Shaw v. Toshiba America Information Systems, Inc.
| Decision Date | 28 January 2000 |
| Docket Number | No. 1:99-CV-0120 (TH).,1:99-CV-0120 (TH). |
| Citation | 91 F.Supp.2d 942 |
| Parties | Ethan SHAW, and Clive D. Moon, On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. TOSHIBA AMERICA INFORMATION SYSTEMS, INC., NEC Electronics, Inc., Toshiba Corporation, Toshiba America, Inc., Toshiba America Electronic Components, Inc., and NEC Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Gilbert Irvine Low, Gary Reger, Allen Jones, Jack Carroll, Orgain Bell & Tucker, Beaumont, TX, Wayne Reaud, Mike Jamail, The Reaud Law Firm, Beaumont, TX, Charles Silver, University Law School, Austin, TX, Hubert Oxford, III, Attorney at Law, Beaumont, TX, L. DeWayne Layfield, Attorney at Law, Beaumont, TX, for Ethan Shaw, On behalf of him & all others similarly situated.
Walter Joshua Crawford, Jr., Crawford & Olesen LLP, Beaumont, TX, Reagan Mark Brown, Frank G. Jones, David Jack Levy, Fulbright & Jaworski, Houston, TX, for Toshiba American Information Systems, Inc.
Walter B. Stuart, IV, Allan VanFleet, Erica L. Krennerich, Jason M. Powers, Vinson & Elkins, Houston, TX, Lawrence Louis Germer, Germer & Gertz, Beaumont, TX, for NEC Electronics, Inc.
Jeffrey L. Simpton, Office of The Attorney General, Sacramento, CA, for California, State of.
Michael Rosenblat, Office of the Illinois Attorney General, Chicago, IL, for Illinois, State of.
John Mark Kraus, Assistant Attorney General, Department of Legal Affairs, Tallahassee, FL, for Florida, State of.
Mike Bradford, U.S. Attorney, Beaumont, TX, for United States of America.
Joseph Charles Blanks, Attorney at Law, Doucette, TX, for Laura Bates.
Benjamin E. Baker, Jr., John P. Willis, IV, M. Clay Alspaugh, Hogan Smith & Alspaugh, Birmingham, AL, for Biehl & Company, Inc.
Lawrence Smith, IDOC Stateville C.C., Joliet, IL, pro se.
Dawn L. Phillips-Hertz, Troy, MI, pro se.
Walter Joshua Crawford, Jr., Crawford & Olesen LLP, Beaumont, TX, Reagan Mark Brown, Frank G. Jones, David Jack Levy, Fulbright & Jaworski, Houston, TX, for Toshiba Corporation, Toshiba America, Inc. and Tosbiba America Electronic Components, Inc.
Daniel R. Castro, Watt Castro & Houser, Austin, TX, for Maxtor Corporation.
Charles M. Thompson, Kearney Dee Hutsler, Thompson Hutsler Law Firm, Birmingham, AL, for JT Karney and Southern Network Services, Inc.
Mark Allen Lindow, Lindow & Treat, San Antonio, TX, for Lindow & Treat LLP.
W. Wilson Randall, Susman Godfrey LLP, Houston, TX, for Dana Timaeus and Robert Rose.
Craig Randal Lively, Harris & Lively, Beaumont, TX, Frank H. Tomlinson, Pritchard McCall & Jones, Birmingham, AL, Edward Cochran, Cochran & Cochran, Shaker Heights, OH, for Lindsey F. Tomlinson, Dan Gray, John Glase, Evan Morse and Betsy Melziner.
Brent M. Langdon, Holman & Langdon LLP, Texarkana, TX, Thomas C. Cronin, Robert P. Cummins, Cummins & Cronin, Chicago, IL, for Deborah Cummins and Frank Pedote.
R. Stephen Griffis, Hooper & Griffis, Birmingham, AL, for David Skinner.
Laurence W. Schonbrun, Office of Laurence Schonbrun, Berkeley, CA, for Robert Demyanovich.
William H. Yoes, Law Offices of William H. Yoes, Beaumont, TX, Robert W. Bishop, Pamela G. Wilson, Bishop & Wilson, Louisville, KY, for Peyton T. Talbott, III.
On October 28, 1999, Plaintiff Class Representatives Ethan Shaw and Clive D. Moon informed this Court they had settled their claims against Toshiba America Information Systems, Inc., Toshiba Corporation, Toshiba America, Inc., and Toshiba America Electronic Components, Inc. Accordingly, this Court conditionally certified the settlement class, preliminarily approved the parties' October 25, 1999 Settlement Agreement (the "Settlement Agreement"), and enjoined the pursuit of litigation in other forums addressing the rights and claims before it. In that same order this Court set a hearing for January 19, 2000 (the "Fairness Hearing") on whether to finally approve the parties' October 28, 1999 Settlement Agreement. Now, after the Fairness Hearing, the parties jointly move this Court to approve the approximately $2.1 billion ($2,100,000,000.00) Settlement Agreement along with attorneys' fees in the amount of $147.5 million ($147,500,000.00). It will.
