Filed: Aug. 20, 2019
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 18-2346 _ Joshua Rawa, on behalf of himself and all others similarly situated; Elisabeth Martin; Robert Ravencamp; Amy Ward; Cynthia Davies; Christopher Abbott; Owen Olson; Jeannie A. Gilchrist; Zachary Sholar; Matthew Myers; John W. Beard, Jr.; Michael Overstreet lllllllllllllllllllllPlaintiffs - Appellees v. Monsanto Company lllllllllllllllllllllDefendant - Appellee v. James Migliaccio lllllllllllllllllllllObjector - Appellant Patrick
Summary: United States Court of Appeals For the Eighth Circuit _ No. 18-2346 _ Joshua Rawa, on behalf of himself and all others similarly situated; Elisabeth Martin; Robert Ravencamp; Amy Ward; Cynthia Davies; Christopher Abbott; Owen Olson; Jeannie A. Gilchrist; Zachary Sholar; Matthew Myers; John W. Beard, Jr.; Michael Overstreet lllllllllllllllllllllPlaintiffs - Appellees v. Monsanto Company lllllllllllllllllllllDefendant - Appellee v. James Migliaccio lllllllllllllllllllllObjector - Appellant Patrick ..
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 18-2346
___________________________
Joshua Rawa, on behalf of himself and all others similarly situated; Elisabeth
Martin; Robert Ravencamp; Amy Ward; Cynthia Davies; Christopher Abbott;
Owen Olson; Jeannie A. Gilchrist; Zachary Sholar; Matthew Myers; John W.
Beard, Jr.; Michael Overstreet
lllllllllllllllllllllPlaintiffs - Appellees
v.
Monsanto Company
lllllllllllllllllllllDefendant - Appellee
v.
James Migliaccio
lllllllllllllllllllllObjector - Appellant
Patrick Sweeney
lllllllllllllllllllllObjector
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: April 16, 2019
Filed: August 20, 2019
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Before SMITH, Chief Judge, ARNOLD and KELLY, Circuit Judges.
____________
SMITH, Chief Judge.
Appellant-objector James Migliaccio was a member of a California class action
against Monsanto Company that alleged the company used misleading labeling on its
Roundup concentrate herbicide. Following certification of the California class in the
Central District of California, class counsel filed the present action in the Eastern
District of Missouri on behalf of a putative class of consumers from the other 49
states. The parties reached a nationwide settlement agreement. The Central District
of California transferred the California action to Missouri, where Monsanto resides,
in order to consolidate the cases and seek preliminary approval of the nationwide
settlement. The federal district court1 in Missouri granted preliminary approval of the
settlement and its notice plan. After the notice period ended, the plaintiffs filed for
final approval of the settlement. Migliaccio objected to certification of the nationwide
class and to the fairness of the settlement on several grounds. The district court
overruled his objection and granted final approval. Upon review, we conclude that
the class members were adequately represented and that the settlement was
reasonable, fair, and adequate. We therefore affirm.
I. Background
Monsanto manufactures and markets Roundup, a well-known herbicide, in both
concentrate and ready-to-use forms. The company marketed its concentrate products,
which require dilution before using, as a better value for consumers. In this class
action lawsuit, plaintiff consumers alleged that Monsanto misled them about the
concentration strength of these products through its product labeling. In doing so,
plaintiffs claim, Monsanto implicitly misrepresented their value—by nearly 50
1
The Honorable Audrey G. Fleissig, United States District Judge for the
Eastern District of Missouri.
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percent on some units. As an example, one product’s label advertised that it could be
used to make up to ten gallons. But consumers discovered that, when diluted
according to package instructions, the product only made just over five gallons.
Class counsel originally filed the suit in the Central District of California on
behalf of a nationwide class. The court, however, eventually certified only a
California class. Class counsel subsequently filed a complaint in Missouri,
Monsanto’s principal location, on behalf of a putative class of consumers from the
other 49 states. The complaint alleged violations of both federal and Missouri laws.
