Court Opinion

ID: 6935588
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:30:38.211557+00
Date Added: 2024-06-11T16:07:26.583822
License: Public Domain

KOZINSKI, Circuit Judge,
dissenting:
At the heart of this case is a difficult but important question: May the district court approve a settlement that treats some class members worse than others for reasons entirely extraneous to the case being settled? The majority recognizes that Lea and Manis-ealco “are treated differently and less favorably than other members of the class in that their money will be held in an interest bearing escrow account pending resolution of the Alshuler case.” Majority op. at 729. It nevertheless approves the settlement because RTC had good reason to treat them differently. But, good though it be, RTC’s reason has nothing to do with this case; the allegations in Alshuler, even if proved true, make Lea and Manisealco no less entitled to an equal share of this settlement. Penalizing them here because of what they are alleged to have done elsewhere is no more appropriate than reducing their share for bad manners, poor personal hygiene or any other extraneous factor.
It’s perfectly fine to treat class members different from each other because of factors intrinsic to the case being settled. Class members may, for instance, be awarded differing amounts depending upon the strength of their claims or the degree of their injuries. See, e.g., Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 629-30 (9th Cir.1982); Petruzzi’s, Inc. v. Darling-Delaware Co., 880 F.Supp. 292, 300-01 (M.D.Pa.1995); Phemister v. Harcourt Brace Jovanovich, Inc., No. 77 C 39, 1984 WL 21981, at *6-7 (N.D.Ill. Sept. 14, 1984). But class members with indistinguishable claims must receive settlement awards of equal value. The awards need not be identical, to be sure; they do have to be worth the same. This means that any additional burden certain class members must bear in one aspect of the settlement must be offset by additional benefits in another.
Under the terms of the settlement, Lea and Manisealco — and no one else — must postpone enjoyment of their money for what *731may be many years, yet they are to receive no offsetting compensation.1 If RTC is unwilling to treat Lea and Maniscalco the same as everyone else, their slice of the settlement fund must be adjusted upwards.2 As it is, however, Lea and Maniscalco are impermis-sibly forced to subsidize the swift resolution of the other class members’ claims.3 See National Super Spuds, Inc. v. New York Mercantile Exch., 660 F.2d 9, 19 (2d Cir.1981) (“An advantage to the class, no matter how great, simply cannot be bought by the uncompensated sacrifice of claims of [other class] members.”); Petruzzi’s, 880 F.Supp. at 800 (mere increased probability of subsequent settlement with other defendants did not “provide consideration” for sacrifices by class minority).
I know of no case where a settlement has been approved giving a smaller share of the bounty to class members whose claims stand on precisely the same footing as everyone else’s. To the contrary, where members of the settling class are treated differently because of factors extraneous to the underlying lawsuit, courts withhold approval. See, e.g., Plummer v. Chemical Bank, 668 F.2d 654, 659-60 (2d Cir.1982); Petruzzi’s, 880 F.Supp. at 299-302. I would remand so the parties can negotiate a new settlement giving all members of the class shares of equivalent value.

. Though the impounded funds are to earn interest, being forced to accept money later rather than having the right to use it now is a burden for which one normally receives compensation. It is for this reason, for example, that fixed-term certificates of deposit command a greater yield than demand deposits.

. While it is difficult to determine the value of the burden Lea and Maniscalco must bear, it is not impossible. I would, of course, give great deference to the district court’s judgment in this respect.

.The matter might be different if RTC were , entitled to withhold payment by way of attachment or garnishment in Alshuler. In such circumstances, Lea and Maniscalco could be precluded from obtaining immediate payment by other means, so the settlement would subject them to no additional burden. But RTC has no right independent of the settlement to withhold ■payment to Lea and Maniscalco, which is why it seeks to structure.the settlement in this way. See Majority op. at 730. RTC is thus using its bargaining power in this case to obtain a benefit in Alshuler.