In re: Motor Fuel Temperature ( 2017 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS August 23, 2017
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
IN RE: MOTOR FUEL TEMPERATURE
SALES PRACTICES LITIGATION
------------------------------
ZACHARY WILSON; MATHEW COOK;
BRENT DONALDSON; SAMANTHA
BAYLARD; CRAIG MASSEY;
RICHARD GALAUSKI; WILLIAM
BOYD; LISA MCBRIDE; TAMARA
MILLER; HEARTLAND LANDSCAPE
GROUP LLC; TEAM TRUCKING;
JAMES ANLIKER; DENNIS K. MANN;
PHYLLIS LERNER; HERB GLASER; No. 15-3221
STEVEN RUBIN; MAX CANDIOTTY;
FRED AGUIRRE; JAMES JARVAIS;
MARA REDSTONE; RAPHAEL
SAGALYN; J.C. WASH; JEAN W.
NEESE; CECIL R. WILKINS; WAYNE
BYRAM; GARY KOHUT; DEBRA
BERG; TIA GOMEZ; SHONNA S.
BUTLER; BEN DOZIER; MARK
SCIVNER; BARBARA CUMBO; JAMES
GRAHAM; KENNEDY G. KRAATZ;
MELISSA D. MURRAY; MICHAEL A.
WARNER; CLINTON J. DAVIS;
STEVEN R. RUTHERFORD; LISA ANN
LEE; BRENT CRAWFORD; DIXCEE
MILLSAP; CARL RITTERHOUSE;
SAMUEL ELY; VICTOR RUYBALID;
HADLEY BOWER; KRISTY DEANN
MOTT; CHARLES COCKRELL, JR.;
WILLIAM RUTTHERFORD; JAN
RUTHERFORD; MARK WYATT;
DAWN LALOR; GERALD PANTO, JR.;
EDGER PAZ; CHARLES D. JONES;
MICHAEL GAUTHREAUX; JOANN
KORLESKI; JEFF JENKINS; SARA
TERRY; JACOB STEED; MARVIN
BRYAN; JOHN TELLES;
CHRISTOPHER PAYNE; SCOTT
CAMPBELL; JONATHAN CHARLES
CONLIN; PRISCILLA CRAFT; ROBERT
HICKS; RICHARD PATRICK; JESSICA
HONIGBERG; RAYSHAUN GLANTON;
GARLAND WILLIAMS; ANNIE SMITH;
BOBBY ROBERSON; SAM
HOTCHKISS; ANNA LEGATES;
ANDREA FRAYSER; MELVIN
ELLISON; CECIL WILKINS; BETTY
CHERRY; JOY HOWELL; ALLEN RAY
KLEIN,
Plaintiffs - Appellees,
v.
CIRCLE K STORES, INC.; PILOT
TRAVEL CENTERS, LLC; KUM&GO,
L.C.; QUICKTRIP CORPORATION;
MURPHY OIL USA, INC.; RACE TRAC
PETROLEUM, INC.; MARATHON
PETROLEUM COMPANY, LLC; THE
PANTRY, INC.; SPEEDWAY
SUPERAMERICA, LLC; SHEETZ, INC.;
WAWA, INC.; FLYING J INC.; 7-
ELEVEN, INC.; PTCAA TEXAS, LP;
Defendants - Appellants,
v.
CHEVRON USA, INC.; CASEY’S
GENERAL STORE, INC.; SINCLAIR
OIL CORPORATION; EXXON MOBIL
CORPORATION; ESSO VIRGIN
ISLANDS, INC. MOBIL OIL GUAM,
INC.; BP PRODUCTS NORTH
AMERICA INC.,
2
Defendants - Appellees,
and
BP CORPORATION NORTH AMERICA,
INC.; CITGO PETROLEUM
CORPORATION; CONOCO PHILLIPS
COMPANY; VALERO MARKETING
AND SUPPLY COMPANY; SUNOCO
CORPORATION; EQUILON
ENTERPRISES, LLC, d/b/a SHELL OIL
PRODUCTS COMPANY, LLC; MOTIVA
ENTERPRISES, LLC; TESORO
REFINING AND MARKETING
COMPANY; SAM’S CLUB; LOVE’S
TRAVEL STOP & COUNTRY STORES,
INC.; G AND M OIL COMPANY, INC.;
UNITED EL SEGUNDO, INC.; WORLD
OIL CORPORATION; M.M. FOLWER,
INC.; DANSK INVESTMENT GROUP,
INC.; B-B OIL COMPANY, INC.; PORT
CITIES OIL LLC; FLASH MARKET,
INC; J&P FLASH, INC.; MAGNESS OIL
COMPANY; COULSON OIL
COMPANY, INC.; DIAMOND STATE
OIL, LLC; EZ MART STORES, INC.;
THORNTONS, INC.,
Defendants.
–––––––––––––––––––––––––––––––––––
IN RE: MOTOR FUEL TEMPERATURE
SALES PRACTICES LITIGATION
------------------------------
No. 15-3227
ZACHARY WILSON; MATHEW COOK;
BRENT DONALDSON; SAMANTHA
BAYLARD; CRAIG MASSEY;
RICHARD GALAUSKI; WILLIAM
BOYD; LISA MCBRIDE; TAMARA
3
MILLER; HEARTLAND LANDSCAPE
GROUP LLC; TEAM TRUCKING;
JAMES ANLIKER; DENNIS K. MANN;
PHYLLIS LERNER; HERB GLASER;
STEVEN RUBIN; MAX CANDIOTTY;
FRED AGUIRRE; JAMES JARVAIS;
MARA REDSTONE; RAPHAEL
SAGALYN; J.C. WASH; JEAN W.
NEESE; CECIL R. WILKINS; WAYNE
BYRAM; GARY KOHUT; DEBRA
BERG; TIA GOMEZ; SHONNA S.
BUTLER; BEN DOZIER; MARK
SCIVNER; BARBARA CUMBO; JAMES
GRAHAM; KENNEDY G. KRAATZ;
MELISSA D. MURRAY; MICHAEL A.
WARNER; CLINTON J. DAVIS;
STEVEN R. RUTHERFORD; LISA ANN
LEE; BRENT CRAWFORD; DIXCEE
MILLSAP; CARL RITTERHOUSE;
SAMUEL ELY; VICTOR RUYBALID;
HADLEY BOWER; KRISTY DEANN
MOTT; CHARLES COCKRELL, JR.;
WILLIAM RUTTHERFORD; JAN
RUTHERFORD; MARK WYATT;
DAWN LALOR; GERALD PANTO, JR.;
EDGER PAZ; CHARLES D. JONES;
MICHAEL GAUTHREAUX; JOANN
KORLESKI; JEFF JENKINS; SARA
TERRY; JACOB STEED; MARVIN
BRYAN; JOHN TELLES;
CHRISTOPHER PAYNE; SCOTT
CAMPBELL; JONATHAN CHARLES
CONLIN; PRISCILLA CRAFT; ROBERT
HICKS; RICHARD PATRICK; JESSICA
HONIGBERG; RAYSHAUN GLANTON;
GARLAND WILLIAMS; ANNIE SMITH;
BOBBY ROBERSON; SAM
HOTCHKISS; ANNA LEGATES;
ANDREA FRAYSER; MELVIN
ELLISON; CECIL WILKINS; BETTY
CHERRY; JOY HOWELL; ALLEN RAY
KLEIN,
4
Plaintiffs - Appellees,
v.
CIRCLE K STORES, INC; PILOT
TRAVEL CENTERS, LLC; KUM&GO,
L.C.; QUICKTRIP CORPORATION;
MURPHY OIL USA, INC.; RACE TRAC
PETROLEUM, INC.; MARATHON
PETROLEUM COMPANY, LLC; THE
PANTRY, INC.; SPEEDWAY
SUPERAMERICA, LLC; SHEETZ, INC.;
WAWA, INC.; FLYING J INC.; 7-
ELEVEN, INC.; PTCAA TEXAS, LP,
Defendants - Appellants,
CHEVRON USA, INC.; CASEY’S
GENERAL STORE, INC.; SINCLAIR
OIL CORPORATION; EXXON MOBIL
CORPORATION; ESSO VIRGIN
ISLANDS, INC.; MOBIL OIL GUAM,
INC.; BP PRODUCTS NORTH
AMERICA INC.,
Defendants - Appellees,
and
BP CORPORATION NORTH AMERICA,
INC.; CITGO PETROLEUM
CORPORATION; CONOCO PHILLIPS
COMPANY; VALERO MARKETING
AND SUPPLY COMPANY; SUNOCO
CORPORATION; EQUILON
ENTERPRISES, LLC, d/b/a SHELL OIL
PRODUCTS COMPANY, LLC; MOTIVA
ENTERPRISES, LLC; TESORO
REFINING AND MARKETING
COMPANY; SAM’S CLUB; LOVE'S
TRAVEL STOP & COUNTRY STORES,
INC.; G AND M OIL COMPANY, INC.;
UNITED EL SEGUNDO, INC.; WORLD
5
OIL CORPORATION; M.M. FOLWER,
INC.; DANSK INVESTMENT GROUP,
INC.; B-B OIL COMPANY, INC.; PORT
CITIES OIL LLC; FLASH MARKET,
INC; J&P FLASH, INC.; MAGNESS OIL
COMPANY; COULSON OIL
COMPANY, INC.; DIAMOND STATE
OIL, LLC; EZ MART STORES, INC.;
THORNTONS, INC.,
Defendants.
–––––––––––––––––––––––––––––––––––
IN RE: MOTOR FUEL TEMPERATURE
SALES PRACTICES LITIGATION
------------------------------
No. 15-3228
ZACHARY WILSON; MATHEW COOK;
BRENT DONALDSON; SAMANTHA
BAYLARD; CRAIG MASSEY;
RICHARD GALAUSKI; WILLIAM
BOYD; LISA MCBRIDE; TAMARA
MILLER; HEARTLAND LANDSCAPE
GROUP LLC; TEAM TRUCKING;
JAMES ANLIKER; DENNIS K. MANN;
PHYLLIS LERNER; HERB GLASER;
STEVEN RUBIN; MAX CANDIOTTY;
FRED AGUIRRE; JAMES JARVAIS;
MARA REDSTONE; RAPHAEL
SAGALYN; J.C. WASH; JEAN W.
NEESE; CECIL R. WILKINS; WAYNE
BYRAM; GARY KOHUT; DEBRA
BERG; TIA GOMEZ; SHONNA S.
BUTLER; BEN DOZIER; MARK
SCIVNER; BARBARA CUMBO; JAMES
GRAHAM; KENNEDY G. KRAATZ;
MELISSA D. MURRAY; MICHAEL A.
