Dawn Wheelahan v. Trans Union LLC

In the
United States Court of Appeals
For the Seventh Circuit
No. 13-1613
IN RE:
TRANS UNION CORP. PRIVACY LITIGATION.
APPEAL OF:
DAWN A. WHEELAHAN.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 00 CV 4729 — Robert W. Gettleman, Judge.
ARGUED SEPTEMBER 23, 2013 — DECIDED JANUARY 23, 2014
Before BAUER, KANNE, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. This appeal arises from an
unusual class settlement for an estimated 190 million class
members. Class settlements usually aim to impose a final and
definitive resolution of a dispute, but this one did not. It
offered class members certain benefits, including cash, in
return for giving up only their right to sue the defendant
through class actions or other collective actions. But the
settlement left the door open for the vast majority of class
2 No. 13-1613
members to file individual suits against the defendant, the
credit reporting company Trans Union.
One key detail has led to this appeal. The settlement created
a fund of $75 million for class members’ claims. It also allowed
Trans Union itself to draw money from the fund as reimburse-
ment for the cost of settling individual follow-on suits, termed
“post-settlement claims” or “PSCs.” There have been many
more of these PSCs than anyone expected. Trans Union has
settled them, and the district court has authorized Trans Union
to reimburse itself from the fund. One of the class counsel,
Dawn Wheelahan, has appealed. We affirm the district court’s
actions in all respects.
I. Factual and Procedural Background
A. The Trans Union Litigation and Settlement
Beginning in 1998, a number of consumer class actions were
filed against Trans Union alleging that it had violated the Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq., by selling lists of
consumer credit reports to target marketers (the “target
marketing” claims) and sharing prohibited consumer informa-
tion with companies that wanted to use the lists to extend
offers of credit or insurance (the “firm offer” claims). In 2000,
the Judicial Panel on Multidistrict Litigation transferred the
cases to Judge Gettleman in the Northern District of Illinois for
consolidated pretrial proceedings. A detailed account of the
litigation’s course over the following decade is not necessary
here. We focus on the settlement and later disputes over the
post-settlement claims or PSCs.
No. 13-1613 3
After preliminary rulings allowed the claims to go forward,
Judge Gettleman asked Magistrate Judge Mason to mediate the
entire dispute. To make a long story short, with his help the
parties eventually reached an agreement that the district court
approved as fair and reasonable. Trans Union agreed to give
all class members “basic” in-kind relief in the form of credit
monitoring services. In addition, class members could either
claim cash from a $75 million settlement fund established by
Trans Union or claim “enhanced” in-kind relief consisting of
additional financial services. Trans Union agreed to provide
roughly $35 million worth of enhanced relief. Five attorneys,
including Wheelahan, were named as settlement class counsel.
While the deal gave significant relief to class members,
court approval under Federal Rule of Civil Procedure 23(e)
remained uncertain because the claims being settled had
potential value far beyond what Trans Union proposed to pay.
See Synfuel Technologies, Inc. v. DHL Express (USA), Inc., 463
F.3d 646, 654 (7th Cir. 2006) (courts evaluating fairness of
settlements generally must compare the value of the relief
offered to the expected value of class claims before approving
the deal); Reynolds v. Beneficial Nat. Bank, 288 F.3d 277, 284–86
(7th Cir. 2002) (same); American Law Institute, Principles of
the Law of Aggregate Litigation § 3.05(a) & cmt. b (advising
the same).
Class counsel sought to represent every consumer whose
credit Trans Union had tracked since 1987. The class was
estimated to include 190 million people, although that figure
surely must have grown in the years since it was cited with
alarm in a related case. Trans Union LLC v. FTC, 536 U.S. 915,
917 (2002) (Kennedy, J., dissenting from denial of certiorari in
4 No. 13-1613
FTC enforcement action against Trans Union). The Fair Credit
Reporting Act authorizes statutory damages of between $100
and $1000 per consumer for willful violations, 15 U.S.C.
§ 1681n, meaning that Trans Union faced at least the theoretical
possibility of $190 billion in liability. Trans Union, 536 U.S. at
917. There are many reasons, starting with Trans Union’s net
worth, why that astronomical number may not have been
meaningful, but the stakes were far greater than the $75 million
in cash that Trans Union was putting on the table.
