Opinion ID: 437588
Heading Depth: 1
Heading Rank: 2

Heading: the objections

Text: 6 Rule 23(e) of the Federal Rules of Civil Procedure requires that a settlement or compromise of a class action be approved by the district court. The court found the settlement involved in this appeal to be fair, reasonable and adequate and, therefore, approved it. Three categories of plaintiffs, each constituting a subclass of the homeowner class, contend before this court that the district court's findings and its concomitant approval of the settlements were erroneous. We are, accordingly, asked to set aside the court's approval. 7 The objecting plaintiff groups advance three reasons why the district court should not have given this settlement its imprimatur. Specifically, plaintiffs contend that the settlement should be set aside because it perpetuates a violation of the Sherman Antitrust Act by tying in separate recreational and maintenance leases to the purchase of a single family home. The plaintiffs also contend that the number and substance of objections to the settlement warrant its disapproval. The plaintiffs' third objection is predicated upon the contention that the land development release in Tamarac violates state law; any settlement which sanctions the scheme, plaintiffs argue, is thus illegal. We hold that none of the grounds advanced provides an adequate legal basis for reversing the district court's approval. 8 Rule 23(e) requires judicial approval of any class action settlement, 6 but does not provide any standards for such approval. It is now abundantly clear, however, that in order to approve a settlement, the district court must find that it is fair, adequate and reasonable and is not the product of collusion between the parties. Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.1977). 7 Determining the fairness of the settlement is left to the sound discretion of the trial court and we will not overturn the court's decision absent a clear showing of abuse of that discretion. See In re Chicken Antitrust Litigation American Poultry, 669 F.2d 228, 238 (5th Cir. Unit B 1982); 8 In re Corrugated Container Antitrust Litigation (Container II), 643 F.2d 195, 207 (5th Cir. Unit B 1981), cert denied sub nom., CFS Continental, Inc. v. Adams Extract Company, 456 U.S. 998, 102 S.Ct. 2283, 73 L.Ed.2d 1294 (1982). 456 U.S. 998 (1981). In addition, our judgment is informed by the strong judicial policy favoring settlement as well as by the realization that compromise is the essence of settlement. See United States v. City of Miami, 614 F.2d 1322, 1344 (5th Cir.1980). 9 Our review of the district court's order reveals that in approving the subject settlement, the court carefully identified the guidelines established by this court governing approval of class action settlements. Specifically, the court made findings of fact that there was no fraud or collusion in arriving at the settlement and that the settlement was fair, adequate and reasonable, considering (1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved. See 1982-2 Trade Cas. at 72, 106, citing, inter alia, Container II, 643 F.2d at 207-08; Cotton v. Hinton, 559 F.2d at 1330-31; Miller v. Republic National Life Insurance Co., 559 F.2d 426, 428-29 (5th Cir.1977). 10 We note that final approval of the settlement was preceded by two preliminary hearings, dissemination of a detailed notice by first-class mail to all known class members, publication of the notice in a Tamarac newspaper, receipt by the court of written objections by class members, filing of briefs by proponents and objectors, and a hearing on the merits during which all objectors were given a full opportunity to testify. In its final order, the district court devoted lengthy consideration to all timely objections to the settlement and meticulously applied the lengthy guidelines of this court as to class actions and settlements. 9 11 Our review of the objections reveals that virtually none of the findings of fact utilized by the district court to determine the adequacy of the settlement are challenged in this appeal. The objectors' primary argument is rather that the settlement agreement perpetuates the alleged recreational lease tie-in and for that reason cannot be approved. This argument, however, properly goes to the merits of the case as presented to the district court; it is inapposite in our review of the settlement under an abuse of discretion standard. Whether there is some merit to plaintiff's contentions that the recreational lease tie-in arrangements constitute antitrust violations is not the issue. Plaintiffs' argument begs the question, for unless the illegality of an arrangement under consideration is a legal certainty, the mere fact that certain of its features may be perpetuated is no bar to approval. See, e.g., Grunin v. International House of Pancakes, Inc., 513 F.2d 114 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975). In this case, the district court reasonably concluded that the plaintiff class would have difficulty succeeding on the merits and found the settlement to be in the best interests of the class. As we have emphasized elsewhere, a just result is often no more than an arbitrary point between competing notions of reasonableness. Container II, 659 F.2d at 1325. 12 Plaintiffs also contend that, in addition to the alleged recreational tie-in upon which the class claims were based, the deed restrictions illegally tie lawn maintenance, exterior house maintenance and television antenna hook-ups to the purchase of residences in Tamarac. Plaintiffs argue that because the settlement agreement does not affect the maintenance leases, the maintenance tie-ins will continue unless the agreement is modified. We, however, will not consider this contention, for the record reveals that the maintenance lease issue was never brought before the district court for consideration. Plaintiff's initial allegations in 1972 contain a brief mention of the alleged maintenance tie-ins. However, the issue has not been mentioned since the initial stages of this litigation; it was not addressed in the pre-trial stipulations nor during any of the court's extensive hearings on the antitrust claims and the resulting settlement. Further, as far as we can discern, none of the parties who hold the maintenance leases is a party to this lawsuit. It is well settled that we will not address an issue which was not raised before the trial court. See, e.g., Container II, 643 F.2d at 222. In these circumstances, the district court had no basis upon which to consider the legality of the maintenance leases, and neither do we. 13 Plaintiffs' claim that there was sufficient opposition to the settlement to require disapproval is likewise without merit. Plaintiffs' discussion regarding the amount of objectors ignores the key fact that whatever the amount of opposition to the settlement, the reasons for that opposition have been thoroughly considered and ultimately rejected by the district court. We find that Judge Gonzalez' finding of firm support for the settlement is fully supported by the record. 10 We further find that the court properly considered the substance of opposition to the settlement in arriving at its conclusion that the agreement is fair, adequate and reasonable as to all parties involved. 14 Plaintiffs' contention that the settlement agreement condones a development scheme which is illegal under Florida state law was considered and rejected by Judge Gonzalez. See 1982-2 Trade Cas. at 72,111. We agree with the district court's finding that this case involves an antitrust treble damages class action which may properly be compromised under Rule 23(e) and which is not in contravention of either Florida law or public policy.