The opinion of the court was delivered by: Simandle, District Judge
This matter is before the Court in this Multidistrict Litigation on the motion of Class Counsel for approval of a plan of distribution of the settlement fund [Docket Item 271]. After reviewing claims received under the previously-approved class action settlement in this case, the Settlement Administrator proposed a plan of distribution that would recognize "allowed purchases" of electrical carbon products in the aggregate amount of over $378 million,*fn1 as the basis for the pro rata distribution from the four settlement funds paid in by the various defendants totaling $21.9 million less attorneys' fees and expenses.*fn2 The proposed plan of distribution excludes those claimants whose claims were submitted after February 16, 2006, or whose purchases allegedly did not consist of electrical carbon products within the class definition. Prior to the hearing on the motion, the following claimants filed opposition to their exclusions from the proposed plan of distribution:
The Chicago Transit Authority ("CTA") [Docket Items 273, 304]; The Class Action Refund Claimants ("original CAR claimants"), which is a group of fifteen individual claimants whom Class Action Refund represented during the claim process, namely, Mahaffey's Electric Motor Repair, Kidd Machine & Manufacturing Company, Warfield Electric Company, Flex-Tech Integrated Supplier, Phelps Dodge High Performance Conductor, Border Industrial Motors*fn3 , Aetna Manufacturing Company, Becker Bros., Aero Accessories, Inc., Milwaukee Electric Tool Corporation, Prestolite Electric, Inc., Zeller Electric Company, Inc., KBZ Electric, Inc., Crown Industrial Supply Division of Steiner Electric Company, and Beltline Electric Motor Repair, Inc. [Docket Items 276, 307];*fn4 Electric Insulation Supply, Inc. ("EIS") [Docket Item 286];
Arkansas General Industries ("AGI")[Docket Item 287]; and Flowserve Corporation ("Flowserve") [Docket Item 283].
The Crowell & Moring Plaintiffs filed a brief in support of Class Counsel's plan of distribution [Docket Item 293].*fn5 (The "Crowell & Moring Plaintiffs" are Emerson Electric Co.; Valeo S.A.; Valeo Inc.; CBS Corporation; Electrolux Home Care Products, Ltd.; Delphi Corporation; Robert Bosch GmbH; Robert Bosch Corporation; A.O. Smith Corporation; Visteon Corporation; Rockwell Automation, Inc.; Baldor Electric Company; Fasco Industries, Inc.; and Siemens Transportation Systems, Inc.)
The Court held hearings on the motion on May 23, June 20 and August 2, 2007, during which several of the parties clarified their positions. Additional facts came to light, additional objections were raised, and some disputes were resolved. Notably, in June 2007 an additional twenty-five claimants represented by CAR ("the new CAR 25") raised objections to their exclusion from the proposed plan of distribution for the first time [See Docket Item 330].*fn6
The Court reserved decision on the motion and now grants it in part and denies it in part as explained herein.
The original deadline for filing claims was October 24, 2005, and claims continued to trickle in after that date.*fn7 Class Counsel proposed treating claims as timely if they were completed on or before February 16, 2006. The dispute about the proposed distribution raises two principal issues: (1) whether claims documented after February 16, 2006 -- the date the Crowell & Moring Plaintiffs decided to opt back into the class subject to Court approval -- are inexcusably late and (2) whether certain claimants failed to make qualifying purchases at all, thus excluding them from the class definition and denying them any basis for their claims.
Rather than setting a cut-off deadline for the claims at issue, the Court looks at each claimant's conduct and determines whether its delay in filing a claim is the result of "excusable neglect" as that term has been defined in this Circuit. See In re Orthopedic Bone Screw Prods., 246 F.3d 315, 323 (3d Cir. 2001). Using this analysis, for reasons discussed below, the Court finds that the CAR claimants and EIS have failed to show their delay is the result of excusable neglect. Therefore, the Court shall grant the motion insofar as it seeks to exclude these late claimants.
As to issue of whether certain claimants made qualifying purchases, the Court will not reach it because it is now moot. Because Class Counsel seeks to exclude only certain CAR claimants for failure to make qualifying purchases, and because the CAR claimants cannot share in the fund under the Court's first ruling due to inexcusable delay, the Court need not parse the class definition on this motion to determine whether certain purchases are within the class definition of electrical carbon products. Although it is not self-evident whether these claimants are members of the class, their failure to show excusable neglect is dispositive of their rights to share in the funds; the Court, therefore, having determined that Class Counsel are correct in excluding the CAR claimants due to inexcusable neglect, shall not reach beyond this motion to decide the merits of disputes when such a decision can have no practical effect.
