General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, In re

Decision Date17 April 1995
Docket Number94-1194,Nos. 94-1064,No. 94-1195,No. 94-1202,No. 94-1203,94-1208 and 94-1219,No. 94-1198,94-1207,No. 94-1207,94-1195,94-1198,No. 94-1194,No. 94-1219,94-1202,No. 94-1064,94-1203,PICK-UP,No. 94-1208,94-1064,94-1208,94-1219,s. 94-1064
Citation55 F.3d 768
Parties, 31 Fed.R.Serv.3d 845 In re GENERAL MOTORS CORPORATIONTRUCK FUEL TANK PRODUCTS LIABILITY LITIGATION. Jack French, Robert M. West, Charles E. Merritt, Gary Blades, Dawn and Tracey Best, Gary and Jackie Barnes, Betty Marteny, John and Mary Southands, Edmund Berning, Dale W. Plummer, Edmund and Anneta Casey, John and Connie Yonki, Carl and Kathryn Corona, Dallas and Patricia Nelson, Mynard and Mildred Duncan, Kirby L. Stegman, DeWayne Anderson, Morris and Barbara Betzold, Appellants inRudolph Jenkins, William D. Cunningham, Mather Johnson, Forrest Charles Ginn, Buren William Jones and Martin D. Parkman, Appellants inParish of Jefferson, Appellant inThe State of New York, Appellant inElton Wilson, individually, and Frank I. Owen, individually and on behalf of the residents of the State of Alabama, Appellants inCity of New York, Appellant inBetty Youngs, Barbara Phillips, Margaret Engel, Larry Swope, Robbin Maxwell and Center for Auto Safety, Appellants inBetty Youngs, Barbara Phillips, Margaret Engel, Larry Swope, Robbin Maxwell and Center for Auto Safety, Appellants inCommonwealth of Pennsylvania, Department of Transportation, Appellant in
CourtU.S. Court of Appeals — Third Circuit

James A. Schink, (argued), J. Andrew Lanagan, Robert B. Ellis, Kirkland & Ellis, Chicago, IL, George J. Lavin, Jr., Francis P. Burns, III, Lavin, Coleman, Finarelli & Gray, Philadelphia, PA, Lee A. Schutzman, Edward C. Wolfe, General Motors Corp., Detroit, MI, for General Motors Corp., appellee.

Andrew M. Hutton, Derek S. Casey, Paul Benton Weeks, III, Michaud, Hutton, Fisher & Anderson, Wichita, KS, for Jack French, Robert M. West, Charles E. Merritt, Gary Blades, Dawn Best, Tracey Best, Gary Barnes, Jackie Barnes, Betty Marteny, John Southards, Mary Southards, Edmund Berning, Dale W. Plummer, Edmund Casey, Anneta Casey, John Yonki, Connie Yonki, Carl Corona, Kathryn Corona, Dallas Nelson, Patricia Nelson, Mynard Duncan, Mildred Duncan, Kirby L. Stegman, Dewayne Anderson, Morris Betzold, Barbara Betzold, Dennis Acuma, appellants.

Diane M. Nast (argued), William E. Hoese, Kohn, Swift & Graf, P.C., Philadelphia, PA, Elizabeth J. Cabraser (argued), Michael F. Ram, Lieff, Cabraser & Heimann, San Francisco, CA, for Dennis Acuma, John E. Martin, plaintiff class/appellees.

John W. Barrett, Barrett Law Offices, Lexington, MS, for John Mayhall, Brendan Hayes, Jimmy Benson, Jimmy Haddock, Dennis Nabors, Marcia Baldwin, appellees.

William S. Lerach, Milberg, Weiss, Bershad, Hynes & Lerach, San Diego, CA, for William A. Lewis, David Grubbs, Raymond Carver, Johnny S. Martinez, Robert A. Flowers, Stone Ridge Agri, Inc., James McKinnish, Douglas A. Livingston, appellees.

Richard S. Schiffrin, Schiffrin & Craig, Bala Cynwyd, PA, for Johnny S. Martinez, Joseph St. Clair, appellees.

Patricia J. Clancy, Sr. Deputy County Counsel, County of Santa Barbara, Santa Barbara, CA, for City of Los Angeles, Alameda City, Santa Barbara City, Utah City, Washington City, amicus-appellee.

James E. Butler, Jr. (argued), Robert D. Cheeley, Peter J. Daughtery, Butler, Wooten, Overby & Cheeley, Columbus, GA, for Rudolph Jenkins, William D. Cunningham, Mather Johnson, Forrest Charles Ginn, Buren William Jones, Martin D. Parkman.

Hans J. Liljeberg, Jefferson Parish Atty.'s Office, Gretna, LA, Jeron J. LaFargue, Jefferson Parish Atty.'s Office, Harahan, LA, for Parish of Jefferson, appellant.

G. Oliver Koppell, Atty. Gen. of the State of N.Y., Peter H. Schiff, Deputy Sol. Gen., Nancy A. Spiegel, Andrea Oser, Asst. Attys. Gen., Albany, NY, for State of N.Y., appellant.

