Rodriguez v. West Publishing Corp.
| Citation | 563 F.3d 948 |
| Decision Date | 23 April 2009 |
| Docket Number | No. 07-56650.,No. 07-56646.,No. 07-56647.,No. 07-56833.,No. 07-56651.,No. 07-56645.,No. 07-56649.,No. 07-56643.,07-56643.,07-56833.,07-56645.,07-56646.,07-56647.,07-56649.,07-56650.,07-56651. |
| Parties | RODRIGUEZ, et al., Plaintiff-Appellee, George Schneider; Jonathan M. Slomba; James Puntumapanitch; Justin Head; Ryan Helfrich, Appellants, v. WEST PUBLISHING CORPORATION, a Minnesota corporation, dba BARBRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, David Feldman; Cameron Gharabiklou; Emily Grant; Jeff Lang; Sarah McDonald; Cara Patton; Rachel Schwartz; Greg Thomas, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, David Oriol; Jason Tingle, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, James Juranek; Audrey Juranek; Richard P. Le Blanc, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, Evans & Mullinix, P.A.; Sarah Siegel; Jennifer Brown McElroy; Daniel Schafer, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, Robert Gaudet, Jr.; Andrea Boggio; Sandeep Gopalan; Elizabeth De Long, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. Rodriguez, et al., Plaintiff-Appellee, Pamela Collins, Appellants, v. West Publishing Corporation, a Minnesota corporation, dba BAR-BRI; Kaplan, Inc., a Delaware corporation, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
N. Albert Bacharach, Jr., N. Albert Bacharach, Jr., P.A., Gainesville, FL, on behalf of objector-appellant Pamela Collins.
J. Garrett Kendrick and C. Benjamin Nutley, Kendrick & Nutley, Pasadena, CA, on behalf of objectors-appellants George Schneider, Jonathan M. Slomba, James Puntumapanitch, Justin Head, and Ryan Helfrich.
Charles A. Sturm, Steele Sturm PLLC, Houston, TX, on behalf of objectors-appellants James Juranek, Audrey Juranek, and Richard P. LeBlanc.
Scott L. Nelson, Public Citizen Litigation Group, Washington, D.C., on behalf of objectors-appellants Robert Gaudet, Jr., Andrea Boggio, Sandeep Gopalan, Elizabeth De Long.
Steven F. Helfand, Helfand Law Offices, San Francisco, CA, on behalf of objectors-appellants David Feldman, Cameron Gharabiklou, Emily Grant, Jeff Lang, Sarah McDonald, Cara Patton, Rachel Schwartz, and Greg Thomas.
J. Darrell Palmer, Law Offices of Darrell Palmer, Solana Beach, CA, on behalf of objectors-appellants Evans & Mullinix, P.A., Sarah Siegel, Jennifer Brown McElroy, Daniel Schafer, David Oriol, and Jason Tingle.
Sidney K. Kanazawa, McGuireWoods LLP, Los Angeles, CA; Dan Drachler, Zwerling, Schachter & Zwerling, LLP, Seattle, WA, on behalf of plaintiffs-appellees Ryan Rodriguez, et al.
Stuart N. Senator, Munger, Tolles & Olson LLP, Los Angeles, CA, on behalf of defendant-appellee Kaplan, Inc.
James P. Tallon, Shearman & Sterling LLP, New York, NY, on behalf of defendant-appellee West Publishing Corporation.
Appeal from the United States District Court for the Central District of California, Manuel L. Real, District Judge, Presiding. D.C. No. CV-05-03222-R(MC).
Before DIARMUID F. O'SCANNLAIN, PAMELA ANN RYMER and KIM McLANE WARDLAW, Circuit Judges.
West Publishing Corp. and Kaplan, Inc. entered a settlement agreement in an antitrust class action brought by those who purchased a BAR/BRI course between August 1, 1997 and July 31, 2006. (BAR/BRI is a subsidiary of West that provides preparation courses for state bar exams.) The district court approved the settlement, and several class members who object (Objectors) appeal. Their principal objection relates to incentive agreements that were entered into at the onset of litigation between class counsel and five named plaintiffs who became class representatives. They also contend that the district court improperly failed to compare the amount of the settlement to the likely recovery of treble, as well as single, damages.
We agree that the ex ante incentive agreements created conflicts among the five contracting class representatives, their counsel, and the rest of the class. We disapprove of them. Nevertheless, there were two other class representatives who had no incentive agreements and whose separate counsel were not conflicted. They provided adequate representation and the court was not required to reject the settlement on this account.