The parties negotiated and reached a tentative nationwide settlement. Other similar
actions had been filed in courts across the country, and class counsel reached out to
the plaintiffs in each case to advise them of the settlement’s terms. Each agreed to
support the settlement in exchange for class counsel’s promise to seek incentive
awards and reimbursement for costs and fees.
Class counsel moved the Central District of California to transfer the action to
the Eastern District of Missouri, seeking consolidation with the 49-state class action.
The court granted the motion.
The plaintiff class then moved the federal district court in the Eastern District
of Missouri for preliminary approval of the nationwide settlement, which covered
over four million retail units representing about $164 million in retail sales. The
motion set forth a notice plan, designed by the class administrator, which estimated
a class size of approximately 3.5 million members who bought the products during
the relevant time period. The notice plan targeted over 20 million people who had
used weed killer products in the past. The plan assumed that the class members would
be included among that number and receive adequate notice of the settlement. The
court granted preliminary approval of the settlement and approved the proposed
notice plan.
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According to the terms of the settlement, Monsanto would establish a $21.5
million non-reversionary Common Fund for claims, notice, and administration costs;
incentive awards; and attorneys’ fees. Class counsel could apply for fees up to one-
third of the Common Fund for their services. Any remaining unclaimed funds would
be donated to cy pres recipients.2
After the notice period ended and the claims were processed, the plaintiffs
moved for final approval of the settlement and for attorneys’ fees. The class
administrator testified that it had validated a total of 70,360 claims, valued at
$10,732,832. Since the claims correspond to a 50 percent refund for the consumers’
affected purchases, the class administrator testified that the value of the claims
represented over $21 million in retail sales. Because Monsanto made $164 million in
retail sales for the relevant period, this produced a claims rate of 13 percent. Class
counsel sought one-third of the Common Fund ($7,166,666) for attorneys’ fees.
Migliaccio filed an objection opposing class certification and final approval of
the settlement. He asserted that consolidation of the California class with the
nationwide class diluted the California class members’ claims, creating a conflict of
interest for the nationwide class counsel that rendered their representation inadequate.
Prior to transfer and consolidation of the California- and Missouri-based classes,
2
Cy pres (from the expression cy pres comme possible, meaning “as near as
possible”) is an equitable doctrine with origins in trust and estates law. In re Airline
Ticket Comm’n Antitrust Litig.,
307 F.3d 679, 682 (8th Cir. 2002).
In the class action context, it may be appropriate . . . to use cy pres
principles to distribute unclaimed funds. In such a case, the unclaimed
funds should be distributed for a purpose as near as possible to the
legitimate objectives underlying the lawsuit, the interests of class
members, and the interests of those similarly situated.
Id.
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counsel consulted with a legal ethics expert to address potential conflict-of-interest
concerns. Based on the expert’s advice, counsel represented to the court that no
conflict existed. Migliaccio challenged the fairness of both the proposed settlement
terms and the attorneys’ fee award. He demanded that the nationwide class counsel
produce the expert ethics opinion sought before the transfer, and he urged the court
to perform a lodestar cross-check on the attorneys’ fee award.
The court asked class counsel to submit detailed billing records and rates to
support the motion for attorneys’ fees and then held a two-hour fairness hearing, in
which Migliaccio participated. Following the hearing, the court entered an order
granting final certification to the nationwide class, final approval of the settlement,
and attorneys’ fees totaling 28 percent of the Common Fund.
II. Discussion
Migliaccio raises four issues on appeal. First, he challenges the final approval,
arguing that the district court based its fairness analysis on erroneous facts. Second,
he avers the court failed to uncover ethical conflicts that made class certification
inappropriate. Third, he contends the award of attorneys’ fees is too high. Fourth, he
argues the cy pres distribution of funds remaining in the Common Fund once all
expenses are deducted is inappropriate and should instead be returned to class
members. In response, the class action plaintiffs argue that Migliaccio lacks standing
to bring this appeal because he could not receive any benefit from a favorable
outcome.