As part of their effort to persuade the district court to
approve the settlement and to narrow the gap between what
Trans Union was offering and what it might owe, the parties
agreed to an unusual feature that preserved class members’
substantive claims even after settlement. Instead of releasing
outright their claims against Trans Union, class members who
did not ask for cash or enhanced in-kind relief would give up
only their ability to sue as part of either a “Class Action” or an
“Aggregated Action.” Both terms were defined in the
settlement, as explained below. These class members retained
the right to bring their modest individual claims separately.
In exchange for class members agreeing not to proceed
further on a class basis, Trans Union offered online credit
monitoring to everyone in the class. Even those who accepted
this “basic” in-kind relief were free to head straight back to
court to file their claims, so long as they filed individually. We
set aside for a moment whether it would make economic sense
No. 13-1613 5
for them to do so.1 The statute of limitations, at least, would be
no bar. Trans Union agreed to waive that defense for pending
PSCs and those commenced within two years. Class members
who pursued the additional option of claiming either monetary
damages or enhanced in-kind relief, however, had to release
their substantive claims against Trans Union.
Class members were not the only ones authorized to draw
from the $75 million cash fund. The critical feature for
purposes of this appeal is that the settlement authorized
reimbursements from the fund—to Trans Union itself—“equal
to any amounts paid to satisfy settlements or judgments arising
from Post-Settlement Claims, not including any defense costs.”
Thus, Trans Union would bear any costs of defending PSCs but
not the cost of settling them since it could reimburse itself for
settlements from the $75 million it had already paid into the
fund. The settlement put no restrictions on Trans Union’s
1
We recognize that giving up the right to pursue some form of collective
action or other cost-sharing device will often mean that no relief is available.
See American Exp. Co. v. Italian Colors Restaurant, 133 S. Ct. 2304, 2309 (2013)
(“the antitrust laws do not guarantee an affordable procedural path to the
vindication of every claim”); id. at 2316 (Kagan, J., dissenting) (individual
plaintiff’s ability to pursue complex antitrust claim was foreclosed by
contractual prohibitions on class arbitration, joinder/consolidation, cost-
shifting, and other means of spreading expenses); AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1760–61 (2011) (Breyer, J., dissenting) (contract
prohibiting class arbitration would likely “lead small-dollar claimants to
abandon their claims” altogether). Class settlements that limit “only” class
members’ procedural options could extinguish their substantive rights as
a practical matter. As we explain below, however, the settlement in this case
did not foreclose outside lawyers from asserting and settling thousands of
modest follow-on claims.
6 No. 13-1613
ability to settle these claims, expressly granting it the “option
to settle any suit or pre-suit demand, or litigate any suit,
involving Post-Settlement Claims.” A committee of
representatives selected in equal parts by Trans Union and
class counsel would monitor PSC reimbursements, although
any disputes would ultimately be settled by the court. Any
money left in the fund after two years would be distributed
among class members who had submitted timely claims for
cash relief. (Approximately 450,000 class members did so.) The
district court granted final approval of the settlement in
September 2008.
B. Post-Settlement Claims
Enterprising lawyers not previously involved in the case
then found an economically viable way to bring individual
post-settlement claims against the $75 million fund. They
solicited class members who had not sought money damages
or enhanced in-kind relief and thus retained their target
marketing and firm offer claims against Trans Union. These
lawyers eventually gathered more than 100,000 PSCs. The
more than 70,000 that were not merely informal demands to
Trans Union were filed as substantially identical but formally
separate individual lawsuits. Most were filed in Nueces
County, Texas—presumably the jurisdiction with the lowest
filing fee the lawyers could find. The remaining PSCs were
filed in other low-fee jurisdictions.
The terms of the class settlement gave Trans Union little
reason to fight these claims. It could settle them without
paying one additional net dollar. The company struck deals
with the post-settlement claimants and then sought to
No. 13-1613 7
reimburse itself from the fund. Class counsel objected. They
argued that the PSCs filed in volume in low-fee jurisdictions
like Nueces County were in fact “Aggregated Actions”
prohibited under the settlement. The theory might have had
some appeal under the term’s ordinary meaning, but the
settlement expressly defined “Aggregated Action.” Its agreed
meaning was “any action in which two or more individual
plaintiffs assert claims relating to the same or similar alleged
conduct.” While the district court conceded that it “never
contemplated such mass actions when it approved the
settlement,” it ruled that the high-volume PSCs were not
covered by the settlement’s definition because each claim was
filed as a separate action on behalf of just one plaintiff. The
claims were therefore not barred by the terms of the settlement.
