Opinion
Misc. No. 99-0197 (TFH), MDL 1285.
November 30, 2004
MEMORANDUM OPINION
Pending before the Court is Class Plaintiffs' Motion for Preliminary Approval of Settlement Between Class Plaintiffs and Defendants Mitsui Co., Ltd.; Mitsui Co. (U.S.A.), Inc.; and Bioproducts, Inc. ("Mot. for Approval"). After careful consideration of that motion, Cargill and Tyson Plaintiffs' Objection Memorandum ("Mot. to Intervene"), Reply Memorandum in Support of Class Plaintiffs' Motion ("Approval Reply"), Reply ofCargill and Tyson Plaintiffs ("Intervention Reply"), State Indirect Purchaser Plaintiffs' Motion to Intervene ("State Purchasers Mot. to Intervene"), the oral argument held on December 17, 2003, and the entire record herein, the Court will grant the motion for preliminary approval of the settlement agreement and deny any outstanding motions to intervene.
I. BACKGROUND
Unless otherwise noted, the following background information was obtained from the Motion for Approval at 1-6.
Antitrust claims pending in multiple federal jurisdictions against national and international vitamin industry defendants were consolidated before this Court. Eight partial class settlements have been approved by this Court and have yielded substantial recovery for class plaintiffs in these proceedings. The settlement at issue is between a class of choline chloride purchasers ("Class Plaintiffs") and the Defendants Mitsui Co., Ltd.; Mitsui Co. (U.S.A.), Inc.; and Bioproducts, Incorporated ("Mitsui Defendants").
Class Plaintiffs consist of "[a]ll persons or entities who directly purchased choline chloride from any defendant or their co-conspirators from January 1, 1988 through September 30, 1998. Excluded from the class are all governmental entities, defendants, and other manufacturers of vitamins, vitamin premixes and bulk vitamin products, and their respective subsidiaries and affiliates." In re Vitamins Antitrust Litig., 209 F.R.D. 251, 256 (D.D.C. 2002).
On August 3, 1999, Class Counsel filed a complaint specifically concerning choline chloride (vitamin B4). Prior to trial, Mitsui Defendants had filed a motion for summary judgment pursuant to Fed.R.Civ.P. 56(b) on August 6, 2002. The Court denied summary judgment at that time. Class Plaintiffs' claims against Mitsui Defendants reached a jury trial before this Court, and Mitsui Defendants moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50 at the close of Class Plaintiffs' evidence. The Court reserved judgment on that motion, and again reserved judgment when Mitsui Defendants renewed the motion at the close of all evidence. On June 13, 2003, the jury returned a special verdict finding that Mitsui Defendants "knowingly participated in a combination or conspiracy to fix, raise, maintain, or stabilize the price of choline chloride." Mot. to Intervene at 1. The jury further assessed $49,539,234 in damages to Class Plaintiffs. With Mitsui Defendants' Rule 50 motion still pending, this Court has not yet issued a final judgment in the case.
This complaint was filed by Animal Science Products, Inc. on behalf of Class Plaintiffs, and this class was certified by this Court on February 25, 2002.
Mitsui Defendants state that they intend to move for a new trial pursuant to Fed.R.Civ.P. 59 in the absence of a settlement agreement in this case.
Following the special jury verdict, Class Plaintiffs and Mitsui Defendants reached a settlement agreement on October 14, 2003 ("Settlement"). The Settlement primarily calls for Mitsui Defendants to pay Class Plaintiffs $53 million in exchange for Class Plaintiffs' release of all claims against Mitsui Defendants. These defendants deposited that sum in escrow on October 14, 2003. The Settlement is contingent upon this Court vacating the June 13, 2003 special jury verdict as to Mitsui Defendants, and dismissing all Class Plaintiffs' claims with prejudice. Pending before this Court is Class Plaintiffs' motion for preliminary approval of the Settlement, which was filed on October 31, 2003.