Michael J. Evans, Steven D. King, Longshore, Evans & Longshore, Birmingham, AL, for Elton Wilson, individually, Frank I. Owen, individually and on behalf of the residents of the State of Alabama, appellants.

John Hogrogian, New York, NY, for City of New York, appellant.

Brian S. Wolfman (argued), David C. Vladeck, Public Citizen Litigation Group, C. Ray Gold, Center for Auto Safety, Washington, DC, for Betty Youngs, Barbara Phillips, Margaret Engel, Larry Swope, Robbin Maxwell, Center for Auto Safety, appellants.

Stephen F.J. Martin (argued), Asst. Counsel In-Charge, Steven I. Roth, Asst. Counsel, Robert J. Shea, Asst. Chief Counsel, John L. Heaton, Chief Counsel, Office of Chief Counsel, Dept. of Transp., Harrisburg, PA, for Com. of Pa., appellant.

Before BECKER, ALITO, and GIBSON, * Circuit Judges.

I. Summary .................... 818

VII. APPROVAL OF THE ATTORNEYS' FEE AWARD .. 819

VIII. OTHER ISSUES; CONCLUSION .............. 823

OPINION OF THE COURT

BECKER, Circuit Judge.

This is an appeal from an order of the District Court for the Eastern District of Pennsylvania approving the settlement of a large class action following its certification of a so-called settlement class. Numerous objectors challenge the fairness and reasonableness of the settlement. The objectors also challenge: (1) the district court's failure to certify the class formally; (2) its denial of discovery concerning the settlement negotiations; (3) the adequacy of the notice as it pertained to the fee request; and (4) the court's approval of the attorneys' fee agreement between the defendants and the attorneys for the class, which the class notice did not fully disclose, thereby (allegedly) depriving the class of the practical opportunity to object to the proposed fee award at the fairness hearing.

The class members are purchasers, over a 15 year period, of mid- and full-sized General Motors pick-up trucks with model C, K, R, or V chassis, which, it was subsequently determined, may have had a design defect in their location of the fuel tank. Objectors claim that the side-saddle tanks rendered the trucks especially vulnerable to fuel fires in side collisions. Many of the class members are individual owners (i.e., own a single truck), while others are "fleet owners," who own a number of trucks. Many of the fleet owners are governmental agencies. As will become apparent, the negotiated settlement treats fleet owners quite differently from individual owners, a fact with serious implications for the fairness of the settlement and the adequacy of representation of the class.

While all the issues we have mentioned are significant (except for the discovery issue), the threshold and most important issue concerns the propriety and prerequisites of settlement classes. The settlement class device is not mentioned in the class action rule, Federal Rule of Civil Procedure 23. 1 Rather it is a judicially crafted procedure. Usually, the request for a settlement class is presented to the court by both plaintiff(s) and defendant(s); having provisionally settled the case before seeking certification, the parties move for simultaneous class certification and settlement approval. Because this process is removed from the normal, adversarial, litigation mode, the class is certified for settlement purposes only, not for litigation. Sometimes, as here, the parties reach a settlement while the case is in litigation posture, only then moving the court, with the defendants' stipulation as to the class's compliance with the Rule 23 requisites, for class certification and settlement approval. In any event, the court disseminates notice of the proposed settlement and fairness hearing at the same time it notifies class members of the pendency of class action determination. Only when the settlement is about to be finally approved does the court formally certify the class, thus binding the interests of its members by the settlement.

The first Manual for Complex Litigation [hereinafter MCL] strongly disapproved of settlement classes. Nevertheless, courts have increasingly used the device in recent years, and subsequent manuals (MCL 2d and MCL 3d (in draft)) have relented, endorsing settlement classes under carefully controlled circumstances, but continuing to warn of the potential for abuse. This increased use of settlement classes has proven extremely valuable for disposing of major and complex national and international class actions in a variety of substantive areas ranging from toxic torts (Agent Orange) and medical devices (Dalkon Shield, breast implant), to antitrust cases (the beef or cardboard container industries). But their use has not been problem-free, provoking a barrage of criticism that the device is a vehicle for collusive settlements that primarily serve the interests of defendants--by granting expansive protection from law suits--and of plaintiffs' counsel--by generating large fees gladly paid by defendants as a quid pro quo for finally disposing of many troublesome claims.

After reflection upon these concerns, we conclude that Rule 23 permits courts to achieve the significant benefits created by settlement classes so long as these courts abide by all of the fundaments of the Rule. Settlement classes must satisfy the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation, as well as the relevant 23(b) requirements, usually (as in this case) the (b)(3) superiority and predominance standards. We also hold that settlement class status (on which settlement approval depends) should not be sustained unless the record establishes, by findings of the district judge, that the same requisites of the Rule are satisfied. Additionally, we hold that a finding that the settlement was fair and reasonable does not serve as a surrogate for the class findings, and also that there is no lower standard for the certification of settlement classes than there is for litigation classes. But so long as the four requirements of 23(a) and the appropriate requirement(s) of 23(b) are met, a court may legitimately...

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