Donald Wortman v. Amy Yang , 701 F. App'x 554 ( 2017 )

FILED
NOT FOR PUBLICATION
JUN 26 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: TRANSPACIFIC PASSENGER No. 15-16280
AIR TRANSPORTATION ANTITRUST
LITIGATION, D.C. Nos. 3:07-cv-05634-CRB
3:08-md-01913-CRB
------------------------------
DONALD WORTMAN, individually and MEMORANDUM*
on behalf of all others similarly situated,
Plaintiff-Appellee,
v.
AMY YANG,
Objector-Appellant,
v.
SOCIETE AIR FRANCE; MALAYSIAN
AIRLINE SYSTEM BERHAD;
SINGAPORE AIRLINES LIMITED;
VIETNAM AIRLINES COMPANY
LIMITED; JAPAN AIRLINES
COMPANY, LTD.,
Defendants-Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted April 21, 2017
San Francisco, California
Before: SCHROEDER and RAWLINSON, Circuit Judges, and LOGAN,** District
Judge.
Appellant Amy Yang (“Yang”) appeals the grant of Donald Wortman’s
motion for final approval of eight class action settlement agreements with
Defendants-Appellees. We review for abuse of discretion. In re Bluetooth
Headset Prods. Liab. Litig., 654 F.3d 935, 940 (9th Cir. 2011). We affirm.
1. The district court properly certified the settlement class and was not
obligated to create subclasses for purchasers of U.S.-originating travel and direct
purchasers of airfare. Federal Rule of Civil Procedure 23(a) does not require a
district court to weigh the prospective value of each class member’s claims or
conduct a claim-by-claim review when certifying a settlement class. See Lane v.
Facebook, Inc., 696 F.3d 811, 823 (9th Cir. 2012) (reasoning that it would be
“onerous” and “impossible” to attribute a specific monetary value to each of the
class members’ asserted claims).
**
The Honorable Steven Paul Logan, United States District Judge for
the District of Arizona, sitting by designation.
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Yang argues that purchasers of foreign-originating travel and indirect
purchasers of airfare should not be entitled to an equal pro rata share of the
settlement funds, in light of Illinois Brick and the Foreign Trade Antitrust
Improvements Act. See 15 U.S.C. § 6a (barring claims arising out of foreign
injury); Illinois Brick Co. v. Illinois, 431 U.S. 720, 728–29 (1977) (providing that
only customers who purchase directly from defendants may recover under federal
antitrust law). But, at the time of settlement, Defendants-Appellees had not raised
these affirmative defenses, and the district court had not ruled on them. Subclasses
may not be created “on the basis of speculative” conflicts of interests. In re Online
DVD-Rental Antitrust Litig., 779 F.3d 934, 942 (9th Cir. 2015) (internal citation
and quotation marks omitted); see also Sullivan v. DB Invs., Inc., 667 F.3d 273,
305 (3d Cir. 2011) (establishing that “a district court has limited authority to
examine the merits when conducting the [class] certification inquiry”).
2. The settlements provided sufficient notice to class members under Rule
23. See Fed. R. Civ. P. 23(c)(2)(B), 23(e)(1), & 23(e)(5). Potential class members
were notified of the opportunity to opt out or object to the settlements no later than
thirty-five days before the fairness hearing. While the class membership period
has remained open for the duration of this appeal, “the class as a whole” was given
sufficient notice to “flush out whatever objections might reasonably be raised to
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the settlement[s].” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir.
1993). Indeed, Defendants-Appellees implemented a comprehensive notice
program that has reached approximately eighty-percent of potential class members
in the United States, and at least seventy-percent in Japan.
AFFIRMED.
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FILED
Wortman v. Yang, Case No. 15-16280
JUN 26 2017
Rawlinson, Circuit Judge, dissenting:
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I respectfully dissent. In my view, the district court abused its discretion
when it certified a settlement class containing members with divergent interests.
Rule 23 of the Federal Rules of Civil Procedure provides in pertinent part:
One or more members of a class may sue or be
sued as representative parties on behalf of all members
only if . . . the representative parties will fairly and
adequately protect the interests of the class.