The vacatur provision of the Settlement is opposed by an independent group of choline chloride plaintiffs with claims pending in other courts. The special jury verdict would potentially benefit these plaintiffs by enabling them to collaterally estop Mitsui Defendants from litigating similar issues in separate proceedings. The plaintiffs in Cargill andTyson initially moved to intervene and filed an objection to the Settlement's vacatur provision on November 21, 2003, but ultimately withdrew their objection upon reaching their own agreement with Mitsui Defendants. Subsequently, however, a group of indirect vitamin purchasers with cases pending in several state courts ("State Indirect Purchasers") filed a motion to intervene on February 13, 2004. State Purchasers Mot. to Intervene at 3. The State Indirect Purchasers have adopted the arguments of the plaintiffs from Cargill and Tyson for the purpose of objecting to the Settlement's vacatur provision. Id. at 1.
State Indirect Purchasers currently have actions pending in state court in Minnesota, Iowa, and Wisconsin.
II. ANALYSIS
Class Plaintiffs request that this Court grant preliminary approval of the Settlement and stay the proceedings against Mitsui Defendants. State Indirect Purchasers request permission to intervene for the limited purpose of objecting to the Settlement's vacatur provision. In determining whether to grant preliminary approval of a settlement, the Court must determine whether "the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preliminary preferential treatment to class representatives or segments of the class, and falls within the range of possible [judicial] approval." In re Vitamins Antitrust Litig., No. 99-197(TFH), 1999 WL 1335318, at *5 (D.D.C. Nov. 23, 1999) (citation omitted) (alternation in original).
Nothing suggests that the Settlement resulted from improper collusion, and State Indirect Purchasers make no allegation of preferential treatment among segments of the class. Further, the Court is satisfied that the Settlement represents the product of arms' length negotiations between experienced counsel for both Class Plaintiffs and Mitsui Defendants. Thus, approval of the Settlement depends on whether it falls within the range of possible approval, which turns on the propriety of the vacatur provision that the Settlement ultimately is conditioned upon.
A. State Indirect Purchasers' Request to Intervene
State Indirect Purchasers move to intervene in this litigation for the limited purpose of objecting to the vacatur provision. They contend that they may intervene as of right pursuant to Fed.R.Civ.P. 24(a) or, in the alternative, that this Court should exercise its discretion to permit their intervention pursuant to Fed.R.Civ.P. 24(b). The Court denies the motion to intervene on either ground.
1. Intervention as of Right
State Indirect Purchasers, as non-parties to the Settlement here, move to intervene as of right for the purpose of objecting to the Settlement. Rule 24(a) provides for intervention "when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest." Fed.R.Civ.P. 24(a). However, this Circuit recognizes the general rule that non-parties to a settlement agreement lack standing to intervene for the purpose of objecting to the settlement. Mayfield v. Barr, 985 F.2d 1090, 1093 (D.C. Cir. 1993) (holding that "those who fully preserve their legal rights cannot challenge an order approving an agreement resolving the legal rights of others"); see also Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 246 (7th Cir. 1992) ("The general rule, of course, is that a non-settling party does not have standing to object to a settlement between other parties."); In re Vitamins Antitrust Litigation, No. 99-197 (TFH), 2000 WL 1737867, at *6 (D.D.C. Mar. 30, 2000) ("[T]he Court finds that both groups of opt-out plaintiffs lack standing to intervene in the proposed Settlement since they have opted out of the class.").
An exception to this general rule exists for parties that may be prejudiced as a direct result of the settlement. Mayfield, 985 F.2d at 1093 (recognizing "[a]n exception to the general rule . . . for nonsettling parties who demonstrate `prejudice' from the settlement"). This Circuit has adopted a definition of such prejudice set forth by the Seventh Circuit in Agretti that requires "plain legal prejudice as when the settlement strips the party of a legal claim or cause of action." Id. (quotingAgretti, 982 F.2d at 247) (internal quotation marks omitted). The scope of this exception is specifically constrained to exclude parties that have their right to litigate their claims independently fully preserved. Id. Allowing intervention in such scenarios "would be to allow the exception to swallow the rule." Id. This Circuit reemphasized this requirement for demonstrating sufficient prejudice in an earlier proceeding in this case. In re Vitamins Antitrust Class Actions, 215 F.3d 26, 31 (D.C. Cir. 2000) (affirming holding in Mayfield that non-settling plaintiffs with fully preserved independent right to litigate their claims may not object to a settlement agreement).
