F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
DEC 24 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
RUTTER & WILBANKS CORP.;
ELLIOTT A. RIGGS; WILLIAM R.
THURSTON, Trustee; GORDON
TANNER; WALTER K. ARBUCKLE
TRUST; ERIC B. WELLS; KEVIN C.
WELLS; CHARLES R. WIGGINS;
KEN KAMON,
Plaintiffs - Appellees,
v. No. 02-1220
SHELL OIL COMPANY; SHELL
WESTERN E&P, INC.; MOBIL OIL
CORPORATION; MOBIL
PRODUCING TEXAS & NEW
MEXICO, INC.; MOBIL
EXPLORATION & PRODUCING,
U.S., INC.; EXXON MOBIL, INC.;
CORTEZ PIPELINE COMPANY, a
partnership; SHELL CO 2 COMPANY,
LTD., a Texas limited partnership;
KINDER MORGAN CO 2 COMPANY,
a Texas limited partnership,
Defendants - Appellees,
W. M. BRELSFORD; JUDITH
WALKER FUNK; REED GILMORE
and W. H. GILMORE, JR., in their
representative capacities as co-
executors of the Estate of W. H.
Gilmore, Sr. and Dorothy R. Gilmore;
PEGGY B. STUART; ANTELOPE
ENERGY CO., LLC; ANTELOPE
PRODUCTION CO.; WILLIAM G.
KEMP and MARIE J. BENCH, in their
representative capacities as co-trustees
of the Bernard M. Bench Family Trust,
Objectors - Appellants.
MARGARET ANN AINSWORTH;
CHARLES M. McAFEE &
COMPANY; DOROTHY GAIL
CHAPPELL; JOHN LARRY CLARK;
NELDA LEE BARLOW; TROY M.
OLIVER; SHORLENE OLIVER;
POVERTY POINT PROPERTIES,
L.P.; JOHN H. MILLER; DEE No. 02-1221
RENAY; HAZEL J. NEELY; INGRID
JOANN HARTLEY; OLIVIA
CARSON, LLC; INA F. GRAY;
BARBARA E. GLAZNER; JOHN H.
GLAZNER; CLARA CUNDIFF;
ESTATE OF VELMA LOUISE
HENDERSON; LOUIS M. GRAY;
KIP E. MAKEEVER; EDITH
DELIGHT JAMES; LAURA H.
KENNEDY; CHARLES R. WIGGINS;
ELVA GORSUCH; KEN KAMON;
JERRY CHAFFIN; DOROTHY
CHAFFIN; JOHNNIE E. DURAN;
VICTOR DURAN; LeROY OLIVER;
J. ELLEN OLIVER; WANDA
HEATHMAN; IDENE MINCHIN;
ERIC B. WELLS; KEVIN C. WELLS;
WOOD OIL COMPANY,
Plaintiffs - Appellees,
v.
SHELL OIL COMPANY; SHELL
WESTERN E&P, INC.; MOBIL OIL
CORPORATION; MOBIL
PRODUCING TEXAS & NEW
MEXICO, INC.; MOBIL
EXPLORATION & PRODUCING
U.S., INC.; EXXON MOBIL, INC.;
CORTEZ PIPELINE COMPANY, a
partnership; SHELL CO 2 COMPANY,
LTD., a Texas limited partnership;
KINDER MORGAN CO 2 COMPANY,
a Texas limited partnership,
Defendants - Appellees,
BRUCE TEFFT; LUCINDA DAVIS;
CHARLES BUTLER,
Objectors - Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. NOS. 00-Z-1854 and 00-Z-1856)
Gary J. Cruciani, McKool Smith, P.C., Dallas, Texas (Jean E. Dubofsky, Jean E.
Dubofsky, P.C., Boulder, Colorado, and Dean Neuwirth, Burke & Neuwirth, P.C.,
with him on the briefs) for Objectors - Appellants.