A. Standing
Before reaching the merits of his arguments, we first address the plaintiffs’
assertion that Migliaccio lacks standing to bring these claims. They note that “class
members lack standing to appeal aspects of a class action settlement that do not
adversely affect their own interests.” Huyer v. Van de Voorde,
847 F.3d 983, 987 (8th
Cir. 2017). They assert that Migliaccio lacks standing to challenge the fairness of a
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settlement that fully compensates him for his claimed out-of-pocket losses. Similarly,
they claim he lacks standing to appeal the award of attorneys’ fees because, according
to the terms of the settlement agreement, any fees deemed excessive would be
returned to the Common Fund and distributed to cy pres beneficiaries rather than to
class members.
“To show standing under Article III of the U.S. Constitution, a plaintiff must
demonstrate (1) injury in fact, (2) a causal connection between that injury and the
challenged conduct, and (3) the likelihood that a favorable decision by the court will
redress the alleged injury.” Iowa League of Cities v. EPA,
711 F.3d 844, 869 (8th Cir.
2013) (internal quotation omitted). “The standing Article III requires must be met by
persons seeking appellate review, just as it must be met by persons appearing in
courts of first instance.” Arizonans for Official English v. Arizona,
520 U.S. 43, 64
(1997). Migliaccio asserts the district court relied on erroneous factual findings in
determining the settlement was fair, reasonable, and adequate. He also contends that
he would have received a more favorable outcome under California state law had the
classes not been consolidated. His challenge to the settlement’s distribution of funds,
if successful, would yield a higher recovery for class members. These allegations
support his having standing to dispute the settlement and class certification. See Keil
v. Lopez,
862 F.3d 685, 699 (8th Cir. 2017) (concluding an objector had standing
because “if the settlement agreement either adjusted recovery to account for the
relative strength of all fifty states’ consumer protection laws or simply provided
greater recovery for class members . . . , [the objector] presumably would receive
more money”).
We need not address standing with respect to a review of the fee award because
“the reasonableness of the attorneys’ fees is within the overall supervisory review of
this court.” Grunin v. Int’l House of Pancakes,
513 F.2d 114, 127 n.13 (8th Cir.
1975). Migliaccio argues that any reduction in attorneys’ fees should inure to the
benefit of class members rather than defaulting to the terms of the settlement, which
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provide that net funds remaining in the Common Fund will be distributed to cy pres
recipients. Because he made this argument below, we may address whether the
district court erred by refusing his request.
B. Substantive Claims
1. Settlement Approval
We review a district court’s order approving a class action settlement for an
abuse of discretion. Marshall v. Nat’l Football League,
787 F.3d 502, 508 (8th Cir.
2015). In so doing, “we ask whether the district court considered all relevant factors,
whether it was significantly influenced by an irrelevant factor, and whether in
weighing the factors it committed a clear error of judgment.”
Id. (cleaned up).
Migliaccio asserts that the nationwide class consists of approximately 3.5
million members. He derives this figure from estimates made prior to the class notice
period. In designing a notice plan, the class administrator used market research data
to “estimat[e] that the class size [was] approximately 3.5 million persons and that a
target audience of 20.08 million persons who have used weed killer products
include[d] the members of the class.” Mem. in Support of Consent Mot. for Prelim.
Approval, Attach. 3 at 4, Rawa v. Monsanto Co., No. 4:17-cv-01252-AGF (E.D. Mo.
Oct. 4, 2017), ECF No. 32-3. The district court did not address this figure in its final
approval analysis. Instead, it adopted the plaintiffs’ reasoning following the claims
period: “[B]ecause 13% of the product was claimed by 70,360 members, the evidence
suggests the Class contains about 541,000 members.” Pls.’ Reply in Supp. of Mot.
and Resp. to Obj. at 1 n.2, Rawa v. Monsanto Co., No. 4:17-cv-01252-AGF (E.D. Mo.
Apr. 3, 2018), ECF No. 49. The district court conducted its fairness analysis using
these figures. The district court commended the settlement’s full compensatory
recovery for claimants and emphasized the considerably high claims rate. See
Keil,
862 F.3d at 697 (observing “that a claim rate as low as 3 percent is hardly unusual in
consumer class actions and does not suggest unfairness”).
