A recent Ninth Circuit decision—In re Cathode Ray Tube Antitrust Litig., 20-15697, 2021 WL 4306895 (9th Cir. Sept. 22, 2021)—that prevented a group of plaintiffs from challenging the approval of a settlement award in a price-fixing case might be on its way to the Supreme Court.   Although non-precedential, the case reflects continuing uncertainty as to the status of intervention rights in class settlements.

The settlement award at issue emanated out of a multi-decade class action concerning cathode ray tubes (“CRT”s), which are now mostly obsolete but in the 1990s and 2000s were a core component of a variety of widely used products, including televisions and computer monitors.  In 2007, a nationwide group of cathode ray tube purchasers filed a class action lawsuit against cathode ray tube manufacturers in a California federal district court.  The class claimed that the manufacturers conspired to price-fix cathode ray tubes.  The price-fixing scheme, the class argued, made the technology containing CRTs significantly more expensive.

In 2015, the defendants agreed to settle the case for $576 million but not all class members approved.  A split emerged among the class members, with one group who would be compensated under the settlement and another group that would not because of variations in state law.  Within the uncompensated group were two subclasses—one whose members were in states with laws that permitted them to recover monetary damages in antitrust litigation (“Omitted Repealer States” or “ORS”) and another whose members were not able to recover monetarily under state law but were still able to get relief under federal law (“Non-Repealer States” or “NRS”).

The ORS and NRS sub-classes (“Petitioners”) moved to intervene under Federal Rule of Civil Procedure 24 so that they could establish their formal recognition as subclasses in the lawsuit.  The district court denied the Petitioners’ motions to intervene, and while the intervention proceedings were ongoing, lead counsel negotiated an amended settlement for the class members who would have received compensation in the original settlement award.  As part of the negotiations, the narrowed class would settle their price-fixing claims against the defendants, but the Petitioners’ claims would be excluded from suit entirely.  In theory, that would have left the Petitioners free to independently pursue their claims against the defendants.

The Petitioners—who were not part of these negotiations—argued, however, that if they were not permitted to intervene in the lawsuit, then any new lawsuit predicated on their price-fixing claims would be untimely, given that it had been more than 10 years since the claims arose.  The Petitioners argued that any settlement by the narrowed class thus would effectively require the Petitioners to also release their claims against the defendants, and the Petitioners objected to the settlement on those grounds.  The district court concluded that the Petitioners lacked standing to challenge the settlement because their claims were not formally released in the amended settlement.  The court thus struck the Petitioners’ objections to the settlement.

The Petitioners appealed the district court’s denial of their right to intervene and the striking of their objections, and simultaneously moved to stay the district court’s final approval proceedings.  The district court rejected the Petitioners’ argument that there was a “possibility” that a final judgment as to the settlement would moot the Petitioners’ appeal regarding their proposed intervention.  The Ninth Circuit denied the Petitioners’ motion to stay the settlement approval, noting that the Petitioners had “not shown that they [were] likely to suffer irreparable injury in the absence of stay.”  The district court then granted final approval to the amended settlement and denied another motion by the Petitioners to intervene.

On appeal, a three-judge panel of the Ninth Circuit affirmed the district court’s striking of the Petitioners’ objections and its settlement approval and then dismissed as moot the Petitioners’ appeal of the denial of its motion to intervene.  The court agreed with the district court that the Petitioners did not have standing to challenge the settlement award because their claims were not released by the settlement of the amended class and thus Petitioners could not show they were injured by it.  For that reason, the court of appeals held that the district court did not err in striking the Petitioners’ objections and affirmed the approval of the settlements.  Then, having affirmed the settlement approval, the court of appeals held that the Petitioners’ appeal of the denial of their intervention motions was moot.  The court explained: “Our affirmance of the amended settlement moots the pending appeals by the [Petitioners] related to intervention in the district court . . .[t]here is no longer an action against [the defendants] into which the [Petitioners] can intervene.”

After the full Ninth Circuit declined to rehear the case, the Petitioners sought review in the Supreme Court, contending that the Court must resolve a circuit split on 1) whether a final judgment moots a pending appeal from an order denying intervention and 2) whether a district court has subject matter jurisdiction to allow class members to intervene as of right into a case coordinated in an MDL proceeding.

As to the first question, the Petitioners contend that the Ninth Circuit’s decision is out of line with the majority rule, in which several circuits have held that a final judgment—like the district court’s approval of the settlement award here—does not moot an appeal regarding a pending intervention into the case.[1]  The Petitioners claim that only the Second Circuit[2] and a subset of cases from the D.C. Circuit[3] recognize the rule adopted by the Ninth Circuit in this case.  The Petitioners urge the Supreme Court to hear the case to resolve the alleged split and to adopt the majority rule.

As to the second question, the Petitioners do not allege a circuit split, but argue that it is important in its own right.  They claim that permitting class members to intervene in a coordinated case would best address basic notions of due process in class representation—specifically, that every member of the class be able to have their position represented in settlement negotiations.  The Petitioners also claim that the Ninth Circuit’s rule presents a “moral hazard” problem—giving named class representatives an incentive to settle cases in a manner that might be contrary to the interests of would-be intervenors.  And they contend that permitting intervention is necessary for the sound functioning of multidistrict litigation.  In particular, they note that the Ninth Circuit’s holding effectively establishes a “jurisdictional bar to intervention” and would “fundamentally shift the way that MDL proceedings will be litigated around the country.”  The Petitioners highlight the fact that the rules governing federal class actions would essentially no longer protect absent class members from joining in and participating in pending proceedings.

If the Ninth Circuit’s decision stands, it might suggest a trend in favor of the minority rule on intervenor appellate rights in class action settlements. A trend in that direction would likely have the effect of inviting more individual lawsuits and less participation in class and collective actions.  Additionally, more putative class members might choose to “opt out” of class participation and eliminate costs at the outset of litigation.

[1] See Neidig v. Rendina, 298 Fed. Appx. 115, 116 n.1 (3d Cir. 2008); CVLR Performance Horses, Inc. v. Wynne, 792 F.3d 469, 475 (4th Cir. 2015); CE Design, Ltd. v. Cy’s Crab House N., Inc., 731 F.3d 725, 730 (7th Cir. 2013); In re Synthroid Mktg. Litig., 264 F.3d 712, 716 (7th Cir. 2001); Mausolf v. Babbitt, 125 F.3d 661, 666 (8th Cir. 1997); FDIC v. Jennings, 816 F.2d 1488, 1491 (10th Cir. 1987).

[2] See, e.g.,, Nat’l Bulk Carriers, Inc. v. Princess Mgmt. Co., Ltd., 597 F.2d 819, 825 (2d Cir. 1979).

[3] See, e.g., Energy Transp. Grp., Inc. v. Mar. Admin., 956 F.2d 1206, 1210 (D.C. Cir. 1992).