Marie Roach Yeates, Vinson & Elkins, L.L.P., Houston, Texas (Andrew
McCollam III, Gwen J. Samora, Vinson & Elkins, L.L.P., Houston, Texas; Kent
Sullivan, Stinson Morrison Hecker LLP, Kansas City, Missouri; Phillip D. Barber,
Phillip D. Barber P.C., Denver, Colorado; Shannon H. Ratliff, Akin Gump Strauss
Hauer & Feld, LLP, Austin, Texas; Robert E. Youle, Brian G. Eberle, Sherman &
Howard, L.L.C., Denver, Colorado; John F. Shepherd, Holland & Hart L.L.P.,
Denver, Colorado, with her on the briefs) for Defendants - Appellees.
John M. Cogswell, Buena Vista, Colorado and Michael J. Heaphy, Denver,
Colorado, submitted a brief on behalf of Plaintiffs - Appellees.
Before TACHA, ANDERSON, and EBEL, Circuit Judges.
ANDERSON, Circuit Judge.
This appeal arises from the district court’s approval of a $70 million class
action settlement of four related cases involving the production of carbon dioxide
(CO 2) contained within the McElmo Dome Unit in Colorado. Appellants are
eleven objectors (“Objectors”) who assert interests in several small royalty and
overriding royalty interests in the McElmo Dome Unit, and who object to the
settlement. 1
1
Objectors are members of only two of the three class actions involved in
this case and purport to appeal the settlement only as it relates to those two
classes. Plaintiffs have filed a Motion to Partially Dismiss this appeal on the
ground that Objectors are not class representatives, have made no effort to
achieve that status, and therefore do not represent the class members in those two
cases and can only object to the settlement as it affects their own individual
interests. Plaintiffs seek dismissal of the appeals as to all class members other
than Objectors because, inasmuch as the settlement agreement provides that there
shall be no distributions as long as there are appeals pending, the pendency of
Objectors’ appeals prevents any distribution.
While we are sympathetic to Plaintiffs’ plight, we can see no practical way
to separate Objectors’ individual interests from those of the other class members
without upsetting the entire settlement fund. Moreover, in Devlin v. Scardelletti,
122 S. Ct. 2005 (2002), in which the Supreme Court held that nonnamed non-
intervening class members objecting to the approval of a settlement may appeal
that approval even though they were not permitted to intervene, the Court noted
that such an objector “will only be allowed to appeal that aspect of the District
(continued...)
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For the reasons that follow, we affirm the district court’s approval of the
settlement.
BACKGROUND
The first of the four related actions was filed in October 1996 as a
purported class action on behalf of a coalition (“Coalition”) of more than seventy
McElmo Dome interest owners against various Shell Oil Company and Mobil Oil
Company entities and the Cortez Pipeline Company (collectively “Defendants”).
CO 2 Claims Coalition v. Shell Oil Co., No. 96-Z-2451 (D. Colo. filed Oct. 22,
1996). The Coalition’s claims generally were for damages and for future relief
caused by the wrongful pricing by Defendants of CO 2 that was transferred through
the Cortez Pipeline to oilfields in West Texas where Defendants used it to
enhance oil production from older oilfields. After class certification was denied
on two separate occasions because the court determined that the alleged class
members’ interests were too divergent to warrant class certification, the Coalition
case proceeded as an individual (non-class) action.
1
(...continued)
Court’s order that affects him.” Id. at 2013, 2010. The Court described that
“aspect,” however, as “the District Court’s decision to disregard his objections.”
Id. at 2010. Objectors’ objections were directed at the entire settlement. We
therefore deny Plaintiffs’ motion to partially dismiss the appeals.
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Subsequently, in September 2000, three class actions were filed
representing the three subgroups of interest holders in the McElmo Dome Unit,
royalty interest owners (“RIOs”), the overriding royalty interest owners
(“ORIOs”), and the small share working interest owners (“SSWIOs”). The three
class actions are Ainsworth v. Shell Oil Co., No. 00-Z-1856 (D. Colo. filed Sept.
22, 2000) (on behalf of the McElmo Dome RIOs; Rutter & Wilbanks Corp. v.