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“The single most important factor in determining whether a settlement is fair,
reasonable, and adequate is a balancing of the strength of the plaintiff’s case against
the terms of the settlement.” Van Horn v. Trickey,
840 F.2d 604, 607 (8th Cir. 1988).
Migliaccio contends that the court’s use of “grossly inaccurate figures” led it to
misjudge the overall value of the settlement. Appellant’s Br. at 13. However,
Migliaccio fails to show that these figures are flawed and is unconvincing that the
court should have based its analysis on pre-notice market research estimates rather
than a simple, evidence-based calculation. So, we hold the district court did not abuse
its discretion in granting final approval of the settlement.
2. Class Certification
We review the district court’s decision to certify the settlement class for an
abuse of discretion. In re Target Corp. Customer Data Sec. Breach Litig.,
892 F.3d
968, 973 (8th Cir. 2018).
Migliaccio argues that class counsel became inadequate due to conflicts that
arose from the transfer and consolidation of the California class. He contends the
transfer and consolidation ultimately “diluted California class members’ claims.”
Appellant’s Br. at 4. Migliaccio devotes much of his argument towards showing that
the California class members received much less per member under the nationwide
settlement when compared to a hypothetical recovery that they would have received
absent consolidation.3 He also seeks disclosure of the ethics opinion that class counsel
sought prior to transfer. He does not, however, name a specific potential conflict that
concerns him.
3
Migliaccio’s calculations are premised on a number of estimates: the pre-
notice estimated nationwide class size of 3.5 million members; a similarly estimated
California class size; and an assumption that the California class would “achieve[] the
same 30% recovery of estimated damages as the $21.5 million settlement represents
of the $70.5 million estimated damages for the nationwide class.” Appellant’s Br. at
21.
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Any California class member who submitted a valid claim recovered at least
100 percent of his or her alleged out-of-pocket damages under the nationwide
settlement. The settlement’s per-unit payment to claimants is higher than what
plaintiffs sought through the damages model in the abandoned California case. Even
if punitive damages are available to successful litigants under California consumer
protection laws, “the outcome of the litigation was far from certain.”
Keil, 862 F.3d
at 696. A nationwide settlement need not account for differences in state laws.
Id. at
700. Moreover, “a settlement is a product of compromise and the fact that a
settlement provides only a portion of the potential recovery does not make such
settlement unfair, unreasonable or inadequate.”
Id. at 696 (internal quotation omitted).
On this record, Migliaccio has failed to show how the California class members’
claims were diluted.
He also maintains that the transfer and consolidation created a conflict for class
counsel. Though he has not asserted precisely what that conflict is, he says “class
counsel recognized the conflict,” as evidenced by their decision to consult with an
ethics expert before asking the California court to transfer the case. Appellant’s Br.
at 22. The district court adequately addressed his concerns at the fairness hearing:
[T]he fact that an attorney consults someone to make sure that they are
on solid ground is not an admission of a conflict. That is a lawyer taking
prudent steps when they have an obligation to a class. . . . I take that as
a sign of responsible behavior by class counsel and not some admission
that a conflict exists.
Tr. of Fairness Hr’g at 58, Rawa v. Monsanto Co., No. 4:17-cv-01252-AGF (E.D.
Mo. May 14, 2018), ECF No. 57.
Migliaccio has failed to show how the California class members have been
disadvantaged by their inclusion as members of the nationwide class. We find no
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abuse of discretion in the district court’s refusal to order production of the expert
ethics opinion.
3. Attorneys’ Fee Award
We review the district court’s award of attorneys’ fees for an abuse of
discretion. Petrovic v. Amoco Oil Co.,
200 F.3d 1140, 1156 (8th Cir. 1999). The
district court has discretion to use either a lodestar or percentage-of-the-fund method
in determining an appropriate recovery, “and the ultimate reasonableness of the award
is evaluated by considering relevant factors from the twelve factors listed in Johnson
v. Ga. Highway Express, Inc.,
488 F.2d 714, 719–20 (5th Cir. 1974).” In re Target
Corp., 892 F.3d at 977 (cleaned up). The district court has the burden of “provid[ing]
a concise but clear explanation of its reasons for the fee award.”