WARNER; CLINTON J. DAVIS;
STEVEN R. RUTHERFORD; LISA ANN
LEE; BRENT CRAWFORD; DIXCEE
MILLSAP; CARL RITTERHOUSE;
6
SAMUEL ELY; VICTOR RUYBALID;
HADLEY BOWER; KRISTY DEANN
MOTT; CHARLES COCKRELL, JR.;
WILLIAM RUTTHERFORD; JAN
RUTHERFORD; MARK WYATT;
DAWN LALOR; GERALD PANTO, JR.;
EDGER PAZ; CHARLES D. JONES;
MICHAEL GAUTHREAUX; JOANN
KORLESKI; JEFF JENKINS; SARA
TERRY; JACOB STEED; MARVIN
BRYAN; JOHN TELLES;
CHRISTOPHER PAYNE; SCOTT
CAMPBELL; JONATHAN CHARLES
CONLIN; PRISCILLA CRAFT; ROBERT
HICKS; RICHARD PATRICK; JESSICA
HONIGBERG; RAYSHAUN GLANTON;
GARLAND WILLIAMS; ANNIE SMITH;
BOBBY ROBERSON; SAM
HOTCHKISS; ANNA LEGATES;
ANDREA FRAYSER; MELVIN
ELLISON; CECIL WILKINS; BETTY
CHERRY; JOY HOWELL; ALLEN RAY
KLEIN,
Plaintiffs - Appellees,
v.
BP CORPORATION NORTH AMERICA,
INC.; CITGO PETROLEUM
CORPORATION; CONOCO PHILLIPS
COMPANY; COSTCO WHOLESALE
CORPORATION; EXXON MOBIL
CORPORATION; SINCLAIR OIL
CORPORATION; VALERO
MARKETING AND SUPPLY
COMPANY; SUNOCO CORPORATION;
EQUILON ENTERPRISES, LLC., d/b/a
SHELL OIL PRODUCTS COMPANY,
LLC; MOTIVA ENTERPRISES, LLC;
TESORO REFINING AND MARKETING
COMPANY; SAM’S CLUB; LOVE’S
TRAVEL STOP & COUNTRY STORES,
7
INC.; G AND M OIL COMPANY, INC.;
UNITED EL SEGUNDO, INC.; WORLD
OIL CORPORATION; M.M. FOLWER,
INC.; J&P FLASH, INC.; DANSK
INVESTMENT GROUP, INC.; CIRCLE
K STORES, INC; KUM&GO, L.C.;
MURPHY OIL USA, INC.; MARATHON
PETROLEUM COMPANY, LLC;
FLYING J INC.; 7-ELEVEN, INC.;
PTCAA TEXAS, LP; PILOT TRAVEL
CENTERS, LLC; QUICKTRIP
CORPORATION; RACE TRAC
PETROLEUM, INC.; THE PANTRY,
INC.; SPEEDWAY SUPERAMERICA,
LLC; SHEETZ, INC.; WAWA, INC.; B-B
OIL COMPANY, INC.; COULSON OIL
COMPANY, INC.; PORT CITIES OIL
LLC; FLASH MARKET, INC.; J&P
FLASH, INC.; DIAMOND STATE OIL,
LLC; MAGNESS OIL COMPANY;
THORNTON'S, INC.,
Defendants,
and
CHEVRON USA, INC.; EZ MART
STORES, INC.; CASEY’S GENERAL
STORE, INC.,
Defendants- Appellees,
v.
MELISSA HOLYOAK; ADAM
SCHULMAN; AMY ALKON; NICOLAS
S. MARTIN; THEODORE H. FRANK,
Objectors - Appellants.
–––––––––––––––––––––––––––––––––––
IN RE: MOTOR FUEL TEMPERATURE
8
SALES PRACTICES LITIGATION
------------------------------
ANNIE SMITH; CHRISTOPHER
PAYNE; PHYLLIS LERNER; HERB
GLAZER; MARA REDSTONE; BRENT
CRAWFORD; VICTOR RUYBALD; No. 15-3254
ZACH WILSON; LISA MCBRIDE;
RAPHAEL SAGALYN; BRENT
DONALDSON; GARY KOHUT;
RICHARD GAULAUSKI; CHARLES
BYRAM; JEAN NEESE; SHONNA
BUTLER; GERALD PANTO, JR.;
JOANN KORLESKI; TAMARA
MILLER; PRISCILLA CRAFT; JEFF
JENKINS; JAMES GRAHAM, Class
Representatives,
Plaintiffs - Appellees,
v.
COSTCO WHOLESALE
CORPORATION,
Defendant - Appellant,
and
BP PRODUCTS NORTH AMERICA
INC.; BP WEST COAST PRODUCTS,
LLC; CASEY’S GENERAL STORES,
INC.; CITGO PETROLEUM
CORPORATION; CONOCOPHILLIPS
COMPANY; EQUILON ENTERPRISES
LLC, d/b/a Shell Oil Products US;
MOTIVA ENTERPRISES LLC; EXXON
MOBIL CORPORATION; MOBIL OIL
GUAM, INC.; ESSO VIRGIN ISLANDS,
INC.; SAM'S EAST, INC.; SAM’S WEST,
INC.; WAL-MART STORES, INC.;
WAL-MART STORES EAST, LP;
9
SINCLAIR OIL CORPORATION;
VALERO MARKETING AND SUPPLY
COMPANY; CHEVRON U.S.A., INC.;
SUNOCO, INC. (R&M); B-B OIL
COMPANY, INC.; COULSON OIL
COMPANY, INC.; DIAMOND STATE
OIL, LLC; FLASH MARKET, INC.; J&P
FLASH, INC.; MAGNESS OIL
COMPANY; PORT CITIES OIL, LLC; E-
Z MART STORES, INC.; LOVE'S
TRAVEL STOP & COUNTRY STORES,
INC.; WR HESS COMPANY; M.M.
FOWLER, INC., d/b/a Family Fare;
DANSK INVESTMENT GROUP, INC.,
f/k/a USA Petroleum Corporation;
TESORO REFINING AND MARKETING
COMPANY; THORNTONS, INC.; G&M
OIL COMPANY, INC.; G&M OIL CO.,
LLC; UNITED EL SEGUNDO, INC.;
WORLD OIL CORPORATION,
Defendants,
v.
SPEEDWAY LLC; 7-ELEVEN, INC.;
CIRCLE K STORES, INC; KUM & GO,
L.C.; MARATHON PETROLEUM
COMPANY LP; MURPHY OIL USA,
INC.; PILOT TRAVEL CENTERS, LLC;
FLYING J INC.; PTCAA TEXAS, LP;
RACETRAC PETROLEUM, INC.;
QUIKTRIP CORPORATION; SHEETZ,
INC.; THE PANTRY, INC.; WAWA,
INC.,
Objectors.
_________________________________
Appeals from the United States District Court
for the District of Kansas
(D.C. No. 2:07-MD-01840-KHV)
_________________________________
10
Tristan L. Duncan, Shook, Hardy & Bacon, L.L.P., Kansas City, Missouri, (William
F. Northrip and Sarah Lynn Baltzell, Shook, Hardy & Bacon, L.L.P., Kansas City,
Missouri, Stephen R. McAllister, Thompson Ramsdell Qualseth & Warner, P.A.,
Lawrence, Kansas, and Jonathan S. Massey, Massey & Gail, LLP, Washington, D.C.,
with her on the briefs) for Speedway LLC, 7-Eleven, Inc., Circle K Stores, Inc., Kum
& Go, L.C., Marathon Petroleum Company LLC, Murphy Oil USA, Inc., Pilot Travel
Centers LLC, Flying J, Inc., The Pantry, Inc., QuikTrip Corporation, RaceTrac,
Petroleum, Inc., Sheetz, Inc., and Wawa, Inc., Defendant-Appellants.
Theodore H. Frank, Competitive Enterprise Institute Center for Class Action
Fairness, Washington, D.C. (Anna St. John and Adam E. Schulman, Competitive
Enterprise Institute Center for Class Action Fairness, Washington, D.C., with him on
the brief) for Amy Alkon, Theodore H. Frank, Melissa Holyoak, Nicolas S. Martin,
and Adam Schulman, Objector-Appellants.
Joseph R. Palmore, Morrison & Foerster, LLP, Washington, D.C. (David F.
McDowell, and Purvi G. Patel, Morrison & Foerster, LLP, Los Angeles, California,
and Bryan J. Leitch, Morrison & Foerster, LLP, Washington, D.C., with them on the
briefs), for Costco Wholesale Corporation, Defendant-Appellant.
Daniel V. Dorris, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.,
Washington, D.C., and Robert A. Horn, Horn Aylward & Bandy, LLC, Kansas City,
Missouri (Thomas V. Bender, Walters Bender Strohbehn & Vaughn, P.C., Kansas
City, Missouri, Joseph A. Kronawitter, Horn, Aylward & Bandy, LLC, Kansas City,
Missouri, David C. Frederick and Amelia I.P. Frenkel, Kellogg, Huber, Hansen,
Todd, Evans & Figel, P.L.L.C., Washington, D.C., with them on the briefs), for
Plaintiff-Appellees
_________________________________
Before LUCERO, PHILLIPS, and MORITZ, Circuit Judges.
_________________________________
MORITZ, Circuit Judge.
_________________________________
Consumers purchase gasoline by the gallon. But gas expands as it heats up.
And that means the number of molecules—and, accordingly, the amount of energy—
in a gallon of gas will vary based on the temperature at which it’s dispensed. Yet
retailers don’t control for the effects of temperature when they sell gas to consumers.
11
So consumers who purchase gas dispensed at higher temperatures may be getting less
energy than they expect.
These simple laws of physics gave rise to complex litigation. Several
individuals in multiple states (collectively, the plaintiffs) brought class action
lawsuits against various fuel retailers (collectively, the defendants) based on the
defendants’ failure to control for, or at least disclose, the effects of temperature on
fuel. In 2007, the Judicial Panel on Multidistrict Litigation consolidated these cases
and designated the District of Kansas as the transferee district.
After years of legal wrangling, several of the parties entered into settlement
agreements, which the district court ultimately approved. These appeals arise from
(1) the district court’s approval of those settlement agreements and (2) its
interpretation of one of them. We consolidated the appeals for procedural purposes
and now affirm.
BACKGROUND
I. The Costco Settlement Agreement
The first defendant to settle was Costco Wholesale Corporation (Costco).
