Antitrust Law Daily Wrap Up, ANTITRUST—EDMich: Final Alleged Conspirator Settles Packaged Ice Purchasers’ Market Allocation Suit, (Nov 14, 2012)

By E. Darius Sturmer, J.D.

The federal district court in Detroit has given its final approval to a proposed settlement of Sherman Act market allocation claims asserted by direct purchasers of packaged ice against Reddy Ice Holdings, Inc., and Reddy Ice Corporation (In re Packaged Ice Antitrust Litigation, November 13, 2012, Borman, P.). Under the settlement, Reddy Ice—which entered bankruptcy earlier this year—agreed to pay $750,000 into a settlement fund and to pay the cost of settlement notice up to another $140,000. The settlement was found by the court to be fair, adequate, and reasonable. Therefore, the court granted the motion for final approval. It also granted a motion for an award of fees, expenses, and incentive awards.

The direct purchasers—retail stores and gas stations who bought directly from ice producers—first filed suit against Reddy Ice and two other producers—Arctic Glacier Int’l, Inc. and Home City Ice Co.—along with their subsidiaries and corporate affiliates in 2008, after a Department of Justice investigation and subsequent series of enforcement actions revealed the conspiracy among them. The lawsuit ultimately swelled to become a consolidated class action involving 68 separate private actions brought by both direct purchasers and end-consumer indirect purchasers under federal and state antitrust law.

The Reddy Ice corporate family signified the sole remaining set of defendants to the direct purchasers’ claims. A settlement with the Home City defendants was approved in February 2011 (2011-1 Trade Cases ¶77,359) and the Arctic Glacier defendants settled last December (2011-2 Trade Cases ¶77,727).

According to the court, consideration of the factors most relevant to the case led to the conclusion that, “given the complexity of the litigation, the multitude of factual and legal hurdles which are presented by Reddy Ice’s recent bankruptcy and the probable status of the direct purchaser claims in the bankruptcy proceedings,” the settlement agreement fell within the range of reasonableness, fairness, and adequacy required under Federal Rule of Civil Procedure 23. “Something was better than nothing,” the court explained.

Weighing the likelihood of the plaintiffs’ success against the amount and form of the relief offered in the settlement supported approval, the court said. As Reddy Ice’s debts have been discharged in bankruptcy, and the plaintiffs’ claims would have been but one of hundreds of other unsecured creditor claims, the direct purchasers stood little chance of recovering anything in bankruptcy. In this context, $750,000 in cash had to be considered more valuable to the class members than an unsecured claim in bankruptcy. The complexity, expense, and likely duration of the litigation also favored approval, the court stated, especially because the plaintiffs faced the additional costly battle in bankruptcy court going forward.

Other factors considered by the court as favoring settlement included: the opinions of class counsel, the lack of objections or opt-outs by absent class members, the lack of any hint of collusion, and the public interest.

A request for attorney fees in the amount of $225,000—30 percent of the settlement amount—was also approved by the court. Noting a determination by the same court in a previous packaged ice settlement that a “requested award of close of 30 percent appears to be a fairly well-accepted ratio in cases of this type and generally in complex class actions,” the court saw no basis to deviate from the prevailing and commonly accepted fee award amount. The total fees awarded in the litigation thus would constitute approximately 26 percent of the aggregate $26.75 million in settlement funds, it was noted.

The court additionally granted requests for $100,000 in litigation expenses and for a total of $50,000 in incentive awards to eight of the class representatives and another class member that agreed to serve on an unsecured creditors committee.

The case is No. 08-MDL-01952.

Jeffrey B. Gittleman (Barrack, Rodos & Bacine) for the plaintiffs. Alan L. Kildow (DLA Piper US, LLP) for Reddy Ice Holdings, Inc.

Cases: Antitrust MichiganNews