Id. (internal
quotation omitted). “We give substantial deference to a district court’s
determinations, in light of the district court’s superior understanding of the
litigation.” In re Genetically Modified Rice Litig.,
764 F.3d 864, 871 (8th Cir. 2014).
Class counsel requested a fee award totaling 33 percent of the Common Fund.
After considering the Johnson factors, the parties’ arguments, the attorney billing
records, and the relevant case law, the district court determined that an award of 28
percent of the Common Fund was appropriate. The court acknowledged that “[t]he
corresponding lodestar multiplier of 5.3 is still quite high compared to similar cases
in this circuit,” but it concluded it was not unreasonable in light of the results
obtained. Rawa v. Monsanto Co., No. 4:17-cv-012520-AGF,
2018 WL 2389040, at
*9 (E.D. Mo. May 25, 2018). The district court decided that a generous award was
warranted based on “the novelty and uncertainty of the claims, the skill required by
counsel to perform the work properly, especially on a nationwide basis, time limits
imposed in the [California case], the experience and ability of the attorneys, and
significantly, the large amount involved and excellent result achieved.”
Id. The court
also cited class counsel’s general efficiency as well as the effectiveness of the notice
process to justify the award.
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Migliaccio uses the same estimated class size and claims rate figures again to
dispute the quality of the settlement’s terms. He takes issue with the district court’s
weighing of the Johnson factors. He also disputes certain hours in the billing records
submitted by class counsel.
The fee award in this case is in line with other awards in this circuit. See Huyer
v. Buckley,
849 F.3d 395, 399 (8th Cir. 2017) (“Indeed, courts have frequently
awarded attorneys’ fees ranging up to 36% in class actions.”). And while the 5.3
lodestar multiplier is high, it does not exceed the bounds of reasonableness. See, e.g.,
In re Charter Commc’ns, Inc., Sec. Litig., No. 4:02-cv-1186-CAS,
2005 WL
4045741, at *18 (E.D. Mo. Jun. 30, 2005) (finding reasonable a 5.61 cross-check
multiplier and noting that “[t]o overly emphasize the amount of hours spent on a
contingency fee case would penalize counsel for obtaining an early settlement and
would distort the value of the attorneys’ services” (internal quotation omitted)). The
district court adequately explained the reasons for its decision, and the result is not
obviously unreasonable in light of our prior case law.
Migliaccio presented his billing record disputes to the district court at the
fairness hearing. In its order, the district court stated that it had taken both the parties’
arguments and the submitted billing records under “careful consideration” in
determining the fee award. Rawa,
2018 WL 2389040, at *9. We find that the district
court “fulfilled its responsibility of providing a concise but clear explanation of its
reasons for the fee award.” In re Genetically Modified Rice
Litig., 764 F.3d at 872
(internal quotation omitted). Migliaccio has failed to show that the court’s decision
amounted to an abuse of discretion.
4. Cy Pres Distribution
Class counsel requested a fee award of 33 percent of the Common Fund, or
$7,166,666. The district court instead awarded 28 percent, or $6,020,000. Migliaccio
argues the difference between these amounts should be distributed to class members
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instead of to cy pres beneficiaries as contemplated by the terms of the settlement
agreement. Essentially, he requests that the district court redraft the terms of the
agreement to allow for an alternative method of fund distribution for the amount in
question.
District courts do not rewrite settlement agreements. “[T]he power to approve
or reject a settlement negotiated by the parties before trial does not authorize the court
to require the parties to accept a settlement to which they have not agreed.” Evans v.
Jeff D.,
475 U.S. 717, 726 (1986). Contrary to Migliaccio’s characterizations on
appeal, the court did not order the cy pres distribution of the difference in fees—the
terms of the settlement agreement did. “[W]hile the settlement agreement must gain
the approval of the district judge, once approved its terms must be followed by the
court and the parties alike. . . . The terms of the settlement agreement are always to
be given controlling effect.” Klier v. Elf Atochem N. Am., Inc.,
658 F.3d 468, 475–76
(5th Cir. 2011) (footnote omitted). Accordingly, we find no error.
III. Conclusion
We affirm the judgment of the district court.
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