Under Sections 4.2 and 4.3 of the Costco settlement agreement (the Costco
Agreement), Costco agreed to convert pumps at its existing gas stations in certain
states to Automatic Temperature Control (ATC) pumps, and to install ATC pumps at
its new gas stations in certain states. And under Section 4.4, Costco agreed to a
specific “[i]mplementation [p]eriod”: it would “complete the conversion and
12
installation of ATC set forth in sections 4.2 and 4.3 . . . within five years” at a certain
yearly rate. Costco App. 178.
But these requirements weren’t absolute. Section 4.7 of the Costco Agreement
contains the following language:
Other Agreements. If at any time prior to the completion of conversion
and installation of ATC, Class Counsel and Class Representatives agree
to enter into any agreement with any person or company to resolve any
action or any other pending or threatened claim concerning ATC that is
materially more favorable to that person or company than this Amended
Settlement Agreement is to Costco (including, without limitation,
calling for a lower conversion percentage, slower rate of conversion to
ATC or for completion of conversion to ATC at a later date than
required by Section 4.4), Class Counsel and Class Representatives agree
to notify Costco promptly of the terms of such agreement. At Costco’s
sole discretion, it may adopt the materially more favorable terms in any
such agreement in place of its obligations under Section 4.4. Costco
agrees to notify Class Counsel and Class Representatives in writing of
any such election. The Parties agree that any change in Costco’s
obligations under Section 4.4 as a result of any such election that is not
a change that is materially adverse to the Settlement Class does not
require additional notice to the class.
Id. at 180.
The district court approved the Costco Agreement on April 24, 2012. Nearly
two years later, several of the plaintiffs agreed, via a “STIPULATION OF
DISMISSAL WITH PREJUDICE” (the Stipulation), to dismiss their individual
claims against several other defendants. App. vol. 16, 4538. And unlike the Costco
Agreement, the Stipulation didn’t require any of those other defendants to implement
ATC at all, let alone to do so by a certain date and on a certain schedule.
Understandably viewing this result as more favorable than the one it obtained, Costco
filed notice of its intent to invoke its rights under Section 4.7. It then asked the
13
district court to grant Costco leave to adopt the “terms” of the Stipulation and to
dismiss the plaintiffs’ claims against Costco with prejudice. Costco. App. 250.
The district court denied both requests. In doing so, it concluded that
(1) Section 4.7 only applies to agreements that “concern the implementation of
ATC”—e.g., agreements that “call[] for a lower conversion percentage, a slower rate
of conversion to ATC[,] or completion of conversion to ATC at a later date than
required by Section 4.4” of the Costco Agreement, id. at 255; and (2) because the
Stipulation didn’t require the dismissed defendants to implement ATC at all, it
necessarily didn’t “concern the implementation of ATC,” id. at 254-55. Accordingly,
the district court refused to let Costco adopt the “terms” in the Stipulation, id. at 250,
or to dismiss the claims against Costco with prejudice.
II. The Remaining Settlement Agreements
In the meantime, the plaintiffs negotiated settlement agreements with 28 other
defendants. For reasons we set forth in Discussion Section II, infra, only nine of
those settlement agreements (plus the Costco Agreement) are at issue here: the
plaintiffs’ settlement agreements with defendants BP, Chevron, Citgo,
ConocoPhillips, ExxonMobil, Shell, Sinclair, Sunoco, and Valero. These ten
settlement agreements fall into two general categories, which we refer to as
conversion settlements and fund settlements.
The Costco and Valero settlements are conversion settlements. Much like
Costco, Valero agreed to convert existing pumps in certain states to ATC and to
install ATC pumps at new stations in certain states.
14
The remaining settlement agreements are fund settlements. They require BP,
Chevron, Citgo, ConocoPhillips, ExxonMobil, Shell, Sinclair, and Sunoco each to
pay a certain sum—ranging from $61,000 to $5,000,000—into a common fund.
Under the terms of the settlement agreements, portions of that fund may be used to
(1) reimburse fuel retailers for expenses they incur if they convert to ATC; and
(2) defray costs that state agencies incur if those states agree to permit or require
ATC at resale. Neither the conversion settlements nor the fund settlements provide
any money to class members.
As relevant here, two groups of objectors lodged objections to some or all of
the relevant settlement agreements. We refer to the first group of objectors,
comprising class members Amy Alkon, Nicolas Martin, Theodore H. Frank, Melissa
Holyoak, and Adam Schulman, collectively as “Alkon.” We refer to the second group
of objectors, comprising non-settling defendants QuikTrip Corporation, 7-Eleven,
Inc., Circle K Stores, Inc., Kum & Go, L.C., Marathon Petroleum Company LP,
Murphy Oil USA, Inc., Pilot Travel Centers, LLC, Flying J, Inc., PTCAA Texas, LP,
RaceTrac Petroleum, Inc., Sheetz, Inc., Speedway LLC, The Pantry, Inc., and Wawa,
Inc., collectively as “Speedway.”
Alkon objected to the settlement agreements on numerous grounds, arguing
that (1) approval of the settlement agreements violates the First Amendment;
(2) approval of the settlement agreements violates separation-of-powers principles;
(3) ATC conversion harms some class members and confers no benefit on others;
(4) the settlement agreements afford preferential treatment to class counsel by paving
15
the way for excessive attorney’s fees; and (5) Fed. R. Civ. P. 23(b)(3)’s superiority
requirement precludes class certification. Speedway advanced similar objections,
arguing that approval of the settlement agreements (1) violates the First Amendment;
(2) violates Article III of the United States Constitution; and (3) poses separation-of-
powers problems. The district court addressed and rejected these objections and
ultimately approved the settlement agreements.
Costco now appeals the district court’s order refusing to allow it to exercise its
rights under Section 4.7 of the Costco Agreement. Alkon and Speedway both appeal
the district court’s order approving the remaining settlement agreements, and Alkon
additionally appeals the district court’s order approving the Costco Agreement.
DISCUSSION
I. Costco isn’t entitled to invoke its rights under Section 4.7.
Costco asserts that the district court erred in refusing to allow it to exercise its
rights under Section 4.7 of the Costco Agreement. Because this argument presents a
question of contract interpretation, our review is de novo. In re Universal Serv. Fund
Tel. Billing Practice Litig., 619 F.3d 1188, 1211 (10th Cir. 2010).
In denying Costco’s motion, the district court relied in part on the fact that
Section 4.7 applies only if “Class Counsel and Class Representatives agree to enter
into any agreement with any person or company to resolve any action or any other
pending or threatened claim concerning ATC.” Costco App. 180 (emphasis added).
Specifically, the district court concluded that the phrase “concerning ATC” modifies
16
the term “agreement,” and thus that only agreements “concerning ATC” can trigger
Costco’s rights under Section 4.7.
Costco argues this was error. Citing the last-antecedent rule, it maintains that
the phrase “concerning ATC” modifies its nearest antecedents—i.e., “claim” and
“action”—and not, as the district court found, the more remote term “agreement.” See
Caughey v. Emp’t Sec. Dep’t, 503 P.2d 460, 463 (Wash. 1972)1 (explaining that
“qualifying words and phrases” typically “refer to the last antecedent”).
But as the plaintiffs correctly point out, the last-antecedent rule only operates
if “no contrary intention appears” in the contract. Id. And here, the district court
implicitly concluded that Section 4.7’s parenthetical list of examples evinces just
such a “contrary intention.” Id.We agree. By giving a parenthetical list of examples of agreements that
concern ATC—i.e., agreements that “call[] for a lower conversion percentage, slower
rate of conversion to ATC, or for completion of conversion to ATC at a later date”—
rather than examples of “claims” or “actions” concerning ATC, Costco App. 180,
Section 4.7 expresses an “intention” that is “contrary” to the general rule that
“qualifying words and phrases refer to the last antecedent,” Caughey, 503 P.2d at
463. Specifically, Section 4.7’s parenthetical list indicates that rather than modifying
its nearest antecedents, the phrase “concerning ATC” instead modifies the term
“agreement.” Costco App. 180.
1
The Costco Agreement specifies that it “is intended to and shall be governed
by the laws of the State of Washington.” Costco App. 134.
17
Costco resists this conclusion. It points out that Section 4.7’s parenthetical list
of examples is preceded by the phrase “including, without limitation.” Id. Thus,
Costco concludes, the district court erred in using Section 4.7’s parenthetical list of
specific examples to limit the general phrase “any agreement” to agreements that are
similar to those in Section 4.7’s parenthetical list—i.e., agreements that concern
ATC.2 Id.
In support, Costco cites United States v. West, 671 F.3d 1195 (10th Cir. 2012).
There, we acknowledged that the principle of ejusdem generis “[o]rdinarily . . . limits
general terms which follow specific ones to matters similar to those specified.” Id. at
1200 (alterations in original) (quoting Gooch v. United States, 297 U.S. 124, 128
(1936)). But we declined to apply that interpretive canon to the statute at issue in
West, in part because Congress prefaced that statute’s list of examples with the
phrase “including, but not limited to.” Id. at 1200 (emphasis omitted) (quoting 21
U.S.C. § 860(e)(1)); see also id. at 1201-02.
Much like the statute at issue in West, Section 4.7 prefaces its list of examples
with the phrase “including, without limitation.” Costco App. 180; see 671 F.3d at
1200. But unlike our task in West—which was to discern “Congress’ intent in
2
In its reply brief, Costco advances a different, albeit related, argument: it
asserts that the district court erred in relying on Section 4.7’s parenthetical list of
examples because “allowing a ‘parenthetical to drive the interpretation of the whole
provision’ would impermissibly permit the ‘tail to wag the dog.’” Costco Rep. Br. 9
(quoting Cabell Huntington Hosp., Inc. v. Shalala, 101 F.3d 984, 990 (4th Cir. 1996)).
Because Costco didn’t advance this argument in its opening brief, we decline to consider
it. See Reedy v. Werholtz, 660 F.3d 1270, 1274 (10th Cir. 2011) (“[A] party waives issues
and arguments raised for the first time in a reply brief.” (quoting M.D. Mark, Inc. v. Kerr-
McGee Corp., 565 F.3d 753, 768 n.7 (10th Cir. 2009))).
18
enacting” the relevant statute, 671 F.3d at 1200—our task here is to determine how
the Supreme Court of Washington would interpret Section 4.7, cf. Valley Forge Ins.
Co. v. Health Care Mgmt. Partners, Ltd., 616 F.3d 1086, 1093 (10th Cir. 2010)
(“[O]ur task in diversity cases is to predict how the state supreme court would rule.”).
And that court recently applied ejusdem generis to a statutory list despite the
presence of a similar introductory phrase. See State v. Larson, 365 P.3d 740 (Wash.
