Court Opinion

ID: 3177809
Source: CourtListenerOpinion
Date Created: 2016-02-17 16:04:10.71501+00
Date Added: 2024-06-11T14:46:18.554848
License: Public Domain

14-4649(L), 14-4710(Con)
     In Re: Elec. Books Antitrust Litig.

                                           UNITED STATES COURT OF APPEALS
                                              FOR THE SECOND CIRCUIT

                                               SUMMARY ORDER

 1   RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
 2   SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
 3   FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
 4   WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
 5   MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
 6   NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
 7   COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 8          At a stated term of the United States Court of Appeals for the Second Circuit, held at
 9   the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
10   on the 17th day of February, two thousand sixteen.
11
12   PRESENT:
13              PIERRE N. LEVAL,
14              BARRINGTON D. PARKER,
15              SUSAN L. CARNEY,
16                          Circuit Judges.
17   _________________________________________
18
19   IN RE: ELECTRONIC BOOKS ANTITRUST LITIGATION*
20
21                                                                                        Nos. 14-4649(L),
22                                                                                        14-4710(Con)
23   _________________________________________
24
25   FOR OBJECTOR-APPELLANT JOHN                                 STEVE A. MILLER, Denver, CO.
26   BRADLEY:
27
28   FOR PLAINTIFFS-APPELLEES STATE                              GARY M. BECKER, Assistant Attorney
29   OF ARIZONA, THE STATE OF                                    General, for George Jepsen, Attorney
30   ALASKA, THE STATE OF ARKANSAS,                              General of Connecticut; (Charles E. Roy,
31   STATE OF COLORADO, THE STATE                                First Assistant Attorney General; Eric
32   OF DELAWARE, THE DISTRICT OF                                Lipman, Assistant Attorney General;
33   COLUMBIA, STATE OF IDAHO,                                   James E. Davis, Deputy Attorney General;
34   STATE OF INDIANA, THE STATE                                 Scott A. Keller, Solicitor General; J.
35   OF KANSAS, STATE OF LOUISIANA,                              Campbell Barker, Deputy Solicitor
     *The Clerk of Court is respectfully directed to amend the official caption in this case to conform to the
     caption above.
 1   STATE OF MARYLAND, THE                     General, for Ken Paxton, Attorney General
 2   COMMONWEALTH OF MASSACHUSETTS,             of Texas, on the brief); (Andrew W. Amend,
 3   STATE OF MICHIGAN, STATE OF                Assistant Solicitor General, for Eric T.
 4    MISSOURI, THE STATE OF NEBRASKA,          Schneiderman, Attorney General of New
 5   THE STATE OF NEW MEXICO, THE               York, on the brief).
 6   STATE OF NORTH DAKOTA, STATE OF
 7   CALIFORNIA, STATE OF WISCONSIN,
 8   THE COMMONWEALTH OF VIRGINIA,
 9   STATE OF TEXAS, STATE OF ILLINOIS,
10   STATE OF IOWA, STATE OF VERMONT,
11   STATE OF TENNESSEE, STATE OF
12   SOUTH DAKOTA, COMMONWEALTH
13   OF PUERTO RICO, COMMONWEALTH
14   OF PENNSYLVANIA, STATE OF OHIO,
15   STATE OF WEST VIRGINIA, STATE OF
16    CONNECTICUT, THE STATE OF
17   ALABAMA, STATE OF NEW YORK, THE
18   STATE OF UTAH:
19
20   FOR PLAINTIFFS-APPELLEES SHILPA    STEVE W. BERMAN (Jeff D. Friedman,
21   GROVER, FREDRIC A. PRESS,          Shana Scarlett, on the brief), Hagens Berman
22   ANTHONY PETRU, JEFFREY EVANS,      Sobol Shapiro LLP, Seattle, WA, Berkeley,
23   ON BEHALF OF HIMSELF AND ALL       CA; (Kit A. Pierson, Jeffrey Dubner,
24   OTHERS SIMILARLY SITUATED,         Douglas Richards, on the brief, Cohen
25   CLARISSA WEISS, ON BEHALF OF       Milstein Sellers & Toll PLLC, New York,
26   HERSELF AND ALL OTHERS             NY, Washington, D.C.).
27   SIMILARLY SITUATED, RHONDA
28   BURSTEIN, JUAN SOTOMAYOR,
29   ROBERT CHEATHAM, JOHN T. MEYER,
30   ON BEHALF OF HIMSELF AND ALL
31   OTHERS SIMILARLY SITUATED, PAUL
32   MEYER, PAUL J. MEYER, ON BEHALF
33   OF ALL OTHERS SIMILARLY SITUATED,
34    LIANA LINGOFELT, MARCIA GREENE,
35   ON BEHALF OF THEMSELVES AND ALL
36   OTHERS SIMILARLY SITUATED, AUBRIE
37   ANN JONES, ON BEHALF OF THEMSELVES
38   AND ALL OTHERS SIMILARLY SITUATED,
39   DAVID YASTRAB, ON BEHALF OF
40   HIMSELF AND ALL OTHERS SIMILIARLY
41   SITUATED, CYRUS JOUBIN, ON BEHALF
42    OF HIMSELF AND ALL OTHERS
43   SIMILARLY SITUATED, BRIAN BROWN,
44   ON BEHALF OF HIMSELF AND ALL
                                            2
 1   OTHERS SIMILARLY SITUATED,
 2   HARRISON GOLDMAN, ON BEHALF
 3   OF HIMSELF AND ALL OTHERS
 4   SIMILARLY SITUATED, KEVIN
 5   RADER-RHODENBAUGH, BRIAN MCGEE,
 6   ON BEHALF OF HIMSELF AND ALL
 7   OTHERS SIMILARLY SITUATED, CAROL
 8    NESS, KATRINA KEY, PATSY DIAMOND,
 9   INDIVIDUALLY AND ON BEHALF OF ALL
10   OTHERS SIMILARLY SITUATED, MARCUS
11   MATHIS, INDIVIDUALLY AND ON
12   BEHALF OF ALL OTHERS SIMILARLY
13   SITUATED, EUGENIA RUANE-GONZALES,
14   STEVEN RIVERS, CHRISTIAN GILSTRAP,
15   CYNTHIA J. TYLER, THOMAS FRIEDMAN,
16   JEREMY SHEPPECK, ALOYSIUS J. BROWN, III,
17   ANNE M. RINALDI, LAURA J. WARNER,
18   BARBARA HEATH, KATHLEEN LINDA
19   PITLOCK, KATHLEEN WEISS,
20   MATTHEW A. HOSKING, DIANE
21   URBANEC, ED MACAULEY, RONNA
22   HAMELIN, JAMES L. NESMITH, LAUREN
23   ALBERT, SUE ROBERTS, SUE ELLEN
24   GORDON, SHANE S. DAVIS, STEVEN
25   D. CAMPBELL, CHARLES LEONARD
26   PELTON, SR., KIMBERLY WHITESIDE
27   BROOKS, JESSICA MOYER, ANDREAS
28   ALBECK, REBECCA L. ROSSMAN,
29   MIRIAM CUMMINGS, CAROLE C. KEHL,
30   KAMAL SONTI, GRETCHEN ULBEE, CHAD
31    MILLER, ELVIRA MONZON, SUSAN
32   HOROWITZ, AMY D. NOLAN, ON BEHALF
33   OF HERSELF AND ALL OTHERS
34   SIMILARLY SITUATED, GRACE HOKE:
35