We conclude that the district court did not clearly abuse its discretion in finding that the $49 million settlement was fair, adequate, and reasonable even though it evaluated the monetary portion of the settlement based only on an estimate of single damages. Courts are not precluded from comparing the monetary component of a settlement to the estimated treble damages if, in their informed judgment, the strength of the particular case warrants it; but they are not obliged to do so in every antitrust class action. In this case, the settlement is substantial and meets the standard for approval by any measure.
Finally, we believe that the incentive agreements may have an effect on attorney's fees that the district court did not acknowledge. It gave no weight to the Objectors' role in securing denial of incentive awards, nor did the court take into account ethics concerns arising out of the incentive agreements when it awarded attorney's fees to class counsel. Both issues need to be revisited.
The Objectors' remaining arguments lack force. Accordingly, we affirm approval of the settlement. We reverse the orders denying any fee award to Objectors and granting the fee award to class counsel, and remand.
Ryan Rodriguez and Reena B. Frailich brought this action on behalf of themselves and "[a]ll persons who purchased a bar review course from BAR/BRI in the United States from August 1997 to the present" against West and Kaplan. They filed a first amended complaint in May 2005 joined by Loredana Nesci, Jennifer Brazeal, and Lisa Gintz. Kari Brewer and Lorraine Rimson were named plaintiffs in a related action (Brewer v. West Publishing Corp.) that was consolidated with Rodriguez. All were eventually designated as class representatives. McGuireWoods LLP was appointed class counsel.
The operative complaint alleges that BAR/BRI has been the major provider of bar preparation courses throughout the United States for decades. In 1995, West started a business called West Bar Review that competed with BAR/BRI in the market for state bar preparation courses. Thomson Company acquired West in 1996 and sought to divest itself of West Bar Review. Kaplan entered into a letter of intent to acquire West Bar Review by early August 1997. BAR/BRI, unaffiliated with West or Kaplan at that time, allegedly sought to thwart the sale of West Bar Review to Kaplan by entering a market division agreement with Kaplan whereby BAR/BRI agreed to pay Kaplan and to withdraw from markets for other test preparation courses, while Kaplan agreed not to enter BAR/BRI's primary market through acquisition of West Bar Review. BAR/BRI then acquired West Bar Review in the fall of 1997. A few years later, in 2001, West bought BAR/BRI.
The pleading also alleges that BAR/BRI erected and maintained various entry barriers to the market for bar preparation courses that included targeting first-year law students with a non-refundable option for BAR/BRI's course when they graduate; offering free access to its Westlaw service to students enrolled in a BAR/BRI course; and advertising constantly on Westlaw, which often has a captive audience of law students required to use the service. It avers that BAR/BRI engaged in numerous other acts of anticompetitive conduct such as entering into an agreement that eliminated a competitor in New York (Marino Bar Review); including non-compete clauses in contracts with law school faculty and other staff to prevent them from working for competitors; destroying competitors' advertising; paying fees to law schools for preferable access; offering a purported scholarship program that actually subsidized students considering a competitor's course; and paying Louisiana State University, a BAR/BRI competitor for preparation courses for the Louisiana bar, to discontinue its course.
Claims are stated for violation of section 7 of the Clayton Act, 15 U.S.C. § 18, by West for the acquisition of West Bar Review by BAR/BRI; violation of section 1 of the Sherman Act, 15 U.S.C. § 1, by West and Kaplan for their market division agreement; and violation of section 2 of the Sherman Act, 15 U.S.C. § 2, by West for BAR/BRI's anticompetitive conduct. The class seeks recovery of actual damages of at least $300 million ($1,000 for each of the estimated 300,000 members) for each claim, treble damages, and injunctive relief.
On May 15, 2006, the district court certified a Fed.R.Civ.P. 23(b)(3) class1 consisting of all persons who purchased a bar review course from BAR/BRI in the United States from August 1997 to the present. West and Kaplan sought interlocutory review of the certification order, which we declined to allow. A notice of class certification was sent to putative class members in the summer of 2006, informing them of their right to opt-out of the class before August 13, 2006.
During discovery, class counsel reviewed more than 400,000 pages of documents, deposed fourteen fact witnesses, and took one deposition pursuant to Fed.R.Civ.P. 30(b)(6). West and Kaplan deposed the seven class representatives and three non-party witnesses. The parties also conducted...
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