2015).
In Larson, the court examined a statute that prohibited, in relevant part, the
“possession of an item, article, implement, or device designed to overcome security
systems including, but not limited to, lined bags or tag removers.” Id. at 741
(emphasis added) (quoting Wash. Rev. Code § 9A.56.360(1)(b)). The court agreed
with the State that “[t]he statutory language ‘including, but not limited to’” indicated
that “lined bags and tag removers” were “illustrative examples rather than an
exhaustive list.” Id. at 743 (quoting § 9A.56.360(1)(b)). But “contrary to the State’s
assertions,” the court also concluded that those “illustrative examples were intended
to limit the scope of the statute” to similar items. Id. (emphasis omitted). And in
reaching that conclusion, the court applied the limiting canon of ejusdem generis. See
id.
Under Larson, we conclude that Section 4.7’s use of the phrase “including,
without limitation” indicates that agreements “calling for a lower conversion
percentage, slower rate of conversion to ATC, or for completion of conversion to
ATC at a later date,” Costco App. 180, are “illustrative examples” of the types of
19
agreements that will trigger Section 4.7, “rather than an exhaustive list” of the
agreements that will do so, 365 P.3d at 743. But, under Larson, we likewise conclude
that Section 4.7’s list of “illustrative examples” nevertheless demonstrates an
“inten[t] to limit the scope of” Section 4.7 to agreements that are “similar” to those
examples. 365 P.3d at 743. And, under Larson, we reach that conclusion despite the
fact that Section 4.7 prefaces its list of illustrative examples with the phrase
“including, without limitation.”3 Costco App. 180; see Larson, 365 P.3d at 743.
Alternatively, even assuming that ejusdem generis applies, Costco argues that
“the most general quality shared by Section 4.7’s [examples] is . . . that they all
minimize or eliminate Costco’s obligations under the settlement,” not that they all
concern the implementation of ATC. Costco Rep. Br. 11. And because the
Stipulation—if Costco were allowed to adopt it—would share this general quality,
Costco asserts that the Stipulation triggered Costco’s rights under Section 4.7.
We find this argument foreclosed by Section 4.7’s plain language, which only
allows Costco to “adopt the materially more favorable terms in any . . . agreement in
3
As Costco points out, “courts have historically employed the principle of
ejusdem generis to limit general terms following specific terms.” West, 671 F.3d at
1200 (emphasis omitted). But Washington applies the canon more broadly. See
Larson, 365 P.3d at 743 (applying ejusdem generis where list of specific terms
followed more general ones); Sw. Wash. Chapter, Nat. Elec. Contractors Ass’n v.
Pierce Cty., 667 P.2d 1092, 1096 (Wash. 1983) (explaining that ejusdem generis
applies to “pattern such as ‘[specific], [specific], or [general]’ or ‘[general],
including [specific] and [specific]’” (alterations in original) (emphasis added)).
Accordingly, the fact that Section 4.7’s parenthetical list of specific examples follows
the general term “any agreement,” Costco. App. 180, rather than vice versa, doesn’t
alter our analysis.
20
place of its obligations under Section 4.4.” Costco App. 180 (emphasis added).
Section 4.4 requires Costco to “complete the conversion and installation of ATC set
forth in sections 4.2 and 4.3 above within five years of the Effective Date in
accordance with the following schedule.” Id. at 178. Sections 4.4.1 through 4.4.5
then set out the schedule under which Costco must implement ATC. In comparison,
Section 4.2 states that Costco will convert pumps at existing stations to ATC. And
Section 4.3 states that Costco will install ATC pumps at any new stations.
By specifying that Costco may only replace its obligations under Section 4.4—
rather than its obligations under Sections 4.2 and 4.3—Section 4.7 operates to allow
Costco to adopt from other agreements only those more favorable terms that govern
how quickly and thoroughly it must implement ATC under Section 4.4, not to
substitute more favorable terms governing whether or not it must implement ATC at
all under Sections 4.2 and 4.3.
Costco disagrees with this analysis. It insists that Section 4.7 allows it to
replace not only its “obligations under Section 4.4, but also those listed in Sections
4.2 and 4.3.” Costco Aplt. Br. 34. In support, it points out that Sections 4.2, 4.3, and
4.4 are all explicitly “subject to” one another and to Section 4.7. Id. at 35 (quoting
Costco App. 177-78).
The plaintiffs argue that Costco forfeited this argument by failing to raise it
before the district court. In response, Costco’s reply brief directs our attention to a
single sentence in its briefing below. There, Costco pointed out that Sections 4.2 and
4.3 “expressly provide that Costco’s obligation to install ATC is ‘[s]ubject to the
21
other provisions in this Agreement,’” including Section 4.7. Costco App. 220
(alternation in original) (quoting Costco App. 177).
But even assuming we could characterize this single sentence as “argument,”
Costco “failed to identify in its opening brief where it raised this argument before the
district court.” Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533, 1540
n.3 (10th Cir. 1996) (emphasis added) (declining to consider appellant’s argument
where appellant failed to provide record citation in opening brief establishing it
raised argument below); see also 10th Cir. R. 28.2(C)(2) (“For each issue raised on
appeal, all briefs must cite the precise reference in the record where the issue was
raised and ruled on.”).
Moreover, on appeal, Costco doesn’t merely argue that Sections 4.2 and 4.3
are subject to Section 4.7, as it (at least cursorily) suggested below. Instead, Costco
argues on appeal that Sections 4.2, 4.3, and 4.4 are all subject to each other, and that
all three sections are therefore “interdependent” and “stand or fall together.” Costco
Aplt. Br. 35. Because the plaintiffs are correct that Costco (1) didn’t raise this
specific argument below and (2) doesn’t attempt to establish plain error on appeal,
we decline to consider this argument. See Schrock v. Wyeth, Inc., 727 F.3d 1273,
1284 (10th Cir. 2013) (explaining that forfeiture rule applies to new theory presented
on appeal, even if that theory falls under same general category as argument
presented below); Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1131 (10th Cir. 2011)
(noting that failure to argue for plain error on appeal “surely marks the end of the
road” for forfeited argument).
22
Further, we reject the suggestion Costco did make below—i.e., that simply
because Sections 4.2 and 4.3 are “[s]ubject to” Section 4.7 means that Costco can
replace its obligations under Sections 4.2 and 4.3, as opposed to its obligations under
Section 4.4, with more favorable terms. Costco App. 177. First, if this were the case,
the parties would have had no reason to specifically refer to Section 4.4 in Section
4.7; Section 4.4 is, like Sections 4.2 and 4.3, also “[s]ubject to” Section 4.7. Costco
App. 178. Second, when viewed together, Section 4.7’s list of representative
examples—e.g., “calling for a lower conversion percentage, slower rate of conversion
to ATC, or for completion of conversion to ATC at a later date than required by
Section 4.4”—and its explicit language allowing Costco to “adopt . . . materially
more favorable terms . . . in place of its obligations under Section 4.4,” Costco App.
180 (emphasis added), make clear that Section 4.7 is only triggered by agreements
that contain more favorable terms concerning how to implement ATC under Section
4.4, not whether to implement ATC under Section 4.2 and 4.3.
Costco again disagrees. It insists that Section 4.7’s examples are actually
consistent with applying Section 4.7 to agreements that, like the Stipulation, don’t
require any ATC implementation. “For example,” Costco argues, “‘a lower
conversion percentage’ is consistent with the [S]tipulation’s terms requiring a zero
‘conversion percentage.’” Costco Aplt. Br. 36 (quoting Costco App. 180). Likewise,
“a ‘slower rate of conversion to ATC’ is consistent with the [S]tipulation’s terms
requiring no ‘rate of conversion to ATC.’” Id. (quoting Costco App. 180). And
finally, “‘completion of conversion to ATC at a later date’ is consistent with the
23
[S]tipulation’s terms requiring no ‘completion of conversion to ATC’ at any date.”
Id. (quoting Costco App. 180).
We reject this argument. First, contrary to Costco’s characterization, the
Stipulation doesn’t actually contain any such express “terms.” Id. It simply states that
the individual defendants “are dismissed with prejudice from the separate civil
actions.” App. Vol. 16, 4538.
Second, even if we were inclined to treat such “terms,” Costco Aplt. Br. 36, as
implicit in the Stipulation, the fact remains that Washington law requires us to
“impute [to the parties] an intention corresponding to the reasonable meaning of the
words [they] used” in drafting the Costco Agreement. Hearst Commc’ns, Inc. v.
Seattle Times Co., 115 P.3d 262, 267 (Wash. 2005); see id. (“We generally give
words in a contract their ordinary, usual, and popular meaning unless the entirety of
the agreement clearly demonstrates a contrary intent.”). And rather than giving the
words in Section 4.7’s examples their “reasonable,” “ordinary,” and “popular”
meanings, id., Costco’s argument gives them tortured and unnatural ones. We don’t
ordinarily say a car is “moving zero miles per hour”; we say it isn’t moving. We
don’t typically say a car is “accelerating at a rate of zero miles per hour”; we say it
isn’t accelerating. And we certainly don’t say that a car that’s never coming will
“arrive at a later date”; we simply say it will never arrive. Thus, Section 4.7’s
examples don’t support Costco’s position.
Costco advances one final argument on appeal. It asserts that the district
court’s conclusion that Section 4.7 only applies to agreements that concern how to
24
implement ATC, as opposed to whether to do so, undermines Section 4.7’s purpose.
In support, Costco points out that district court’s interpretation would allow Costco to
assert its rights under Section 4.7 in response to a later agreement that contains
materially more favorable terms—“but only if such terms are not too ‘materially
more favorable.’” Costco Aplt. Br. 33. In other words, while Costco could adopt later
settlement terms that require a slower conversion to ATC, it couldn’t adopt later
settlement terms that would require no conversion to ATC. Id. And according to Costco,
this result is contrary to “the parties’ intent.” Id. at 34.
But as the plaintiffs point out, this argument asks the panel to look beyond the
plain language of Section 4.7 to the parties’ subjective intent in drafting that agreement.
