In re New Motor Vehicles Canadian Export Antitrust Litig., Civil No. 2:03–MD–1532–DBH.

• Decision Date: 01 August 2011
• Docket Number: Civil No. 2:03–MD–1532–DBH.
• Citation: 2011 Trade Cases P 77667,800 F.Supp.2d 328
• Parties: In re NEW MOTOR VEHICLES CANADIAN EXPORT ANTITRUST LITIGATION.
• Court: U.S. District Court — District of Maine

2011-2 Trade Cases P 77,667

800 F.Supp.2d 328

In re NEW MOTOR VEHICLES CANADIAN EXPORT ANTITRUST LITIGATION.

Civil No. 2:03–MD–1532–DBH.

United States District Court, D. Maine.

Aug. 1, 2011.

Todd A. Seaver, Berman DeValerio, San Francisco, CA, for Plaintiffs.

Daniel E. Loeb, Elisabeth M. Stein, Fried, Frank, Harris, Shriver & Jacobson, LLP, Michael R. Lazerwitz, Cleary, Gottlieb, Steen & Hamilton LLP, Washington, DC, Richard L. O'Meara, Murray Plumb & Murray, James T. Kilbreth, Dylan Smith, Verrill Dana LLP, Portland, ME, Lee F. Berger, for Defendants.

SUPPLEMENTAL DECISION AND ORDER ON PROPOSED SETTLEMENTS AND PLAN OF ALLOCATION FOLLOWING ADDITIONAL BRIEFING

D. BROCK HORNBY, District Judge.

In my Order of April 13, 2011, 2011 WL 1398485, following the fairness hearing on two settlements and a plan of distribution, I said that I could not approve the Toyota and CADA settlements that released Hawaii state law claims, because the Hawaii Attorney General had not been involved, a necessity under Hawaii law. I also expressed concern over the cash allocation of the settlement funds (allocation is not part of the settlement agreements) in light of the fact that residents of some jurisdictions that permit indirect purchaser recovery were not sharing in the cash allocation. I mentioned in particular Alabama, District of Columbia, Florida, Iowa and North Carolina. Following my Order, I have received:

1. Correspondence from the Hawaii Attorney General waiving that office's right to be part of settlement proceedings, but on the premise that Hawaii residents then will be added to the cash allocation, see Letter dated June 1, 2011, to Judge D. Brock Hornby from Hawaii Attorney General David M. Louie (Docket Item 1187);

2. A filing by the Attorneys General for the states of Alabama, Florida, Iowa, North Carolina and for the District of Columbia that seeks to have their residents added to the cash allocation, see Am. Resps. of the States of Alabama, Florida, Iowa, North Carolina and Washington D.C. to Proposed Plan of Allocation (Docket Item 1186);

3. A response from the plaintiffs ¹ that

a. says that the Hawaii Attorney General's letter allows the settlement to go forward vis-à-vis Hawaii state law claims, yet without any cash allocation to Hawaii residents; or, in the alternative on that issue, asks for the opportunity to try to negotiate with Toyota and CADA to remove the release of Hawaii state law claims from the settlement agreement; and

b. recognizes that some omitted jurisdictions do allow indirect purchaser recovery but justifies not including their residents in the cash allocation on the basis that

i. Alabama law does not justify recovery due to its limitation to intrastate commerce;

ii. Florida residents should not participate because of Florida's loser pay rule, and the fact that here the plaintiffs lost most of their lawsuit;

iii. Individuals did not step forward to be class representatives for the residents of these other jurisdictions;

iv. The plaintiffs' original “crucible of litigation” argument that I found wanting is still valid;

v. It is reasonable either to include or not to include these jurisdictions and I should therefore accept the plaintiffs' decision not to include them; and

vi. If I reexamine this issue, then on account of Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., ––– U.S. ––––, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010), I will have to reexamine earlier rulings that I made in the course of the lawsuit that certain state substantive laws would not allow recovery of damages through class actions, see Pls.' Supplemental Br. on Plan of Allocation (Docket Item 1181);

4. A response from objector Kevin Luke that

a. reasserts his claim on behalf of Hawaii residents and criticizes the plaintiffs' characterization of the Hawaii Attorney General's position;

b. asserts that the additional jurisdictions identified in my Order of April 13, 2011 should also be included in the cash allocation; and

c. asserts that I should reconsider whether other states (Georgia, Montana, New York, Utah) should receive a cash allocation in light of Shady Grove, see Kevin Luke's Resp. to Pls.' Supplemental Br. on Plan of Allocation (Docket Item 1183); and

5. An objection from Joey Hutto, Jeanne Finn, Channing Carder, Deborah Colburn and Wayne Phillips/American Electric Motor Service, which joins in Luke's arguments and asserts on behalf of three Alabama resident objectors that Alabama residents should be included, see Resp. to Pls.' Supplemental Br. on Plan of Allocation by Unnamed Class Members (Docket Item 1184).

