Opinion
MDL No. 1261.
May 4, 2004
ORDER AND MEMORANDUM ORDER
AND NOW, this 4th day of May, 2004, and upon consideration of Motions and Declarations Under Rule 60(b) Federal Rule of Civil Procedure filed by All American Gourmet Company (docket no. 337), Country Pure (docket no. 367), Tree Top (docket no. 345), Foremost Foods USA (docket no. 344), Johanna Foods (docket no. 342), Pasco Beverages (docket no. 333), Ventura (docket no. 338), Vita Pakt Citrus (docket no. 336), Rich Ice Cream (docket no. 343), and Almanac Enterprises, Inc. (docket no. 346) and Declarations filed by H.J. Heinz Company (docket no. 355), Rich Products Corporation (docket no. 359), WestPoint Stevens, Inc. (docket no. 362) and PepsiCo, Inc. (docket no. 358), IT IS ORDERED as follows:
1. The Motions Under Fed.R.Civ.P. 60(b) filed by All American Gourmet Company (docket no. 337), Country Pure (docket no. 367), Tree Top (docket no. 345), Foremost Foods USA (docket no. 344), Johanna Foods (docket no. 342), Pasco Beverages (docket no. 333), Ventura (docket no. 338), Vita Pakt Citrus (docket no. 336), Rich Ice Cream (docket no. 343), and Almanac Enterprises, Inc. (docket no. 346) are GRANTED;
2. The following judgments entered in this action are AMENDED to remove the names of the companies identified in paragraph 1 from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court referenced in those judgments:
a. Order of April 26, 2003, granting Class Plaintiffs' Motion for Final Approval of Settlement Agreement between the Classes and Temple-Inland, Inc. and Gaylord Container Corporation;
b. Order of December 8, 2003, granting Class Plaintiffs' Motion for Final Approval of Settlement Agreement Between the Class and International Paper Company and Union Camp Corporation, Georgia-Pacific Corporation, and Weyerhauser Company; and
c. Order of April 21, 2004 granting Class Plaintiffs' Motion for Final Approval of the Settlements with Defendants Packaging Corporation of America, Inc., Tenneco, Inc. And Tenneco Packaging Inc. and with Defendants Stone Container Corporation, Jefferson Smurfit Corporation, and Smurfit Stone Container Corporation.
MEMORANDUM
Presently before the Court are Motions and Declarations Under Rule 60(b) Federal Rule of Civil Procedure filed by 10 companies that were opted out of the class litigation in this case by another company that lacked the authority to do so. The Court grants those motions for the reasons that follow.I. BACKGROUND
In a letter dated February 18, 2004, Liaison Counsel for Tag-Along Plaintiffs Richard Leveridge, Esq. informed the Court that some of his clients had opted-out certain other companies from the classes certified by the Court without authority to do so. The Court held a conference on the matter with all interested parties on March 12, 2004. There was further discussion on the topic at the regularly scheduled monthly status conference on March 18, 2004.
On March 19, 2004, the Court issued an order directing those companies, by name, that were identified by Liaison Counsel as having been improperly opted out of the classes certified by the Court to file with the Court motions and declarations pursuant to Fed.R.Civ.Proc. 60(b) to amend the judgments entered in this action to remove their names from lists of entities identified as having opted out of this class action litigation ("Rule 60(b) Motions"). The following ten companies identified in the Court's March 19, 2004, did so: All American Gourmet Company, Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura, Vita Pakt Citrus, Rich Ice Cream, and Almanac Enterprises, Inc. ("movants")
In the Order of March 19, 2004, the Court also directed the 13 companies that Liaison Counsel reported to the Court had opted-out other companies without authority to "file a Declaration that identifies the company or companies [that the company opted out without authority] and the details of the process by which they opted out each such company." All companies so directed submitted such a declaration by the due date, April 15, 2004.
The judgments addressed by these 60(b) Motions are three Orders issued by this Court approving partial settlements with the defendants in this litigation — the (1) Order of April 26, 2003, granting Class Plaintiffs' Motion for Final Approval of Settlement Agreement between the Classes and Temple-Inland, Inc. and Gaylord Container Corporation; (2) Order of December 8, 2003, granting Class Plaintiffs' Motion for Final Approval of Settlement Agreement Between the Class and International Paper Company and Union Camp Corporation, Georgia-Pacific Corporation, and Weyerhauser Company; and (3) Order of April 21, 2004 granting Class Plaintiffs' Motion for Final Approval of the Settlements with Defendants Packaging Corporation of America, Inc., Tenneco, Inc. And Tenneco Packaging Inc. and with Defendants Stone Container Corporation, Jefferson Smurfit Corporation, and Smurfit Stone Container Corporation. Each Order incorporates by reference a list of companies that opted out of the classes certified by the Court. Specifically, paragraphs two and three of each Order refer to a "Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court." The practical effect of this Order is to remove the names of the movants from this list.