And under Washington law, “the subjective intent of the parties is generally irrelevant if
the intent can be determined from the actual words used.” Hearst, 115 P.3d at 267. Here,
we can determine the parties’ intent “from the actual words [they] used.” Id. Specifically,
we can determine their intent from (1) Section 4.7’s language indicating that Section 4.7
only applies to agreements “concerning ATC,” Costco App. 180; (2) Section 4.7’s
parenthetical list of examples, which all describe how a party must implement ATC, as
opposed to whether it must do so; and (3) Section 4.7’s repeated references to Section
4.4, which likewise details how Costco must implement ATC, as opposed to Sections 4.2
and 4.3, which instead explain whether it must do so. Taken together, these three aspects
of Section 4.7 demonstrate that the parties never intended to allow Costco to replace its
obligations regarding whether to implement ATC under Sections 4.2 and 4.3 with more
favorable terms. Instead, they only intended to allow Costco to replace its obligations
25
regarding how to implement ATC under Section 4.4 with such terms. And because that
intent is evident from “the actual words [the parties] used” in Section 4.7, we decline to
look beyond those words to the parties’ subjective intent. Hearst, 115 P.3d at 267.
Accordingly, we affirm the district court’s order denying Costco’s motion to invoke its
rights under Section 4.7.
II. The district court didn’t abuse its discretion in approving the settlement
agreements.
Both Speedway and Alkon appeal the district court’s order approving the
remaining 28 settlement agreements. And Alkon additionally appeals the district court’s
order approving the Costco Agreement. But before we may consider the merits of their
challenges, we must first determine whether Speedway and Alkon have standing to
advance them.
A. Although Speedway lacks standing to object to any of the settlement
agreements, Alkon has standing to challenge 10 of them.
Speedway asserts that it objected to all of the settlement agreements except the
Costco agreement. But the district court concluded that Speedway failed to demonstrate it
had Article III standing to challenge any of them. Speedway challenges this ruling on
appeal, arguing that (1) it has standing under the plain-legal-prejudice doctrine; (2) it has
standing under Bond v. United States, 564 U.S. 211 (2011); and (3) it has standing to
challenge eight of the settlement agreements as a member of the underlying settlement
classes.
“The doctrine of standing is ‘an essential and unchanging part of the case-or-
controversy requirement of Article III . . . .’” Ne. Fla. Chapter of Associated Gen.
26
Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 663 (1993) (quoting Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560 (1992)). To establish standing, a party must
demonstrate (among other things) an “injury in fact,” id. (quoting Lujan, 504 U.S. at
560)—i.e., “an invasion of a legally protected interest,” id.Non-settling defendants like Speedway “generally have no standing to complain
about a settlement.” Weinman v. Fid. Capital Appreciation Fund (In re Integra Realty
Res., Inc.), 262 F.3d 1089, 1102 (10th Cir. 2001) (quoting Transamerican Ref. Corp. v.
Dravo Corp., 952 F.2d 898, 900 (5th Cir. 1992)). That’s because they lack “a legally
protected interest in the settlement” and therefore can’t satisfy Article III’s injury-in-fact
requirement. Id. But as Speedway points out, “[c]ourts have recognized a limited
exception to this rule where nonsettling parties can demonstrate they are ‘prejudiced’ by
a settlement.” Id. “‘[P]rejudice’ in this context means ‘plain legal prejudice,’ as when ‘the
settlement strips the party of a legal claim or cause of action.’” Id. (alteration in original)
(quoting Mayfield v. Barr, 985 F.2d 1090, 1093 (D.C. Cir. 1993)).
Here, Speedway asserts it qualifies for this exception because (1) “the settlements
prejudice [its] legal right to conduct business as [it has] historically done and as currently
authorized by law,” Spdwy. Aplt. Br. 48; and (2) the settlements burden its speech. But as
the plaintiffs suggest, these alleged injuries don’t rise to the level of plain legal prejudice
as we have defined it.4 See New England Health Care Emps. Pension Fund v. Woodruff,
4
Perhaps realizing as much, Speedway argues for the first time in its reply
brief that the settlement agreements “risk depriving [it] of the defenses asserted in
this litigation.” Spdwy. Rep. Br. 20. But Speedway conceded below that the
settlement agreements didn’t “place[]” Speedway “at a ‘tactical’ disadvantage in the
27
512 F.3d 1283, 1288 (10th Cir. 2008) (explaining that plain legal prejudice “include[s]
any interference with a party’s contract rights or a party’s ability to seek contribution or
indemnification,” and that “[a] party also suffers plain legal prejudice if the settlement
strips the party of a legal claim or cause of action, such as a cross[-]claim or the right to
present relevant evidence at trial” (quoting Weinman, 262 F.3d at 1102-03)). Thus, we
agree with the district court that Speedway lacks standing to object to any of the
settlements on this basis.
Alternatively, Speedway cites Bond, 564 U.S. 211, for the proposition that “when
a federal branch [of government] acts in excess of its delegated power[s],” then
individuals who are “adversely affected . . . have standing to object.” Spdwy. Aplt. Br.
52. Because Speedway alleges that (1) the district court acted in excess of its delegated
powers by approving the settlements, and (2) the settlements adversely affect Speedway,
it argues that it has standing to object to the settlements under Bond.
First, we question whether Speedway adequately preserved this argument for
appeal; below, Speedway confined its analysis of Bond to a one-paragraph footnote. Cf.
United States v. Hardman, 297 F.3d 1116, 1131 (10th Cir. 2002) (“Arguments raised in a
perfunctory manner, such as in a footnote, are waived.”). Perhaps that explains why the
district court didn’t address it. And perhaps we need not address it either. See Singleton v.
underlying litigation.” App. vol. 20, 5510. And in any event, Speedway didn’t raise
this argument in its opening brief. Accordingly, we deem the argument waived and
decline to consider it. See Reedy v. Werholtz, 660 F.3d 1270, 1274 (10th Cir. 2011)
(“[T]he general rule in this circuit is that a party waives issues and arguments raised for
the first time in a reply brief.” (quoting M.D. Mark, Inc. v. Kerr–McGee Corp., 565 F.3d
753, 768 n. 7 (10th Cir. 2009))).
28
Wulff, 428 U.S. 106, 120 (1976) (“It is the general rule, of course, that a federal appellate
court does not consider an issue not passed upon below.”); Salt Lake Tribune Publ’g Co.
v. Mgmt. Planning, Inc., 454 F.3d 1128, 1142 (10th Cir. 2006) (declining to address issue
that district court didn’t rule on, even though parties fully briefed it below).
In any event, even if we assume Speedway preserved this argument for appeal, it
conflates Article III standing, which is at issue here, with prudential standing, which was
at issue in Bond. See Sac & Fox Nation of Mo. v. Pierce, 213 F.3d 566, 573 (10th Cir.
2000) (distinguishing between Article III standing and prudential standing and explaining
that, under latter doctrine, “a plaintiff generally must assert its own rights, rather than
those belonging to third parties”).
In Bond, there was no question that the defendant had Article III standing to
challenge the criminal statute at issue; her conviction under that statute resulted in her
incarceration, and her incarceration “constitute[d] a concrete injury” that was
“redressable by invalidation of the conviction.” 564 U.S. at 217 (quoting Spencer v.
Kemna, 523 U.S. 1, 7 (1998)). Instead, the question in Bond was whether the defendant
had prudential standing to challenge the statute on certain grounds. Citing the Tenth
Amendment, id. at 214, she attempted to challenge the statute on the basis that it
“interfere[d] with the powers reserved to States,” id. at 216; see id. at 217, 220, 225.
Citing “the prudential rule that a party ‘generally must assert his own legal rights
and interests, and cannot rest his claim to relief on the legal rights or interests of third
parties,’” Court-appointed amicus insisted this argument was one that the “States and
States alone” could make. Id. at 220 (quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)).
29
The Court disagreed, reasoning that “[t]he limitations . . . federalism entails are not . . . a
matter of rights belonging only to the States”; rather, “[f]ederalism also protects the
liberty of all persons within a State.” Id. at 222. Accordingly, the Court held that there
was “no basis in precedent or principle to deny [the defendant’s] standing to raise her
claims.” Id. at 226.
But in doing so, the Court reiterated that “[a]n individual who challenges federal
action on these grounds is, of course, subject to the Article III requirements.” Id. at 225.
And it’s those very “Article III requirements” that pose a problem for Speedway here. Id.
As discussed above, “[n]on-settling defendants generally have no [Article III] standing to
complain about a settlement,” Weinman, 262 F.3d at 1102 (quoting Transamerican Ref.
Corp., 952 F.2d at 900), because they lack “a legally protected interest in the settlement”
and therefore can’t satisfy Article III’s injury-in-fact requirement, id. And while there
exists an exception to this general rule for parties that can demonstrate plain legal
prejudice, see id., Speedway fails to satisfy that exception for the reasons discussed
above.
Finally, even assuming it lacks standing to challenge all of the settlement
agreements as a non-settling defendant, Speedway asserts that it nevertheless has class-
member standing to challenge eight of those settlement agreements: Valero, Chevron,
CITGO, Sinclair, Shell, ConocoPhillips, BP, and Exxon. See Tennille v. W. Union Co.,
785 F.3d 422, 429 (10th Cir. 2015) (noting that objectors had standing because they were
class members).
30
The district court rejected Speedway’s class-member argument below. In doing so,
it pointed out that the court’s Notice to Class Members outlined the following
requirements for objecting to the settlements: “To object, you must send a letter via first
class mail stating which Settlement(s) you object to and why. Be sure to include your
name, address, telephone number and signature. You must mail the objection to [the
Clerk of the Court, class counsel and defense counsel] no later than March 23, 2015.”
App. vol. 27, 7522 (quoting App. vol. 27, 7547).
On March 23, 2015, Speedway filed its initial objection. But according to the
district court’s order, that objection “did not identify which settlement agreements
[Speedway] objected to based on class membership.” App. vol. 27, 7523 (emphasis
added). Instead, it merely asserted that (1) “[s]ome of the Objectors are members of the
settlement classes as defined in some of the . . . Settlements and have standing to object to
those settlements for that reason as well,” App. vol. 20, 5513 (emphases added), and
(2) because “some of objectors’ employees . . . bought retail fuel while on business trips
for which they were reimbursed by their respective companies . . . , they are members of
these settlement classes,” id. at 5514 (emphases added). And while Speedway appended a
declaration to its objection in which a Marathon employee attests to purchasing gas while
on official business, the district court noted that the declaration doesn’t “identify from
which retailers [the employee] purchased fuel.” App. vol. 27, 7523.
Based on these perceived deficiencies in Speedway’s objection, the district court
ruled that Speedway “did not timely identify who was objecting based on class
membership and to which settlements they objected.” Id. Thus, it concluded, Speedway’s
31
“objections based on class membership [were] untimely and not properly before the
[c]ourt.” Id. at 7524.
On appeal, Speedway challenges the district court’s ruling, arguing that “[c]lass
membership need not be supported with evidence at the time an objection is filed.”
