF AND ALL 6 OTHERS SIMILARLY SITUATED, CAROL 7 NESS, KATRINA KEY, PATSY DIAMOND, 8 INDIVIDUALLY AND ON BEHALF OF ALL 9 OTHERS SIMILARLY SITUATED, MARCUS 10 MATHIS, INDIVIDUALLY AND ON 11 BEHALF OF ALL OTHERS SIMILARLY 12 SITUATED, EUGENIA RUANE-GONZALES, 13 STEVEN RIVERS, CHRISTIAN GILSTRAP, 14 CYNTHIA J. TYLER, THOMAS FRIEDMAN, 15 JEREMY SHEPPECK, ALOYSIUS J. BROWN, III, 16 ANNE M. RINALDI, LAURA J. WARNER, 17 BARBARA HEATH, KATHLEEN LINDA 18 PITLOCK, KATHLEEN WEISS, 19 MATTHEW A. HOSKING, DIANE 20 URBANEC, ED MACAULEY, RONNA 21 HAMELIN, JAMES L. NESMITH, LAUREN 22 ALBERT, SUE ROBERTS, SUE ELLEN 23 GORDON, SHANE S. DAVIS, STEVEN 24 D. CAMPBELL, CHARLES LEONARD 25 PELTON, SR., KIMBERLY WHITESIDE 26 BROOKS, JESSICA MOYER, ANDREAS 27 ALBECK, REBECCA L. ROSSMAN, 28 MIRIAM CUMMINGS, CAROLE C. KEHL, 29 KAMAL SONTI, GRETCHEN ULBEE, CHAD 30 MILLER, ELVIRA MONZON, SUSAN 31 HOROWITZ, AMY D. NOLAN, ON BEHALF 32 OF HERSELF AND ALL OTHERS 33 SIMILARLY SITUATED, GRACE HOKE: 34 351 Appeal from a judgment of the United States District Court for th e Southern District 2 of New York (Cote, J. ). 3
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, 4 ADJUDGED, AND DECREED that the judgment entered by the District Court on 5 November 21, 2014, is AFFIRMED

. 6
After a bench trial, the District Court determined that Apple Inc. (“Apple”) 7 conspired to raise the prices of electronic book s (“ebooks”) in violation of state and federal 8
antitrust laws. See United States v. Apple Inc. , 952 F. Supp. 2d 638, 709 (S.D.N.Y. 2013) (the 9 “Liability Finding”). Apple ap pealed this determination. See United States v. Apple, Inc. , 791 10 F.3d 290, 339 (2d Cir. 2015) (affirming the District Court’s Liability Finding), pet. for cert. 11
docketed , No. 15-565 (U.S. Nov. 2, 2015) (the “Liabili ty Appeal”). Approximately five weeks 12
before the scheduled start of a trial on dam ages—while the Liability Appeal was still pending 13 before a panel of our Court—Apple entered in to a class action settlement (the “Settlement”) 14 resolving claims for damages stemming from the Liability Finding brought on behalf of 15 consumers of ebooks. The District Court approved the Settlement. In this appeal, 16 Objector-Appellant John Bradley challenges th e fairness, reasonableness, and adequacy of 17
the Settlement. 1 We assume the parties’ familiarity with the underlying facts and the 18 procedural history of the case, to which we re fer only as necessary to explain our decision to 19
affirm. 20
The payments Apple agreed to make unde r the Settlement depend on the outcome of 21 the Liability Appeal. If the Li ability Finding is affirmed, th e Settlement calls for Apple to 22 pay $400 million in damages to consumers, plus a total of $50 million in attorneys’ fees and 23 costs to the private plaintiffs and the states that brought suit as parens patriae (together, 24 “Plaintiffs”). If the Liability Finding is rema nded for further proceedings after either vacatur 25 or reversal, the Settlement requi res Apple to pay far less: $50 million to consumers, and $20 26