Shell Oil Co., No. 00-Z-1854 (D. Colo. filed Sept. 22, 2000) (on behalf of
McElmo Dome ORIOs); and Watson v. Shell Oil Co., No. 00-Z-1855 (D. Colo.
filed Sept. 22, 2000) (on behalf of the SSWIOs). The proposed class
representative for each action was alleged to be a holder of the specific type of
interest involved in the action, and represented similarly situated unnamed class
members. The claims asserted were largely identical to those claims asserted in
the CO 2 Claims Coalition action.
Objectors’ counsel, Gary Cruciani, is the lead counsel in two competing
class actions against the Defendants filed on behalf of certain McElmo Dome
ORIOs and RIOs in the probate court of Denton County, Texas: Shores v. Mobil
Oil Corp., No. GC-99-01184 (Denton County Prob. Ct. filed Dec. 22, 1999) (on
behalf of ORIOs); First State Bank of Denton v. Mobil Oil Corp., No. 8552-01
(Denton County Prob. Ct. filed March 2001) (on behalf of RIOs).
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By the summer of 2001, the CO 2 Claims case was nearing trial, after
extensive discovery and other pretrial proceedings. After sporadic mediation
efforts, at the encouragement of the district court, in August 2001, the Colorado
parties pursued mediation under the guidance of former Colorado Supreme Court
Justice Howard Kirshbaum. After more than seven weeks of negotiation, the
parties agreed to and signed a settlement of all four actions (The CO 2 Claims
Coalition action and the three class actions) on September 24, 2001. They also
filed a joint motion for preliminary approval of the settlement.
The basic terms of the settlement were as follows: defendants agreed to
pay almost $52.9 million in cash, with 8% interest from August 21, 2001, until
the final payment, the actual sum to be adjusted up or down based upon the
number of actual subscribers to the settlement; defendants agreed to pay future
relief of various sorts, which future relief the district court determined had a
present value of $22.5 million; and the actual allocation of the settlement funds
was to be determined by the district court. As finally adjusted, the settlement
fund was $50,430,308.00. The settlement essentially required a minimum of 90%
participation. After opt-outs, the final subscription rate to the settlement was as
follows: 99.7869% of the RIOs; 87.5882% of the ORIOs; and 99.9996% of the
SSWIOs. In total, the subscription percentage was 96.0081%. Objectors have not
opted out of the Colorado settlement.
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Meanwhile, on August 30, 2001, two of the Objectors (two of the Texas
class representatives) acting on behalf of a named plaintiff in each of the two
competing Texas actions, filed motions to intervene in the Colorado proceedings
in order to object to the upcoming settlement. After the Plaintiffs in the Colorado
proceedings had filed various motions, including the motion for preliminary
approval of the class action settlement on behalf of the three class actions (Rutter,
Ainsworth, and Watson) and a motion to appoint a fairness expert to review the
fairness of the overall settlement, including any allocation as determined by the
court, the district court held a status conference on October 1, 2001. After
hearing from the two Objectors’ counsel at the October 1 status conference, the
district court established a briefing schedule on Objectors’ motion to intervene.
Accordingly, Objectors appeared and argued at an October 26 hearing on
their motion to intervene, at the conclusion of which the district court denied the
motions to intervene, “primarily . . . on timeliness.” App. Vol. XV, tab 134 at
5010. Then, a hearing on preliminary settlement approval took place on
November 14. The court noted that although it was not permitting the Objectors
to formally intervene, it would permit them to file amicus briefs. On December 6,
the court signed the order conditionally certifying the class, preliminarily
approving the settlement, and formally appointing James Lyons as the fairness
expert. Mr. Lyons was specifically directed to address the following matters:
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(1) the fairness, reasonableness, and adequacy of the Settlement
Agreement as to the class members; (2) the fairness of Plaintiffs’
proposed allocation of the Settlement Fund; (3) the fairness of
Plaintiffs’ claims for payment of costs and attorneys’ fees from the
Settlement Fund; (4) the fairness of Plaintiffs’ proposed bonus
allocation to the class representatives; and (5) other matters in the
contemplation of the Court.
