Settlements

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Last month, the Delaware Chancery Court drastically reduced – from $275,000 to $50,000 – a mootness fee award requested by plaintiffs’ counsel in a lawsuit challenging the merger between PayPal and Xoom Corporation, finding the supplemental disclosures that flowed from the lawsuit provided only minor benefits to stockholders. In re Xoom Corp. Stockholder Litigation. The steep fee reduction reinforces Trulia’s admonition earlier this year that the days of $250,000-$350,000 attorneys’ fee awards for meaningless additional disclosures are over, as Delaware judges will carefully scrutinize attorneys’ fee requests for litigation that yields disclosures of little or no value.

Settlement agreements often include broad general releases covering claims existing from the “beginning of the world” to the settlement date – whether the claims are known or unknown to the releasing party. And in many states, such broad releases are valid and enforceable. Indeed, it is the peace provided by such releases that often makes settlement possible.

In Hartford Accident and Indemnity v. Crum & Forster Specialty Insurance et al., the Eleventh Circuit recently reversed a District Court’s decision refusing to vacate its prior judgments even though vacatur was a condition of a settlement agreement negotiated between two litigating parties. The Eleventh Circuit found the District Court abused its discretion and misapplied the Supreme Court’s decision in U.S. Bancorp Mortgage Company v. Bonner Mall Partnership, which sets out an equitable approach that generally counsels against granting requests for vacatur made after the parties settle, absent exceptional circumstances. The Eleventh Circuit decision is consistent with analyses out of the First and Second Circuits.

Non-disclosure and confidentiality provisions can be an important aspect of resolving a case through settlement. But when one of the parties is a purported class, and the allegation is an antitrust violation, settlement and secrecy may be like water and oil.

This tension came to a head in Shane Group v. Blue Cross Blue Shield of Michigan, in which the Sixth Circuit vacated a $30 million settlement between the defendant and a class of Michigan citizens and corporations, settling allegations of health insurance price fixing. The reason: the district court refused to unseal the parties’ substantive filings – including the Amended Complaint, the motion for class certification, and the expert report on which the settlement was based. When a group of class members moved to intervene to unseal parts of the record and adjourn Rule 23 fairness hearings until they could review the settlement, the district court denied their motion to intervene. In the district court’s own view, the settlement was “fair, reasonable, and adequate,” and thus, class members had no further need for information about the case.

jury box-1The jury renders its verdict. No party objects. The judge thanks the jury for its service, discharges them, and tells them they are free to go. The jury exits, but there’s one problem: the jury’s verdict is internally inconsistent. Is it too late to call the jury back to rectify the inconsistencies in its verdict?

This was the question facing the Supreme Court in the case of Dietz v. Bouldin, decided earlier this month. After the jury delivered a verdict of $0 in damages, the judge discharged the jury and the jurors left the courtroom. However, the judge quickly realized that the jury’s verdict was legally impermissible: the parties had stipulated that medical expenses of $10,136 were owed, and the only question for the jury to decide was whether the award should be even higher.

Anyone who watches Survivor or Game of Thrones knows that alliances are critical. And while they may be necessary to endure from one day to the next, alliances are inevitably broken.

Co-defendants in antitrust cases can draw lessons from these shows. Like alliances, joint defense agreements (“JDA” or “JDAs”) help facilitate defendants’ common interests. JDAs create efficiencies and cost savings by “present[ing] a pooling of resources, a healthy exchange of vital information, a united front against a common litigious foe, and the marshaling of legal talent and advice.” Lugosch v. Congel. Under the right circumstances, JDAs also serve the vital purpose of allowing defendants to realize those benefits without waiving privilege. Id.

When settling a case, litigators are naturally focused on avoiding “Round 2” of the litigation for their clients. Toward this goal, lawyers avoid drafting settlement agreements that include any sort of representations or warranties that could form the basis of a future claim against their own client. But as the recent Florida case of Moriber v. Dreiling confirms, under Florida law, if a party doesn’t specifically incorporate the representations made by an adversary into the settlement agreement, those representations are as good as gone – as well as any potential recourse if they prove untrue. Indeed, the Florida appellate court’s advice on this issue could not be clearer: when settling a case based on the existence or non-existence of some fact, deal with it specifically in the written settlement agreement.