Analysis and Decision

I conclude that residents of two of the additional states that I identified in my Order of April 13, 2011, should not be included in the cash allocation. The Alabama limitation of its state law claims to intrastate activity ² negates the claims of its residents to recover for what is clearly interstate activity as alleged in the pleadings and record of this case. The Alabama state law claims in this case are not worth anything given Alabama's restrictive law. That material difference justifies excluding them from the cash allocation.³ Moreover, Florida's provision that a loser must pay devalues the worth of its state law claims. This was a very high risk lawsuit; the plaintiffs did in fact lose most of the lawsuit, with only two defendants settling, out of many. Pursuing the Florida claims could have significantly reduced the plaintiffs' recovery after paying the defendants' attorney's fees and costs.⁴ I conclude that the Florida claims were therefore worth substantially less than those of other indirect purchaser states.

I reject the suggestion that Shady Grove should cause me to rethink either my careful examination of the settlement allocation the plaintiffs proposed, or cause me to revisit earlier rulings in the lawsuit. It is not at all clear that Shady Grove would lead to a change in my earlier rulings. That would be controlled by Justice Stevens' concurring opinion, because it was his concurring opinion that cast the tie-breaking vote in Shady Grove. (Moreover, Justice Stevens has now been succeeded by Justice Kagan.) I believe that my rulings were correct when they were made, no objector raised the issue in response to the notice of hearing, it came up only on the plaintiffs' in terrorem effort to persuade me to back off my questioning of their allocation, and then objector Luke joined in. No one has provided the careful legal analysis that would be required to assess the arguments. Under those circumstances, I conclude that the value of these claims was properly assessed under the law as it was then, pre- Shady Grove.

As for Hawaii, I do not understand how the plaintiffs can conclude that the Hawaii Attorney General's letter authorizes them to proceed in a settlement that will give Hawaii residents no cash benefit. I said earlier that Hawaii's midPacific Ocean location made plausible the plaintiffs' assertion that its residents would have had additional obstacles to overcome in order to show that the alleged conspiracy affected list prices on new vehicles in Hawaii. Decision and Order on Proposed Settlements and Plan of Allocation at 20 (Docket Item 1175). No one has since done any work on this issue. Not the plaintiffs, not the objector and not the Hawaii Attorney General. I had expected that at least the plaintiffs would provide something from their expert to back up their plausible assertion.⁵ They did not, resting instead on the plausibility as grounds for excluding Hawaii. That is not sufficient. The plaintiffs have the burden “to establish that the settlement is fair and reasonable to the absent class members who are to be bound by that settlement.” Principles of Aggregate Litigation § 3.05(c). Moreover, since the Hawaii Attorney General has now waived any failure to comply with his right to notification, the plaintiffs' failure to notify him is no longer grounds for excluding Hawaii residents from the settlement agreements. Because the only way the plaintiffs could settle the Hawaii claims is with the consent of the Hawaii Attorney General and because he had the authority to bring a class action on behalf of indirect purchasers, I see no reason why the damages period should be shortened for Hawaii residents as previously argued. See 1980 Haw. Sess. Laws 91–93 (Act 69); 1987 Haw. Sess. Laws 837 (Act 274); 2002 Haw. Sess. Laws (Act 229).

Hawaii permits indirect purchaser recovery. Decision and Order on Proposed Settlements and Plan of Allocation at 18. The plaintiffs concede that the laws of the District of Columbia, Iowa, and North Carolina also permit indirect purchasers to recover. I therefore proceed to consider the asserted grounds for leaving residents of these jurisdictions out of the cash allocation.

The plaintiffs argue that their proposed plan of distribution properly distributes assets only to residents of those jurisdictions that survived the “crucible of litigation,” that these jurisdictions did not survive that crucible, and/or that it is reasonable either to include or to exclude them in the cash allocation, and that I should therefore respect the plaintiffs' decision. I pointed out earlier that some of these jurisdictions did not “survive the crucible of litigation” because the plaintiffs never subjected them to that crucible. In fact, the District of Columbia ⁶ and North Carolina did survive the crucible of litigation in the sense of surviving motions to dismiss based on the substance of their state or local laws allowing indirect purchaser recovery, see Order on Defs.' Mot. to Dismiss Certain Claims in Pls.' Second Am. Compl. (Docket Item 173). Their claims were nevertheless withdrawn from the lawsuit later, before the motion to certify individual state classes, apparently because the plaintiffs had no class representatives from those jurisdictions. Pls.' Supplemental Br. on Plan of Allocation at 9. ⁷ They also had no class...