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Halley v. Honeywell International, Inc.

United States Court of Appeals, Third Circuit

June 29, 2017

MATTIE HALLEY; SHEM ONDITI; LETICIA MALAVE; TEMPORARY ADMINISTRATOR OF THE ESTATE OF SERGIO DE LA CRUZ, On Behalf of Themselves and All Others Similarly Situated
v.
HONEYWELL INTERNATIONAL, INC.; PPG INDUSTRIES, INC. Maureen Chandra, Appellant

          ARGUED: January 17, 2017

         On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 2-10-cv-03345) District Judge: Honorable Esther Salas

          Thomas Paciorkowski, Esq. [ARGUED] Jersey City, N.J. 07304 Rui O. Santos, Esq. Shebell & Shebell Counsel for Appellant

          Allan Kanner, Esq. Elizabeth B. Petersen, Esq. Kanner & Whiteley, Ned I. Miltenberg, Esq. National Legal Scholars Law Anthony Z. Roisman, Esq. [ARGUED] Counsel for Appellees Mattie Halley, Shem Onditi, Leticia Malave, and Temporary Administrator of the Estate of Sergio De La Cruz

          Michael D. Daneker, Esq. Allyson T. Himelfarb, Esq. Arnold & Porter Kaye Scholer, Michael R. McDonald, Esq. Gibbons One Gateway Center Newark, Counsel for Appellee Honeywell International Inc.

          Before: AMBRO, VANASKIE, and SCIRICA, Circuit Judges

          OPINION

          SCIRICA, Circuit Judge.

         This is an appeal from the approval of a settlement of a Federal Rule of Civil Procedure 23(b)(3) class action arising out of hexavalent chromium contamination in Jersey City, New Jersey. The class action was brought on behalf of property owners in several neighborhoods in Jersey City whose homes were allegedly contaminated by byproducts disposed of at two chromium chemical manufacturing plants. Defendants Honeywell International, Inc., and PPG Industries, Inc., are the successors in interest of the manufacturing plant owners and operators. Plaintiffs asserted common law tort claims and civil conspiracy claims for depreciation of their property values due to the alleged contamination, but not claims for harm other than economic loss to property value, such as personal injury or medical monitoring claims. The District Court certified a settlement-only class as to the claims against Honeywell[1] and approved a $10, 017, 000 settlement fund, which included an award of costs and attorneys' fees for plaintiffs' counsel. Maureen Chandra is a member of the Honeywell settlement class who objects to various aspects of the settlement and the award of costs and attorneys' fees.

         We conclude the class certification requirements of Federal Rule of Civil Procedure 23(a) and (b)(3) are satisfied, and the District Court did not abuse its discretion in approving the settlement under Federal Rule of Civil Procedure 23(e) and the award of attorneys' fees under Federal Rule of Civil Procedure 23(h). But we will remand for the District Court to reconsider the award of costs under Rule 23(h).

         I. BACKGROUND AND PROCEDURAL HISTORY

         A. Chromium Production in Jersey City

         This case involves two chromate chemical production facilities in Jersey City, New Jersey. Honeywell is the successor in interest to Mutual Chemical Company of America, which operated a facility from 1895 to 1954 on West Side Avenue. PPG is the successor in interest to Pittsburgh Plate Glass Company and Natural Refining Company, which operated a facility from 1924 to 1963 on Garfield Avenue.

         Both facilities created chromium ore processing residue ("COPR") as a byproduct of chemical manufacturing. COPR waste from the facilities was disposed of at two sites in Jersey City. Mutual disposed of COPR at a site near its plant on the west side of Jersey City, near the Hackensack River ("the Mutual site"). Pittsburgh Plate Glass disposed of COPR near its plant further east ("the Pittsburgh Plate Glass site"). Plaintiffs allege more than one million tons of waste products were disposed of at the two sites.

         COPR contains hexavalent chromium, [2] which the United States Environmental Protection Agency and the New Jersey Department of Environmental Protection classify as a known human carcinogen. Hexavalent chromium is hazardous to humans and other organisms if inhaled or ingested in contaminated water.