In re Trans Union Corp. Privacy Litig., 2011 WL 918396 (N.D. Ill.
Mar. 14, 2011).
For their efforts, the PSC attorneys received contingency
fees of between 45 and 50 percent. In mid-2011, class counsel
other than Wheelahan asked the district court for a share of the
PSC attorney fees under the common-fund doctrine. See
generally Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
Wheelahan did not join that request because she had already
successfully pursued her own appeal for more fees based on
her role in negotiating the original settlement. See In re Trans
Union Corp. Privacy Litig., 629 F.3d 741 (7th Cir. 2011). Trans
Union responded in the district court by moving for final
approval of its PSC settlements, which would resolve the bulk
of the outstanding claims for around $35 million from the fund.
In separate orders issued in August and September 2011, the
district court denied class counsels’ motion for common-
8 No. 13-1613
benefit fees and then approved the PSC settlements and Trans
Union’s reimbursement for them.
C. The Prior Appeal
Class counsel minus Wheelahan appealed both of those
2011 orders. The appeals were consolidated and Wheelahan
joined in, representing her own view of the class’s interests. We
affirmed both orders in a terse non-precedential order. App.
11-3030 ECF 101.2 With the reimbursement issue seemingly
resolved, Trans Union paid on its provisional PSC settlements
and moved the district court for a final order that would
distribute the remainder of the fund and bring the litigation to
an end. Judge Gettleman issued the order in February 2013.
Wheelahan now appeals from that final order, as well as
several interim orders approving reimbursements for PSCs.
II. Analysis
Wheelahan raises three issues on appeal in an effort to
block reimbursement of Trans Union for settling the PSCs.
First, she challenges the district court’s final distribution order
on the ground that it impermissibly modified the terms of the
original settlement. Second, she asks us to reverse the district
court’s determination that the PSCs were not brought as
prohibited class or aggregate actions. And third, she wants
2
The order said in its entirety: “This appeal, successive to In re Trans Union
Corp. Privacy Litigtion, 629 F.3d 741 (7th Cir. 2011), involves a conflict
between class action lawyers over fees. We AFFIRM. The conflict was
resolved by the district judge in an order based on an extended colloquy
with the lawyers. We find no error in the order, or reason to enlarge on the
judge’s analysis.”
No. 13-1613 9
Trans Union to reimburse the fund for money spent settling
PSCs the company could have defeated at little cost because
the claims were either barred by the statute of limitations or
otherwise meritless.
We review de novo a district court’s interpretation of a
consent decree. Bailey v. Roob, 567 F.3d 930, 940 (7th Cir. 2009);
United States v. Krilich, 303 F.3d 784, 789 (7th Cir. 2002). Our
opinions have sometimes said that we will give an unspecified
amount of deference to a district court’s interpretation when
that court has overseen the litigation for a long time and is
familiar with the details of what may be a complex
arrangement. See, e.g., Foufas v. Dru, 319 F.3d 284, 286 (7th Cir.
2003) (dicta); United States v. Alshabkhoun, 277 F.3d 930, 934 (7th
Cir. 2002). This line of cases seems to have sprung from a
footnote in a Sixth Circuit opinion simply recognizing the
district court’s view of a consent decree as one of a number of
“relevant aids to contract interpretation.” Brown v. Neeb,
644 F.2d 551, 558 n. 12 (6th Cir. 1981), cited in United States v.
Bd. of Educ. of City of Chicago, 717 F.2d 378, 382 (7th Cir. 1983).
When the issue is one of case management, such deference
is appropriate. When the issue involves reliance interests,
however, with parties and especially with non-parties who
may not have time or opportunity to ask a court to clarify an
ambiguous order, it is less clear that we should defer to the
authoring judge’s interpretation. Litigants as well as third
parties must be able to rely on the clear meaning of court
orders setting out their substantive rights and obligations, and
appellate courts should interpret those orders in the same
manner. See Mendez v. Republic Bank, 725 F.3d 651, 663 (7th Cir.
2013) (“It is not reasonable to expect a third-party citation
10 No. 13-1613
respondent to investigate the intended meaning of a court
order beyond the text of the order itself.”). Because we would
affirm the district court under ordinary de novo review,
however, we need not decide the degree of deference here.