Spdwy. Aplt. Br. 47. But Speedway’s argument misconstrues the district court’s ruling.
The district court didn’t find Speedway’s objection deficient because Speedway failed to
prove class membership, as Speedway alleges. Instead, the district court found
Speedway’s objection deficient because Speedway failed to “timely identify who was
objecting based on class membership and to which settlements they objected.” App. vol.
27, 7523. In other words, the district court didn’t require Speedway to prove membership
in any particular class; it merely required Speedway to specifically allege (1) the class or
classes of which it was a member, and (2) the settlements it was objecting to on that
basis. And it found that Speedway failed to timely do so.
In short, the district court concluded that Speedway’s “objections based on class
membership” weren’t “properly before the [c]ourt” because Speedway failed to comply
with the district court’s notice requirements. Id. at 7524. And Speedway makes no
attempt in its opening brief to argue that such a decision was beyond the bounds of the
district court’s discretion.5 See In re Deepwater Horizon, 739 F.3d 790, 808-09 (5th Cir.
2014) (concluding that “district court plainly acted within its discretion” in declining to
5
Speedway does attempt to address this issue in its reply brief, arguing for the first
time that it did, in fact, “[c]ompl[y] with” the district court’s notice requirements. Spdwy.
Rep. Br. 17. But arguments raised for the first time in a reply brief are waived. See Reedy,
660 F.3d at 1274.
32
consider objections where objectors failed to timely comply with requirements of court’s
“Preliminary Approval Order”). Under these circumstances, we won’t disturb the district
court’s ruling that Speedway’s objections weren’t properly before it. See Reedy, 660 F.3d
at 1274 (declining to address propriety of district court’s ruling because appellant failed
to “challenge the court’s reasoning on th[at] point” (emphasis added)). Accordingly, we
decline to consider Speedway’s objections to the settlement agreements.
That leaves Alkon. The plaintiffs don’t dispute that Alkon is indeed a member of
10 of the settlement classes: Costco, BP, Chevron, Citgo, ConocoPhillips, ExxonMobil,
Shell, Sinclair, Sunoco, and Valero. Accordingly, Alkon has standing to challenge those
10 settlement agreements. See Tennille, 785 F.3d at 429 (noting that objectors had
standing because they were class members).
But Alkon doesn’t assert it has standing to challenge the remaining 19 settlement
agreements, and has therefore waived any argument that it does. See Colo. Outfitters
Ass’n v. Hickenlooper, 823 F.3d 537, 544 (10th Cir. 2016). Accordingly, we confine our
remaining analysis to Alkon’s challenges to the 10 settlement agreements listed above.6
In doing so, we “review the [district] court’s approval of the settlement agreement[s] for
an abuse of discretion.” Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1186
(10th Cir. 2002) (quoting United States v. Hardage, 982 F.2d 1491, 1495 (10th Cir.
1993)). To the extent that several of Alkon’s arguments present constitutional questions,
6
In evaluating Alkon’s arguments, we consider those portions of Speedway’s
opening brief that Alkon adopts by reference. See Fed. R. App. P. 28(i) (“In a case
involving more than one appellant or appellee, including consolidated cases, . . . any
party may adopt by reference a part of another’s brief.”).
33
our review is de novo. See Citizens for Responsible Gov’t State Political Action Comm. v.
Davidson, 236 F.3d 1174, 1199 (10th Cir. 2000).
B. The district court’s approval of the fund settlements doesn’t violate the
First Amendment.
The fund settlements set aside money for state regulators to defray the costs
associated with enacting and implementing new regulatory programs for conversion to
ATC. Alkon argues this aspect of the agreements requires absent class members to
subsidize the plaintiffs’ lobbying efforts aimed at obtaining regulatory approval for ATC.
And according to Alkon, this amounts to the “compelled funding of speech” in violation
of the First Amendment. Spdwy. Aplt. Br. 37; see Alk. Aplt. Br. 45.
But as the plaintiffs point out, the First Amendment only limits state—as opposed
to private—action. Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d
1269, 1276 (10th Cir. 2005). And the plaintiffs insist that neither the district court’s
approval nor its potential enforcement of these private settlement agreements constitutes
state action for purposes of the First Amendment. Cf. Davis v. Prudential Sec., Inc., 59
F.3d 1186, 1192 (11th Cir. 1995) (“[T]he mere confirmation of a private arbitration
award by a district court is insufficient state action to trigger the application of the Due
Process Clause.”).
Citing Shelley v. Kraemer, 334 U.S. 1 (1948), Alkon disagrees. In Shelley, the
Court held that a state court’s enforcement of private covenants designed to prevent
people of color from purchasing real estate constituted state action for purposes of the
Equal Protection Clause. 334 U.S. at 18-20. Under Shelley, Alkon argues, “[t]he judicial
34
imprimatur of the approval orders . . . demonstrate[s]” that the settlement agreements at
issue here “are more than merely private contracts.” Alk. Aplt. Br. 38.
But as the plaintiffs note, courts have uniformly declined to extend Shelley beyond
cases involving discrimination. See, e.g., Everett v. Paul Davis Restoration, Inc., 771
F.3d 380, 386 n.1 (7th Cir. 2014) (“However, Shelley’s holding has never been applied
outside the context of race discrimination.”); Naoko Ohno v. Yuko Yasuma, 723 F.3d 984,
998 (9th Cir. 2013) (noting that “Shelley’s attribution of state action to judicial
enforcement has generally been confined to the context of discrimination claims under
the Equal Protection Clause”); Davis, 59 F.3d at 1191 (“The holding of Shelley, however,
has not been extended beyond the context of race discrimination.”); United Egg
Producers v. Standard Brands, Inc., 44 F.3d 940, 943 (11th Cir. 1995) (“[T]he reach of
Shelley remains undefined outside of the racial discrimination context.”).
Alkon doesn’t suggest that the settlement agreements implicate the Equal
Protection Clause. Nor does it cite any cases extending Shelley outside of that context or
present a reasoned argument why we should do so here. Accordingly, we conclude that
the district court’s approval of the settlement agreements doesn’t constitute state action.
And absent any state action, Alkon’s First Amendment argument fails. See Dominion
Video Satellite, Inc., 430 F.3d at 1276.
35
C. The district court’s approval of the settlement agreements doesn’t
violate Article III.
Next, Alkon asserts that the settlement agreements violate Article III and
separation of power principles for various reasons. Before we address the merits of some
of these arguments, we first explain why we decline to address the merits of others.
First, for the reasons discussed below, we decline to address Alkon’s assertion that
the district court lacked Article III authority to approve the settlement agreements
because (1) those settlement agreements don’t actually redress the plaintiffs’ alleged
injuries; (2) whether the settlement agreements will actually provide any redress for the
plaintiffs’ alleged injuries is contingent upon the actions of third-party actors, e.g., state
legislatures; and (3) the settlement agreements aim to change the law, rather than to
redress an injury caused by a violation of existing law.
We agree with Alkon that, to establish Article III standing, “a litigant must have
suffered some actual injury that can be redressed by a favorable judicial decision.” Iron
Arrow Honor Soc’y v. Heckler, 464 U.S. 67, 70 (1983). The problem is that Alkon makes
no effort to explain how Article III’s redressability requirement operates in the context of
a settlement agreement. Alkon appears to be suggesting that when the parties to a
settlement agreement ultimately agree to a remedy that doesn’t actually and fully redress
a plaintiff’s alleged injury, that factor somehow operates to retroactively dissolve the
plaintiff’s Article III standing to bring—and thus a federal court’s jurisdiction to hear—
that plaintiff’s claims in the first place. But we know of no authority that would support
this argument. And Alkon cites none. Accordingly, we find this argument inadequately
36
briefed and decline to consider it. See Fed. R. App. P. 28(a)(8)(A) (requiring argument
section of appellant’s brief to contain “contentions and the reasons for them, with
citations to the authorities . . . on which the appellant relies”); Bronson v. Swensen, 500
F.3d 1099, 1104 (10th Cir. 2007) (“[W]e routinely have declined to consider arguments
that are . . . inadequately presented[] in an appellant’s opening brief.”).
Likewise, we decline to consider Alkon’s assertion that the conversion settlement
agreements constitute advisory opinions and therefore run afoul of Article III. See Fialka-
Feldman v. Oakland Univ. Bd. of Trs., 639 F.3d 711, 715 (6th Cir. 2011) (“The ‘case or
controversy’ requirement prohibits all advisory opinions . . . .”). Here, the Valero and
Costco settlement agreements contain releases enjoining class members from suing based
on “actions taken by [Valero and Costco] that are authorized or required by” the
agreements. Alk. Aplt. Br. 31. Alkon alleges that if the “plaintiffs tried to bring a lawsuit
against Costco today contending that its gasoline sales practices in 2017 will violate
consumer law, the complaint would be dismissed as unripe.” Id. at 35. Yet “just because
[the plaintiffs] changed the cover sheet to say ‘Proposed Settlement’ rather than
‘Complaint,’” Alkon laments, the parties were able to “induce[] the district court to issue
an advisory opinion that no class member may proceed against Costco’s and Valero’s
future practices.” Id. But again, Alkon doesn’t cite any authority suggesting that a district
court’s approval of a private settlement agreement containing a future-conduct release
constitutes an advisory opinion. And again, its failure to do so waives this argument.
Finally, we decline to consider Alkon’s related argument that the future-conduct
releases in the conversion-settlement agreements purport to release claims that aren’t
37
“based on the identical factual predicate as that underlying the claims in the settled class
action.” TBK Partners, Ltd. v. W. Union Corp., 675 F.2d 456, 460 (2d Cir. 1982). Here,
the underlying claims against Costco and Valero are based on Costco and Valero’s
failure to use ATC. Yet the settlement agreements purport to release future claims against
Costco and Valero for using ATC, as the settlements require them to do. And Alkon
makes a convincing argument that using ATC and not using ATC aren’t identical factual
predicates; rather, they’re opposite ones.
But despite its obligation to do so, Alkon doesn’t provide a record citation
establishing that it raised this identical-factual-predicate argument below. See 10th Cir.
R. 28.2(C)(2); Harolds Stores, Inc, 82 F.3d at 1541 n.3. And our independent review
of the record suggests it didn’t. Moreover, Alkon fails to argue for plain error on appeal.
And that “surely marks the end of the road for” this argument on appeal. Richison, 634
F.3d at 1131.
