Blessing v. Sirius Xm Radio Inc.

11-3696-cv (L)
Blessing et al., v. Martin
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER
MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 20th day of December, two thousand twelve.
PRESENT: ROBERT D. SACK,
DENNY CHIN,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
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CARL BLESSING, EDWARD A. SCERBO,
JOHN CRONIN, CHARLES BONISIGNORE,
ANDREW DREMAK, TODD HILL, CURTIS
JONES, JOSHUA NATHAN, JAMES
SACCHETTA, DAVID SALYER, SUSIE
STANAJ, PAUL STASIUKEVICIUS, SCOTT
BYRD, GLENN DEMOTT, MELISSA FAST,
JAMES HEWITT, RONALD WILLIAM KADER,
EDWARD LEYBA, GREG LUCAS, KEVIN
STANFIELD, TODD STAVE, PAOLA
TOMASSINI, JANEL STANFIELD, BRIAN
BALAGUERA, individually and on
behalf of all others similarly
situated,
Plaintiffs-Appellees,
-v.-
SIRIUS XM RADIO INC.,
Defendant-Appellee,
11-3696-cv (Lead)
11-3729-cv (Con)
11-3834-cv (Con)
11-3883-cv (Con)
-v.- 11-3908-cv (Con)
11-3910-cv (Con)
11-3916-cv (Con)
11-3965-cv (Con)
11-3970-cv (Con)
11-3972-cv (Con)
MARVIN UNION, ADAM FALKNER, NICOLAS
MARTIN, JILL PIAZZA, KEN WARD, RUTH
CANNATA, LEE CLANTON, CRAIG
CANTRALL, BEN FRAMPTON, KIM
FRAMPTON, JOEL BROIDA, JOHN
SULLIVAN, SHEILA MASSIE, JASON M.
HAWKINS, STEVEN CRUTCHFIELD, SCOTT
D. KRUEGER, ASSET STRATEGIES, INC.,
CHARLES B. ZURAVIN, JENNIFER
DEACHIN, RANDY LYONS, TOM CARDER,
JOHN IRELAND, JEANNIE MILLER,
MICHAEL HARTLEIB, BRIAN DAVID GOE,
DONALD K. NACE, CHRISTOPHER BATMAN,
Objectors-Appellants,
LINDA MROSKO, LANGE M. THOMAS,
Objectors.
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FOR PLAINTIFFS-APPELLEES: JAMES J. SABELLA (Jay W.
Eisenhofer, Richard S. Schiffrin,
Shelly L. Friedland, Grant &
Eisenhofer P.A., New York, New
York, Mary S. Thomas, Grant &
Eisenhofer P.A., Wilmington,
Delaware, Reuben Guttman, Grant &
Eisenhofer, Washington, District of
Columbia, Paul F. Novak, Milberg
LLP, Detroit, Michigan, Herman
Cahn, Anne Fornecker, Milberg LLP,
New York, New York, Nicole Duckett,
Milberg LLP, Los Angeles,
California, Christopher B. Hall,
Edward S. Cook, P. Andrew Lampros,
Cook, Hall & Lampros, LLP, Atlanta,
Georgia, on the brief).
FOR DEFENDANTS-APPELLEE: TODD R. GEREMIA (John M. Majoras,
Thomas Demitrack, on the brief),
Jones Day, New York, New York.
FOR OBJECTORS-APPELLANTS: THEODORE H. FRANK, Center for Class
Action Fairness LLC, Washington,
District of Columbia, PAUL S.
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ROTHSTEIN, Gainesville, Florida
(Michael Hartlieb, pro se, Brian
David Goe, pro se, N. Albert
Bacharach, Jr., Gainesville,
Florida, R. Stephen Griffis,
Hoover, Alabama, Charles M.
Thompson, Birmingham, Alabama,
Joseph Darrell Palmer, Law Offices
of Darrell Palmer P.C., Solana
Beach, California, Steve A. Miller,
Denver, Colorado, on the briefs).
FOR AMICUS CURIAE: Michael E. Rosman, Michelle A.
Scott, for Center for Individual
Rights, Washington, District of
Columbia.
Meriem L. Hubbard, Joshua P.
Thompson, for Pacific Legal
Foundation, Sacramento, California.
Appeal from the United States District Court for the
Southern District of New York (Baer, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the judgment and order of the district court are
AFFIRMED.