Paragraph 2 makes reference to the list of opt-outs as follows:
Class counsel provided the Court with a Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court. That Record of all such Class Members shall be appended to this Order and docketed by the Clerk of Court. A certified copy of the record of potential Class Members who timely excluded themselves from the classes shall be provided by the Clerk of Court to counsel for Packaging Corporation of America, Inc., Tenneco, Inc., and Tenneco Packaging, Inc. and with Stone Container Corporation, Jefferson Smurfit Corporation, and Smurfit Stone Container Corporation.
Paragraph 3 makes reference to the list of opt-outs as follows:
The Court finds that the persons and entities listed in the attached Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court, and no others, have timely excluded themselves from the classes and accordingly are not included in or bound by the Final Judgment entered pursuant to this Order.
II. LEGAL STANDARD
A. General Authority to Manage Class Actions in Multidistrict Litigation
"[A] district court needs to have broad discretion in coordinating and administering multi-district litigation." In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig., 953 F.2d 162, 165 (4th Cir. 1992) (citing In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d 1007, 1019 (1st Cir. 1988)). The district court's ultimate goal in multidistrict litigation is to ". . . promote the just and efficient conduct of such actions." 28 U.S.C. § 1407(a).
"Given that class action procedures are conceptualized as an exception to the general rule that only parties to a lawsuit are legally bound by a final judgment, and that interested parties normally have a real voice in the strategy and management of the litigation, the procedure can be tolerated, if not completely justified, only if there is fealty to both the sprit and the letter of the procedural rules . . ." Greenfield v. Villager Industries, Inc., 483 F.2d 824, 832 (3d Cir. 1973). Responsibility for compliance is placed primarily upon the active participants in the lawsuit, especially upon designated counsel, for, in addition to the normal obligations of an officer of the court, designated counsel possess, in a very real sense, fiduciary obligations to those not before the court. Id. "The ultimate responsibility of course is committed to the district court in whom, as the guardian of the rights of the absentees, is vested broad administrative, as well as adjudicative, power.Id. B. Specific Authority to Manage Administration of Settlement Funds
This Court has approved four partial settlement agreements that, taken together, resolve all claims in the class litigation. "Settlement administration in a complex class action often requires the courts to use their equitable powers under Rule 23 to manage the disparate interests competing over a finite pool of assets with which to satisfy the class. In re Orthopedic Bone Screw Products Liability Litigation, 246 F.3d 315, 321 (3d Cir. 2001). As stated in the Manual for Complex Litigation, "[t]he Court's equitable powers may be necessary to deal with other problems that commonly arise during administration of settlements but might not be covered by the terms of the agreement." Manual for Complex Litigation (Fourth) § 21.7 (2004) (the "Manual"). These equitable powers are retained by the court until the settlement fund is actually distributed. In re Orthopedic Bone Screw Products Liability Litigation, 246 F.3d at 321; Zientis v. LaMorte, 459 F.2d 628, 630 (2d Cir. 1972). "A primary use of these equitable powers is balancing the goals of expedient settlement distribution and the consideration due to late-arriving class members. In re Orthopedic Bone Screw Products Liability Litigation, 246 F.3d at 321. The instant dispute presents, as will be explained below, a group of companies improperly opted out of the classes certified by the Court that now seek to return to the classes. .
C. Federal Rule of Civil Procedure 60(b)
"The general purpose of Rule 60, which provides relief from judgments for various reasons, is to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice must be done." Boughner v. Secretary of Health, Education and Welfare, 572 F.2d 976, 977 (3d Cir. 1978); Liberty National Bank and Trust Co. v. Yackovich, 99 F.R.D. 518, 519 (W.D. Pa. 1982). "The decision to grant or deny relief pursuant to Rule 60(b) lies in the `sound discretion of the trial court guided by accepted legal principles applied in light of all the relevant circumstances.'"Hernandez, 158 F. Supp.2d at 392 (quoting Ross v. Meagan, 638 F.2d 646, 648 (3d Cir. 1981)). A court's discretion to grant relief has been described as "especially broad," Hopper v. Euclid Manner Nursing Home, Inc., 867 F.2d 291 (6th Cir. 1988) and the rule has been described as a "grand reservoir of equitable power to do justice in a particular case" Pierre v. Bernuth, Lembecke Co., 20 F.R.D. 116, 117 (S.D.N.Y. 1950). Further, "a 60(b) motion to set aside judgment is to be `construed liberally to do substantial justice.'" Fackelman v. Bell, 564 F.2d 734, 735 (5th Cir. 1977) citing Laguna Royalty Co. v. Marsh, 350 F.2d 817, 823 (5th Cir. 1965). However, a "Rule 60(b) motion may not be used as a substitute for appeal . . ." Smith v. Evans, 853 F.2d 155, 158 (3d Cir. 1988).
