In re Online DVD Antitrust Litigation: adverse decision and en banc petition

You might recall the settlement approval in Online DVD Antitrust Litigation we briefed back in 2012. A district court held that the Wal-Mart $12.03 "gift cards" the settlement awarded weren't "coupons," refused to apply the Class Action Fairness Act, and awarded fees based on the face value of the coupons.

On February 27, the Ninth Circuit, in a Judge Sidney Thomas opinion, affirmed.

Wait a second! careful readers exclaim, Didn't you already win that exact issue on appeal?!

Yep. Appellees made the same arguments about "settlement vouchers" and attorney-fee calculations in Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014), and that court, in a Judge Posner opinion, rejected them in a lengthy and lively discussion that was widely discussed.

So what did the Ninth Circuit say to reject the contrary Seventh Circuit case?

Absolutely nothing. They didn't mention it once, though we filed a Rule 28(j) letter in September.

Was there another appellate precedent that they followed instead?

Nope. Some district courts make the same mistake that Redman criticized (though some don't), and the Ninth Circuit followed those cases without mentioning the others while creating a circuit split.

What now?

Well, we've asked for rehearing or rehearing en banc. If we don't get correction, we have an interesting circuit split to put before the Supreme Court in a certiorari petition.

October and November doings

In addition to our Supreme Court amicus and our MagSafe appellate brief, we've kept busy over the last two months.

• We had oral arguments in the Second, Sixth, and Ninth Circuits on the Blessing v. Sirius XM, Pampers Dry Max, and HP Inkjet appeals. Only Inkjet is available online.
• The district court ruled against us in Johnson & Johnson after some additional briefing; we've appealed, and (assuming that the court orders more than a token amount of attorneys' fees; the fee award has not yet been made) will raise the question of first impression of whether securities lawyers who regularly rely upon the efficient market hypothesis can ask a court to rely upon an expert opinion contradicting it when it is inconvenient for their theory of attorney-fee recovery.
• We filed our reply brief in the Online DVD appeal.
• We filed our reply brief in the Texas Frontier Oil appeal over a $0 settlement, which has gotten some press attention. Oral argument is scheduled in Houston in January 16. I was a Bellaire debater, but this is my first time in a Texas court.
• $2.7 million was paid to class members $3.93 at a time in the Classmates case. This is paltry, but more than the $56,000 or so class counsel was going to be happy with had we not successfully. objected. [Ars Technica]

We filed interesting objections in two new cases in California federal courts over the last few days, and I'll discuss over the course of the week.

In re Online DVD Rental Antitrust Litigation

The Class Action Fairness Act puts limitations on coupon settlements. In In re Online DVD Rental Antitrust Litigation, however, the district court approved a settlement that would pay $5.2 million in cash and $8.9 million in Walmart.com coupons to the class and held CAFA did not apply because the parties called the coupons "gift cards." Does the Class Action Fairness Act regulate semantics or something more? I argue the latter in a Ninth Circuit opening brief filed today.

The district court also awarded a disproportionate $8.512 million to the attorneys. Our appeal addresses that issue as well. And because I miss Lionel Hutz, the brief cites the classic case of Homer Simpson v. The Frying Dutchman Restaurant.

March updates

• If you listen to one oral argument from March 27, well, I have to say that you need to listen to Paul Clement's performance in HHS v. Florida. But if you have time for a second oral argument, and you have a hankering for Third Circuit class action action, I'd be curious about your thoughts of the argument in Dewey v. Volkswagen. See also.
  
• Following up on our earlier post, the Third Circuit denied the motion for sanctions without comment, or permitting us to file a reply brief. (Mazie Slater had no explanation for the misquote; they used the passive voice in describing its mysterious appearance in the brief, and didn't explain how citecheckers missed it.) Having been given such carte blanche, Mazie Slater then proceeded to lie to the court about the terms of the settlement and settlement notice during the oral argument. I simply don't understand why courts aren't willing to do more to police the attorneys who appear before them. If the only consequence for inventing a citation out of whole cloth is the need to file an errata deleting an invented citation (i.e., the brief that should have been filed in the first place), what incentive does the Holmesian "bad actor" have to get the law right in the first place? After all, if there's a 5% chance that the fictionalized version will swing the case, 5% times $9 million in fees is a $450,000 incentive to lie to the court. If the bad actor isn't facing a proportionate downside, you can expect the bad actor to act badly.
  
• We renewed our objection in Bluetooth. Details at Point of Law.
  
• The Apple MagSafe settlement—$600,000 for the class, $3.1 million for the attorneys—was rubber-stamped by the district court. We plan to appeal to the Ninth Circuit.
  
• In the Online DVD Rental Antitrust Litigation settlement with Wal-Mart for a class of Netflix customers, the district court agreed with the settling parties that a coupon isn't a coupon if they call it a "gift card" instead, and that the restrictions on coupon settlements in the Class Action Fairness Act didn't apply, and rejected my objection. We believe this contradicts CAFA, as well as Seventh Circuit precedent, and plan to ask the Ninth Circuit to address this problem.

Online DVD Rental Antitrust Litigation / Wal-Mart/Netflix Settlement

Class members (including me) are getting email notice of a class action settlement with Wal-Mart in the Online DVD Rental Antitrust Litigation, No. M 09-2029 PJH (N.D. Cal.). Wal-Mart will pay $27,250,000, in "cash and gift cards" to a settlement fund to be distributed to the class and lawyers.

Of course, there are 40 million class members. That's 68 cents a class member. And you can only get cash if you spend 44 cents on a stamp to submit your claim, though it's possible to ask for a gift card on line.

But wait, there's more. The attorneys and class representatives are asking for $8,592,500 of the $27 million. And "notice and administration costs"—the amount of which is entirely undisclosed—will be deducted from the $27 million before the class will get anything. (This contradicts what the parties told the court in the motion for preliminary approval, which said the entire amount after attorneys' fees and expenses would go to the class.) In reality, the attorneys are asking for over a third and perhaps as much as half of the money available for the class.

That would be bad enough, but the "gift-card" aspect makes this a coupon settlement (the coupons cannot be sold and are good only at Wal-Mart—again, contradicting the motion for preliminary approval, which falsely called them "fully transferable"), and there seems to be no plan to have a fee request that complies with the Class Action Fairness Act's restrictions on coupon settlements.

Lots of class members have contacted us, and, yeah, we're going to be objecting to this one.

Update: a class member writes me to point out that I was misled by the notice. Though the notice says "Wal-Mart gift card," it is not a Wal-Mart gift card, because the gift card is only good at walmart.com, where prices are often higher when shipping is included.