Objectors-appellants appeal from the district court's
August 25, 2011 final order and judgment approving the settlement
of this class action, and its August 25, 2011 order awarding
class counsel $13 million in attorneys' fees and expenses. We
assume the parties' familiarity with the underlying facts, the
procedural history of the case, and the issues on appeal.
This Court reviews for abuse of discretion a district
court's approval of a proposed class action settlement, D'Amato
v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001), and its award
of attorneys' fees, In re Nortel Networks Corp. Sec. Litig., 539
F.3d 129, 134 (2d Cir. 2008).
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Collectively, objectors argue, inter alia, that the
district court erred when it: (1) found that the proposed
settlement was fair, reasonable, and adequate; (2) found that the
attorneys' fee award was reasonable; and (3) directed the sole
candidate for class counsel to address diversity concerns in
staffing the case. We address each of these arguments in turn.
1. The Proposed Settlement
A district court's approval of a settlement is
contingent on a finding that the settlement is "fair, reasonable,
and adequate." Fed. R. Civ. P. 23(e)(2); see also 28 U.S.C.
1712(e) (2006) (judicial scrutiny of coupon settlement requires
finding that the settlement is "fair, reasonable, and adequate").
This entails a review of both procedural and substantive
fairness. See, e.g., D'Amato, 236 F.3d at 85. With respect to
procedural fairness, a proposed settlement is presumed fair,
reasonable, and adequate if it culminates from "arm's-length
negotiations between experienced, capable counsel after
meaningful discovery." McReynolds v. Richards-Cantave, 588 F.3d
790, 803 (2d Cir. 2009) (internal quotation marks omitted). A
proposed settlement is substantively fair if the nine factors
outlined in City of Detroit v. Grinnell Corp. weigh in favor of
that conclusion. See, e.g., Wal-Mart Stores, Inc. v. Visa
U.S.A., Inc., 396 F.3d 96, 117 (2d Cir. 2005) (citing Grinnell,
495 F.2d 448, 463 (2d Cir. 1974)).
Here, the proposed settlement provided, in part, that
defendant-appellant Sirius XM Radio Inc. ("Sirius XM") would not
raise its prices for five months. Furthermore, class members
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received no cash remedy. The case was settled on the eve of
trial, after nearly three years of litigation, including
extensive fact and expert discovery. Moreover, competent counsel
appeared on both sides, and settlement was reached only after
contentious negotiations. Thus, the district court did not abuse
its discretion when it presumed the proposed settlement was
procedurally fair, see McReynolds, 588 F.3d at 803, and objectors
presented no evidence to rebut that presumption.
The record also supports a finding of substantive
fairness. The district court conducted a fairness hearing, where
it considered objectors' arguments. The district court's opinion
and order approving the proposed settlement also noted that it
had considered the oral and written submissions of the objectors.
Moreover, although objectors now complain that the district court
did not thoroughly evaluate the value of the settlement, no one
requested an evidentiary hearing to ascertain the settlement's
value, more time to identify expert witnesses, or an opportunity
to present any witnesses.
Finally, the Grinnell factors supported the district
court's determination that the proposed settlement was
substantively fair. In particular, it became apparent that, were
the case to go to trial, plaintiffs' likelihood of success was
slim. We acknowledge that valuing nonmonetary antitrust
settlements -- much like the price freeze here -- is an
inherently imprecise business, see Merola v. Atl. Richfield Co.,
515 F.2d 165, 172 (3d Cir. 1975) (courts should apply their
"informed economic judgment" and any "probative evidence of the
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monetary value" of the remedy when assessing nonmonetary
antitrust settlement value), and as the record provides a factual
basis for its finding, we hold that the district court did not
abuse its discretion when it concluded that the proposed
settlement was substantively fair.
2. Reasonableness of the Attorneys' Fee Award
Except as otherwise required by statute, fees awarded
pursuant to a class action suit must be calculated as either a
"percentage of the fund" or by applying the lodestar method.
See, e.g., Masters v. Wilhelmina Model Agency, Inc., 473 F.3d
423, 436 (2d Cir. 2007); Wal-Mart Stores, 396 F.3d at 121. The
reasonableness of a fee calculated by either of these methods,
however, is determined by the factors outlined in our decision in
Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir.