Rule 60(b) provides that on motion and upon such terms as a are just, the court may relieve a party or a party's legal representative from a final judgment order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgement is void; (5) the judgment has been satisfied, released or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.
III. DISCUSSION
A. The Court Will Analyze the Motions Under Rule 60(b)(1)
Each of the movants certified that they had no knowledge of the fact that they were opted out of the classes certified by the Court. Therefore, the only evidence on the issue is that provided in the declarations filed by the 13 companies that opted the movants out of the classes without authority to do so. Based on this evidence, the Court concludes that the Motions should be granted under Rule 60(b)(1) since all companies that opted out these entities attest that they did so inadvertently or based on mistaken knowledge about the nature of their relationship with the company they opted out. B. In Each Case, the Facts Support Granting the Rule 60(b) Motions
1. All American Gourmet
In its Notice of Request for Exclusion ("Notice of Exclusion") served in June 2003, H.J. Heinz Company ("Heinz") advised the Court of its intent to exclude from the classes certified by the Court all purchases made by its "subsidiaries, affiliates, predecessors, successors, partners, parents, assigns and/or divisions" pursuant to the Initial Notice of Class Action. Dec. of H.J. Heinz Company ¶ 2. According to Heinz, the Notice of Exclusion inadvertently included All American Gourmet. Id.
Heinz stated in its Declaration that the inclusion of All American Gourmet was based on a misunderstanding of the relationship of All American Gourmet to Heinz. Id. at ¶ 3. All American Gourmet was a wholly-owned subsidiary sold prior to the opt-out deadline. All American Gourmet was mistakenly included in the Notice of Exclusion among the names of current subsidiaries being opted out of the classes certified by the Court.
All American Gourmet certified in its Rule 60(b) Motion that it had no knowledge it was opted out of the classes. Heinz stated in its Declaration that All American Gourmet had not authorized Heinz to file a Notice of Exclusion on its behalf and had no knowledge of the opt-out process or about being opted-out of the classes. Id. at ¶ 5.
On the basis of this evidence, the Court concludes that All American Gourmet's Rule 60(b) Motion should be granted. The Orders of April 26, 2003, December 8, 2003 and April 21, 2004 are amended to remove its name from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court.
2. Rich Ice Cream Company
In its Notice of Exclusion served in June 2003, Rich Products Corporation ("Rich Products") advised the Court of its intent to exclude from the classes certified by the Court all purchases made by its "subsidiaries, affiliates, predecessors, successors, partners, parents, assigns and/or divisions" pursuant to the Initial Notice of Class Action. Dec. of Rich Products Corporation ¶ 2. According to Rich Products, the Notice of Exclusion inadvertently included Rich Ice Cream Company. Id.
Rich Products stated in its Declaration that the inclusion of Rich Ice Cream Company was based on a misunderstanding of the relationship of Rich Products to Rich Ice Cream Company. Id. at ¶ 3. Rich Ice Cream Company, Inc. is a private company that is not owned by the same family that owns Rich Products, but rather is owned by a member of the Rich extended family. Id.
Rich Ice Cream Company certified in its Rule 60(b) Motion that it had no knowledge it was opted out of the classes. Rich Products stated in its Declaration that Rich Ice Cream Company had not authorized Rich Products to file a Notice of Exclusion on its behalf and had no knowledge of the opt-out process or about being opted-out of the classes. Id. at ¶ 5.
On the basis of this evidence, the Court concludes that Rich Ice Cream Company's Rule 60(b) Motion should be granted. The Orders of April 26, 2003, December 8, 2003 and April 21, 2004 are amended to remove its name from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court.
3. Almanac Enterprises, Inc.
In its Notice of Exclusion served in June 2003, WestPoint Stevens, Inc. ("WestPoint Stevens") advised the Court of its intent to exclude from the classes certified by the Court all purchases made by its "subsidiaries, affiliates, predecessors, successors, partners, parents, assigns and/or divisions" pursuant to the Initial Notice of Class Action. Dec. of WestPoint Stevens, Inc. ¶ 2. According to WestPoint Stevens, the Notice of Exclusion inadvertently included Almanac Enterprises, Inc. Id.