Lyons Aff. at ¶ 1 n.1, App. Vol. XII, tab 35 at 4125.
On December 14, a hearing on preliminary allocation was held, at which
Objectors’ counsel, Mr. Cruciani, presented his objections to the proposed
allocation, and the court ensured that Mr. Cruciani was able to express his
concerns to the fairness expert, Mr. Lyons.
On January 25, 2002, Objectors filed a 57-page brief objecting to the
settlement, including affidavits and exhibits. They also filed motions to intervene
for the limited purpose of objecting to the proposed class settlement. 2 They
2
As indicated, supra, the Supreme Court has recently ruled that a class
member who objects to a class settlement need not intervene in the district court
in order to have standing to appeal the district court’s approval of the settlement.
Devlin, 122 S. Ct. at 2013. We note that one court has held that Devlin only
applies to mandatory class settlements, where class members have no option to
opt out. See Ballard v. Advance America, 79 S.W. 3d 835, 837 (Ark. 2002); see
also In re: Gen. Am. Life Ins. Co. Sales Practice Litig., Lewis & Ellis, Inc. v.
Gen. Am. Life Ins. Co., 302 F.3d 799, 800 (8th Cir. 2002) (noting Ballard and
stating “we believe the limited reading of Devlin has considerable merit,” but
avoiding deciding the issue). Were we to similarly narrow Devlin’s application,
this entire appeal could be dismissed because Objectors did have the right to opt
out of the settlement.
However, as Devlin makes clear, the issue of whether a non-intervening
unnamed class member may challenge the fairness of the settlement “does not
(continued...)
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objected on numerous grounds, including the total amount of the settlement, its
resolution of the “no transportation” claim, 3 the allocation of the settlement,
alleged conflicts of interest by Plaintiffs’ counsel, and alleged “collusion” in the
settlement negotiations. In his Affidavit concerning the proposed class action
settlement, Mr. Lyons stated that he “had various and extensive discussions with
counsel for all parties, including counsel for Objectors.” Lyons Aff. ¶ 1, App.
Vol. XII, tab 35 at 4125.
In February 2002, Objectors moved to take expedited discovery and sought
to depose everyone involved in the settlement, which was denied. They also
requested a status conference to discuss whether they would be allowed to present
live testimony at the final fairness hearing scheduled for April 8, 2002. There
2
(...continued)
implicate the jurisdiction of the courts under Article III of the constitution,” nor
does it “raise the sorts of concerns that are ordinarily addressed as a matter of
prudential standing.” Devlin, 122 S. Ct. at 2009. We therefore elect to leave the
scope of Devlin to another day, and proceed to the merits of this case, particularly
in view of the fact that the parties do not discuss that argument and because the
result of our decision is the same (unfavorable to Objectors).
3
In brief, the “no transportation” claim involved a dispute as to who should
have borne the cost of transporting the CO 2 to its ultimate destination in West
Texas. The Objectors assert that the claim, which they included among their
claims in the Texas cases, is worth up to $200 million. The Colorado cases did
not include such a claim, and it is released by the settlement agreement. The
fairness expert, along with Plaintiffs and Defendants, argue that because of many
uncertainties regarding the viability of such a claim, it would be worth, if
anything, far less than $200 million. The “no transportation” claim, which is
based on several different theories, has not thus far succeeded in the Texas cases.
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was apparently a status conference held on February 11, 2002, which was not
transcribed, and in which Objectors again requested permission to present live
testimony at the final fairness hearing. The court invited briefs on the issue.
Objectors then filed a motion to present live testimony, which the district court
denied, stating:
The Court, having presided over this entire matter for almost six
years, is familiar with the case, and all elements thereof. The
objectors have been afforded procedural protections. They have
received notice, despite initial inefficiencies, and have alerted the
Court to their concerns over this settlement via voluminous written
material, exhibits, and affidavits. They have participated in this case
since their intervention motions were filed, and have had access to
significant discovery in this matter and the Texas cases. Under these
circumstances . . . objectors’ motion for live testimony will be
denied.
