Court Opinion

ID: 169686
Source: CourtListenerOpinion
Date Created: 2010-08-14 17:37:40+00
Date Added: 2024-06-11T17:25:03.457283
License: Public Domain

F I L E D
                                                                United States Court of Appeals
                                                                        Tenth Circuit
                        UNITED STATES CO URT O F APPEALS
                                                                      August 28, 2007
                                     TENTH CIRCUIT                 Elisabeth A. Shumaker
                                                                       Clerk of Court

 DAVID HELLER, individually and on
 behalf of all others similarly situated,

           Plaintiff-Appellee,

 v.

 QUO VAD X, INC.; LORINE R.
                                                         No. 07-1110
 SW EENEY ; and GA RY T.
                                                 (D.C. No. 04-cv-00665-RPM )
 SC HERPIN G ,
                                                          (D . Colo.)
           Defendants-Appellees,

 ---------------------------------------------

 W ILLIA M S. K A RN ,

           Appellant.

                                 OR DER AND JUDGM ENT *

Before LUCERO , HA RTZ, and GORSUCH, Circuit Judges.

       *
        After examining appellant’s brief and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2) and 10th Cir. R.
34.1(G ). The case is therefore ordered submitted without oral argument. This
order and judgment is not binding precedent except under the doctrines of law of
the case, res judicata and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      W illiam S. Karn, an attorney representing himself, appeals from the district

court’s denial of his objection to a settlement agreement in a class action suit

involving Quovadx, Inc., of which M r. Karn is a shareholder. Because we agree

with the district court that M r. Karn lacks standing to object to the settlement, and

because M r. Karn’s filings before the district court and this court fail to identify

any relevant evidence or legal authority supporting his various theories about

class action litigation, we affirm.

                                         ***

      On April 5, 2004, David Heller brought suit against Q uovadx and two of its

officers, Lorine R. Sw eeney and Gary T. Scherping, on behalf of all open-market

purchasers of Quovadx shares during the period from October 22, 2003 to

M arch 15, 2004. M r. Heller alleged that defendants had intentionally issued false

and misleading financial statements during that period in aid of Q uovadx’s cash

and stock acquisition of Rogue W ave Software. The litigation proceeded with the

typical motions and filings involved in such class action shareholder suits, and

eventually the parties entered into settlement discussions. In November 2006, the

parties came to an agreement and filed a stipulation of settlement, and M r. Heller

filed an unopposed motion for court approval of the settlement. The district court

subsequently granted preliminary approval, scheduled a fairness hearing, and

ordered notice of the proposed settlement to all class members.

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      On December 28, 2006, M r. Karn filed an objection to the settlement – the

only objection lodged by any party against the proposed settlement. Although

M r. Karn purports to be a Quovadx shareholder, he does not claim to be a member

of the class of shareholders represented by M r. Heller (those who purchased

shares between October 22, 2003 and M arch 15, 2004). In his objection, M r.

Karn essentially argued that the defendant corporate officers, and not the

corporation itself, should have to pay any settlement or judgment for the alleged

harm to the class members. M r. Karn followed his objection with a number of

motions in the district court, asking, among other things, that the court charge the

parties in the suit and their counsel with violations of the Sherman Act, 15 U.S.C.

§ 1 (illegal restraints of trade), that the court rule on the constitutionality of class

action lawsuits writ large, and that the court allow M r. Karn to file litigation

documents by posting them on his w ebsite and announcing the posting by email to

the court and other parties.

      The district court denied all of M r. Karn’s motions but postponed ruling on

his objection to the settlement until the fairness hearing, scheduled for

February 23, 2007. At the fairness hearing, the court denied M r. Karn’s objection

and granted final approval of the proposed settlement. On February 26, 2007, the

court issued a written order denying M r. Karn’s objection, citing as its reasons: 1)

M r. Karn did not “identify any purchases of Quovadx stock within the class

period and therefore has no standing to make an objection”; and 2) M r. Karn’s

                                           -3-
statements to the court “did not constitute valid objections.” Feb. 26, 2007, Order

Denying Shareowner Objection. The court also ordered that a so-called

“memorandum of law” – filed by M r. Karn one day before the fairness hearing –

be stricken from the record because its contents were “irrelevant.” Id. M r. Karn

filed a timely notice of appeal.

                                         ***

      M r. Karn’s appeal apparently only concerns the district court’s denial of

standing for M r. Karn’s objection. Specifically, he presents two questions to this

court: 1) w hether the district court’s denial of standing violated his Fifth

Amendment rights of due process; and 2) whether the denial of standing violated

the Takings Clause of the Fifth Amendment. For at least three independent

reasons, we affirm the district court’s denial of M r. Karn’s objection to the

proposed settlement.

      First, we affirm because M r. Karn fails to appeal the district court’s second,

independent ground for denying his objection – namely, its conclusion that M r.

Karn, standing or no standing, simply did not raise any valid objection. See

M etzger v. U NU M Life Ins. C o. of Am., 476 F.3d 1161, 1168 (10th Cir. 2007)

(affirming because appellant did not challenge on appeal the district court’s

“second, independent ground” for judgment).

      Second, we affirm because we agree that M r. Karn indeed lacked standing

to object to the proposed settlement. Rule 23(e)(4) of the Federal Rules of Civil

                                          -4-
Procedure provides only that “class member[s] may object to a proposed

settlement.” As such, “non-class members have no standing to object . . . .”

Gould v. Alleco, Inc., 883 F.2d 281, 284 (4th Cir. 1989). It is undisputed that M r.

Karn is not a class member in this suit, or at least he has never presented to this

court or the district court any evidence suggesting membership, and therefore he

has no standing to object under Rule 23. Rather, “[i]nterjection of the opposing

views of non-class members [such as M r. Karn] should proceed via intervention

under Rule 24.” Id. M r. Karn has never attempted to intervene, nor does he

present to us any evidence or argument suggesting that he would qualify for

intervention under Rule 24.

      Third, and finally, we affirm the district court because M r. Karn presents

no evidence or relevant legal argument to support his contentions that such a

denial of standing violates the Fifth Amendment. See Phillips v. Hillcrest M ed.

Ctr., 244 F.3d 790, 800 n.10 (10th Cir. 2001) (“Because appellants have failed to

support this [argument] with any authority, legal or otherwise, we need not

consider it.”). Instead of providing this court with case citations to support his

appeal, M r. Karn spends the bulk of his brief noting the inefficiencies and

burdens of paper-based litigation and advocating the adoption of electronic filing

systems. W e do not doubt that technological innovation presents great

opportunities for the judiciary. But we disagree with M r. Karn that the current

                                         -5-
procedural requirements with which he must comply deprive him or others of any

constitutional rights. Affirmed. 1

                                     ENTERED FOR THE COURT

                                     Neil M . Gorsuch
                                     Circuit Judge

      1
          Appellees’ motion to dismiss is denied as moot.

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