                                       3
 1
 2             Appeal from a judgment of the United States District Court for the Southern District
 3   of New York (Cote, J.).

 4             UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
 5   ADJUDGED, AND DECREED that the judgment entered by the District Court on
 6   November 21, 2014, is AFFIRMED.

 7             After a bench trial, the District Court determined that Apple Inc. (“Apple”)
 8   conspired to raise the prices of electronic books (“ebooks”) in violation of state and federal
 9   antitrust laws. See United States v. Apple Inc., 952 F. Supp. 2d 638, 709 (S.D.N.Y. 2013) (the
10   “Liability Finding”). Apple appealed this determination. See United States v. Apple, Inc., 791
11 F.3d 290, 339 (2d Cir. 2015) (affirming the District Court’s Liability Finding), pet. for cert.
12   docketed, No. 15-565 (U.S. Nov. 2, 2015) (the “Liability Appeal”). Approximately five weeks
13   before the scheduled start of a trial on damages—while the Liability Appeal was still pending
14   before a panel of our Court—Apple entered into a class action settlement (the “Settlement”)
15   resolving claims for damages stemming from the Liability Finding brought on behalf of
16   consumers of ebooks. The District Court approved the Settlement. In this appeal,
17   Objector-Appellant John Bradley challenges the fairness, reasonableness, and adequacy of
18   the Settlement.1 We assume the parties’ familiarity with the underlying facts and the
19   procedural history of the case, to which we refer only as necessary to explain our decision to
20   affirm.

