Court Opinion

ID: 2781662
Source: CourtListenerOpinion
Date Created: 2015-02-24 21:01:19.364259+00
Date Added: 2024-06-11T10:58:59.872488
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                 FEB 24 2015

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

SALVATORE GALLUCCI; et al.,                      No. 12-57081

              Plaintiffs - Appellees,            D.C. No. 3:11-cv-02039-JAH-NLS

  v.
                                                 MEMORANDUM*
HENRY GONZALES,

              Objector - Appellant,

  v.

BOIRON, INC.; et al.,

              Defendants - Appellees.

                   Appeal from the United States District Court
                      for the Southern District of California
                    John A. Houston, District Judge, Presiding

                    Argued and Submitted December 11, 2014
                             Pasadena, California

Before: WARDLAW and BERZON, Circuit Judges, and SMITH, District Judge.**

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable William E. Smith, Chief District Judge for the U.S.
District Court for the District of Rhode Island, sitting by designation.
      Objector Henry Gonzales appeals from the district court’s order approving a

class settlement (Settlement) with Boiron, Inc. and awarding fees and expenses to

class counsel. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

      1. The district court did not clearly abuse its discretion in concluding that

the Settlement—which created a fund from which class members could receive

refunds for their purchases of Boiron’s allegedly mislabeled products and provided

injunctive relief in the form of label modifications—was fair, reasonable, and

adequate. Fed. R. Civ. P. 23(e); In re Bluetooth Headset Prods. Liab. Litig., 654
F.3d 935, 940 (9th Cir. 2011).

      Because the class was certified for purposes of settlement only, the district

court was required to closely scrutinize the settlement “for evidence of collusion or

other conflicts of interest.” In re Bluetooth, 654 F.3d at 946. Both the district

court’s final approval order and the transcript of the settlement approval hearing

make clear that the court searched for signs of collusion—including the “subtle

signs” of collusion explicitly mentioned in Bluetooth—and correctly found none.

Id. at 947. This conclusion is bolstered by the fact that the Settlement was

negotiated with the aid of a retired magistrate judge and experienced mediator,

who reported no evidence of collusion.

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      The district court also acted within its discretion in approving the Settlement

despite the theoretical possibility—based only on the existence of multiple

potential classes with which Boiron could have settled—that a reverse auction

could have occurred. The record contains no evidence suggesting that a bidding

war between the various potential class counsel actually occurred, and as we have

observed in a different context, if the mere existence of multiple potential classes

were sufficient to prove collusion, “the reverse auction argument would lead to the

conclusion that no settlement could ever occur in the circumstances of parallel or

multiple class actions.” Negrete v. Allianz Life Ins. Co. of N. Am., 523 F.3d 1091,

1099-1100 (9th Cir. 2008) (internal quotation marks omitted). We have never

adopted such a rule and decline to do so here.

      Gonzales contends that even if the district court adequately considered signs

of collusion, we nevertheless must reverse because the court clearly abused its

discretion in its balancing of the so-called Churchill factors, used to determine

whether a settlement is fair, reasonable, and adequate. See Churchill Vill., L.L.C.

v. Gen. Electric, 361 F.3d 566, 575 (9th Cir. 2004). Focusing primarily on the

fourth factor, “the amount offered in settlement,” id., Gonzales argues that the

district court failed to compare the cash value of the Settlement to the expected

value of going to trial. The record demonstrates, however, that the district court

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was fully informed of the parties’ competing estimates of the class action’s value

and considered those estimates in determining whether the Settlement was

adequate. Moreover, we have never required courts “to estimate the range of

possible outcomes and ascribe a probability to each point on the range.” Rodriguez

v. W. Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009) (internal quotation marks

and alterations omitted) (explaining that approval of a settlement is “nothing more

than an amalgam of delicate balancing, gross approximations and rough justice”

(internal quotation marks omitted)). More importantly, the Settlement’s $5 million

common fund was intended to be—and by all accounts, is in fact—more than

adequate to compensate all class members who submitted refund claims.

      The remaining Churchill factors also support the district court’s order. For

example, the record shows that Boiron had a potentially effective defense, that

class counsel were experienced, and that the class was largely satisfied with the

Settlement. See Churchill, 361 F.3d at 575.

      2. The district court did not abuse its discretion in awarding 25 percent of

the cash value of the Settlement in fees to class counsel. See Bluetooth, 654 F.3d

at 940, 942 (“Because the benefit to the class is easily quantified in common-fund

settlements, we have allowed courts to award attorneys a percentage of the

common fund in lieu of the often more time-consuming task of calculating the

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lodestar. Applying this calculation method, courts typically calculate 25% of the

fund as the ‘benchmark’ for a reasonable fee award . . . .”).

      3. The district court did not err in concluding that the Settlement provided

for “the best notice that is practicable under the circumstances.” Fed. R. Civ. P.

23(c)(2)(B) (emphasis added); see Eisen v. Carlisle & Jacquelin, 417 U.S. 156,

172-73 (1974). The settling parties had no means of identifying and targeting

notice to individual Boiron customers, who made their small purchases nationwide,

primarily at retail locations. Instead, notice was conveyed through nationwide

online and print media that, according to reliable expert testimony, were

specifically tailored to reach Boiron’s customer base. Thus, the notice provided

was “reasonably calculated, under all the circumstances, to apprise interested

parties of the pendency of the action.” Eisen, 417 U.S. at 174-75 (internal

quotation marks omitted) (endorsing, albeit implicitly, notice by publication where

notice by mail is impossible).

      4. The district court did not abuse its discretion in certifying the class for

settlement purposes. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1023-24 (9th

Cir. 1998). The class representatives’ claims and legal theories are reasonably co-

extensive with those of the other class members, as all class members alleged that

Boiron’s labeling and marketing deceptively masked the possibility that the

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products would not work as advertised due to heavy dilution. See id. at 1020

(noting that Rule 23(a)(3)’s typicality requirement is “permissive”).

      AFFIRMED.

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