Turning next to the arguments that Alkon has adequately preserved and briefed, it
first argues that the district court abused its discretion in approving both the fund and
conversion settlement agreements because (1) regulators and policymakers have long
debated requiring or authorizing ATC at retail but have ultimately “chosen not to,”
Spdwy. Aplt. Br. 28; (2) selling gas by the gallon is lawful; (3) deciding whether to use
ATC is a policy decision best left to the legislature; (4) the district court made an
impermissible policy judgment about ATC when it found that class members would
derive some benefit from the settlements to the extent that the settlements will increase
the odds of conversion to ATC; (5) what the plaintiffs actually seek here is a change in
38
the existing law, which is a political remedy, not a judicial one; and (6) the district court
lacked authority to provide that political remedy under Article III.
But as the district court reasoned, the settlements don’t actually change the law.
True, the fund settlement agreements remove one disincentive to implementing ATC by
offering funds to reimburse state regulators for costs incurred as a result of conversion.
But the district court didn’t order states to require, or even allow, conversion to ATC; that
decision remains in the hands of state lawmakers—a fact that Alkon concedes (and in fact
relies on) in arguing that the plaintiffs can’t satisfy Article III’s redressability
requirement. Thus, contrary to Alkon’s argument, the district court didn’t usurp the
legislature’s role by “altering the method of sale cooperatively established by Congress
and the States,” Spdwy. Aplt. Br. at 30; instead, policy decisions about whether to allow
or require ATC remain with state policy makers.
Second, Alkon says a court can’t “approve a class settlement based on an
unanchored belief that the settlement would further the public interest.” Id. at 31. In
support, it cites Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). But even
assuming that Amchem supports this general assertion, the district court in this case didn’t
approve the settlements based on “an unanchored belief that the settlement would further
the public interest,” Spdwy. Aplt. Br. 31; it made a finding that the settlements would
benefit the class members.
Third, Alkon argues that in approving the settlements, the district court violated
the Rules Enabling Act. See 28 U.S.C. § 2072(b) (explaining that Federal Rules “shall not
abridge, enlarge or modify any substantive right”). In support, Alkon cites Authors Guild
39
v. Google Inc., 770 F. Supp. 2d 666 (S.D.N.Y. 2011). There, the district court ruled that a
settlement agreement ran afoul of the Rules Enabling Act because it “attempt[ed] to use
the class action mechanism to implement forward-looking business arrangements that
[went] far beyond the dispute before the [c]ourt in th[at particular] litigation.” Id. at 677.
But as the plaintiffs point out, at least two of our sister circuits have since
concluded that the Rules Enabling Act has no application in this context. See Marshall v.
Nat’l Football League, 787 F.3d 502, 511 n.4 (8th Cir. 2015) (concluding that district
court’s approval of settlement agreement “is not a ‘substantive adjudication of the
underlying causes of action,’ and therefore . . . does not implicate the Rules Enabling
Act”) (quoting In re Baby Prods. Antitrust Litig., 708 F.3d 163, 173 n.8 (3d Cir. 2013)),
cert. denied, 136 S. Ct. 1166 (2016); Sullivan v. DB Invs., Inc., 667 F.3d 273, 313 (3d
Cir. 2011) (“In the absence of a finding that plaintiffs are actually entitled to relief under
substantive state law, we reiterate that a court does not ‘abridge, enlarge, or modify any
substantive right’ by approving a voluntarily-entered class settlement agreement.”
(quoting § 2072(b))); cf. Whitlock v. FSL Mgmt., LLC, 843 F.3d 1084, 1092-93 (6th Cir.
2016). We find these authorities persuasive. Accordingly, we reject this argument.
D. Attorney’s fees don’t render the district court’s approval of the
settlement agreements an abuse of discretion.
A district court may approve a settlement agreement “after a hearing and on
finding that it is fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). We review a
district court’s approval of a settlement agreement under Rule 23(e)(2) for an abuse of
40
discretion. But we review any factual findings for clear error. Rutter & Wilbanks Corp. v.
Shell Oil Co., 314 F.3d 1180, 1186-87 (10th Cir. 2002).
This court has “noted four factors to be considered in assessing whether a
proposed settlement is fair, reasonable and adequate,” id. at 1188:
(1) whether the proposed settlement was fairly and honestly negotiated;
(2) whether serious questions of law and fact exist, placing the ultimate
outcome of the litigation in doubt;
(3) whether the value of an immediate recovery outweighs the mere
possibility of future relief after protracted and expensive litigation; and
(4) the judgment of the parties that the settlement is fair and reasonable.
Id. (quoting Gottlieb v. Wiles, 11 F.3d 1004, 1014 (10th Cir. 1993), abrogated on other
grounds by Devlin v. Scardelletti, 536 U.S. 1 (2002)).
Here, Alkon argues that an additional factor rendered the district court’s approval
of the settlement agreements an abuse of discretion. Alkon points out that the settlement
agreements contemplate awarding millions of dollars in attorney’s fees and argues that
this aspect of the settlement agreements makes class counsel—rather than class
members—the primary beneficiaries of those agreements.7 According to Alkon, Rule
23(e) simply doesn’t permit such a result.8
7
Alkon doesn’t challenge the district court’s ultimate award of attorney’s fees.
Instead, it argues only that the amount of attorney’s fees that the settlement
agreements permitted class counsel to request is so high as to render the district
court’s approval of those agreements an abuse of discretion.
8
Alkon asserts that any refusal to consider this aspect of the settlement
agreements in determining whether the district court abused its discretion would
create a circuit split. But for purposes of this case, we need not affirmatively resolve
41
We agree with Alkon that class action settlements pose obvious conflict-of-interest
problems. “The defendant cares only about the size of the settlement, not how it is
divided between attorneys’ fees and compensation for the class. From the selfish
standpoint of class counsel and the defendant, therefore, the optimal settlement is one
modest in overall amount but heavily tilted toward attorneys’ fees.” Eubank v. Pella
Corp., 753 F.3d 718, 720 (7th Cir. 2014). Thus, class counsel may be tempted “to sell out
the class by agreeing with the defendant to recommend that the judge approve a
settlement involving a meager recovery for the class but generous compensation for the
lawyers.” Id.Alkon suggests that’s what happened here. In support, it advances three general
arguments: (1) the agreements don’t benefit the class; (2) even assuming the agreements
benefit the class, they provide the same benefit to the general public; and (3) even
assuming the agreements provide unique benefits to the class, the primary beneficiaries
of the agreements are class counsel, who stand to receive millions of dollars in attorney’s
fees.
In challenging the district court’s conclusion that the settlement agreements
benefit the class, Alkon first argues that the district court’s conclusion that the settlements
benefit the class members is based on clearly erroneous factual findings. Specifically,
Alkon asserts the district court clearly erred in finding that “retailers [who convert to
this issue; even assuming that we must incorporate this factor into our analysis, we
conclude that under the facts of this case, the district court didn’t abuse its discretion
in approving the settlement agreements.
42
ATC] would not raise prices to reflect increases in marginal costs because of
competition.” Alk. Aplt. Br. 24.
We’re not convinced that the district court ever made such an unequivocal finding.
To the contrary, the court explicitly recognized the possibility that retailers might pass the
additional expenses associated with conversion along to their customers, and concluded
not that competition would necessarily prevent retailers from raising prices altogether,
but simply that competition would impact whether retailers raised their prices “and if so
by how much.” App. vol. 27, 7513.
Moreover, in approving the plaintiffs’ settlement agreements with BP, Chevron,
Citgo, ConocoPhillips, ExxonMobil, Shell, Sinclair, Sunoco, and Valero, the district
court incorporated by reference its earlier analysis in approving the Costco Agreement.
And there, the district court again (1) explicitly acknowledged the possibility that
retailers might raise prices in response to conversion; (2) concluded it was impossible to
determine with any certainty the prices that retailers might charge for gas in the future;
and (3) reasoned that, even assuming the price of fuel might rise slightly as a result of
conversion, class members would still benefit simply from “knowing that they can get
accuracy and consistency of fuel measurement for their fuel dollar, regardless of fuel
temperature at the time of pumping.” R. vol. 11, 3146. In other words, the district court
didn’t necessarily find that retailers wouldn’t raise fuel prices; it concluded that even
assuming fuel prices might rise slightly, conversion to ATC would still benefit class
members. Thus, we conclude that the district court didn’t make a clearly erroneous fact
finding, let alone rely on that finding to the objectors’ detriment.
43
Next, in a related argument, Alkon asserts the district court “independently erred
in refusing to consider” (1) the report of its expert witness, David Henderson; and
(2) evidence supporting Alkon’s cross-subsidization theory. Alk. Aplt. Br. 25. That
theory posits that “any temperature differentials in volumetric gasoline sales simply
mean[] that customers purchasing at above-average temperatures [are] cross-subsidizing
customers purchasing at below-average temperatures without any additional profit to the
retailers,” and that while converting ATC will “end the cross-subsidization,” doing so
will only benefit the former at the expense of the latter, “without any net benefit to the
class as a whole.” Id. at 10-11.
But Alkon fails to provide a citation to the record demonstrating that the district
court “refus[ed] to consider” either the Henderson report or Alkon’s cross-subsidization
theory. Id. at 25. To the contrary, the district court explicitly acknowledged the
Henderson report in approving the Costco settlement and then explained why it found it
unnecessary to resolve whether, as the Henderson report suggests, ATC conversion will
increase consumer fuel costs. And in approving the remaining settlement agreements, the
district court incorporated this analysis by reference. The fact that the district court
ultimately found the Henderson report irrelevant doesn’t establish that the district court
“refus[ed] to consider” that report, as Alkon alleges. Id.
Similarly, while the district court didn’t explicitly address Alkon’s cross-
subsidization theory, Alkon doesn’t provide a record citation that suggests the district
court “refus[ed] to consider” it. Id. And in any event, Costco’s cross-subsidization theory
simply posits that the class as a whole won’t reap any economic benefit from ATC
44
conversion. Because the district court took that possibility into account and explained
why it declined to find the potential lack of any economic benefit dispositive in
determining whether the settlement agreements benefited the class, any error in the
district court’s failure to consider Alkon’s cross-subsidization theory was harmless.
Next, even assuming the settlement agreements benefit the class, Alkon argues
those benefits aren’t unique to the class members. After all, it points out, non-members
will receive the same supposed benefits from ATC conversion. And unlike class
members, non-members won’t have to release their claims in order to obtain those
benefits. Thus, Alkon asserts, the agreements actually leave class members worse off
than non-members.
We reject this argument for two reasons. First, the district court found that the
plaintiffs’ “overall prospects of ultimately prevailing in litigation” were slim. App. vol.
27, 7502. In other words, class members didn’t give up much by releasing their claims.