Thus, because their request falls squarely under the general rule that non-parties to a settlement lack a right to object to that settlement, the State Indirect Purchasers argue that the widely recognized exception permits their intervention because they can demonstrate plain legal prejudice. Specifically, they point to the Ninth Circuit's decision in American Games, Inc. v. Trade Products, Inc., which held that the potential loss of collateral estoppel effects establishes standing for purposes of mandatory intervention. 142 F.3d 1164 (9th Cir. 1998). However, the collateral estoppel value at stake in American Games was fully established by the lower court's entry of summary judgment. In contrast, the State Indirect Purchasers' potential loss of preclusive effects is entirely speculative, given that the jury verdict remains subject to Mitsui Defendants' pending Rule 50 motion. At this stage of the litigation, any concern over the speculative effects of the Settlement is much less significant than the concern seen in American Games over the loss of established preclusion. In any event, the loss of even such an established preclusive effect does not limit a party's right to litigate its claims independently. Instead, the loss of preclusive effects may alter only the strength of an independent party's position or the ease of their subsequent litigation. These effects, however, do not rise to the standard of "plain legal prejudice" recognized in this Circuit. Mayfield, 985 F.2d at 1093; see also Purcell v. BankAtlantic Fin. Corp., 85 F.3d 1508, 1513 (11th Cir. 1996) (holding that "collateral estoppel effect of the jury's verdict in this case is too collateral, indirect, and insubstantial to support intervention as of right"). Thus, because the law of this Circuit dictates that preclusive effects do not rise to the level of prejudice required for a non-party to intervene as of right to object to a settlement, the interest cited by State Indirect Purchasers fails to meet the "plain legal prejudice" standard that requires a showing that a settlement would strip away a legal right or claim.
To the extent that American Games may conflict with this Circuit's established standard, this Court declines to follow it.
2. Permissive Intervention
State Indirect Purchasers also contend that this Court should exercise its discretion to permit their intervention pursuant to Fed.R.Civ.P. 24(b). Rule 24(b) provides, in pertinent part, that "upon timely application, anyone may be permitted to intervene in an action . . . when an applicant's claim or defense and the main action have a question of fact or law in common." Fed.R.Civ.P. 24(b). In considering whether to permit intervention under this standard, the Court must consider "whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties." Id.
Before reaching the merits of State Indirect Purchasers' argument to permit intervention under Rule 24(b), this Court must look at the question of Article III standing as it applies to permissive intervention. Previously in this litigation, this Court held that a party must establish legal standing under Article III to support permissive intervention. In re Vitamins Antitrust Litig., 2000 WL 1737867, at *6 ("Permissive intervention under Rule 24(b) is not a mechanism for evading the requirements of legal standing."); see also EEOC v. Nat'l Children's Ctr., Inc., 146 F.3d 1042, 1046 (D.C. Cir. 1998) ("Permissive intervention . . . has always required an independent basis for jurisdiction"). On appeal from this Court's decision earlier in this litigation, however, the Court of Appeals noted the uncertainty regarding whether a party must demonstrate Article III standing before they may intervene under Rule 24(b). In re Vitamins Antitrust Class Actions, 215 F.3d at 31-32 (finding it "inappropriate to exercise our pendant jurisdiction" given the "uncertainty over whether standing is necessary for permissive intervention").
Compare National Children's Ctr., 146 F.3d at 1045-46 (recounting that Rule 24(b) requires would-be intervenors to have "an independent ground for subject matter jurisdiction" on a claim or defense that shares a common question with the claims of the original parties), and Diamond v. Charles, 476 U.S. 54, 76 (1986) (O'Connor, J., concurring) ("The words `claim or defense' manifestly refer to the kinds of claims or defenses that can be raised in courts of law as part of an actual or impending lawsuit."); with National Children's Ctr., 146 F.3d at 1045-46 (noting that our circuit precedent avoids "strict readings of the phrase `claim or defense,' allowing intervention even in `situations where the existence of any nominate `claim' or `defense' is difficult to find'").