Order at 3, App. Vol. XI, tab 104 at 3772.
However, the court did state that Objectors “may file additional written
proffers and/or affidavits not to exceed five pages each, on or before April 3,
2002,” and it stated that they “may file with the Court suggested questions to be
posed to Mr. Lyons at the Fairness Hearing, which the Court may or may not ask,
on or before April 4, 2002.” Id. at 3772-3773. At Objectors’ request, those
deadlines were extended to April 5, 2002, with written submissions not to exceed
ten pages, although Objectors were directed they “may not file affidavits and/or
proffers by persons who previously have filed similar papers with the Court.”
Minute Order, App. Vol. XII, tab 108, 109. The court also denied Objectors’
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motions to intervene for the limited purpose of objecting to the proposed
settlement.
On April 5, Objectors filed written proffers of the live testimony they had
hoped to present, exhibits, written questions for Mr. Lyons, and a motion for
leave to reply to the parties’ responses to their objections. Additional materials
Objectors proffered on the day of the hearing, April 8, were not considered by the
court.
At the April 8 final fairness hearing, counsel for Plaintiffs, Defendants, and
Objectors were present and were allowed to argue. Additionally, Mr. Lyons
testified as to his opinion of the fairness and reasonableness of the settlement.
The district court repeatedly reminded all present that it was familiar with the
case and had carefully considered all arguments, specifically including Objectors’
arguments. Indeed, the judge stated, “[i]n light of the fact that the parties are
settling or are attempting to settle this case, I am benefitted by the objectors’
position in bringing a certain adversarial element back into the proceedings. This
has caused an examination of the issues raised.” Transcript of Settlement Hr’g,
App. Vol. XVI, tab 139 at 5227. The district court accordingly gave final
approval of the settlement at the conclusion of the April 8 hearing, and, on May 6,
2002, entered final judgments granting class certification, giving final approval of
the settlement, and dismissing Plaintiffs’ claims with prejudice. It then entered
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findings of fact and conclusions of law which specifically addressed Objectors’
arguments, ruling against them and concluding that the settlement was fair,
reasonable, and adequate.
Objectors brought this appeal, arguing: (1) the district court denied them
due process by refusing to permit them to present live testimony in the final
fairness hearing and denying them the right to file rebuttal affidavits and to cross-
examine the fairness expert; (2) Plaintiffs’ counsel failed to adequately represent
the class and had conflicts of interest which rendered the settlement unfair and
unreasonable; (3) the settlement itself was not fair and reasonable; and (4) the
district court erred in failing to find that the entire settlement agreement was a
collusive “reverse auction.”
DISCUSSION
“Due process issues, which call for legal conclusions, are subject to de
novo review.” United States v. Clark, 84 F.3d 378, 381 (10th Cir. 1996). By
contrast, “[w]e review the court’s approval of the settlement agreement for an
abuse of discretion.” United States v. Hardage, 982 F.2d 1491, 1495 (10th Cir.
1993); see also Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)
(noting that the district court’s “decision to approve or reject a settlement is
committed to the sound discretion of the trial judge because he is exposed to the
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litigants, and their strategies, positions, and proof”). Any factual findings we
review under the clearly erroneous standard. Fed. R. Civ. P. 52(a). “In reviewing
a court’s determination for abuse of discretion, we will not disturb the
determination absent a distinct showing it was based on a clearly erroneous
finding of fact or an erroneous conclusion of law or manifests a clear error of
judgment.” Cartier v. Jackson, 59 F.3d 1046, 1048 (10th Cir. 1995).
I. Due Process Claim
Objectors argue their due process rights were violated by the district court’s
refusal to let them present live testimony in support of their objections at the final
fairness hearing. They further argue the district court compounded that error by
not allowing Objectors to present rebuttal affidavits or cross-examine Mr. Lyons,
the fairness expert.