So even assuming that class members are now worse off than non-class members, any
difference is marginal. Second, and more importantly, Alkon cites no authority for the
proposition that a district court abuses its discretion in approving a settlement agreement
unless the agreement benefits class members more than it benefits non-members. Here,
the class members gave up their claims—claims the district court said were unlikely to
succeed—in exchange for a potential informational benefit. While non-class members
might receive the same benefit, this isn’t a zero-sum game where that fact somehow
detracts from the informational benefit that class members might receive. Likewise, the
fact that class members may be marginally worse off than non-class members doesn’t
45
change the fact that class members will still be better off than they were before the
settlement. Under these circumstances, the district court didn’t abuse its discretion.
Finally, even assuming that class members might receive some marginal
informational benefit from the settlement agreement, Alkon argues that class counsel
remain the primary beneficiaries of the settlement agreements. And according to Alkon,
that makes the settlement agreements unreasonable.
Under the Costco Agreement, Costco agreed to pay attorney’s fees in whatever
amount the court awarded. Under the Valero Agreement, Valero agreed to pay
$4,000,000 in attorney’s fees. Finally, under the remaining eight settlement agreements
that Alkon has standing to challenge, the defendants agreed not to oppose attorney’s fees
and litigation costs of up to 30% of the settlement amounts. The following list illustrates
that percentage for each of the remaining relevant settlement agreements:
BP: $ 1,500,000
CITGO: $ 270,000
ConocoPhillips: $ 1,500,000
ExxonMobil: $ 1,500,000
Shell: $ 1,500,000
Sinclair: $ 240,000
Chevron: $ 637,500
Sunoco: $ 18,300
In total, that means the defendants agreed not to object to attorney’s fees up to
$11,165,800, plus any amount the court awarded for the Costco Agreement.
Alkon argues that this amount is “grossly disproportionate” to any benefit the class
members might receive from the settlement agreements. Alk. Aplt. Br. 27. But in making
this argument, Alkon puts the attorney’s fees on one side of the ledger and the potential
46
economic benefits to the class on the other—benefits that Alkon says will amount to, at
most, one cent per consumer per year.
While this comparison makes for compelling imagery, it also mischaracterizes the
district court’s decision. The district court didn’t base its approval of the settlement
agreements on a finding that they might provide class members with an economic benefit.
In fact, it readily acknowledged that (1) it’s impossible to accurately predict ATC’s
potential impact on future fuel prices and (2) there exists a possibility that consumers will
actually pay slightly more for gas under ATC. Instead, the district court found that the
settlement agreements provide class members with a potential informational benefit:
“accuracy and consistency of fuel measurement for their fuel dollar.” R. vol. 27, 7500;
see also id. at 7502. To the extent that Alkon attempts to reduce the question before us to
one of simple arithmetic, its arguments are unpersuasive.
So too is its citation to In re Dry Max Pampers Litigation, 724 F.3d 713 (6th Cir.
2013). There, a divided panel of the Sixth Circuit concluded that the district court abused
its discretion in approving a settlement agreement under which the class members
received meaningless injunctive relief, while class counsel raked in $2.73 million—much
less than defendants agreed to pay in attorney’s fees here. Id. at 721. But class counsel in
In re Dry Max Pampers Litigation apparently also did much less work: counsel didn’t
“take a single deposition, serve a single request for written discovery, or even file a
response to [defendant’s] motion to dismiss.” Id. at 718. Alkon doesn’t suggest that’s the
case here, and a mere glance at the district court’s docket—which contains almost 5,000
entries spanning more than nine years—confirms otherwise.
47
More importantly, the district court’s order approving the settlement agreement in
In re Dry Max Pampers Litigation failed to address any of the objector’s objections. Id. at
717. When a district court “is required to make a discretionary ruling that is subject to
appellate review, we have to satisfy ourselves, before we can conclude that the judge did
not abuse his discretion, that he exercised his discretion, that is, that he considered the
factors relevant to that exercise.” New England Health Care Emps. Pension Fund v.
Woodruff, 512 F.3d 1283, 1290 (10th Cir. 2008) (quoting United States v. Cunningham,
429 F.3d 673, 679 (7th Cir. 2005)). While that was impossible to do in In re Dry Max
Pampers Litigation, it’s not impossible to do here; the district court provided thorough,
well-reasoned responses to each objection—including, critically, Alkon’s arguments that
the settlement agreements (1) don’t benefit class members; and (2) allow excessive
attorney’s fees. Because we are therefore confident that the district court in this case
“considered the factors relevant” to its exercise of discretion, Woodruff, 512 F.3d at 1290(quoting Cunningham, 429 F.3d at 679), we owe its exercise of that discretion great
deference, see Jones v. Nuclear Pharmacy, Inc., 741 F.2d 322, 324 (10th Cir. 1984)
(“The authority to approve a settlement of a class or derivative action is committed to the
sound discretion of the trial court.”). We therefore decline to rely on the Sixth Circuit’s
opinion in In re Dry Max Pampers Litigation.
We likewise decline to rely on Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir.
2014), which Alkon also cites. There, the Seventh Circuit held that the district court
abused its discretion in approving a settlement agreement that set aside approximately $2
million for class counsel fees and attorney expenses and only $865,284 for the 30,245
48
class members, concluding that the settlement amounted to “a selfish deal between class
counsel and the defendant” that “disserve[d] the class.” 772 F.3d at 780-81, 787. In
reaching that conclusion, the Seventh Circuit suggested that the “presumption should . . .
be that attorneys’ fees awarded to class counsel should not exceed a third or at most a
half of the total amount of money going to class members and their counsel.” Id. at 782.
We disagree. As the Sixth Circuit has explained, “[c]onsumer class actions . . .
have value to society more broadly, both as deterrents to unlawful behavior—particularly
when the individual injuries are too small to justify the time and expense of litigation—
and as private law enforcement regimes that free public sector resources.” Gascho v.
Glob. Fitness Holdings, LLC, 822 F.3d 269, 287 (6th Cir. 2016), cert. denied sub nom.
Blackman v. Gascho, No. 16-364, 2017 WL 670215 (Feb. 21, 2017), and sub nom. Zik v.
Gascho, No. 16-383, 2017 WL 670216 (Feb. 21, 2017). “If we are to encourage these
positive societal effects, class counsel must be adequately compensated—even when
significant compensation to class members is out of reach (such as when contact
information is unavailable, or when individual claims are very small).” Id. And “[a]n
inflexible, categorical rule,” such as the one the Seventh Circuit espoused in Pearson,
“neglects these additional considerations.” Id.In short, Alkon doesn’t cite a single case in which this court has disturbed a
district court’s order approving a settlement agreement. And our research yields only one:
Woodruff, 512 F.3d 1283. But in Woodruff, as in Pearson, the district court failed to
provide “any independent reasoning or analysis” to support its decision to approve the
settlement agreement. Id. at 1290. That’s not the case here. And while we may not agree
49
with the decision the district court ultimately reached, we cannot say that decision is an
abuse of discretion.
E. The district court didn’t abuse its discretion in certifying the class.
Finally, Alkon asserts that because the district court found it “infeasible to
distribute damages to class members if the litigation were successful,” the district court
erred in finding certification appropriate under Fed. R. Civ. P. 23(b)(3). Alk. Aplt. Br. 43;
see Fed. R. Civ. P. 23(b)(3) (requiring, in relevant part, finding that class action is
“superior to other available methods for fairly and efficiently adjudicating the
controversy”). The district court rejected this argument, concluding that (1) the
settlements “provide value and benefit to class members”; and (2) Alkon failed to
establish that class members could feasibly pursue individual claims given the cost of
maintaining separate actions. App. vol. 27, 7508.
“The decision to grant or deny certification of a class belongs within the discretion
of the trial court. We will not interfere with that discretion unless it is abused.” J.B. ex
rel. Hart v. Valdez, 186 F.3d 1280, 1287 (10th Cir. 1999) (quoting Reed v. Bowen, 849
F.2d 1307, 1309 (10th Cir. 1988)).
Here, Alkon appears to suggest that a district court necessarily abuses its
discretion by certifying a class when a class action “can provide no compensatory value
to class members.” Alk. Aplt. Br. 43-44. But none of the cases that Alkon cites establish
such a bright line rule. At best, one of them establishes that a district court may deny
certification on similar grounds—not that a district court must to do. See Quinn v.
Nationwide Ins. Co., 281 F. App’x 771, 778 (10th Cir. 2008) (unpublished) (concluding
50
that district court didn’t abuse its discretion in refusing to certify class under Rule
23(b)(3) where “class action proposed by plaintiffs would be difficult to manage and
would not be more efficient than having the claims of individual class members resolved
independently”). The other cases Alkon cites are distinguishable on factual and legal
grounds. See In re Aqua Dots Prod. Liab. Litig., 654 F.3d 748, 752 (7th Cir. 2011)
(acknowledging that district court erred in “departing from the text of Rule 23(b)(3)” in
refusing to certify class, but nevertheless affirming district court’s ultimate decision not
to certify class under Rule 23(a)(4)); In re Hotel Tel. Charges, 500 F.2d 86, 89, 90-91
(9th Cir. 1974) (concluding that class action wasn’t superior method of adjudication
under Rule 23(b)(3) where any monetary benefit to class members would have been
“entirely consumed by the costs of notice alone,” but never addressing whether non-
monetary benefits to class members might satisfy Rule 23(b)(3)).
Here, the district court found that “in light of the limited size of any potential
financial recovery for any particular class member and the possibility of inconsistent
results, a class action [was] a far superior method of resolving the claims compared to
individual suits.” App. vol. 27, 7498-99. And again, even assuming we might disagree
with the district court on this point, Alkon fails to establish that the district court’s
decision is so unreasonable as to constitute an abuse of discretion. See Queen v. TA
Operating, LLC, 734 F.3d 1081, 1086 (10th Cir. 2013) (explaining that district court
abuses its discretion only if “it makes a clear error of judgment, exceeds the bounds of
permissible choice, or when its decision is arbitrary, capricious or whimsical, or results in
51
a manifestly unreasonable judgment” (quoting Eastman v. Union Pac. R. Co., 493 F.3d
1151, 1156 (10th Cir. 2007))).
CONCLUSION
The settlement agreements at issue here are unusual. But the decision to
approve them rests with the sound discretion of the district court. Under the unique
facts of this case, we can’t say the district court abused that discretion. Accordingly,
we affirm the district court’s approval of the 10 settlement agreements that Alkon has
demonstrated standing to challenge. We likewise affirm the district court’s order
refusing to allow Costco to adopt the terms of the Stipulation under Section 4.7 of the
Costco Agreement.
52