Moulton v. U.S. Steel Corp.
| Decision Date | 22 September 2009 |
| Docket Number | No. 08-2311.,No. 08-2312.,08-2311.,08-2312. |
| Citation | 581 F.3d 344 |
| Parties | Malcolm MOULTON, Plaintiff-Appellant (08-2311), Ron Anderson, Lead putative class member, et al., Movants-Appellants (08-2312), Oundra Stanley, et al., Plaintiffs-Appellees, v. UNITED STATES STEEL CORPORATION, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
James P. Murphy, Berry Moorman P.C., Detroit, Michigan, for Appellants. J. Van Carson, Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio, Peter W. Macuga, II, Macuga, Liddle & Dubin, Detroit, Michigan, for Appellees. Donnelly W. Hadden, Donnelly W. Hadden, P.C., Ann Arbor, Michigan, for Movants
ON BRIEF:
James P. Murphy, Richard R. Zmijewski, Sr., Berry Moorman P.C., Detroit, Michigan, for Appellants. J. Van Carson, Lianne Mantione, John D. Lazzaretti, Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio, Peter W. Macuga, II, Macuga, Liddle & Dubin, Detroit, Michigan, Jason J. Thompson, Sommers Schwartz, Southfield, Michigan, William J. McKim, United States Steel Corporation Law Department, Pittsburgh, Pennsylvania, Jack O. Kalmink, Clark Hill PLC, Detroit, Michigan, for Appellees. Donnelly W. Hadden, Donnelly W. Hadden, P.C., Ann Arbor, Michigan, for Movants.
Before: CLAY and SUTTON, Circuit Judges; THAPAR, District Judge.*
Malcolm Moulton challenges the district court's approval of a settlement agreement arising from a class action filed by the neighbors of a steel mill owned by United States Steel Corporation. A group of other class members, led by Ron Anderson, join Moulton's objections, and separately challenge the district court's management of the opt-out process and its handling of attorney Donnelly Hadden's attempts to represent them. We affirm, except with respect to the district court's approval of the attorney's fee award, which we vacate and remand for further explanation.
In 2003, U.S. Steel purchased a steel mill bordering Ecorse and River Rouge, Michigan. At the time, the mill's pollution-control equipment was in disrepair. After purchasing the mill, the company spent $65 million to upgrade the old pollution-control equipment and to buy new equipment.
About a year after the purchase, several residents of Ecorse and River Rouge filed a class-action lawsuit against the company. The final amended complaint, filed in 2006, named seven residents as plaintiffs: Oundra Stanley, Malcolm Moulton, Karen Ward, Charles Hunter, Betty Compton, Marcia Brown and Tansley Ann Clarkson. The plaintiffs raised several tort and statutory claims, all to the effect that the mill wrongfully discharged harmful "metal-like dust and flakes" that settled on their real and personal property. ROA 1070.
In March 2006, the district court certified a class that included all individuals owning property or residing in River Rouge and Ecorse at any point after U.S. Steel purchased the mill. The certification order designated Jason Thompson and Peter Macuga, the attorneys who filed the final amended complaint, as Class Counsel.
Several weeks after the court certified the class, but before it had approved a method for notifying class members, attorney Donnelly Hadden sent a letter to "All River Rouge & Ecorse Clients" regarding the "Suit Against U.S. Steel." ROA 1118. It is not clear on this record how many individuals received the letter or how many class members, if any, had previously retained Hadden to represent them in the lawsuit. The letter says that Hadden had been meeting with residents of the two cities about the litigation, and encourages its recipients to exclude themselves from the class, advising that doing so would be "the best choice for everyone," because "people who `opt out' ... always get a much higher settlement than ... the general population." Id. To remain in the class, Hadden instructed, recipients had to complete an attached form and return it to Hadden's office by April 10, 2006. Id. Hadden pledged to "opt out" any recipient who did not return the form. Id. Either way, the letter concluded, Hadden would "continue to be [the recipients'] lawyer[], whether [they] choose to stay in the class or opt out." Id. It appears that neither U.S. Steel nor Class Counsel learned of Hadden's initiative until April 14, 2006, when U.S. Steel received a letter from Hadden listing the individuals he claimed to represent and purporting to place an attorney's lien on any settlement proceeds.
