Paulson v. Dynamic Pet Prods., LLC

• Decision Date: 28 August 2018
• Docket Number: WD 81070
• Citation: 560 S.W.3d 583
• Parties: Khristie Reed PAULSON, et al., Objectors/Appellants, Michael Taylor, et al., Plaintiffs/Respondents, v. DYNAMIC PET PRODUCTS, LLC, et al., Defendants/Respondents.
• Court: Missouri Court of Appeals

560 S.W.3d 583

Khristie Reed PAULSON, et al., Objectors/Appellants,

Michael Taylor, et al., Plaintiffs/Respondents,
v.
DYNAMIC PET PRODUCTS, LLC, et al., Defendants/Respondents.

WD 81070

Missouri Court of Appeals, Western District.

OPINION FILED: August 28, 2018
Application for Transfer to Supreme Court Denied September 25, 2018
Application for Transfer Denied December 4, 2018

Robert A. Horn and Joseph Kronawitter, Kansas City, MO, and Timothy G. Blood, Leslie E. Hurst, and Jennifer L. MacPherson, San Diego, CA, Attorneys for Objectors/Appellants.

Christopher S. Shank, Stephen J. Moore, and David L. Heinemann, Mission Woods, KS, Attorneys for Plaintiffs/Respondents Michael Taylor, Dawn Fortner, and Catherine Gemkow.

Daniel E. Tranen and Jason D. Johnson, Edwardsville, IL, and Steven P. Kuenzel, Washington, MO, Attorneys for Defendants/Respondents Dynamic Pet Products, LLC and Frick’s Meat Products, Inc.

Before Division Four: Karen King Mitchell, Chief Judge, Cynthia L. Martin, Judge, and Jeff Harris, Special Judge

Karen King Mitchell, Chief Judge

Khristie Reed Paulson, Rebecca Brandel, Diane Canutt, Rod Canutt, Crystal Lewis, Rene Lucht, Diane Ortman, Debra Porwoll, Kris Vosburgh, and Stephanie Brown (collectively "Objectors") appeal the entry of a judgment approving a class action settlement between Plaintiffs/Class Representatives Michael Taylor, Dawn Fortner, and Catherine Gemkow (collectively "Plaintiffs")¹ and Defendants Dynamic Pet Products, LLC, and Frick’s Meat Products, Inc. Objectors raise three arguments on appeal: (1) the court erred in approving the settlement on numerous grounds; (2) the court erred in failing to strike and then relying on a statement from the mediator; and (3) the court erred in denying Objectors' motion to intervene. Finding no error, we affirm.

Background²

On May 1, 2015, Objectors filed a nationwide class action lawsuit in the United

560 S.W.3d 587

States District Court for the Southern District of California against Defendants, alleging false and deceptive advertising with respect to Defendants' product, "The Real Ham Bone for Dogs," in violation of state consumer protection laws. On October 5, 2015, Objectors also filed a state court action for injunctive relief on the same grounds in San Diego Superior Court.³

On May 16, 2016, Plaintiffs filed a class action petition in Missouri state court, alleging several violations of the Missouri Merchandising Practices Act (MMPA) by Defendants insofar as the Defendants' product, "The Real Ham Bone for Dogs," falsely advertised that it was safe for dogs but, in fact, was inherently dangerous to dogs, resulting in injury or death.⁴ Defendants filed their answer in the case below on December 1, 2016, denying the allegations and raising thirty-six affirmative defenses. On both February 16, 2017, and March 16, 2017, Plaintiffs and Defendants participated in court-ordered mediation sessions for which John R. Phillips from Husch Blackwell, LLP, served as the mediator. On January 16, 2017, Plaintiffs' counsel invited Objectors' counsel to participate in the mediation sessions in hopes of reaching a global settlement of both the Reed and Taylor cases. Objectors' counsel attended and fully participated in both mediation sessions, wherein both Objectors' and Plaintiffs' counsel jointly proposed a claims-made settlement structure and a reversion of unclaimed funds to Defendants.⁵

As a result of the mediation sessions, the parties in the underlying suit were able to reach an agreement, and on April 4, 2017, Plaintiffs filed an amended petition identifying a nationwide class and a request for preliminary approval of a class action settlement.⁶ Attached to the request was a term sheet for the proposed settlement agreement, a draft claim form, and draft settlement notices.⁷

On April 12, 2017, the court set a hearing date of April 19, 2017, for preliminary approval of the settlement agreement. The next day, Plaintiffs' counsel emailed Objectors' counsel to notify Objectors' counsel of the upcoming hearing. Objectors' counsel did not respond and did not attend the hearing for preliminary approval.