It is not necessary to resolve this uncertainty given that the other factors in Rule 24(b) ultimately do not support intervention. While the State Indirect Purchasers appear to have a claim or defense in common with Class Plaintiffs in this action, intervention under Rule 24(b) would unduly delay or prejudice the settling parties. In contrast with actually joining the Class Plaintiffs in litigating their common claims or arguments earlier in the litigation, State Indirect Purchasers are seeking to intervene at the eleventh hour to prevent the pending resolution of the dispute. Further, as interveners (and in contrast to being amicus curiae), State Indirect Purchasers would be able to appeal any unfavorable outcome with regard to the settlement, potentially creating significant delay for any settlement Class Plaintiffs would receive. In re Vitamins Antitrust Litig., 2000 WL 1737867, at *7 (finding that "permissive intervention would only serve to unduly delay the Settlement"). Additionally, courts generally deny permissive intervention where the applicant "is already a party to other litigation in which his rights can be fully determined," 7C Wright, Miller, Kane, Federal Practice and Procedure § 1913, at 315-87 (2d ed. 1986), and State Indirect Purchasers move to intervene here precisely because they are parties to other litigation that will fully determine their rights. Permitting them to act as amicus curiae adequately serves the purposes of the desired intervention without unduly delaying or prejudicing the settling parties, allowing the State Indirect Purchasers to lodge their objections to the Settlement that this Court was going to evaluate in the first place.
The commonality of the claims are highlighted by Mitsui Defendants' insistence on the vacatur clause in the settlement agreement, likely to avoid issue preclusion on common claims. Further, the primary distinction in the antitrust claims between Class Plaintiffs and State Indirect Purchasers derives from the respective plaintiffs' place in the chain of purchasing, whereas the price-fixing claims overlap.
B. The Vacatur Provision
The Supreme Court in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), clarified the standards governing appellate court vacatur of a lower court judgment. While the general rule "in dealing with civil cases which have become moot is to reverse or vacate the judgment below and remand with a direction to dismiss," the holding in Bancorp represents an "exception to [this] equitable doctrine of vacatur upon mootness." NFL Players Ass'n v. Pro-Football, Inc., 79 F.3d 1215, 1216-17 (D.C. Cir. 1996). In particular, the Bancorp Court held that, where a case is mooted by voluntary action of the party seeking relief, vacatur is appropriate only under exceptional circumstances. 513 U.S. at 29. The "mere fact that the settlement agreement provides for vacatur" does not, without more, constitute such exceptional circumstances. Id.
State Indirect Purchasers urge that the reasoning in Bancorp should control this Court's analysis of the vacatur provision of the proposed Settlement. Mot. to Intervene at 5. Class Plaintiffs contend, however, that Bancorp does not apply here because the posture of the instant case places it outside the scope of the Supreme Court's ruling in Bancorp. Approval Reply at 14-17. InBancorp, the Supreme Court was asked to vacate the judgment of a federal appellate court, so it analyzed in general the issue of appellate court vacatur of lower court judgments. 513 U.S. at 28. The controversy at issue now does not involve appellate vacatur, as the Settlement would require this District Court to vacate a special jury verdict prior to ruling on post-trial motions and issuing final judgment in the matter. Class Plaintiffs urge that vacatur of a jury verdict by a district court prior to final judgment does not invoke the skeptical lense of Bancorp, and instead should be approved as a matter of course where the dispute is moot. Approval Reply at 9-10, 14-17.
Whether or not the restrictions in Bancorp govern vacatur in district court or prior to final judgment, the totality of the equities in this case still satisfy the exceptional circumstances outlined in Bancorp. 513 U.S. at 29 (noting that settlement-induced vacatur may be appropriate under exceptional circumstances). Vacatur is "an equitable doctrine," NFL Players Ass'n, 79 F.3d at 1216, and Bancorp outlines the significant equitable factors that a court considers in granting vacatur.Valero Terrestrial Corp. v. Paige, 211 F.3d 112, 116-17 (4th Cir. 2000) (finding that Bancorp's analysis, while not binding on district courts, nonetheless identifies significant factors for vacatur analysis). Evaluating the Settlement at issue in relation to those considerations, it is clear that the factors from Bancorp counsel for granting vacatur under the exceptional circumstances present in this case. These factors include the parties' role in causing the mootness, the public interest in maintaining an effective judicial process, and the public interest in facilitating settlements. Bancorp, 513 U.S. at 23, 27-28.
