On August 27, 2020, Judge Jon S. Tigar of the United States District Court for the Northern District of California denied a motion to intervene filed by two subclasses of indirect cathode ray tube purchasers (“Non-Settling Plaintiffs”) that would have allowed them to derail a $500 million settlement between 22 state classes of indirect purchasers (“Settling Plaintiffs”) and seven cathode ray tube manufacturers (“Settling Defendants”). The Non-Settling Plaintiffs sought intervention in order to appeal the District Court’s final approval of the settlement. The decision is In re Cathode Ray Tube (CRT) Antitrust Litig., No. 07-cv-05944-JST (N.D. Cal. Aug. 27, 2020).
The underlying multidistrict litigation began in 2007 based on allegations that the cathode ray tube manufacturers fixed prices for cathode ray tubes. One of the complaints consolidated in the MDL sought to represent a putative nationwide class of indirect purchasers. As the litigation progressed, however, the lead counsel for the indirect purchaser plaintiffs belatedly acknowledged that differences in different states’ laws as to damages claims for indirect purchasers, and resulting conflict among putative class members, rendered a nationwide class untenable and pursued settlement on behalf of residents of states with the strongest Illinois Brick “repealer” statutes, which, unlike the Clayton Act, permit damages claims for antitrust violations by indirect purchasers. Eventually, these plaintiffs reached a settlement on behalf of indirect purchasers for 22 states, which they presented to the Court for settlement class certification and approval. Plaintiffs from other states not included in the settlement objected.
In March of 2020, the Court certified 22 classes of indirect purchasers based on the each of 22 states’ repealer statutes and granted preliminary approval of a settlement that the classes had reached with certain defendants. The settlement, however, excludes two subclasses: (1) indirect purchasers from states with repealer statutes or case law that differ in certain respects from those applicable to the 22 state settling classes, and (2) indirect purchasers from non-repealer states (collectively, “the Non-Settlors”), based on potential conflicts between interests of these two subclasses and the settling classes. The Non-Settlors unsuccessfully moved to intervene, and then sought to appeal the preliminary approval order. The Ninth Circuit dismissed that portion of the appeal based on lack of jurisdiction over the preliminary approval order, but left open the possibility of the Non-Settlors moving to intervene to appeal the final approval order. On July 8, the Court granted final approval of the settlement with the 22 certified classes and shortly thereafter the Non-Settlors moved to intervene.
The Court evaluated the Non-Settlors’ new motion to intervene under Federal Rule of Civil Procedure 24 (“Fed. R. Civ. Proc. 24”) and denied both their request to intervene by right and as a matter of permissive discretion. The Ninth Circuit interprets Fed. R. Civ. Proc. 24 to permit intervention by right where a movant has an interest “protectable under some law” and can show “a relationship between the legally protected interest and the claims at issue.” Judge Tigar found that the Non-Settlors lacked a “significant protectable interest” that would be impacted by the appeal because they asserted different claims than the Settling Plaintiffs and they would not be bound by the settlement. The Non-Settlors’ claim that the settlement “may … remove the largest and most culpable defendants” from the MDL structure and impact their own settlement negotiation, the Court found, was both too hypothetical and otherwise legally insufficient.
Judge Tigar also declined to grant the Non-Settling Plaintiffs’ request to intervene on a permissive basis, citing its own “broad discretion” on the question. While it found that the intervenors had standing and met Fed. R. Civ. Proc. 24’s bare requirements for permissive intervention, the Court reasoned that the Non-Settlors would not be prejudiced by an adverse ruling and that intervention would delay settlement and prejudice the settling parties.
The settlement with the 22 state classes would not have affected any legal right or claim of the Non-Settlors. Instead, their primary argument was that the settlements would destroy or drastically reduce their settlement leverage. But this is the precise reason that separate classes and separate settlements were appropriate—there was a clear conflict between putative class members with weak claims (or, in the case of non-repealer states, essentially non-existent claims) and putative class members with stronger claims under their respective state laws. As Judge Tigar pointed out, if, as the Non-Settlors argued, the settlement may “terminate the MDL litigation as to certain defendants,” that would be because the Non-Settlors would have “no live claims,” not because of anything the settling classes did.
Unfortunately, it is still not uncommon for plaintiffs to bring putative indirect purchaser class actions that at least initially purport to seek to represent a nationwide class. But there is seldom, if ever, a situation where there will not be an intra-class conflict between indirect purchasers seeking damages under a repealer statute and indirect purchasers who cannot assert such a claim. The kind of intra-class dispute found here could be avoided if more care is taken in determining an appropriate scope for the claimed class before the complaint is filed.