A. Challenge to the Final Order
We begin with Wheelahan’s argument that the final
distribution order impermissibly modified the original
settlement by restricting her ability to raise objections on behalf
of the class. As mentioned above, the settlement called for a
committee composed of equal numbers of class counsel and
Trans Union agents to receive quarterly reports concerning
PSCs. Wheelahan is not a member of the committee, but she
retained her status as one of the class counsel. She now objects
to a provision in the final order in which the court recognized
“the possibility that it may be required to resolve future
disputes raised by any member of the Committee chosen by
Settlement Class Counsel.” Wheelahan contrasts this language
with the original settlement, which said the court would
address “Any dispute about the propriety of a
reimbursement,” including presumably one raised by a class
attorney not on the committee. She argues that the new
language will bar her from protecting the class’s interests and
that the district court lacked the authority to make such a
change.
We do not see the conflict. Wheelahan retained her status
as class counsel. Nothing in the final order limited her ability
to fulfill her fiduciary responsibilities to the class, see Fed. R.
Civ. P. 23(g)(4), even though she is not on the committee
overseeing the post-settlement claims. The committee did not
No. 13-1613 11
displace class counsel and was never designated the sole
advocate for the class, which makes sense since half its
members were representatives of Trans Union. As we read the
original settlement and the final order, any class counsel could
bring an issue to the district court on behalf of the class.
B. Challenges to Interim Orders
More substantively, Wheelahan offers two reasons why
Trans Union should not be reimbursed for all or some PSC
settlements. First, she argues that the district court erred in
approving settlements for PSCs that were in substance
prohibited class actions. Her second argument is that Trans
Union is not entitled to reimbursement for settling claims it
could easily have defeated, either because they were clearly
barred by the statute of limitations or meritless on their face.
We discuss these arguments together here because they raise
the same threshold issues of appellate procedure, though
ultimately we find our way to the merits and agree with the
district court. The terms of the settlement allowed Trans Union
to find peace by settling arguably worthless claims from the
$75 million settlement fund.
1. Appellate Jurisdiction
We have jurisdiction to hear Wheelahan’s appeal from the
final distribution order itself under 28 U.S.C. § 1291. Although
the order acknowledged that the court might have to resolve
residual disputes, it effectively concluded the litigation by
distributing the remaining money and is final for purposes of
§ 1291. See Ray Haluch Gravel Co. v. Central Pension Fund, 134 S.
Ct. —, No. 12-992, 2014 WL 127952, at *5 (Jan. 15, 2014); Solis v.
Current Dev. Corp., 557 F.3d 772, 775–76 (7th Cir. 2009). An
12 No. 13-1613
appeal from a final judgment encompasses review of earlier
interlocutory rulings—even those that could have been the
subject of an interlocutory appeal—so long as the issues
decided in those rulings have not become moot. Calma v.
Holder, 663 F.3d 868, 873 (7th Cir. 2011); Habitat Educ. Center v.
U.S. Forest Service, 607 F.3d 453, 456 (7th Cir. 2010); 15A
Wright & Miller, Federal Practice & Procedure § 3911 (2d ed.)
(“The only consequences of forgoing a collateral order appeal
opportunity should be the risk that further proceedings may
moot the issue, and that in some circumstances the standard of
review may be different” on appeal from a final judgment.). So
no jurisdictional obstacles block our examination of the district
court’s orders concerning reimbursements.
2. Effects of the Prior Appeal
The procedural problem for Wheelahan is that the
reimbursements she challenges were already the subject of the
prior appeal before this court decided May 22, 2012. That was
the consolidation of two appeals filed by Wheelahan’s fellow
class counsel. The first challenged the district court’s denial of
class counsels’ motion for more fees in an order dated
August 8, 2011. The second challenged a broader order dated
September 8, 2011 in which the district court rejected all of
class counsels’ objections to the reimbursements and approved
the PSC settlements in all respects.
Class counsel argued on appeal that the district court had
erred in blessing Trans Union’s reimbursements. Their main
contention was that the court and Trans Union both were
obliged to examine the fairness of the PSC settlements, and
particularly the accompanying fee arrangements, before
No. 13-1613 13
paying from the settlement fund. Wheelahan joined the fray as
an appellee, arguing that Trans Union was being reimbursed
improperly for settling meritless PSCs. According to her, an
FTC lawsuit had led Trans Union to stop selling lists of
consumers to target marketers in 2001, yet PSC counsel were
asserting target marketing claims on behalf of some consumers
who had not entered Trans Union’s database until after 2001
and thus could never have been victims of target marketing
practices. She argued that this disqualified Trans Union from
settling any such claims because they were certainly meritless.