Fed. R. Civ. P. 23(a)(4) (emphasis added).
The settlement class certified by the district court ignored the requirements
of Rule 23 by lumping together class members with fundamentally different
interests. The Japan Airlines Company, Ltd. (JAL) settlement lumps together
purchasers of domestic travel and purchasers of foreign travel for the same pro
rata distribution of settlement proceeds, despite the fact that the Foreign Trade
Antitrust Improvements Act (FTAIA) precludes federal courts from exercising
jurisdiction over claims of overcharges associated with foreign travel. See 15
U.S.C. 6a (providing that the prohibitions against monopolies and restraint of trade
do not apply to “trade or commerce . . . with foreign nations”). With such an
apparent conflict within the class, it is virtually impossible for the class
representatives to adequately represent a class that includes members who may be
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entitled to absolutely no recovery. See Amchem Prods., Inc. v. Windsor, 521 U.S.
591, 627 (1997) (“[T]he adversity among subgroups requires that the members of
each subgroup cannot be bound to a settlement except by consents given by those
who understand that their role is to represent solely the members of their respective
subgroups.”) (citation omitted) (emphasis added); see also Ortiz v. Fibreboard
Corp., 527 U.S. 815, 856 (1999) (“[I]t is obvious after Amchem that a [divided]
class requires . . . homogenous subclasses under Rule 23(c)(4)(B), with separate
representation to eliminate conflicting interests of counsel. See Amchem, 521 U.S.
at 627, 117 S. Ct. 2231 (class settlements must provide ‘structural assurance of fair
and adequate representation for the diverse groups and individuals affected. . . .’”)
(citations omitted).
In a similar vein, the settlement agreement lumped together passengers who
purchased tickets directly from the airlines and passengers who purchased tickets
through an intermediary, such as a travel agent or ticket broker. We have explicitly
recognized that the “indirect purchaser rule” articulated by the United States
Supreme Court in Illinois Brick Co. v. Illinois, 431 U.S. 720, 746-47 (1977) “bars
suits for antitrust damages by customers who do not buy directly from a
defendant.” Somers v. Apple, Inc., 729 F.3d 953, 961 (9th Cir. 2013). And we
have defined “indirect purchasers of airline tickets” as individuals who “did not
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purchase tickets directly from [the airlines] but instead bought them from direct
purchasers such as travel agents and consolidators.” In re Korean Air Lines Co.,
Ltd. Antitrust Litig., 642 F.3d 685, 689 (9th Cir. 2011). Yet again, these disparate
claims prevent adequate representation of the class. See Amchem Prods., 521 U.S.
at 627; see also Hesse v. Sprint Corp., 598 F.3d 581, 589 (9th Cir. 2010)
(concluding that representation of class was inadequate and conflicting when “one
group within a larger class possesse[d] a claim that is neither typical of the rest of
the class nor shared by the class representative”) (citing Amchem, 521 U.S. at 625-
27).
In sum, the district court abused its discretion by lumping together disparate
claimants, failing to comply with Rule 23 and our governing precedent. See
Zonowick v. Baxter Healthcare Corp., 850 F.3d 1090, 1093 (9th Cir. 2017) (noting
that the district court abuses its discretion when it commits an error of law).
Unfortunately, the district court took the easy way out rather than sorting through
the various claims and claimants. See Ortiz, 527 U.S. at 856 (requiring “division
into homogenous subclasses” when there are conflicting claims within the class).
Rather than affirming, I would reverse and remand for the district court to
create the necessary subgroups to ensure adequate representation of all claimants.
See Amchem, 521 U.S. at 627.
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Because I would reverse on the class certification issue, I would not address
the notice issue. However, as my colleagues in the majority have included that
issue in their discussion, I simply note that it is patently unreasonable to end the
notice period before all prospective class members are identified, thereby
completely depriving those class members of any notice. See Fed. R. Civ. P.
23(c)(2)(B), (e)(1) (requiring reasonable notice to prospective class members).
I respectfully dissent.
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