Plaintiffs’ counsel and defense counsel have spent untold hours working on a class action settlement. The parties have met numerous times with a court-appointed mediator, and have finally come to an agreed upon resolution of the case. The settlement is submitted to the court for preliminary approval, which is granted. Then, just prior to the fairness hearing, objectors appear, seeking to block the settlement. What now? In Kaplan, et al. v. Mead Johnson & Company, et al., Case No. 11-15956 (July 20, 2012 11th Circuit), the Eleventh Circuit weighed in on this scenario, affirming the district court’s decision overruling the objections.
The plaintiff in Kaplan filed a putative class against Mead Johnson alleging that the defendants had falsely represented their product, infant formula. Following discovery and a class certification hearing, the district court certified a class of Florida consumers who had purchased the infant formula. The parties then mediated the case several times with a court-appointed mediator, ultimately coming to a proposed settlement.
Just after the parties agreed to the proposed settlement, the Judicial Panel on Multidistrict Litigation transferredfive other related cases to the district court, which were consolidated with Kaplan. The parties then agreed to an amended complaint that established a nationwide class. They simultaneously sought conditional certification of the nationwide class and preliminary approval of the terms of their proposed settlement. The district court preliminarily approved the settlement and conditionally certified the class.
Sandra Pack and ten others filed written objections to the settlement. At the fairness hearing, the district court overruled all of the objections and approved the settlement and Pack appealed. In imposing an appeal bond the district court found “significant evidence of bad faith on the part of Appellant Pack,” including that her counsel sought $150,000 in exchange for a withdrawal of the appeal. The district court found this to suggest that Pack’s objections were really for her own financial interest “rather than ensuring an adequate settlement for the class.” As further evidence of Pack’s bad faith, the district court noted that she was represented by her brother’s law firm, had no retention agreement with it, and had not read any documents concerning the Kaplan lawsuit. The district court found “Pack’s lack of knowledge about her own case worrisome and evidence of her lack of good faith.” According to the district court, that Pack’s counsel had represented three previous objectors also weighed in favor of the imposition of an appellate bond.
On appeal, the Eleventh Circuit affirmed the district court approval of the settlement. It determined that Pack’s objections were “conclusory and failed to account for other pertinent consideration, including the plaintiffs’ risk of losing at trial,” and, in other respects, “wholly unfounded.”
Objectors can be an important part of the class action settlement process when their motives are to benefit the class, rather than themselves or their counsel. But when the objector’s motivation is personal gain, it is incumbent on class counsel to take a stand, perhaps with the assistance of defense counsel, to prevent illegitimate outside forces from disrupting a settlement approved by the parties and court. While it may be expedient to simply “buy them off,” professional objectors are like stray dogs – if you keep feeding them they will keep coming back!