The court approved an official notice procedure about two months after Hadden sent his letter. The court required Class Counsel to send each class member an "opt-out" form, which instructed class members who did not want to participate in the suit to sign the form and return it to Class Counsel by July 7, 2006.
As the opt-out deadline approached, Hadden moved to enter an appearance as counsel for 171 class members who purportedly had signed retainer agreements with him. Two days before the deadline, Hadden filed a motion on behalf of still more class members. Claiming that "583 members of the class" had retained him and told him "they want to be excluded from the class" (presumably by not returning the form Hadden sent them), he asked for leave to file a collective, attorney-signed opt-out form. ROA 1144. The opt-out deadline passed without a ruling on any of the motions.
In August 2006, the court denied Hadden's motions, finding them "procedurally improper" because "Hadden is not counsel of record in this case." ROA 1310. At the same time, it created a new opt-out period for the class members whom Hadden purported to represent. Hadden's clients could still opt out of the suit, the court instructed, but only by submitting an individually signed opt-out form, as opposed to one signed only by Hadden. Once the extended opt-out period closed, the order permitted Hadden to "take appropriate action with respect to those persons who have opted out and who[m] he represents." ROA 1310-11. At the end of this second opt-out period, Class Counsel submitted a final report tallying the number of individuals who had declined to participate in the suit.
The dispute over Hadden's role was a sideshow to the main events—extensive discovery, motions practice and eventually a proposed settlement agreement. In June 2008, nearly four years after the initial complaint and after months of negotiation, Class Counsel and U.S. Steel filed a joint motion for preliminary approval of a $4.45 million settlement agreement. Class representatives Karen Ward and Malcolm Moulton objected to initial versions of the agreement, arguing (among other things) that the agreement allocated too much money to Class Counsel's fees, and that the agreement's release—which discharged claims arising from pollution emanating from the mill both "prior to" the agreement and "in the future," ROA 1758—was too broad.
The parties eventually narrowed the scope of the release. Rather than releasing all claims for future emissions, the final version of the release discharged continuing-nuisance claims relating to pollutants emitted "at any time up to and including" the agreement's execution date. ROA 1987. In addition, the final version released:
[Claims for] [a]ll alleged damages, past, present, or future ... under any theory of continuing nuisance, arising out of or relating to the maintenance of any structures, any acts, any operations, or any conditions that existed, began, or were initiated [at the mill] prior to the Settlement Effective Date and that continue for an indefinite period of time, [including pollutants] emanating from [the mill] prior to the Settlement Effective Date or during all periods of time that any such structures, any such acts, any such operations, or any such conditions continue. ROA 1987-88.
The release contained several exceptions. It did not bar "claims based solely on a future catastrophic [event]." ROA 1988. Nor did it preclude "claims based solely on future operations by [U.S. Steel] that (i) involve substantially different manufacturing processes and (ii) result in substantially different or greater air emissions, releases, or odors than current or historical operations." Id.
Moulton and Ward again objected, claiming that the agreement unfairly released "any claims that occur in the future." ROA 1760. Attorney Hadden, acting on behalf of his clients, added objections of his own. In addition to objecting to the size of the settlement and the scope of the release, Hadden alleged that 34 class members had not been included in the final opt-out report due to clerical error, making it necessary to create another opt-out period for class members.
After a final fairness hearing, at which Hadden and Moulton voiced their objections, the court approved the settlement agreement. In a separate order, the court addressed each objection, finding that none supported rejecting the settlement agreement.
On appeal, Moulton and Hadden first argue—together—that the settlement agreement is not "fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2). To determine whether a settlement agreement satisfies Rule 23's fairness standard, we consider: "(1) the risk of fraud or collusion; (2) the complexity, expense and likely duration of the litigation; (3) the amount of discovery engaged in by the parties; (4) the likelihood of success on the merits; (5) the opinions of class counsel and class representatives; (6) the reaction of absent class members; and (7) the public interest." UAW v. Gen. Motors Corp., 497 F.3d 615, 631 (6th Cir.2007). Moulton and Hadden submit (1) that the agreement disserves the "public interest" due to the broad scope of the release, (2) that "collusion" between Class Counsel and U.S. Steel tarnished the agreement and (3) that the agreement improperly prioritizes the distribution of the settlement proceeds. We review the district court's contrary conclusions for abuse of discretion. Id. at 625.
The objectors charge that the...
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