Filed: Feb. 17, 2016
Latest Update: Mar. 02, 2020
Summary: 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 DATA
Summary: 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 DATAB..
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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
8