WestPoint Stevens stated in its Declaration that the inclusion of Almanac Enterprises, Inc. was a clerical error attributable to the fact that the name Almanac Enterprises, Inc. is similar to two other "Almanac" entities included in the Notice of Exclusion and currently owned by WestPoint Stevens. Id. at ¶ 3. Almanac Enterprises, Inc., which at one time had been a wholly owned subsidiary of WestPoint Stevens, was sold prior to the opt-out deadline to Dyersburg Corporation. Id.
Almanac Enterprises, Inc. certified in its Rule 60(b) Motion that it had no knowledge it was opted out of the classes. WestPoint Stevens stated in its Declaration that Almanac Enterprises, Inc. had not authorized WestPoint Stevens to file a Notice of Exclusion on its behalf and had no knowledge of the opt-out process or about being opted-out of the classes. Id. at ¶ 5.
On the basis of this evidence, the Court concludes that Almanac Enterprises, Inc.'s Rule 60(b) Motion should be granted. The Orders of April 26, 2003, December 8, 2003 and April 21, 2004 are amended to remove its name from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court.
4. Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura, Vita Pakt Citrus.
In its Notice of Exclusion served in June 2003, PepsiCo advised the Court of its intent to exclude from the classes certified by the Court all purchases made by its "subsidiaries, affiliates, predecessors, successors, partners, parents, assigns and/or divisions" pursuant to the Initial Notice of Class Action. Dec. of PepsiCo, Inc. ¶ 2. Included among PepsiCo's listed entities were certain identified "Contract Manufacturers/Tolling Companies": Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura, and Vita Pakt Citrus. Id.
According to PepsiCo, the above entities manufactured and packaged products for PepsiCo's subsidiaries. Id. at ¶ 3. Pursuant to these contracts, certain PepsiCo subsidiaries at various times purchased corrugated materials for delivery to and use by these entities. Id. In opting out these entities from the classes, PepsiCo intended only that purchases actionable by PepsiCo and/or its subsidiaries be excluded. Id. PepsiCo was unaware that these entities had themselves purchased corrugated products.
PepsiCo later learned, after filing the Notices of Exclusion, that the above identified entities had in some instances made purchases of corrugated materials for their own use or on behalf of other unrelated companies, which are not actionable by PepsiCo or its subsidiaries. Id. at ¶ 3. PepsiCo stated in its Declaration that it did not intend to exclude from the classes such purchases. Id.
Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura and Vita Pakt Citrus all certified in their respective Rule 60(b) Motions that they had no knowledge they were opted out of the classes. Further, PepsiCo stated in its Declaration that these companies had not authorized PepsiCo to file Notices of Exclusion on their behalf and that these companies had no knowledge of the opt-out process or about being opted-out of the classes. Id. at ¶ 5.
On the basis of this evidence, the Court concludes that the 60(b) Motions filed by Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura, and Vita Pakt Citrus should be granted. The Orders of April 26, 2003, December 8, 2003 and April 21, 2004 are amended to remove their names from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court.
C. The Effect of the Court's Ruling is to Restore the Movants to the Class
The effect of this Order and Memorandum is to restore the movants, and only the movants, to the classes certified by the Court. The movants are therefore bound by the settlement agreements entered into between the classes and the defendants. As a result, movants are entitled to file claims against the settlement funds in this litigation and movants claims' against the defendants that are party to those settlement agreements are dismissed with prejudice. Those entities mistakenly opted out of the classes that chose not to file Rule 60(b) motions are not members of the classes. They are not bound by the settlement agreements. Therefore, they are not entitled to share in the proceeds of the class settlements.
IV. CONCLUSION
On the current state of the record, the Court concludes that the movants were inadvertently or as a result of mistake opted out of the classes certified by the Court. Therefore, the Court grants the Motions and Declarations Under Rule 60(b), Federal Rule of Civil Procedure filed by All American Gourmet Company, Country Pure, Tree Top, Foremost Foods USA, Johanna Foods, Pasco Beverages, Ventura, Vita Pakt Citrus, Rich Ice Cream, and Almanac Enterprises, Inc. and amends the Orders of April 26, 2003, December 8, 2003 and April 21, 2004 to remove their names from the Record of Potential Class Members Who Excluded Themselves from the Classes Certified by the Court.