1. Parties' Role in Mooting the Dispute
In weighing the equities, the "principal condition to which [the Court in Bancorp] looked [was] whether the party seeking relief from the judgment below caused the mootness by voluntary action." 513 U.S. at 24. The Court characterized such a voluntary forfeiture of review as a "failure of equity" that weighed decisively against vacating the district court's judgment. Id. at 26. The Court distinguished cases mooted by voluntary action of the parties from cases mooted by "the vagaries of circumstance" or by the unilateral action of the party that prevailed below. Id. at 25; see also NFL Players Ass'n, 79 F.3d at 1216-17 (distinguishing between mootness resulting from voluntary settlement and mootness resulting from happenstance). As the First Circuit noted in evaluating the Bancorp decision, even agreement by both parties to a settlement that hinges upon vacatur does not sufficiently demonstrate equitable entitlement.Wal-Mart Stores, Inc. v. Rodriguez, 322 F.3d 747, 750 n. 1 (1st Cir. 2003). Were it otherwise, the decision to vacate would essentially remain in the hands of the parties, contrary to the holding in Bancorp. Id.
However, vacatur is available where parties on appeal voluntarily moot the case by settlement but where that failure of equity is outweighed by other considerations. One important factor is whether or not the district court has issued a final judgement. As this Court noted in Amoco Production Co. v. Fry:
The Supreme Court's analysis in the Bancorp case does not apply to a claim of mootness prior to a district court's entry of judgment. Whether Bancorp attempted to avoid the adverse judgment of the lower courts by settling the case on appeal was the key issue in Bancorp. Indeed the Court specifically distinguished between settlements reached before a district court enters its judgment and settlements that occur while the case is on appeal.908 F. Supp. 991, 995 (D.D.C. 1995) (emphasis added). This important distinction is true here, as the jury verdict is subject to Mitsui Defendants' Rule 50 motion and the Court has yet to issue a final judgement.
Where the district court has yet to issue a final judgment, additional factors mitigate the failure of equity otherwise assessed against a party that seeks vacatur after voluntarily mooting its case. In Vladimir v. U.S. Banknote Corp., the jury returned a verdict against the defendant in a securities fraud class action. 976 F. Supp. 266, 266 (S.D.N.Y. 1997). The court reserved final judgment in the case, however, pending its consideration of the defendant's motion for judgment as a matter of law. Id. At that point, the parties reached a settlement conditioned upon the court vacating the prior jury verdict. Id. After acknowledging the Bancorp prohibition against routinely granting settlement-induced vacatur, the court found that other considerations, such as the pending motion for judgment as a matter of law, created exceptional circumstances under Bancorp. Id. at 267. The court found that the vulnerability of the jury verdict in light of the pending motion combined with the advantageousness of the settlement to the plaintiff class created exceptional circumstances that favored vacating the verdict.Id.
The vulnerability of the verdict distinguishes theVladimir holding from the result in Evans v. Mullins, where the court denied settlement-induced vacatur of a jury verdict after the court had issued final judgment based, in part, on concerns for preserving the finality of judgment and for eliminating the impression of "doubt as to the legal validity of the jury's verdict." 130 F. Supp. 2d 774, 776 (W.D. Va. 2001).
Here, like in Vladimir, the parties settled their dispute and agreed to the vacatur provision while Mitsui Defendants' Rule 50 motion was still pending in this Court. This vulnerability of the jury verdict, combined with the advantageousness of the settlement to Class Plaintiffs as described below, creates exceptional circumstances that favor vacating the verdict, in contrast with the post-judgment voluntary action that caused mootness in Bancorp.
2. Judicial Process
A secondary factor in the Bancorp Court's analysis is the public interest in the record to be vacated and in the orderly procedures of the judicial system. 513 U.S. at 26-27. In describing the procedural interest, the Court cautioned that allowing a party that "steps off the statutory path" to employ vacatur as a "refined form of collateral attack on the judgment" would impede the orderly operation of the judicial system. Id. at 27. The Seventh Circuit emphasized this public interest factor, holding that the public act of creating judicial precedent is not the parties' property to sell or exchange. In re Mem'l Hosp., 862 F.2d 1299, 1302 (7th Cir. 1988). In weighing public interest as it relates to vacatur, the Supreme Court emphasized the value of establishing judicial precedent, which is "presumptively correct and valuable to the legal community as a whole." Bancorp, 513 U.S. at 26.
