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 lexis.com 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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