Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Consumers seek Supreme Court review of settlement distribution in airline price fixing suit, (Aug 2, 2024)

By Patricia K. Ruiz, J.D.

The petitioners challenged the distribution of unclaimed settlement funds as attorney fees and a second distribution to class members who cashed their first checks.

A corporation and an individual who objected to attorney fees and a secondary distribution of settlement funds following the $58 million settlement of consumers’ price fixing claims against All Nippon Airways (ANA) filed a petition for a writ of certiorari in the U.S. Supreme Court. The petitioners seek clarify from the Supreme Court surrounding the distribution of undelivered or uncashed checks payable to approved claimants in federal class action cases (Xanadu Corp. v. Adlin (U.S. July 25, 2024)).

In 2009, a class of consumers brought litigation against various airlines alleging price fixing surrounding international transpacific flights. Through various settlements, the airlines agreed to pay money for distribution to the class. After all of the settlements, approximately $104 Million became available for distribution to the class members. However, over 16,000 of 61,770 claimants, which represents over 26% of claimants, did not receive their payment either because it was returned by the postal service or because the checks went uncashed. After a motion was filed for a secondary distribution, two objectors (one individual and one corporation) filed objections as one did not receive its check and the other because the claims administrator and Class Counsel took no action—such as sending emails—to notify the 16,000 claimants whose checks were returned or uncashed.

In 2019, the federal district court in San Francisco issued the orders in dispute concerning the settlement between consumers and ANA, the final air carrier to settle in the consumers’ price fixing lawsuit. One order gave the attorneys for the consumers more than $14 million in fees and unreimbursed expenses for their work in reaching the settlement. The other order approved a secondary distribution of settlement funds to class members who had participated by cashing their first checks. The petitioners appealed.

The Ninth Circuit, in a not-for-publication decision, affirmed the orders granting attorney fees and a secondary distribution of settlement funds. A corporation and an individual who had objected to class counsel’s motion for fees and further distribution lacked standing to do so, in the appellate court’s view. Moreover, evaluating the merits of the orders, the appellate court concluded that the district court did not abuse its discretion by approving notice of the motion for attorney fees and for secondary distribution or by approving that secondary distribution rather than directing the funds to the state treasuries associated with the last known address of each intended recipient.

Questions presented. The petition for a writ of certiorari presented two questions: (1) whether class counsel and the claims administrator must turn over undelivered or uncashed checks payable to approved claimants in federal class action cases to state unclaimed property agencies or if class counsel can instead convert the money to additional attorney’s fees with the remaining amounts redistributed to other class members; and (2) whether due process allows class counsel, who were concurrently seeking to convert undelivered checks into attorney fees, to cause a class action claimant’s approved claim to be reopened and audited over a year after its approval, subjected to a heightened and different standard of review than other claimants, but not provide any meaningful judicial review mechanism for the new decision.

The petitioners argued that between ten and thirty percent of payments do not reach the approved claimant, and that class counsel often do not represent the best interests of the class in their rush to close the case. The petition asks the Supreme Court to determine whether the lower courts may allow Class Counsel to take money belonging to approved claimants who did not receive their settlement check or did not cash them and take attorney fees from them and redistribute the remaining amounts, or whether unclaimed property laws compel lodging the payments with the appropriate state unclaimed property agency.

Also, the petition argues the Ninth Circuit’s affirmation of the district court’s “implicitly” finding that the corporate petitioner did not have a valid claim based on Class Counsel’s findings did not comport with due process and created a dangerous situation. The Court should grant certiorari to address the extent a claimant has a due process right to obtain review from the district court as to the denial of its claim and any requirement that class members be held to the same evidentiary standards.

Attorneys: John Allen Roth (J. Allen Roth, Attorney at Law) for Xanadu Corp. and David Gould.

Companies: Xanadu Corp.

News: Antitrust