Our decision affirming the district court, although brief,
stated conclusively that we found “no error in the [district
court’s] order, or reason to enlarge on the judge’s analysis.”
This language effectively adopted the reasoning of the district
court’s September 8, 2011 order and rejected all the appellants’
arguments. See Burlington Northern R.R. Co. v. City of Superior,
962 F.2d 619, 620 (7th Cir. 1992) (per curiam).
Under these circumstances, Trans Union urges us not to
consider the merits of Wheelahan’s arguments in this appeal.
Trans Union argues that we should apply the law of the case
doctrine or find forfeiture. We see considerable merit in these
procedural arguments, but neither the law of the case nor
forfeiture is a rigid doctrine. Both allow this court some
discretion in application. See Creek v. Village of Westhaven,
144 F.3d 441, 446 (7th Cir. 1998) (law of the case); Humphries v.
CBOCS West, Inc., 474 F.3d 387, 391 (7th Cir. 2007) (forfeiture),
aff’d, 553 U.S. 442 (2008); see also 18B Wright & Miller § 4478.2.
Applying either doctrine here raises some delicate problems
because of potential uncertainty about the scope of our prior
decision and the complications that can arise when some
14 No. 13-1613
parties—in this case, Wheelahan’s co-counsel—pursued an
interlocutory appeal and others claimed to have reserved their
right to appeal after a final judgment. See generally 18B
Wright & Miller § 4478.6 (advising greater clarity in courts’
application of overlapping but distinct doctrines of law of the
case and forfeiture).
In applying either law of the case or forfeiture, the sound
exercise of our discretion would lead us to look beyond the
procedural obstacles to the merits of Wheelahan’s arguments.
We have done so here, and the arguments’ lack of merit is so
clear that we elect to bypass the law of the case and forfeiture
doctrines. We simply affirm the district court on the merits.
3. The Merits of the Remaining Objections
We first address Wheelahan’s argument that most of the
PSCs that Trans Union settled were in truth prohibited class
actions. This argument is based on Bullard v. Burlington
Northern Santa Fe Railway Co., 535 F.3d 759 (7th Cir. 2008), a
case applying the Class Action Fairness Act provision that
gives federal courts jurisdiction over certain types of mass
actions. See 28 U.S.C. § 1332(d)(11). Bullard read the term
“mass action” in a way that might encompass the PSCs here.
But the fact that CAFA treats mass actions as class actions for
purposes of federal jurisdiction does not mean that we should
read the settlement’s unambiguous definition of “Class
Action” to incorporate a separate statutory definition of “mass
action.” For purposes of applying the settlement, the meaning
agreed upon by the parties and approved by the district court
is the one that counts. That definition reaches any action
“brought by one or more individual plaintiffs on behalf of a
No. 13-1613 15
class of similarly situated persons.” As explained above, each
PSC was filed on behalf of one individual plaintiff rather than
on behalf of a class of similarly situated claimants. None fall
within the settlement’s clear definition of “Class Action.”
Wheelahan also asserts that Trans Union should not be
reimbursed for settling PSCs it could have defeated at little
cost, either because they were barred by the statute of
limitations or were meritless. Wheelahan’s claim concerning
time-barred PSCs is based on the provision in the settlement
that says Trans Union will waive the statute of limitations for
PSCs commenced within two years. Wheelahan objects to
reimbursing Trans Union for settling claims asserted outside
the two-year window.
The argument overlooks language in the settlement that
empowered Trans Union “to settle any suit or pre-suit
demand” involving PSCs and to be reimbursed for “any
amounts paid to satisfy” such settlements. Although the
settlement required Trans Union to waive the statute of
limitations in some instances, it did not require Trans Union to
assert the defense in any. Nothing in the settlement would
require Trans Union to assert all available defenses or to
defend each arguably time-barred PSC to the death. The
settlement gave Trans Union complete discretion to fold even
a winning hand. The same reasoning applies to Wheelahan’s
argument that some PSCs included meritless targeting
marketing claims. Trans Union was under no obligation to
spend its own money to defend such claims rather than settle
them. This argument also overlooks the fact that these
claimants may have held valid firm offer claims even if their
target marketing claims were extremely weak. We see no error
16 No. 13-1613
in the district court’s order authorizing reimbursement for
these settlements.
We AFFIRM both the final distribution order and the
challenged interlocutory orders approving the PSC settlements
and Trans Union’s reimbursements for them.