In this Multidistrict class action, the Court certified a class, pursuant to Fed. R. Civ. P. 23(a) and (b)(3), and approved a settlement, pursuant to Fed. R. Civ. P. 23(e), on August 30, 2006. In re Electrical Carbon Prods. Antitrust Litig., 447 F. Supp. 2d 389 (D.N.J. 2006). The Court defined the class as:
All persons and entities (excluding Federal government entities, Defendants and their respective parents, subsidiaries, and affiliates) who purchased Electrical Carbon Products in the United States, or from a facility located in the United States, directly from Defendants, their affiliates, subsidiaries, or alleged co-conspirators, during the period January 1, 1990 through December 31, 1999 (the "Class Period").
The Court had given preliminary approval of the settlement classes and the proposed settlements on May 11, 2005. In re: Elec. Carbon Prods. Antitrust Litig., No. 03-2182 (JBS), (D.N.J. May 11, 2005) [Docket Item 179]. The Court ordered that notice (1) be mailed via first class mail on or about June 27, 2005 to the last-known addresses of all members of the class as identified by Defendants; (2) be published in the Wall Street Journal on or about July 7, 2005; and (3) be posted on the Claims Administrator's website. Id. at ¶¶ 7-10. The Court also ordered that all requests for exclusion be mailed by August 22, 2005 and that all proof of claim forms be postmarked by October 24, 2005 and comply with the requirements for filing a proof of claim set forth in the notice. Id. at ¶¶ 11, 13-14. That notice included a provision which stated, "The Settlement Fund . . . will be distributed among the members of the Class who file timely and valid Claim Forms ("Claimants"). Ex. 1 to id., at 5.
The Net Settlement Fund will be distributed pro rata to all claimants based on their direct purchases" from Defendants in the United States during the relevant time period. Id. Another provision emphasized, "Any Class Member who does not complete and timely return the Claim Form will not be entitled to share in the Net Settlement Fund." Id. at 6. The proof of claim form, with its instructions, was attached to the notice. Ex. 3 to id. The proposed settlement fund for the original settlement was $24.2 million. Ex. 1 to id. at 3. Pursuant to the Court's Order, the Claims Administrator mailed notice to 4,887 class members on June 27, 2005. (Hamer Aff. Sept. 29, 2005, ¶ 4.)
Shortly before the date for requesting final exclusion from the class in 2005, thirteen entities gave timely notice of their wish to opt-out, including twelve large companies represented by the law firm of Crowell & Moring (the "Crowell & Moring" Plaintiffs). In re Elec. Carbon Prods. Antitrust Litig., 447 F. Supp. 2d at 393. The Crowell & Moring Plaintiffs had made a sizable share of purchases at issue in this case, totaling several hundred million dollars. Id. Their opting-out triggered the walk-away rights under the Morgan, Schunk and Carbone settlement agreements. Id. (The SGL agreement has no walk-away provision.) Thereafter, the Morgan, Schunk and Carbone settling Defendants announced their intention to withdraw from the proposed settlements because of the volume of purchases represented by the Crowell & Moring Plaintiffs.*fn8 Id. at n.4. If that had happened, the litigation would have gone forward with no settlements. Id. Other than the Crowell & Moring Plaintiffs, only one entity opted out, leaving approximately 451 class member claimants. Id. at 393.*fn9
Class Counsel, joined by counsel for Morgan, Carbone, and Schunk, entered into discussions with the Crowell & Moring Plaintiffs to determine whether the latter would be willing to rejoin the Class and participate in the settlements. Id. at 394. Under Court supervision, these discussions led to agreements whereby the Crowell & Moring Plaintiffs requested to rejoin the Morgan, Schunk, and SGL settlements, id., on February 17, 2006, after viewing the number and amount of claims submitted to that date, (Hamer Aff., Feb. 7, 2007).*fn10 On February 21, 2006, the Court entered an Order approving the Crowell & Moring Plaintiffs' withdrawal of their request for an exclusion [Docket Item 221].
Because Class Counsel agreed to reduce their request for attorneys' fees from 33 1/3% including costs and expenses, to 25% of the settlement funds, not including costs and expenses, the same fund increased the net value to the class of the Morgan, Schunk, and SGL settlements. 447 F. Supp. 2d at 394.
The initial Carbone settlement was renegotiated and amended by reducing the negotiated settlement amount from $6 million to $3.7 million. Id. In exchange for that reduction, the Carbone Defendants agreed not to exercise their option to terminate their settlement with the class, even though the Crowell & Moring Plaintiffs did not rejoin that settlement.*fn11 Id. Requested attorneys' fees from the Carbone settlement fund remained capped at 33 1/3%, including costs and expenses. Id.