1 Objector Dianne Young Erwin also appealed the District Court’s approval of the Settlement, but has voluntarily dismissed her appeal pursuant to Federal Rule of Appellate Procedure 42(b). See Order Granting Mot. to Dismiss, No. 14-4649, ECF No. 117 (July 30, 2015) . Her claims ar e therefore not addressed in this order.5 million in fees and costs to Plaintiffs. If the Liability Finding is reversed without providing 1 for the possibility of a Plaintiffs’ victory, th e Settlement provides that Apple will make no 2 payments to consumers or for attorneys’ fees or costs, and Plaintiffs will move to dismiss 3 their claims against Appl e with prejudice. 4
Our Court has now affirmed the Liability Fi nding, and Apple did not move to rehear 5
en banc . The Liability Finding will stand unless th e Supreme Court grants Apple’s pending 6

certiorari petition and rejects our judgment. 7
A district court may approve a class action settlement only if the settlement is “fair, 8 reasonable, and adequate.” Fed R. Civ. P. 23(e)(2). In this Ci rcuit, district courts examine 9 the fairness, reasonableness, and adequa cy of a class settlemen t according to the Grinnell 10
factors—considerations that we enunciated in City of Detroit v. Grinnell Corp. , 495 F.2d 448 (2d 11 Cir. 1974), abrogated on unrelated grounds by Gol dberger v. Integrated Resources, Inc. , 209 F.3d 43, 49– 12 50 (2d Cir. 2000). The Grinnell factors are: 13

14 (1) the complexity, expense and likely duration of the litigation; (2) the 15 reaction of the class to the settlement; (3) the stage of the proceedings 16 and the amount of discovery completed; (4) the risks of establishing 17 liability; (5) the risks of establis hing damages; (6) the risks of 18 maintaining the class action through th e trial; (7) the ability of the 19 defendants to withstand a greater judgment; (8) the range of 20 reasonableness of the settlement fund in light of the best possible 21 recovery; (9) the range of reasonabl eness of the settlement fund to a 22 possible recovery in light of all the attendant risks of litigation. 23 24 Id . at 463 (citations omitted). We review for abuse of discretion a district court’s 25 determination, pursuant to the Grinnell factors, that a class action settlement is fair, 26 reasonable, and adequate. See McReynolds v. Richards-Cantave , 588 F.3d 790, 800 (2d Cir. 2009). 27 The deference that we give the District Court’ s determination is “consi derable”: “The trial 28 judge’s views are accorded great weight becaus e [s]he is exposed to the litigants, and their 29 strategies, positions and proofs. Simply stated, [s]he is on the firing line and can evaluate the 30 action accordingly.” Joel A. v. Giuliani , 218 F.3d 132, 139 (2d Cir. 2000) (internal quotation 31 marks and alterations omitted). 326 The District Court here concluded, and Bradley does not contest on appeal, that 1
Grinnell factors one, two, and eight weighed in favor of approving the settlement. As to 2 factor one, the District Court found that the case was a complex antitrust conspiracy 3 involving a number of parties, and that, absent settlement, Apple would attempt to draw out 4 the litigation. As to factor two, it c oncluded that the class implicitly approved the 5 settlement, observing that “[t]here have been under the circumstances few exclusions and 6 few objections.” Tr. of Final Fairness H’rg at 12, In Re: Elec. Books Antitrust Litig. (No. 11- 7 md-02293), ECF No. 686. Most importantly, as to factor eight, it found that Apple’s 8 promised payments to consumers were reasona ble in light of its assessment of their best 9 possible recovery after trial. An expert for the private plaintiffs estimated total consumer 10 losses resulting from the conspiracy to be approximately $280 million. Taking into 11 consideration the payments of approximately $166 million that these consumers had already 12 secured from settlements with Apple’s co -conspirators, the Settlement would give 13 consumers just over 200 percent of their es timated losses (if the Liability Finding is 14 affirmed), and 77 percent of their estimated loss es (if the Liability Finding is either reversed 15 and remanded, or vacated and remanded). In pa rticular, the District Court found the former 16 result to be “an excellent recovery” for cons umers. Tr. of Final Fairness H’rg at 14; see also, 17

