The opinion of the court was delivered by: Thomas I. Vanaskie United States District Judge
On July 22, 2008, this Court conducted a hearing on Class Plaintiffs' Motion for Final Approval of Settlement and for Expenses. (Dkt. Entry 377.) The proposed settlement between Class Plaintiffs and two of the Defendants to this antitrust litigation -- UPM-Kymmene Corporation ("UPM") and its wholly-owned subsidiary, Raflatac, Inc. ("Raflatac") -- calls for the Settling Defendants to pay $8.25 million in cash and cooperate with Class Plaintiffs, in exchange for which the Settling Defendants are to be discharged from further liability. No party objected to the proposed settlement at the hearing or prior thereto. At the conclusion of the hearing, the Court expressed its determination that the proposed settlement was "fair, reasonable, and adequate," thus deserving approval. The Court also approved the request of Class Plaintiffs' counsel for payment of $500,000 from the settlement fund to use in paying outstanding and future litigation costs. This Memorandum Opinion memorializes the findings upon which approval of the Settlement was based. Appended to this Memorandum Opinion is the Final Approval Order and Judgment proposed by Class Plaintiffs, which will be adopted by this Court.
This anti-trust litigation began in April of 2003 when several purchasers of self-adhesive labelstock commenced litigation in several different United States District Courts, including the Middle District of Pennsylvania. In November of 2003, the Judicial Panel on Multi-District Litigation issued an Order transferring all related cases to the Middle District of Pennsylvania for coordinated pre-trial proceedings. (Dkt. Entry 1.)
On February 16, 2004, Class Plaintiffs filed an Amended and Consolidated Class Action Complaint, alleging that Defendants Avery Dennison Corporation ("Avery"), Bemis Company, Inc. ("Bemis"),*fn1 Morgan Adhesives Company ("MACtac") (a wholly owned subsidiary of Bemis), Raflatac, and UPM conspired to restrain competition in the United States market for pressure-sensitive labelstock by fixing, maintaining, or stabilizing prices, as well as by allocating market shares. (Dkt. Entry 46.) On April 15, 2004, this Court issued an Order that limited discovery to class certification-related issues, with the explicit reservation that "class-based and merits-based issues may not be mutually exclusive, and discovery on class-based issues is not precluded merely because it overlaps with merits-based issues." (Dkt. Entry 64, at 1.)
Class certification-related discovery was extensive and protracted. In addition, the parties presented comprehensive reports of expert witnesses that included analyses of the labelstock industry and pertinent transactional data.
In January of 2006, this Court granted Class Plaintiffs' motion for leave to file a second amended complaint, (Dkt. Entry 189), as a result of which the proposed Class Period was expanded. A telephonic discovery conference was conducted on January 25, 2006, for purposes of determining the scope of additional discovery in light of the filing of the second amended complaint.
On August 14, 2006, Class Plaintiffs moved for class certification. (Dkt. Entry 244.) Briefing on the motion was completed on February 23, 2007, and oral argument on the class certification motion was held on March 1, 2007. By Memorandum and Order dated November 19, 2007, (Dkt. Entry 335), this Court granted Plaintiffs' motion, certifying the following class:
All persons (excluding governmental entities, Defendants, co-conspirators, other producers of self-adhesive labelstock, and the present and former parents, predecessors, subsidiaries, and affiliates of the foregoing) who purchased paper-based self-adhesive labelstock or film-based self-adhesive labelstock in the United States directly from any of the Defendants, or any present or former parent, subsidiary, or affiliate thereof, at any time during the period from January 1, 1996, to July 25, 2003. The terms "paper-based self-adhesive labelstock" and "film-based self-adhesive labelstock" do not include Avery's FasClear and PRIMAX film products. Nor do those terms include foil and "piggyback" self-adhesive labelstock.
The settlement agreement between Class Plaintiffs, UPM, and Raflatac was executed in November of 2007. As noted above, it calls for the creation of an $8.25 million cash fund, which has already been paid into escrow. In addition, the Settling Defendants have agreed to "proffer all known facts and information potentially relevant to the Class Action, including without limitation those that arguably evidence collusion or agreements between and among producers or potential producers of Self-Adhesive Labelstock in the United States during the Class Period." (Settlement Agreement, Dkt. Entry 338-2, ¶ 51.) The Settling Defendants are also to identify all current and former officers, directors, and employees that they believe may have potentially relevant information, and to meet with counsel for Class Plaintiffs to identify such individuals, make them available for interviews and for testimony in deposition and at trial, and provide declarations and affidavits from such persons relating to the litigation. (Id. ¶¶ 51-52.)
