Opinion ID: 8414968
Heading Depth: 2
Heading Rank: 1

Heading: The Costco Settlement Agreement

Text: The first defendant to settle was Costco Wholesale Corporation (Costco). Under Sections 4.2 and 4.3 of the Costco settlement agreement (the Costco Agreement), Costco agreed to convert pumps at its existing gas stations in certain states to Automatic Temperature Control (ATC) pumps, and to install ATC pumps at its new gas stations in certain states. And under Section 4.4, Costco; agreed to a specific “[i]mplementation [p]eriod”: it would “complete the conversion and installation of ATC set forth in sections 4.2 and 4.3 ... within five years” at a certain yearly rate. Costco App. 178. But these requirements weren’t absolute. Section 4.7 of the Costco Agreement contains the following language: Other Agreements. If at any time prior to the completion of conversion and installation of ATC, Class Counsel and Class Representatives agree to enter into any agreement with any person or company to resolve any action or any other pending or threatened claim concerning ATC that is materially more favorable to that person or company than this Amended Settlement Agreement is to Costco (including, without limitation, calling for a lower conversion percentage, slower rate of conversion to ATC or for completion of conversion to ATC at a later date than required by Section 4.4), Class Counsel and Class Representatives agree to notify Costco promptly of the terms of such agreement. At Costco’s sole discretion, it may adopt the materially more favorable terms in any such agreement in place of its obligations under Section 4.4. Costco agrees to notify Class Counsel and Class Representatives in writing of any such election. The Parties agree that any change in Costco’s obligations under Section 4.4 as a result of any such election that is not a change that is materially adverse to the Settlement Class does not require additional notice to the class. Id. at 180. The district court approved the Costco Agreement on April 24, 2012. Nearly two years later, several of the plaintiffs agreed, via a “STIPULATION OF DISMISSAL WITH PREJUDICE” (the Stipulation), to dismiss their individual claims against several other defendants. App. vol. 16, 4538. And unlike the Costco Agreement, the Stipulation didn’t require any of those other defendants to implement ATC at all, let alone to do so by a certain date and on a certain schedule. Understandably viewing this result as more favorable than the one it obtained, Costco filed notice of its intent to invoke its rights under Section 4.7. It then asked the district court to grant Costco leave to adopt the “terms” of the Stipulation and to dismiss the plaintiffs’ claims against Costco with prejudice. Costco. App. 250. The district court denied both requests. In doing so, it concluded that (1) Section 4.7 only applies to agreements that “concern the implementation of ATC”'—e.g., agreements that “call[ ] for a lower conversion percentage, a slower rate of conversion to ATC[,] or completion of conversion to ATC at a later date than required by Section 4.4” of the Costco Agreement, id. at 255; and (2) because the Stipulation didn’t require the dismissed defendants to implement ATC at all, it necessarily didn’t “concern the implementation of ATC,” id. at 254-55. Accordingly, the district court refused to let Costco adopt the “terms” in the Stipulation, id. at 250, or to dismiss the claims against Costco with prejudice.