         Honeywell and its predecessors in interest have been proceeding with COPR cleanup at the Mutual site for many years. See Interfaith Community Org. v. Honeywell Int'l, Inc., 399 F.3d 248 (3d Cir. 2005). The State of New Jersey first sought a remedy for the site in 1982, after chromium waste was discovered in surface water on the site. Id. at 252. Over the course of ongoing negotiations with NJDEP, Honeywell and its predecessors attempted various interim remediation measures, including capping parts of the site with asphalt and a plastic liner. Id. at 253. There have been a number of consent orders regarding the Honeywell site arising from litigation brought by NJDEP under New Jersey environmental protection statutes and regulations in the New Jerseys state courts, beginning with a 1990 consent order, and most recently a 2011 consent judgment, as modified in 2013.[3]

         In 1995, a community organization and its members brought a federal action against Honeywell and other defendants to compel cleanup of the Mutual site under the citizen suit provision of the Resource Conservation and Recovery Act, 42 U.S.C. § 6972(a)(1)(B). Id. at 252. The United States District Court for the District of New Jersey determined Honeywell was required to remediate under RCRA and directed Honeywell to excavate and remove chromium waste from the Mutual site under the supervision of a federal-court-appointed site administrator. See id. at 268 (affirming injunction against Honeywell to compel cleanup of Mutual site).

         B. Procedural History

         This action involves three putative classes of property owners in Jersey City in three different neighborhoods near the chromium manufacturing plants and related disposal sites. Class A includes property owners in a neighborhood east and south of the Mutual site. Class C includes property owners located in a smaller area west of Class A. Together, Class A and Class C include 3, 497 properties. The neighborhood comprising Class B is in a different part of Jersey City, to the east of Class A and surrounding the Pittsburgh Plate Glass site to the north.

         Plaintiffs allege both defendants negligently disposed of COPR and other chromium manufacturing byproducts, resulting in continuing contamination of the surrounding properties. They further allege Honeywell, PPG, and their predecessors, individually and in conspiracy with one another, concealed the fact of COPR disposal and the known health risks resulting from the disposal.

         The Sixth Amended Complaint asserted five causes of action on behalf of the three putative classes: (1) private nuisance, (2) strict liability, (3) trespass, (4) negligence, and (5) civil conspiracy.[4] Plaintiffs sought compensatory relief in the form of economic damages "for loss of property value, " as well as punitive damages.

         Plaintiffs initially filed this action in New Jersey state court in 2010, and defendants removed the case to the United States District Court for the District of New Jersey. On February 28, 2011, the District Court granted in part and denied in part Honeywell's motion to dismiss, and the case proceeded to discovery. On July 17, 2014, prior to the completion of discovery or filing of a motion for class certification, plaintiffs and Honeywell informed the District Court they had reached a settlement in principle following negotiations under the auspices of an independent third-party mediator.

         On November 7, 2014, plaintiffs and Honeywell filed a motion for preliminary approval of the class action settlement. The District Court granted the motion on May 1, 2015, and certified two classes for settlement purposes, comprising Class A and Class C. The District Court also appointed class counsel and approved the proposed claims administrator and form of notice.

         Following notice to the class, the District Court received three objections from four class members, and twenty-eight opt-out requests. Maureen Chandra was one of the objectors.

         After the close of the objections period, on September 3, 2015, plaintiffs and Honeywell filed a motion for final approval of the class action settlement. Chandra filed a brief in opposition to the joint motion for settlement approval. On September 25, 2015, the District Court held a fairness hearing on the proposed settlement under Federal Rule of Civil Procedure 23(e)(2), at which Chandra made an appearance through counsel. On April 26, 2016, the District Court, as outlined below, certified the class for settlement purposes under Rule 23(a) and (b), granted final approval of the settlement as fair and reasonable under Rule 23(e), and approved plaintiffs' counsel's motion for costs and attorneys' fees under Rule 23(h). See Halley v. Honeywell Int'l, Inc., Civil Action No. 10-3345, 2016 WL 1682943 (D.N.J. April 26, 2016).