“‘The fundamental requirement of due process is the opportunity to be
heard at a meaningful time and in a meaningful manner.’” Kowalczyk v. INS,
245 F.3d 1143, 1147 (10th Cir. 2001) (quoting Mathews v. Eldridge, 424 U.S.
319, 333 (1976)); Jones v. Nuclear Pharm., Inc., 741 F.2d 322, 325 (10th Cir.
1984) (“The essence of procedural due process is that the parties be given notice
and opportunity for a hearing.”). As we held in Jones, “[a]n objecting
shareholder is not entitled, as a matter of right, to an evidentiary hearing during a
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settlement hearing.” Jones, 741 F.2d at 325. Objectors attempt to distinguish
Jones by arguing that the objector in that case “had complete access to
discovery.” Id. Our review of the record in this case fully supports the district
court’s conclusion that Objectors in this case had adequate discovery and
opportunity to be heard:
[Objectors] have received notice, despite initial inefficiencies, and
have alerted the Court to their concerns over this settlement via
voluminous written materials, exhibits, and affidavits. They have
participated in this case since their intervention motions were filed,
and have had access to significant discovery in this matter and the
Texas cases.
Order at 3, App. Vol. XI, tab 104 at 3772. “The universal rule of due process is
fairness; the trial court afforded all parties to the settlement, including [objector],
such fairness.” Jones, 741 F.2d at 325.
Similarly, we perceive no additional due process violation because the
district court, shortly before the final fairness hearing, refused to permit Objectors
to file rebuttal affidavits by parties who had already filed affidavits, and by its
refusal to permit cross-examination of the fairness expert. 4 “Although the right to
be heard is an integral part of due process, an individual entitled to such process
4
As Plaintiffs and Defendants point out, Objectors had ample time to file
rebuttal affidavits. The refusal about which they complain involves the decision
five days before the final fairness hearing to not permit Objectors to file
affidavits from those who had previously filed “similar” affidavits.
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is not entitled to dictate to the court the precise manner in which he is to be
heard.” Id. Objectors were afforded adequate due process.
II. Adequacy of Representation and Conflicts of Interest
Rule 23(a) demands that “the representative parties will fairly and
adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).
“Resolution of two questions determines legal adequacy: (1) do the named
plaintiffs and their counsel have any conflicts of interest with other class
members and (2) will the named plaintiffs and their counsel prosecute the action
vigorously on behalf of the class?” Hanson, 150 F.3d at 1020; see also Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 626 n.20 (1997) (“The adequacy heading
also factors in competency and conflicts of class counsel.”).
Objectors argue the district court abused its discretion in certifying the
settlement classes, because the class representatives, and Plaintiffs’ counsel,
failed to adequately represent the classes and/or suffered conflicts of interest.
Objectors particularly focus on Plaintiffs’ counsel, alleging “numerous conflicts
of interest.” Appellants’ Op. Br. at 28. The district court carefully examined this
argument, and concluded “the Court finds that Plaintiffs’ Counsel has vigorously
and competently represented all class members.” Findings of Fact and
Conclusions of Law at 5-6, App. Vol. XV, tab 131 at 4786-87. Indeed, as
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Plaintiffs point out, Objectors fail to demonstrate why, given the fact that the
court, not the parties, determined the allocation of the settlement between the
various subgroups, any alleged conflict between those subgroups would be
magnified or exacerbated by the fact that Plaintiffs’ counsel represented all the
groups. Rather, that situation would motivate Plaintiffs’ counsel to seek the
largest overall award possible.
Further, as Defendants point out, each subgroup had its own class
representative during settlement negotiations, and the fairness expert spent
considerable time reviewing the details of the settlement and the allocation,
including recommending some modifications, which the district court accepted.
See Amchem Prods., Inc., 521 U.S. 591, 627 (1997) (noting that a settlement
needs “structural assurance of fair and adequate representation for the diverse
groups and individuals affected”). Additionally, Objectors themselves and their
counsel argued strenuously on behalf of the RIOs and ORIOs, the two subgroups
involved in the Texas cases. See Gottlieb v. Wiles, 11 F.3d 1004, 1008 n.4 (10th
Cir. 1993), overruled in part on other grounds, Devlin v. Scardelletti, 122 S. Ct.