On March 5, 1999, Ethan Shaw and Clive D. Moon (collectively referred to as "Plaintiffs") filed a class-action complaint on behalf of themselves and all others similarly situated against Toshiba America Information Systems, Inc. ("Toshiba") and NEC Electronics, Inc.2 Plaintiffs alleged Toshiba and NEC designed, manufactured, created, distributed, sold, transmitted, and marketed faulty floppy-diskette controllers ("FDC's") containing allegedly defective microcode.3 On July 15, 1999, Toshiba and NEC filed their summary judgment motions arguing, inter alia, the Plaintiffs' claims could not be brought under Title 18 U.S.C. § 1030, the "Computer Fraud and Abuse Act." On August 20, 1999, this Court referred this case to the Honorable Thomas A. Thomas for mediation. Then, on August 24, 1999, this Court ordered the parties to resume mediation. Meanwhile, after extensive briefing by the parties, this Court denied Toshiba's and NEC's summary judgment motions on August 26, 1999. See Order Denying Motion for Partial Summary Judgment [98]; Order Denying Motions for Partial Summary Judgment [99]. Apparently, the Plaintiffs and Toshiba continued their settlement discussions and, eventually, reached an agreement. On October 28, 1999, the Plaintiffs and Toshiba informed this Court they had settled this lawsuit. See Joint Motion for Preliminary Approval of Settlement Agreement, Temporary Class Certification, and Order Protecting Jurisdiction of Court [144]. Accordingly, this Court conditionally certified the settlement class, preliminarily approved the parties' Settlement Agreement, and enjoined the pursuit of litigation in other forums addressing the rights and claims before it. See Order Conditionally Certifying Class, Preliminarily Approving Settlement and Settlement Agreement and Protecting This Court's Jurisdiction [151].
Under the terms of the Settlement Agreement Toshiba agrees to pay approximately $2.1 billion ($2,100,000,000.00) in the form of cash remedies, warranty remedies, hardware replacements, software patches, and coupons all designed to address the allegedly defective FDC's in Toshiba's computers and compensate their respective owners. In return, Toshiba admits no liability and avoids the further expense and inconvenience of complex litigation. In short, class members get their computers overhauled and Toshiba gets closure.
However, this Court must make several determinations before any of this can happen. First, this Court must find the proposed class satisfies the requirements of Federal Rule of Civil Procedure 23. It does. Second, this Court must find the approximately $2.1 billion ($2,100,000,000.00) settlement is "fair, adequate, and reasonable." It is. Finally, this Court must find the $147.5 million ($147,500,000.00) in attorneys' fees are "fair, just, and reasonable." They are.
Federal Rule of Civil Procedure 23 says, in part:
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class ...
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
... (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other methods for the fair and efficient adjudication of the controversy.
FED.R.CIV.P. 23. This is the federal rule relating to class actions-specifically, the "23(b)(3) class action."4 But where did class actions-these representative lawsuits-come from? So glad you asked ...
Although it appears that the modern-day class action was born probably some time during the Middle Ages, there are reports of ecclesiastical proceedings against numerous insects and animals dating as early as A.D. 824. See Nicholas Sellers, Criminal Prosecution of Animals (in two parts), 35 THE SHINGLE 179 (Nov. 1972), 36 THE SHINGLE 19 (Jan.1973), p. 18. Apparently, there were two kinds of insect and animal trials in early courts — those brought against individual offenders which had killed humans or committed other crimes, and those brought in the church courts against insects, rodents, or other vermin (in effect, defendant class actions) to cause such creatures to stop their depredations against certain villages or communities. See id. Here's how the latter-type "defendant class actions" would go:
Inhabitants of an area afflicted with locusts, rats, weevils, or other depredators would petition the Church for relief. The offending insects or rodents would be summoned to court, and, upon their inevitable nonappearance, tried in abstentia, and ordered to cease and desist from their wrongful behavior and to depart the area, or to suffer excommunication and church anathemas.
Id. These early "defendant class actions" "date from a very early period: in A.D. 824, against moles in Aosta; in A.D. 864, bees in Worms;5 in A.D. 886 locusts of Romagna; and in the same century, serpents of Aux-les-Bains."6 Id.
The modern-day class action is a representative lawsuit born probably some time during the Middle Ages. In medieval England social relations...
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