Because these developments changed the original settlements, the Court Ordered a Supplemental Notice to all entities that had responded to the prior notice (the 451 class member claimants and the one opt-out that was not a Crowell & Moring Plaintiff) on March 27, 2006. Id. The Court gave preliminary approval of the amended settlements and of the Crowell & Moring Plaintiffs' application to withdraw their opt-out notices and rejoin the class for the Morgan, Schunk, and SGL settlements.*fn12 See id. Anybody wishing to object to this preliminary determination was informed of the right to do so by submitting an objection by May 1, 2006. See id. Copies of relevant documents were also available on the website for this case, www.ElectricalCarbonProductsLitigation.com. No objection to the amended settlements was received, and none was voiced at the final hearing on May 12, 2006. Id. at 394. In response to the supplemental notice, no other party opted-out or objected to the settlements and the requested attorneys' fees and costs.*fn13 Id. at 394-95.
The Court determined that permitting the Crowell & Moring Plaintiffs to rejoin the Morgan, Schunk, and SGL settlements enabled those settlements to go forward and that this was in the best interests of the Settlement Class -- that there be a fair and reasonable settlement including these parties rather than no settlement at all. Id. at 397. The Court also determined that the opt-in of the Crowell & Moring Plaintiffs was fair to all the Class Claimants who had not opted out but submitted their claims from the beginning because no class member relied to its detriment on the Crowell & Moring Plaintiffs' original decision to opt out as that development was contemporaneous with all other decisions and could not have been a factor in the decision of any particular class member to participate. Id. Second, because two of the three Settling Defendants -- Morgan and Schunk ---indicated they would exercise their withdrawal options in the absence of the participation by the Crowell & Moring Plaintiffs, the Court noted there would have been no settlements without them. Id. Third, the Court found there was no special advantage conferred upon the Crowell & Moring Plaintiffs through opting out and then opting back in. Id. Finally, the Court found that these settlements were adequate, reasonable, and fair to the class members, as required by Rule 23(e), Fed. R. Civ. P. Id. at 397-404.
The Court also found the Carbone settlement, which the Crowell & Moring Plaintiffs did not rejoin, to be fair and reasonable because it increased the anticipated payment to each remaining claimant. Id. at 397-98, 404.
In determining whether the class counsel's fee was appropriate, the Court had to consider the size of the fund created and the number benefitting from it. The Court relied on the number of claimants at that time in determining whether those fees were reasonable:
The total fund created from these four settlements is $21,900,000, representing over 3% of class members' purchases in the United States during the class period. Approximately 5,000 class members were mailed copies of the Class Notice. There are approximately 451 Class claimants, plus the 12 Crowell & Moring Plaintiffs which have been allowed to opt-in to the final Morgan, Schunk and SGL settlements, as discussed in Parts II and III.B, above. Class Counsel were instrumental in negotiating, and renegotiating, settlements creating a substantial fund for the class of plaintiffs which had the wide majority of sales.
Thus, the Court's fairness determination depended both on a reasonable projected range of money class members would receive and on a finding that no class member was being treated to an advantage the others did not also enjoy.
On February 7, 2007, Class Counsel filed this motion for approval of its proposed plan of distribution. Timely opposition followed from the CTA, the original CAR claimants, EIS, AGI, and Flowserve. This Court held hearings and heard argument on May 23, June 20 and August 2, 2007. [Docket Items 309, 327, 337.] At those hearings, new facts were developed and new objections were raised, especially regarding the adequacy of documentation, the timeliness of objections and whether certain claimants made qualified purchases from Defendants. The Court reserved decision and now addresses the motion for approval of the plan of distribution filed by Class Counsel.
A. Claims Filed After February 16, 2006
As noted, the Court required all claim forms to be completed and postmarked by October 24, 2005. Class Counsel essentially suggests a grace period until February 16, 2006, in light of the then-ongoing negotiation of the amended settlements. Primarily, Class Counsel seeks to preclude all claims that were filed after the date on which the Crowell & Moring Plaintiffs assessed the value of the settlement to them and decided to rejoin the class. Because this Court is required to determine whether there was excusable neglect for the delay of each claim, the Court will not set a generic cut-off date. Rather, the Court shall analyze each proposed late claim and determine whether the delay in filing it is excusable.
An overview of the claims process will aid understanding the factual background of this motion. Class members submitting proofs of claim were required to fill out a schedule setting forth the dollar amount of their claimed purchases for each class year listed and indicate from which defendant they purchased.
For any year within the class period without a claimed purchase, the claimant was supposed to enter a zero. However, several claimants initially filed blank claim forms, with no information about purchases, and ...