However, in contrast to settlements requiring vacatur after a final judgment has issued, the Memorial Hospital court explained that "[i]f parties want to avoid stare decisis and preclusive effects, they need only settle before the district court renders a decision, an outcome our approach encourages." 862 F.2d at 1302. Class Plaintiffs and Mitsui Defendants have done just that: settled their differences before this Court has issued a final judgment. Thus, the Settlement cannot be deemed a "collateral attack" on any judgment. Further, the Settlement only vacates a jury verdict, which is quite different from the judicial opinions that the Supreme Court sought to protect inBancorp. Indeed, court opinions represent different investments and values than does a special jury verdict. While the reasoning and precedent of court opinions may be systemically valuable in many future instances, the role of the jury in the judicial system is confined solely to deciding the case before it without explanation of its reasoning. Allen v. Minnstar, Inc., 97 F.3d 1365, 1371 (10th Cir. 1996) (finding correct a jury instruction indicating that the jury's responsibility is confined solely to the case before it). As a result, the public interest in maintaining a record of a jury verdict is inherently weaker than the interest in preserving the judicial precedent created by court opinions. In fact, the ultimate value of this jury verdict here is exceptionally speculative given the pending Rule 50 motion before this Court.
The same rationale distinguishes this case from patent cases that have adopted the view that orders issued pursuant to aMarkman hearing but preceding final judgment should not generally be vacated as a result of voluntary settlement. E.g., Allen-Bradely Co. v. Kollmorgen Corp., 199 F.R.D. 316, 319-20 (E.D. Wis. 2001) (finding that, given the court's substantial investment of judicial time in preparing a Markman order, judicial economy counseled against vacating it). In the case currently before the court, no such judicial order has been issued.
State Indirect Purchasers cite Devore v. City of Philadelphia, No. Civ.A.00-3598, 2003 WL 21961975 (E.D. Pa. June 24, 2003), for the proposition that the public interest in preserving a jury verdict outweighs the parties' interest in a settlement, but the court in Devore specifically based its holding in consideration of the stage of the proceedings after a jury has returned a verdict and the court has entered judgment.
State Indirect Purchasers also are concerned with the loss of potential preclusive effect caused by eliminating the jury findings. Mot. for Approval at 19. As in Vladimir, however, significant motions remain to be ruled upon in this case, and final judgment has not yet been issued. With a final judgment from this Court still outstanding, the uncertainty of the remaining litigation in this case and consequent vulnerability of the jury verdict significantly decreases the current preclusive value of the special jury verdict. Further, the availability to State Indirect Purchasers of a jury verdict in this case in no way affects their right to a fair trial against Mitsui Defendants on the merits. Vladimir, 976 F. Supp. at 267 (explaining that vacating jury verdict did not materially affect rights of third party seeking to use verdict for collateral estoppel). The desire of State Indirect Purchasers to simplify their future litigation does not prevent this Court from approving an equitable disposition between the parties before it.
That the Court reserved judgment as to Mitsui Defendants' Rule 50 motion implies no conclusion as to its potential merit, as "trial judges are formally encouraged for cogent reasons of judicial economy ordinarily to submit all but the plainest cases for jury verdict subject to the reserved ruling." Colonial Lincoln-Mercury, Inc. v. Musgrave, 749 F.2d 1092, 1098 n. 3 (4th Cir. 1984).
State Indirect Purchasers further urge that the public interest in judicial economy must be accounted for in the decision to vacate and point to the resources consumed at trial in obtaining the jury verdict. Mot. to Intervene 32-35. This analysis fails to account for the judicial resources saved by achieving settlement of the case at the district court level. For instance, the Settlement obviates the need for a ruling on any outstanding motion seeking to set aside the verdict, any appeal and potential remand, and any new trial that this Court or an appellate court potentially could require. The significant judicial economy achieved in this case through settlement at the district court level counterbalances the resources expended in obtaining the jury verdict that prompted settlement. In any event, the judicial resources that resulted in the jury verdict were not wasted, as the verdict surely had a significant effect on the Settlement's outcome. As such, vacating the jury verdict presents no significant concerns regarding the judicial process.
3. Facilitation of Settlements
The final equitable factor addressed by the Court in Bancorp was "the facilitation of settlement, with the resulting economies for the federal courts." 513 U.S. at 28. In analyzing vacatur at the appellate level, the Court cautioned that the availability of vacatur might "deter settlement at an earlier stage." Id. (emphasis removed). The Court expressed concern that " [s]ome litigants, at least, may think it worthwhile to roll the dice rather than settle in district court, or in the court of appeals, if, but only if, an unfavorable outcome can be washed away by settlement-related vacatur." Id. (emphasis in original).
