Opinion ID: 2208347
Heading Depth: 1
Heading Rank: 4

Heading: The Trial Court's Approval of the Settlement Agreement

Text: The consumer class member objectors' main complaint about the settlement agreement is that, unlike commercial class members, consumer class members will not receive direct cash distributions. They vigorously attack the cy pres distribution approved by the trial court, and contend that D.C.Code § 28-4507(b)(2)(B) mandates that members of the consumer class receive direct monetary relief. Our review of a trial court's approval of a settlement agreement under the local parens patriae statute or in the analogous context of class actions ... [is] limited, and we give great weight [to the trial judge's] views because he [or she] is exposed to the litigants, and their strategies, positions and proofs. Shepherd Park Citizens Ass'n v. General Cinema Beverages of Washington, D.C., Inc., 584 A.2d 20, 22 (D.C.1990) (citations omitted). Appellants must show that the [trial] [c]ourt abused its discretion: this generally requires a showing either that the agreement in question was so manifestly unfair as to preclude judicial approval, or that the court did not have sufficient facts before it to make an informed judgment. Id. at 22 (citation omitted). The Honorable Joan Zeldon dismissed the objections of the consumer class member objectors to the final approval of the settlement agreement because they were not meritorious; there is nothing in the record to suggest that the settlement was manifestly unfair or that the trial court had insufficient facts before it to make an informed judgment. Shepherd Park, supra, 584 A.2d at 22. Specifically, the judge declared: It would be utterly impracticable for the [s]ettlement to provide individual compensation to the [c]onsumer [s]ettlement [c]lass members. Very few consumers could be expected to have kept proof of purchase of goods containing vitamins as far back, in some cases, as 1990. The difficulty and cost of identifying and paying individual claimants would likely use up the fund provided for the [c]onsumer [c]lass [s]ettlement. The Court is satisfied with the appropriateness of the entities selected to receive settlement monies allocated for the [c]onsumer [s]ettlement [c]lass, using a cy pres recovery approach, which has been sanctioned by the District of Columbia Court of Appeals. See Shepherd Park [, supra, ] 584 A.2d [at] 26. Based upon the affidavit of Neil Zola, Vice President for the Garden City Group, the settlement administrator, the trial court considered the cy pres distribution for the consumer class to be fair and reasonable: Due to the impracticability of identifying particular injured consumers of [i]ndirect [v]itamin [p]roducts during the [r]elevant [p]eriod and the high costs of administering a direct cash distribution to hundreds of thousands of District of Columbia individual consumers relative to the average likely award to those consumers, the Court finds that a cy pres distribution administered by the District of Columbia Corporation Counsel to eligible organizations for the express purpose of ensuring the fund to be used for the improvement of the health and/or nutrition of the citizens of the District of Columbia and/or the advancement of nutritional, dietary or agricultural science in the District of Columbia is fair, reasonable, and adequate and in the best interests of the District of Columbia [c]onsumer [s]ettlement [c]lass. Nevertheless, the objectors urge us to reverse the trial court's final approval of the settlement agreement on the ground that it violates D.C.Code § 28-4507(b)(2)(B), which requires that any distribution procedures adopted shall first afford each person [sustaining damages] a reasonable opportunity to secure each such person's appropriate portion of the net monetary relief. We do not accept the objectors' argument that § 28-4507(b)(2)(B) compels a direct distribution of monetary relief to each member of the consumer class, and that the cy pres distribution violates § 28-4507(b)(2)(B) as a matter of law. Subsection (b) authorizes the District to sue [or, as in this case, to intervene] as parens patriae on behalf of its resident natural persons for their injuries resulting from any antitrust violation set forth in [the District of Columbia Antitrust Act]. COUNCIL OF THE DISTRICT OF COLUMBIA, COMMITTEE ON THE JUDICIARY, REPORT ON BILL 3-107, THE DISTRICT OF COLUMBIA ANTITRUST ACT OF 1980, October 8, 1980, at 15 (Council Report). We apply principles of statutory interpretation to understand the meaning and scope of subsection (b) within the context of a class action in which the District government intervenes as parens patriae, and in which the monetary relief per consumer is de minimis. We look to the plain meaning of a statute first, construing words according to their ordinary meaning. See J. Parreco & Son v. Rental Hous. Comm'n, 567 A.2d 43, 45 (D.C.1989). The literal words of [a] statute, however, are `not the sole index to legislative intent,' but rather, are `to be read in the light of the statute taken as a whole, and are to be given a sensible construction and one that would not work an obvious injustice.' District of Columbia v. Gallagher, 734 A.2d 1087, 1091 (D.C. 1999) (quoting Metzler v. Edwards, 53 A.2d 42, 44 (D.C.1947) (footnotes omitted) (other citations omitted)). Furthermore, `if divers statutes relate