By Order dated April 11, 2008, this Court preliminarily approved the Settlement and authorized the dissemination of notice of the Settlement to the Plaintiff Class. (Dkt. Entry 370.) In addition to approving the plan of notice, this Court's Order scheduled a final approval hearing for July 22, 2008.
On May 2, 2008, the Claims Administrator mailed the approved notice to more than 5,000 direct purchasers of self-adhesive labelstock. In addition, the Summary Notice approved by the Court was published in the June/July issue of Labels and Labeling, a periodical serving the labelstock industry.
As noted above, no party objected to the proposed Settlement. Moreover, only four members of the Plaintiff Class requested to be excluded from the settlement. The purchases of the entities that excluded themselves from the Settlement Class represent a tiny fraction of all purchases.
Class Plaintiffs moved for final approval of the proposed settlement on June 2, 2008. (Dkt. Entry 377.) A hearing was held on July 22, 2008.
In determining whether to approve a proposed settlement of a class action, the Court must assure that adequate notice has been provided to the members of the class. In addition, the Court must find that the settlement "is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2).
A. Adequacy of Notice of the Proposed Settlement
As to the notice requirement, this Court previously determined that the content of the notice was sufficient to apprise class members of the terms of the Settlement Agreement and their rights in relation to the proposed settlement. The method of notice, first-class mail to all members of the class plus a summary of the notice published in a pertinent publication, was also adequate to satisfy the requirements of both the Federal Rules of Civil Procedure and due process. See Zimmer Paper Prods., Inc. v. Berger & Montague, P.C., 758 F.2d 86, 90-93 (3d Cir. 1985).
B. Fairness, Reasonableness, and Adequacy of the Proposed Settlement
Whether to approve a proposed class action settlement is committed to the trial court's discretion. See In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004).
Exercise of this discretion is guided by a number of factors, including (1) the complexity, expense, and probable duration of the litigation; (2) the reaction of the class to the proposed settlement; (3) the stage of the proceeding and the amount of discovery completed; (4) the risk of establishing liability; (5) the risk of establishing damages; (6) the risk of maintaining the class action through trial; (7) the settling defendants' ability to withstand a greater judgment; (8) the range of reasonableness of the settlement amount in light of the best possible recovery; and (9) the range of reasonableness of the settlement amount to a possible recovery in light of the attendant risks of litigation. See Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975). Consideration of these factors compelled this Court to exercise its discretion in favor of approving the proposed partial settlement as fair, reasonable, and adequate.
First, this litigation has already proven to be complex, expensive, and protracted. Merits-based discovery has just begun, and is projected to extend for a considerable period of time. There undoubtedly will be dispositive motions. This factor certainly weighs in favor of approving the proposed settlement. See In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 536-37 (D.N.J. 1997).
Second, the reaction of the class to the proposed settlement favors its approval. No party has objected to the proposed settlement. As Judge DuBois remarked in In re Linerboard Antitrust Litigation, 321 F. Supp. 2d 619, 629 (E.D. Pa. 2004), "[t]his fact strongly militates a finding that the settlement is fair and reasonable." And as Judge Shapiro observed in Fisher Bros. v. Phelps Dodge Industries, Inc., 604 F. Supp. 446, 451 (E.D. Pa. 1985) (quotation omitted), "unanimous approval of the proposed settlement by the class members is entitled to nearly dispositive weight in this court's evaluation of the proposed settlement." Also weighing in favor of approval of the settlement is the fact that the four entities that have excluded themselves from the settlement represent a minuscule amount of total sales to the Class. Thus, the reaction of the Class to the proposed settlement strongly favors approval.
As to the stage of the proceeding and the amount of discovery completed, Class Plaintiffs represent that they have completed extensive discovery, expending in excess of $1 million in costs alone. Although merits-related discovery has just been allowed to proceed, discovery on class-related issues necessarily resulted in the disclosure of information concerning substantive issues. In addition, Class Plaintiffs have conferred with pertinent expert witnesses and have obtained comprehensive analyses of the relevant market. This Court carefully assessed the record compiled during class discovery in determining that class certification was warranted. Plainly, Class Plaintiffs have been able to uncover sufficient information to evaluate the strengths and weaknesses of the claims and defenses in this matter. Thus, this factor also weighs in favor of approving the settlement.
Risks of establishing liability and damages are substantial. Already, one Defendant has been dismissed from this action. In addition, the criminal investigation that likely instigated this antitrust litigation was concluded without the issuance of any indictments. Even if liability is established, damages are not a certainty. Thus, the risk of ...