Opinion ID: 771571
Heading Depth: 2
Heading Rank: 2

Heading: Georgi's Objections to the Settlement

Text: 28 Appellant objects to the settlement terms as inadequate and unfair. Specifically, he contends that class counsel misled the District Court in their representation that the release of documents provided for in the settlement agreement would be important in the settlement negotiations with the German Banks. Additionally, he contends that class counsel under-represented the number of claims that would be made under the settlement. He also objects to the provision of the settlement agreement where the Austrian Banks claim no admission of wrongdoing. Further, he argues that the $40 million amount is too low because it allows the Austrian Banks to keep money converted from Holocaust victims and because the Austrian Banks could withstand a higher judgment and makes a conclusory statement that his interests are being inadequately represented. Because Georgi offers only conclusory and speculative allegations and statements outside the record in support of his arguments, we find that the District Court did not abuse its discretion in approving the settlement. The District Court properly and thoroughly considered the factors required to assess a class action settlement. 29 Under Federal Rule of Civil Procedure 23, a class action cannot be settled without the approval of the District Court. See Fed. R. Civ. P. 23(e). The District Court must carefully scrutinize the settlement to ensure its fairness, adequacy and reasonableness, see County of Suffolk v. Long Island Lighting, 907 F.2d 1295, 1323 (2d Cir. 1990) (citing Plummer v. Chemical Bank, 668 F.2d 654, 658 (2d Cir. 1982)), and that it was not a product of collusion. See Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000). This Court will disturb a judicially-approved settlement only when an objector has made a clear showing that the District Court has abused its discretion. City of Detroit v. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974), abrogated on other grounds by Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000). When a settlement is negotiated prior to class certification, as is the case here, it is subject to a higher degree of scrutiny in assessing its fairness. See Long Island Lighting, 907 F.2d at 1323 (citing Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir. 1982)). The District Court determines a settlement's fairness by examining the negotiating process leading up to the settlement as well as the settlement's substantive terms. See Malchman v. Davis, 706 F.2d 426, 433 (2d Cir. 1983) (citations omitted). 30
31 A court reviewing a proposed settlement must pay close attention to the negotiating process, to ensure that the settlement resulted from arm's-length negotiations and that plaintiffs' counsel have possessed the experience and ability, and have engaged in the discovery, necessary to effective representation of the class's interests. Weinberger, 698 F.2d at 74. We are satisfied that the District Court in this case examined the negotiation process with appropriate scrutiny. 32 Here, the District Court expressly considered whether the negotiations were a result of arm's length negotiations and whether plaintiffs' counsel possessed the experience and ability to represent effectively the class's interests. Austrian and German Bank Holocaust Litig., 80 F. Supp. 2d at 173-74. The District Court found that plaintiffs' counsel were extremely experienced and were involved in other Holocaust-related litigation. Id. at 174. 33 Additionally, the District Court appointed Special Master D'Amato to assist in the negotiation process, and he testified at the Fairness Hearing that the process was bona fide, at times contentious, and all counsel involved were capable. Id. This Court has noted that a court-appointed mediator's involvement in pre-certification settlement negotiations helps to ensure that the proceedings were free of collusion and undue pressure. See Long Island Lighting, 907 F.2d at 1323. 34 Appellant argues on appeal that the counsel involved in this case were conflicted by their involvement in the German Banks settlement negotiations, and that counsel misrepresented to the District Court the importance of the Austrian Banks' agreement to provide access to its documents. These conclusory allegations, based on speculation and documents outside the record, are insufficient to warrant disturbing the District Court's approval of the settlement. 35 The District Court gave thorough attention to its inquiry into the negotiation process. The District Court's assessment that the settlement was the product of arms-length [sic] negotiations conducted by experienced counsel, knowledgeable in complex class actions was not clearly erroneous as to render its conclusion an abuse of discretion. Austrian and German Bank Holocaust Litig., 80 F. Supp. 2d at 174. 36
37 A district court reviewing a settlement must consider the following nine factors, enumerated initially in Grinnell Corp., 495 F.2d at 463: 38 (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 maintaining 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, (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation[.] 39 Long Island Lighting, 907 F.2d at 1323-24 (quoting Robertson v. Nat'l Basketball Ass'n, 556 F.2d 682, 684 n.1 (2d Cir. 1977)). In this case, the District Court expressly considered each of the nine factors described above in assessing the fairness of this settlement. It also considered several specific contentions raised in eighteen written objections received. We are satisfied that Judge Kram's review was methodical, reasonable, and thorough. We therefore decline to intervene in the District Court's approval of the settlement in this case. 40 Appellant argues that the $40 million settlement amount is too low to cover even his claim. The District Court specifically addressed the settlement amount, noting that it is unlikely that any sum of money, no matter how large, could ever be thought of as righting the wrongs committed during the Holocaust. Austrian and German Bank Holocaust Litig., 80 F. Supp. 2d at 179. In reviewing the risks of proceeding to trial, establishing liability and damages, and the complexity, length and expense of litigation, the District Court concluded that, given the difficulties of coming forward with fifty year old evidence and the existence of possible defenses, the settlement was fair, reasonable and adequate. 41 Appellant also argues that the Austrian Banks could withstand a higher judgment. The District Court explicitly acknowledged that the defendants' ability to withstand a higher judgment weighed against the settlement, but explained that this factor, standing alone, does not suggest that the settlement is unfair. Id. at 178 n.9; see also In re Painewebber Ltd. Partnerships Litig., 171 F.R.D. 104, 129 (S.D.N.Y. 1997), aff'd 117 F.3d 721 (2d Cir. 1997). This conclusion cannot be considered an abuse of discretion, given that other Grinnell factors weigh heavily in favor of settlement. 42 For example, the district court noted that, of the 27,883 notices sent to current or former Austrian citizens, seventy-two persons requested exclusion from the settlement and that it had received eighteen written objections and comments. See Austrian and German Bank Holocaust Litig., 80 F. Supp. 2d at 175-76. The District Court properly concluded that this small number of objections weighed in favor of the settlement. See, e.g., Marisol A. v. Giuliani, 185 F.R.D. 152, 163 (S.D.N.Y. 1999) (The Court views the small number of comments from a plaintiff class of over 100,000 children as evidence of the Settlement Agreements' fairness, reasonableness, and adequacy.); In re Warner Communications Secs. Litig., 618 F. Supp. 735, 746 (S.D.N.Y. 1985) (noting small number of objections and opt-outs, approving settlement). 43 Also, the district court properly recognized that, although no formal discovery had taken place, the parties had engaged in an extensive exchange of documents and other information. Id. at 176. Thus, the stage of proceedings factor also weighed in favor of settlement approval. 44 Appellant simply has not demonstrated on appeal that this Court should disturb Judge Kram's approval of the settlement. We therefore conclude that Judge Kram, following her thorough application of the Grinnell factors, did not abuse her discretion in concluding that, under the unique circumstances of this difficult case, the settlement negotiated was fair and reasonable. We conclude that all other arguments of appellant are without merit.