         Chandra filed this appeal.[5] Chandra does not dispute the District Court's conclusions with respect to the requirements of Rule 23(a) and (b). But Chandra argues the District Court abused its discretion in finding the settlement fair and reasonable under Rule 23(e) and in awarding plaintiffs' counsel attorneys' fees and costs under Rule 23(h).

         C. Proposed Settlement

         The settlement provides a $10, 017, 000.00 non-reversionary settlement fund for residential property owners in Class A and Class C to include payments to class members, incentive awards for class representatives, litigation costs, attorneys' fees, and fund administration expenses. The final breakdown of those payments is as follows:

Total Fund

$10, 017, 000.00

Incentive Awards

$20, 000.00

Litigation Costs

$1, 140, 023.77

Attorneys' Fees

$2, 504, 250.00

Fund Administration

$219, 278.87

Expenses Settlement Class Funds

$6, 133, 447.36

         The two settlement classes include 3, 497 properties, entitled to $1, 745 per potential claimant. Valid claims were submitted on behalf of 2, 085 properties, and the unclaimed funds will be distributed pro rata to valid claimants. Thus, the final allocation per property is $2, 926.

         II. CLASS CERTIFICATION

         To approve a class action settlement, a district court must determine the requirements for class certification of Federal Rule of Civil Procedure 23(a)[6] and (b)[7] are met. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619-20 (1997). The proposed settlement may be taken into consideration when evaluating whether these requirements are met. Id.; In re Prudential Ins. Co. America Sales Practice Litig. Agent Actions, 148 F.3d 283, 308 (3d Cir. 1998). We review the District Court's decision to certify a class for settlement purposes for an abuse of discretion. Prudential, 148 F.3d at 299.

         The District Court determined the proposed settlement classes should be certified after concluding the requirements of Rule 23(a) and (b) were met. With respect to Rule 23(a), the Court concluded joinder of the owners of the 3, 497 properties in Classes A and C would be impractical. See Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). Second, the Court determined questions of fact relating to operation of the Mutual plant and subsequent remediation satisfied the commonality requirement. Third, the Court concluded the class representatives of Class A and Class B satisfied the typicality requirement through their contention that their respective properties have been adversely affected by COPR contamination resulting from Honeywell's conduct. Fourth, the Court determined class counsel was qualified to adequately represent the class, and the interests of the class representatives were adequately aligned with the other class members because they allegedly suffered the same harm through COPR contamination of their property and they seek the same remedy.

         The District Court also found the requirements of Rule 23(b)(3) were met.

         The predominance requirement was satisfied because common issues relating to the generation, disposal, and failure to remediate COPR, and Mutual and Honeywell's knowledge of and negligence with respect to the effects of COPR disposal predominated over any individual issues. The Court determined the superiority requirement was met because the class action device achieved significant efficiencies compared to individual actions.

         As noted, none of the objectors raised any issues with respect to Rule 23(a) and (b), and Chandra does not dispute these conclusions in this appeal. We conclude the District Court's findings were well within its sound discretion.

         III. FAIRNESS OF THE PROPOSED SETTLEMENT

         Federal Rule of Civil Procedure 23(e) provides "the claims . . . of a certified class may be settled . . . only with the court's approval." "Even if it has satisfied the requirements for certification under Rule 23, a class action cannot be settled without the approval of the court and a determination that the proposed settlement is fair, reasonable and adequate." Prudential, 148 F.3d at 316 (quotation omitted). When the parties seek simultaneous class certification and settlement approval, courts must "be even more scrupulous than usual when they examine the fairness of the proposed settlement." Id. at 317 (quotation omitted). The ultimate decision whether to approve a proposed settlement under this standard "is left to the sound discretion of the district court." Id. at 299. "An appellate court may find an abuse of discretion where the district court's decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact." Id. (quotations omitted).

         We have articulated a number of factors to guide district courts in the exercise of their discretion to approve class action settlements. In Girsh v. ...


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