e.g. , In re Remeron Direct Purchaser Antitrust Litig. , No. 03-0085, 2005 WL 3008808, at *9 (D.N.J. 18 Nov. 9, 2005) (concluding that payment of 56 to 69 percent of estimated damages to be 19 “above the range of settlements routinely gr anted final approval,” and collecting cases). 20 Bradley argues that the District Court’s approval of the Settlement is “premature,” 21 and that, because the Settlement’s actual payout s will depend on the outcome of the Liability 22 Appeal, “it [was] impossible fo r the district court to properl y analyze whether the settlement 23 is fair.” Bradley Br. at 10. Bradley did not make this argument, however, in the District 24
Court. It is thus waived. See Greene v. United States , 13 F.3d 577, 586 (2d Cir. 1994) (“[I]t is a 25 well-established general rule that an appellate court will not consider an issue raised for the 26 first time on appeal.”). 27 Even were this argument not waived, however , we would reject it. A district court is 28 capable of determining whether a settlemen t is fair and reasonable notwithstanding 297 important contingencies. Indeed, eval uation of the fairness and adequacy of every settlement 1 requires a court to assess the likely outcome of fu ture legal proceedings, namely, the relative 2 probabilities of various outcomes if there were no settlement and the parties went to trial. 3
See Malchman v. Davis , 706 F.2d 426, 433 (2d Cir. 1983) (“Th e trial judge determines fairness, 4 reasonableness, and adequacy of a proposed settlement by considering[,] [ inter alia ,] the 5 substantive terms of the settlement compared to th e likely result of a trial . . . .”). As the 6
District Court commented about Grinnell factor three in this case, the parties settled 7 “essentially on the eve of trial,” after “[f]ull discovery, both fact and expert discovery, had 8 taken place.” Tr. of Final Fairness H’rg at 12. The District Court had already issued a 9 thorough opinion on Appl e’s liability; ruled on a motion for class certification; and resolved 10 several disputes regarding the admissibility of ev idence at the damages trial. “If all discovery 11 has been completed and the case is ready to go to trial, the court obviously has sufficient 12
evidence to determine the adequacy of settlement.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc.
, 13 396 F.3d 96, 118 (2d Cir. 2005) (inter nal quotation marks omitted). 14 Also characterizing his prematurity argume nt as one of “ripeness,” Bradley argues 15 that the Settlement was not yet “fit for judicial decision,” and that th e District Court would 16 have benefitted by “waiting for a decision in th e [L]iability [A]ppeal.” Bradley Br. at 13–14, 17 15 (internal quotation marks omitted). Ripeness, however, concerns “threshold criteria for 18 the exercise of a federal court’s jurisdiction,” Simmonds v. I.N.S. , 326 F.3d 351, 356–57 (2d 19 Cir. 2003), matters not at issue here. The dispute the District Court was charged with 20 resolving was plainly ripe for adjudication: Apple was alleged (and found) to have 21 orchestrated a conspiracy among publishers to raise prices of ebooks; prices rose; and 22 consumers bought ebooks at inflated prices. See 791 F.3d at 298–311. Plaintiffs then filed 23 suit, seeking to recover for harm already suffere d. Evaluating a settlement of these damages 24 claims is properly undertaken pursuant to the Grinnell factors—particularly, for this 25 Settlement, factor three, which asks a court to consider “the stage of the proceedings and the 26 amount of discovery completed”—not the ri peness doctrine. For all these reasons, the 27
District Court did not abuse its discretion in determining that factor three also supported 28
settlement. 298 * * * 1
We have considered Bradley’s remaining ar guments and find them to be without any 2
merit. The District Court observed that Brad ley’s arguments were made by a “professional 3 objector,” not by someone “who ha[s] a stake in the enterprise in a wa y that a class member 4 would.” Tr. of Final Fairness H’rg at 20. In the class action settlement context, 5 “professional objectors” are lawyers who “file st ock objections to class action settlements” 6

— objections that are “[m]os t often . . . nonmeritorious”

— and then are “rewarded with a fee 7 by class counsel to settle their objections.” William B. Rubenstein, N EWBERG ON C LASS 8
A CTIONS § 13:21 (5th ed. 2012). Bradley’s appeal, in which he asserts arguments either not 9 presented to the District Court or devoid of merit, has done nothing to cast any doubt on 10
the District Court’s characterization. 11

12

We AFFIRM the judgment of the District Court. 13

14

FOR THE COURT: 15 Catherine O’Hagan Wolfe, Clerk of Court 16