2005 (2002) (noting that any claim of inadequacy of representation “was cured by
the [objectors’] active participation in the Rule 23(e) settlement approval hearing
and by the district court’s explicit addressing of the [objectors’] objections in its
order approving settlement.”). Given the district court’s familiarity with the case,
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we perceive no abuse of discretion in its conclusion that “the adequacy
requirement of Rule 23(a)(1) is satisfied in every respect and that no disabling
conflicts exist here.” Id. at 6.
III. Approval of Settlement as Fair and Reasonable
We have noted four factors to be considered in assessing whether a
proposed settlement is fair, reasonable and adequate:
(1) whether the proposed settlement was fairly and honestly
negotiated;
(2) whether serious questions of law and fact exist, placing the
ultimate outcome of the litigation in doubt;
(3) whether the value of an immediate recovery outweighs the
mere possibility of future relief after protracted and expensive
litigation; and
(4) the judgment of the parties that the settlement is fair and
reasonable.
Gottlieb, 11 F.3d at 1014; see also Jones, 741 F.2d at 324.
Objectors make a variety of arguments as to why the settlement was unfair
and unreasonable. They particularly argue that the allocation of the settlement
fund among the various subgroups is unfair. They also repeatedly allege that the
settlement was the product of collusion, although they point to little concrete
evidence in support of this allegation. 5 The district court carefully went through
5
For instance, they assert that, because Defendants defeated Plaintiffs’ two
prior motions for class certification in the CO 2 Claims Coalition case, but
(continued...)
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each of the four factors listed in Gottlieb and Jones and considered all of
Objectors’ arguments. The court thoroughly considered Objector’s allocation
arguments, and their arguments concerning purported collusion, and solicited
extensive input from the fairness expert. We conclude that the district court did
not abuse its discretion in determining that the settlement, from which an
extremely small percentage of class members opted out, was fair, reasonable and
adequate, for substantially the reasons stated in the district court’s findings of fact
and conclusions of law.
IV. Reverse Auction Argument
Finally, Objectors argue the district court erred in failing to find that the
settlement agreement was a collusive “reverse auction” designed to undercut the
competing Texas class actions. The district court found that there was no
evidence of collusion, and nothing Objectors direct us to in the record convinces
us that the district court’s finding on that point was clearly erroneous. Moreover,
5
(...continued)
supported class certification in connection with the settlement of that case plus
the three class actions, an inference of collusion between Plaintiffs and
Defendants is warranted. However, as Defendants assert, it was not inconsistent
to oppose class certification in the CO 2 Claims Coalition case, when all types of
interests were involved with no differentiation between the different subgroups,
but to support it when each subgroup was separated into its own class with its
own class representative.
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Objectors have no response to the argument the settling parties make, and with
which the district court agreed, that Objectors reverse auction argument “would
lead to the conclusion that no settlement could ever occur in the circumstances of
parallel or multiple class actions—none of the competing cases could settle
without being accused by another of participating in a ‘collusive reverse
auction.’” Findings of Fact and Conclusions of Law at 20, App. Vol. XV, tab 131
at 4801. Absent some more concrete evidence of collusion than Objector’s
conclusory allegations and inferences, we decline to disturb the district court’s
conclusion that the settlement was not a collusive reverse auction. 6
CONCLUSION
We have carefully reviewed the lengthy record and briefs in this case, and
have fully considered all of Objectors’ arguments. For the foregoing reasons, we
AFFIRM the district court’s judgment.
6
In a short footnote in their brief, Objectors also assert that the district
court erred in awarding excessive attorney’s fees and in failing to follow the
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) factors.
They fail to further develop this argument, and we therefor do not address it.
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Rutter & Wilbanks Corp. v. Shell Oil Co.
Court: Court of Appeals for the Tenth Circuit
Date filed: 2002-12-24
Citations: 314 F.3d 1180
Copy Citations