At the preliminary approval hearing, Plaintiffs' counsel advised the court that "Reed counsel had a full and fair opportunity

560 S.W.3d 588

to participate and have a voice in the mediation, both before, during, and after." Plaintiffs' counsel further advised, "I gave the Reed counsel notice of this hearing, Your Honor, so that he would be aware—they would be aware of that and participate if they wished."

Following the hearing, the court issued a preliminary order approving the settlement and setting dates for notice, opt-outs, and objections. On May 5, 2017, Objectors filed a motion to intervene, which was denied by the trial court on June 6, 2017.⁸ In denying the motion to intervene, the court found "that [Objectors] are able to protect their interest in the underlying case without intervention," and "that intervention would create the possibility of undue delay and prejudice to the original parties to the above captioned case." On July 11, 2017, Objectors filed their objections to the settlement agreement and notice of intent to appear at the final settlement approval hearing.⁹

Because Objectors' opposition to the settlement was based, in part, on the allegation that the settlement was the product of collusion, Plaintiffs filed Suggestions in Response to Objections to Settlement, which included, as an attachment, a declaration of Mediator Phillips indicating that the settlement was reached as a result of an arms-length negotiation. While acknowledging that he could not divulge confidential information, Mediator Phillips declared:

I can verify ... that counsel made vigorous and thoughtful presentations and arguments regarding their clients' positions on key issues. The parties were represented by zealous, well-informed, experienced and able counsel from both the Missouri litigation and the California litigation. The settlement was reached through vigorous, arm’s length negotiations during the mediation sessions I conducted as well as prior and subsequent telephone calls and conferences conducted under my mediator authority.

Objectors filed an "Objection to Plaintiffs' and Class Counsel’s Application for an Award of Attorneys' Fees and Expenses and Incentive Awards to Class Representatives," in which they argued that "the declaration submitted by mediator John R. Phillips should be stricken,"

560 S.W.3d 589

implying that it violated Phillips’s duty of impartiality. At the final hearing, however, Objectors did not re-assert their request to strike; accordingly, the court did not rule on the motion.

Following the final approval hearing, wherein the court received argument from Plaintiffs, Defendants, and Objectors, the court issued its "Final Order and Judgment," approving the settlement and dismissing the petition with prejudice.¹⁰ Objectors appeal.

Analysis

Objectors raise three points on appeal. In their first point, they argue that the trial court erred in entering judgment and approving the settlement because the settlement constituted a "reverse auction," had due process defects, and was unfair, inadequate, and unreasonable to absent class members. In their second point, they argue that the trial court erred in both failing to strike and relying on the declaration of Mediator Phillips because the declaration constituted a violation of Phillips’s duty to remain impartial. And, in their third point, Objectors argue that the trial court erred in denying their motion to intervene. For ease of analysis, we address these points in reverse order.

A. Intervention was unnecessary.

Because Objectors' third point addresses their standing to appeal, we will discuss it first. To begin, Objectors have failed to include either the actual motion to intervene or any of the responsive filings in the record on appeal. Accordingly, we cannot discern whether they sought intervention as a matter of right or by permission. This is important, as it affects our standard of review. "Intervention is permitted by Rule 52.12(a) as a matter of right or by Rule 52.12(b), which provides for intervention by permission of the court." Johnson v. State , 366 S.W.3d 11, 20 (Mo. banc 2012). "A trial court’s decision regarding intervention as a matter of right will be affirmed unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Id. But we "review[ ] permissive intervention for abuse of discretion." Id. Accordingly, we could simply dismiss this point for violation of Rule 81.12(a). But, under either standard of review, Objectors' claim is meritless.

According to Objectors' brief, their purpose in seeking intervention below was to preserve their ability to appeal any adverse judgment: "Missouri law is unclear as to whether absent class members have standing to appeal based on their objections, or whether intervention is required. To [en]sure their standing, [Objectors] both filed objections to final approval of the settlement and a motion to intervene...." (Internal citations omitted.)...