to the same thing, they ought all to be taken into consideration in construing any one of them....' Luck v. District of Columbia, 617 A.2d 509, 514 (D.C.1992) (quoting United States v. Freeman, 44 U.S. (3 How.) 556, 564-65, 11 L.Ed. 724 (1845) (other citations omitted)). If related statutes conflict, we must reconcile them. See Gonzalez v. United States, 498 A.2d 1172, 1174 (D.C.1985). A reading of the plain words of § 28-4507(b)(2)(B), giving them their ordinary meaning, establishes that a consumer is not guaranteed net monetary relief on an individual basis. Rather, what is guaranteed is a reasonable opportunity to secure ... [an] appropriate portion of the net monetary relief. Here, after hearing oral arguments and examining affidavits and the settlement negotiations, the trial court concluded that there was no reasonable way to make a direct distribution of cash to each individual consumer. A similar conclusion was reached by the United States District Court for the Southern District of New York, and approved by the Second Circuit, in New York v. Reebok Int'l Ltd., 96 F.3d 44 (2d Cir.1996). There, the court faced language virtually identical to § 28-4507(b)(2)(B) in construing a provision of the federal antitrust law, 15 U.S.C. § 15e. As the court stated in Reebok: Section 15e provides that the settlement proceeds shall be distributed in such manner as the district court in its discretion may authorize, subject to the requirement that the procedure adopted affords each beneficiary a reasonable opportunity to secure his appropriate portion of the net monetary relief. Because of the unlikelihood of there being any significant net monetary relief for individual claimants if an attempt were made to distribute the settlement proceeds among them, the district court did not err in approving distribution to the States and non-profit entities to be used in providing and improving athletic equipment and facilities and related uses, areas in which Reebok equipment plays a substantial role. Distribution in this manner is not without judicial precedent. See New York v. Keds Corp., 1994 WL 97201, 1994 U.S. Dist. LEXIS 3362 (S.D.N.Y. Mar. 21, 1994); New York v. Dairylea Coop., Inc., [1985 U.S. Dist. LEXIS 18501] (S.D.N.Y. June 26, 1985). Id. at 49. Since the federal antitrust law is a source for the District of Columbia Antitrust Act, see Council Report at 4, we will follow the Second Circuit's interpretation and hold, in this case, that the trial court did not err in granting final approval to the settlement agreement because it does not violate D.C.Code § 28-4507(b)(2)(B). There is no reasonable opportunity to award each individual member of the consumer class an appropriate portion of the net monetary relief, given the relatively small size of the District's share of the consumer settlement fund, the prohibitive costs of administering a distribution system, and the difficulty of identifying District residents who were indirect purchasers of vitamin products. [7] We turn now to the appropriateness of a cy pres distribution. [8] We determined that § 28-4507(b)(2)(B) was not a bar in Shepherd Park, supra, to the approval of a distribution of parens patriae settlement monies into a fund administered by the District of Columbia Corporation Counsel. [9] But, since the appellant objectors' in Shepard Park were in fact arguing for a cy pres distribution (rather than for the funds to be deposited into the District of Columbia anti-trust fund), we have not had occasion before to consider whether § 28-4507(b)(2)(B) requires at least a portion of the class settlement funds to be distributed to consumer class members before a cy pres distribution can be made. Although cy pres distributions (also known as fluid recoveries) in class actions received early criticism, see Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973), that criticism has diminished considerably. Such distributions, including the entire amount of the consumer settlement fund rather than just the residue, are being used or advocated increasingly where direct distribution of settlement funds to individual class members is impractical; and where important consumer goals, such as disgorgement of ill-gotten gains from and deterrence of future over-pricing and manipulation of market allocation by the offending entities, can be achieved. [10] See, e.g., Reebok, supra ; New York v. Keds Corp., supra ; see also In re Agent Orange Prod. Liab. Litig., 818 F.2d 179 (2d Cir.1987). We agree with the trial court that a cy pres distribution in this case is appropriate. [11] The infeasibility of [direct] distribution [to individual members of the consumer class] was ample justification for placing the money in a fund available for [activities] in the public interest, Shepherd Park, supra, 584 A.2d at 26. We are satisfied that the fund will benefit consumers; as the District notes in its brief: The proposed recipients under the cy pres plan would serve District of Columbia residents by expanding pediatric services, operating a medical clinic, counseling pregnant adolescents, offering health-related education to schoolchildren, and enforcing the District's consumer protection law. Under the circumstances, we discern no abuse of discretion in the trial court's approval of the settlement agreement. Accordingly, for the foregoing reasons, we affirm the judgment of the trial court. So ordered.