21             The payments Apple agreed to make under the Settlement depend on the outcome of
22   the Liability Appeal. If the Liability Finding is affirmed, the Settlement calls for Apple to
23   pay $400 million in damages to consumers, plus a total of $50 million in attorneys’ fees and
24   costs to the private plaintiffs and the states that brought suit as parens patriae (together,
25   “Plaintiffs”). If the Liability Finding is remanded for further proceedings after either vacatur
26   or reversal, the Settlement requires Apple to pay far less: $50 million to consumers, and $20

     1Objector Dianne Young Erwin also appealed the District Court’s approval of the Settlement, but has
     voluntarily dismissed her appeal pursuant to Federal Rule of Appellate Procedure 42(b). See Order Granting
     Mot. to Dismiss, No. 14-4649, ECF No. 117 (July 30, 2015). Her claims are therefore not addressed in this
     order.
 1   million in fees and costs to Plaintiffs. If the Liability Finding is reversed without providing
 2   for the possibility of a Plaintiffs’ victory, the Settlement provides that Apple will make no
 3   payments to consumers or for attorneys’ fees or costs, and Plaintiffs will move to dismiss
 4   their claims against Apple with prejudice.

 5           Our Court has now affirmed the Liability Finding, and Apple did not move to rehear
 6   en banc. The Liability Finding will stand unless the Supreme Court grants Apple’s pending
 7   certiorari petition and rejects our judgment.

 8           A district court may approve a class action settlement only if the settlement is “fair,
 9   reasonable, and adequate.” Fed R. Civ. P. 23(e)(2). In this Circuit, district courts examine
10   the fairness, reasonableness, and adequacy of a class settlement according to the Grinnell
11   factors—considerations that we enunciated in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d
12   Cir. 1974), abrogated on unrelated grounds by Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 49–
13   50 (2d Cir. 2000). The Grinnell factors are:
14
15               (1) the complexity, expense and likely duration of the litigation; (2) the
16               reaction of the class to the settlement; (3) the stage of the proceedings
17               and the amount of discovery completed; (4) the risks of establishing
18               liability; (5) the risks of establishing damages; (6) the risks of
19               maintaining the class action through the trial; (7) the ability of the
20               defendants to withstand a greater judgment; (8) the range of
21               reasonableness of the settlement fund in light of the best possible
22               recovery; (9) the range of reasonableness of the settlement fund to a
23               possible recovery in light of all the attendant risks of litigation.
24
25   Id. at 463 (citations omitted). We review for abuse of discretion a district court’s
26   determination, pursuant to the Grinnell factors, that a class action settlement is fair,
27   reasonable, and adequate. See McReynolds v. Richards-Cantave, 588 F.3d 790, 800 (2d Cir. 2009).
28   The deference that we give the District Court’s determination is “considerable”: “The trial
29   judge’s views are accorded great weight because [s]he is exposed to the litigants, and their
30   strategies, positions and proofs. Simply stated, [s]he is on the firing line and can evaluate the
31   action accordingly.” Joel A. v. Giuliani, 218 F.3d 132, 139 (2d Cir. 2000) (internal quotation
32   marks and alterations omitted).

                                                        5
 1          The District Court here concluded, and Bradley does not contest on appeal, that
 2   Grinnell factors one, two, and eight weighed in favor of approving the settlement. As to
 3   factor one, the District Court found that the case was a complex antitrust conspiracy
 4   involving a number of parties, and that, absent settlement, Apple would attempt to draw out
 5   the litigation. As to factor two, it concluded that the class implicitly approved the
 6   settlement, observing that “[t]here have been under the circumstances few exclusions and
 7   few objections.” Tr. of Final Fairness H’rg at 12, In Re: Elec. Books Antitrust Litig. (No. 11-
 8   md-02293), ECF No. 686. Most importantly, as to factor eight, it found that Apple’s
 9   promised payments to consumers were reasonable in light of its assessment of their best
10   possible recovery after trial. An expert for the private plaintiffs estimated total consumer
11   losses resulting from the conspiracy to be approximately $280 million. Taking into
12   consideration the payments of approximately $166 million that these consumers had already
13   secured from settlements with Apple’s co-conspirators, the Settlement would give
14   consumers just over 200 percent of their estimated losses (if the Liability Finding is
15   affirmed), and 77 percent of their estimated losses (if the Liability Finding is either reversed
16   and remanded, or vacated and remanded). In particular, the District Court found the former
17   result to be “an excellent recovery” for consumers. Tr. of Final Fairness H’rg at 14; see also,
18   e.g., In re Remeron Direct Purchaser Antitrust Litig., No. 03-0085, 2005 WL 3008808, at *9 (D.N.J.
19   Nov. 9, 2005) (concluding that payment of 56 to 69 percent of estimated damages to be
20   “above the range of settlements routinely granted final approval,” and collecting cases).
21          Bradley argues that the District Court’s approval of the Settlement is “premature,”
22   and that, because the Settlement’s actual payouts will depend on the outcome of the Liability
23   Appeal, “it [was] impossible for the district court to properly analyze whether the settlement
24   is fair.” Bradley Br. at 10. Bradley did not make this argument, however, in the District
25   Court. It is thus waived. See Greene v. United States, 13 F.3d 577, 586 (2d Cir. 1994) (“[I]t is a
26   well-established general rule that an appellate court will not consider an issue raised for the
27   first time on appeal.”).
28          Even were this argument not waived, however, we would reject it. A district court is
29   capable of determining whether a settlement is fair and reasonable notwithstanding