2000). See Masters, 473 F.3d at 436.
Objectors contend that the $13 million fee was
unreasonable because of the clear-sailing and reversionary
provisions written into the settlement, and in light of the
limited recovery to the class. To the extent objectors argue
that the clear-sailing and reversionary provisions suggest
improper collusion between class counsel and Sirius XM, we note
that such provisions, without more, do not provide grounds for
vacating the fee. See Malchman v. Davis, 761 F.2d 893, 905 & n.5
(2d Cir. 1985) (addressing clear-sailing provision), abrogated on
other grounds, Amchem Prods., Inc. v. Windsor, 521 U.S. 591(1997). Moreover, the fee was negotiated only after settlement
terms had been decided and did not, as the district court found,
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reduce what the class ultimately received. See id. (such factors
favored respecting the fee); Thompson v. Metro. Life Ins. Co.,
216 F.R.D. 55, 71 (S.D.N.Y. 2003) (same). Finally, the district
court independently inspected applicable time and expense records
before judging the reasonableness of the requested fee, which --
after accounting for expenses -- represented less than sixty
percent of the lodestar calculation. Thus, as the record
supports a finding that the $13 million award was reasonable, the
district court did not abuse its discretion in granting the fee
award.
Objectors also argue that the price freeze offered in
the proposed settlement was the equivalent of a "coupon" and,
therefore, should have been subject to the attorneys' fee
provisions applicable to coupon settlements under the Class
Action Fairness Act of 2005 ("CAFA"). See § 1712(a)-(c). We
need not, however, decide this issue. Even assuming that the
coupon provisions of CAFA were applicable, the district court's
approval of the proposed settlement and the attorneys' fee award
was appropriate. As noted, the attorneys' fees were negotiated
only after the terms of the settlement were reached, and the fee
award comes directly from Sirius XM, rather than from funds (or
coupons) earmarked for the class.
Thus, even assuming the price freeze was the equivalent
of a coupon, no "portion of [the] attorney's fee award . . . is
attributable to the award of the coupons." § 1712(a). Where "a
portion of the recovery of the coupons is not used to determine
the attorney's fee to be paid to class counsel, any attorney's
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fee award shall be based upon the amount of time class counsel
reasonably expended working on the action." § 1712(b)(1); see
also S. Rep. No. 109-14, at 30 (2005) ("[T]he proponents of a
class settlement involving coupons may decline to propose that
attorney's fees be based on the value of the coupon-based relief
provided by the settlement. Instead, the settlement proponents
may propose that counsel fees be based upon the amount of time
class counsel reasonably expended working on the action."). The
district court approved the fee award after determining it was
reasonable under the lodestar method, which reflects "the amount
of time class counsel reasonably expended working on the action,"
and is therefore consistent with CAFA. § 1712(b), (c)(2).
3. Diversity of Class Counsel
In the class certification order, the district court
requested that class counsel consider diversity when staffing the
1
case, a provision objectors now contest. To establish standing
to bring a claim, a plaintiff must show (1) injury-in-fact, (2)
causation, and (3) redressability. Town of Babylon v. Fed. Hous.
Fin. Agency, 699 F.3d 221, 228 (2d Cir. 2012). An injury-in-fact
is a "'concrete and particularized' harm to a 'legally protected
interest.'" Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 89 (2d
Cir. 2009); see also W.R. Huff Asset Mgmt. Co., LLC v. Deloitte &
Touche LLP, 549 F.3d 100, 107 (2d Cir. 2008) ("[P]laintiff must
have personally suffered an injury."). Although objectors allege
1
The class certification order stated that class counsel "should
ensure that the lawyers staffed on the case fairly reflect the class
composition in terms of relevant race and gender metrics." Opinion and Order
at 14, Blessing v. Sirius XM Radio Inc., No. 09-cv-10035 (S.D.N.Y. Mar. 29,
2011), ECF No. 85.
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that staffing a case with an eye to diversity "may interfere with
[counsel's] ability to provide the best representation for the
class," J.A. 829, they never contend that class counsel's
representation was actually inferior. As objectors failed to
state an injury-in-fact, we find that they lack standing to
challenge the district court's diversity request in its class
certification order.
We have considered objectors' remaining arguments and
conclude they are without merit. For the foregoing reasons, we
AFFIRM the orders and judgment of the district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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