Opinion ID: 150495
Heading Depth: 3
Heading Rank: 2

Heading: De Beers's Participation in These Actions

Text: De Beers initially refused to appear in the lawsuits because it asserted that courts in the United States lacked personal jurisdiction over it and that any judgment entered by those courts would be a legal nullity. By September 2004, defaults or default judgments had been entered against De Beers in six of the seven actions. In May 2005, counsel for De Beers approached plaintiffs' counsel to discuss settlement of the indirect purchasers' claims. Those discussions produced a settlement of the indirect purchasers' claims in four of the cases (the indirect purchaser settlement). Under the indirect purchaser settlement, De Beers agreed not to contest certification of a settlement class of indirect purchasers, and further agreed to establish a settlement fund of $250 million to be paid to class members. De Beers also agreed to a stipulated injunction that restrained it from violating U.S. antitrust law, and it consented to the District Court's jurisdiction for the purpose of enforcing the injunction. On November 30, 2005, the District Court entered an order (the November 30 order) that preliminarily approved the settlement agreement and conditionally certified a settlement class of indirect purchasers under Rules 23(b)(2) and 23(b)(3) of the Federal Rules of Civil Procedure. [5] Rule 23(b)(2) allows a court to certify a class that seeks final injunctive relief ... respecting the class as a whole, FED. R.CIV.P. 23(b)(2), whereas Rule 23(b)(3) authorizes certification when questions of law or fact common to class members predominate over any questions affecting only individual members, FED.R.CIV.P. 23(b)(3). Hence, the Court preliminarily approved the class under Rule 23(b)(2) for the purpose of entering the stipulated injunction and likewise approved the same class under Rule 23(b)(3) in order to distribute the proceeds of the settlement fund. De Beers then entered into settlement negotiations with the direct purchasers and ultimately reached a settlement agreement with them in March 2006. That agreement mirrored the indirect purchaser settlement: De Beers agreed not to contest certification of a direct purchaser settlement class and to create a fund of $22.5 million to satisfy class members' Sherman Act claims. De Beers also agreed to increase the indirect purchaser class settlement fund by $22.5 million because the lawsuits filed by the direct purchasers included as plaintiffs some indirect purchasers who had not participated in the earlier settlement. Finally, De Beers agreed to injunctive relief that was substantively identical to that imposed under the indirect purchaser settlement. On March 31, 2006, the District Court amended its November 30 order to conditionally certify both the direct and indirect purchaser settlement classes under Rules 23(b)(2) and 23(b)(3), and to preliminarily approve a combined settlement for both classes. The proposed combined settlement agreement provided for a fund of $295 million to be paid to both the direct and indirect purchaser classes. The direct purchasers were to receive $22.5 million of the fund, while $272.5 million was allotted to the indirect purchaser claims. The combined settlement also provided for entry of a stipulated injunction that, among other things, required De Beers to comply with all federal and state antitrust laws, limited De Beers's ability to purchase diamonds from third-party producers, and prohibited De Beers from restricting the geographic territory within which sightholders could resell De Beers diamonds. De Beers also agreed to subject itself to personal jurisdiction in the United States for enforcement of the combined settlement agreement. The parties stipulated that the injunction would take effect in April 2006 even though, at that time, the Court had not yet entered a final order certifying the class and approving the settlement agreement.