                                                      6
 1   important contingencies. Indeed, evaluation of the fairness and adequacy of every settlement
 2   requires a court to assess the likely outcome of future legal proceedings, namely, the relative
 3   probabilities of various outcomes if there were no settlement and the parties went to trial.
 4   See Malchman v. Davis, 706 F.2d 426, 433 (2d Cir. 1983) (“The trial judge determines fairness,
 5   reasonableness, and adequacy of a proposed settlement by considering[,] [inter alia,] the
 6   substantive terms of the settlement compared to the likely result of a trial . . . .”). As the
 7   District Court commented about Grinnell factor three in this case, the parties settled
 8   “essentially on the eve of trial,” after “[f]ull discovery, both fact and expert discovery, had
 9   taken place.” Tr. of Final Fairness H’rg at 12. The District Court had already issued a
10   thorough opinion on Apple’s liability; ruled on a motion for class certification; and resolved
11   several disputes regarding the admissibility of evidence at the damages trial. “If all discovery
12   has been completed and the case is ready to go to trial, the court obviously has sufficient
13   evidence to determine the adequacy of settlement.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc.,
14   396 F.3d 96, 118 (2d Cir. 2005) (internal quotation marks omitted).
15          Also characterizing his prematurity argument as one of “ripeness,” Bradley argues
16   that the Settlement was not yet “fit for judicial decision,” and that the District Court would
17   have benefitted by “waiting for a decision in the [L]iability [A]ppeal.” Bradley Br. at 13–14,
18   15 (internal quotation marks omitted). Ripeness, however, concerns “threshold criteria for
19   the exercise of a federal court’s jurisdiction,” Simmonds v. I.N.S., 326 F.3d 351, 356–57 (2d
20   Cir. 2003), matters not at issue here. The dispute the District Court was charged with
21   resolving was plainly ripe for adjudication: Apple was alleged (and found) to have
22   orchestrated a conspiracy among publishers to raise prices of ebooks; prices rose; and
23   consumers bought ebooks at inflated prices. See 791 F.3d at 298–311. Plaintiffs then filed
24   suit, seeking to recover for harm already suffered. Evaluating a settlement of these damages
25   claims is properly undertaken pursuant to the Grinnell factors—particularly, for this
26   Settlement, factor three, which asks a court to consider “the stage of the proceedings and the
27   amount of discovery completed”—not the ripeness doctrine. For all these reasons, the
28   District Court did not abuse its discretion in determining that factor three also supported
29   settlement.

                                                     7
 1                                               * * *

 2          We have considered Bradley’s remaining arguments and find them to be without any
 3   merit. The District Court observed that Bradley’s arguments were made by a “professional
 4   objector,” not by someone “who ha[s] a stake in the enterprise in a way that a class member
 5   would.” Tr. of Final Fairness H’rg at 20. In the class action settlement context,
 6   “professional objectors” are lawyers who “file stock objections to class action settlements”
 7   —objections that are “[m]ost often . . . nonmeritorious”—and then are “rewarded with a fee
 8   by class counsel to settle their objections.” William B. Rubenstein, NEWBERG ON CLASS
 9   ACTIONS § 13:21 (5th ed. 2012). Bradley’s appeal, in which he asserts arguments either not
10   presented to the District Court or devoid of merit, has done nothing to cast any doubt on
11   the District Court’s characterization.
12

13          We AFFIRM the judgment of the District Court.
14

15                                                       FOR THE COURT:
16                                                       Catherine O’Hagan Wolfe, Clerk of Court

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