This motivation behind the Supreme Court's restriction on vacatur at the appellate level counsels for allowing vacatur under the circumstances here. The parties now before this Court propose to do exactly as the Supreme Court in Bancorp and the Seventh Circuit in Memorial Hospital advocated: achieve settlement at the district court level. As the Memorial Hospital court stressed, settling "before the district court renders a decision [is] an outcome our approach encourages." 862 F.2d at 1302 (emphasis added). Unlike settlement at the appellate level, the pre-judgment Settlement occurring at the district-court level promotes judicial economy as described above. Bancorp, 513 U.S. at 28.
Thus, vacatur here actually creates a positive result for the public interest with regard to facilitating settlements. The Second Circuit explained that exceptional circumstances for vacatur arose where both parties desired settlement, settlement was in the best interest of both parties, and public interest would not be harmed. Major League Baseball Props., Inc. v. Pacific Trading Cards, Inc., 150 F.3d 149, 152 (2d Cir. 1998). The circumstances of the proposed vacatur embody many of these characteristics. Significantly, the pre-judgment Settlement serves the interests of both Mitsui Defendants and Class Plaintiffs. Class Plaintiffs can avoid the possibility of having the trial award set aside by this Court or on appeal, while Mitsui Defendants avoid the collateral effects of the verdict. In addition, both parties seek to avoid the costs and delay caused by further litigation, while creating certainty through the Settlement's results. For the same reasons that typically motivate settlements at the district court level, the parties here want to avoid continuing litigation in both this Court and the appellate system and to benefit from the certainty of their proposed agreement.
State Indirect Purchasers contend that the Settlement sum of $53 million represents an "undeserved premium" paid in exchange for vacating the jury verdict, Mot. to Intervene at 30; however, the sum is in proportion to the jury award and compensates the Class Plaintiffs reasonably for the alleged damages. Further, the Settlement is not "undeserved" given the substantial jury verdict achieved by Class Plaintiffs and the other interests of the parties. State Indirect Purchasers do not contend that, apart from the vacatur provision, the Settlement is not otherwise fair, reasonable, and adequate.
State Indirect Purchasers posit an extension of the Court's argument in Bancorp and contend that vacating jury verdicts at the district court level discourages settlement at an even earlier stage of district court proceedings. Mot. to Intervene at 42. The factors motivating Bancorp's reasoning, however, do not apply with the same force as with settlements at the appellate level. The Supreme Court noted that, in the case of appellate vacatur, " some litigants, at least, may roll the dice rather than settle in the district court" if they can later wash away unfavorable results through a settlement-induced vacatur.Bancorp, 513 U.S. at 28 (second emphasis added). Here, the parties are settling in the district court. Further, the Court is unpersuaded that parties at the district court level otherwise amenable to early settlement would routinely endure the expense and uncertainty of trial due to the possibility that an unfavorable jury verdict could be vacated by settlement prior to entry of final judgment — especially given the practical inability in light of the Bancorp decision to vacate by settlement once a district court has entered final judgment. In contrast with the appellate level, where ultimate certainty in the district court process has attached with the final judgment, the parties at the district court level can never be certain about when the court might enter final judgment. This uncertain window of opportunity seems rather risky for the "roll the dice" strategy as the district court can bring finality to a jury's verdict at any moment, ending the opportunity to vacate the verdict without warning. In any event, the Supreme Court inBancorp disclaimed that it found "it quite impossible to assess the effect of [the] holding, either way, upon the frequency or systemic value of settlement," id., and at the very least this speculative factor cannot weigh against the other circumstances supporting the vacatur provision of the Settlement.
III. Conclusion
There is no basis to allow intervention given that the objections of the State Indirect Purchasers may be heard as amicus curiae without creating the potential for delay in the litigation. Upon hearing their objections to the Settlement at issue, this Court determines that the equitable analysis inBancorp illuminates the exceptional circumstances presented in this case and justifies the vacatur provision of the Settlement. For the foregoing reasons, the Court will deny the State Indirect Purchaser Plaintiffs' Motion to Intervene. The Court also will grant Class Plaintiffs' Motion for Preliminary Approval of Settlement Between Class Plaintiffs and Mitsui Defendants. Pending final settlement, the Court further will grant a stay of proceedings in this case against Mitsui Defendants.