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Certifying Settlement Class Actions


In its much anticipated en banc opinion in Sullivan v. DB Investments, Inc., the Third Circuit affirmed the District Court's certification of two settlement classes of diamond purchasers over objections that the settlement failed to satisfy the requirements of Rule 23. Sullivan v. DB Invs., Inc., 667 F.3d 273 (3d Cir. 2011) [an enhanced version of this opinion is available to subscribers], cert. denied Murray v. Sullivan, 2012 U.S. LEXIS 2656 (Apr. 2, 2012). Specifically, the Sullivan case resolves questions-at least in the Third Circuit-regarding the ability resolve and release class claims where members of the class may not have cognizable antitrust or indirect purchaser claims.

The case arose out of alleged price fixing activity by the De Beers family of companies in the wholesale market for gem-quality diamonds. Plaintiffs brought claims against De Beers under the Sherman and Clayton Acts as well as the antitrust, consumer protection, and unjust enrichment laws of all fifty states and the District of Columbia. Plaintiffs were divided into two classes. The first class of plaintiffs, the direct purchaser class, consisted of those plaintiffs who had purchased rough gem diamonds directly from De Beers during the relevant time period. The second class of plaintiffs, the indirect purchaser class, consisted of those plaintiffs who purchased gem diamonds during the relevant time period from sources other than De Beers or one of its competitors. Both consumers and jewelry retailers who purchased their diamonds from middlemen were included n the indirect purchaser class.

While the indirect purchaser class asserted a classwide injunctive claim under the Sherman Act, its monetary claims depended on the laws of various states. Specifically, in some states, the indirect purchaser plaintiffs had a cause of action under state antitrust law. In other states, recovery was limited to consumer protection and unjust enrichment statutes, or statute provided a cause of action for monetary relief.

Plaintiffs entered into settlement negotiations with De Beers that ultimately resulted in a proposed settlement dividing the plaintiffs into the two putative settlement classes and creating a settlement fund of $295 million to be shared by the two classes. The United States District Court for the District of New Jersey overruled the objections of several plaintiffs to the settlement, certified the two settlement classes, and approved the settlement agreement.

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