5th Circuit: Claim for legal fees can keep antitrust case alive

September 15, 2012

The old proverb says that the only certainties in life are death and taxes. In the context of litigation, you can add one additional inevitability to that list: legal fees. In a ruling Thursday, the 5th Circuit Court of Appeals avoided the subject of taxes, but took the opportunity of a case about death to address the question of attorneys’ fees.

I’ve been writing a lot recently about courts rejecting outsize fees for plaintiffs’ lawyers whose clients received no (or minimal) monetary recovery. This 35-page decision involved a diametrical counterpoint to that scenario. The plaintiffs — 10 individual coffin purchasers and a group called the Funeral Consumers Alliance — originally filed a class action against the largest U.S. casket maker, Batesville, and the three biggest U.S. funeral home chains, claiming that they conspired to make it impossible for consumers to buy Batesville coffins directly from discount providers. After U.S. District Judge Kenneth Hoyt of Houston refused to certify a class, the plaintiffs reached a settlement with one of the funeral chains (Stewart Enterprises) that, according to the 5th Circuit, covered all of their compensatory damages, including the treble damages available under the Clayton Act. Hoyt then dismissed the case against the remaining defendants, ruling that the plaintiffs no longer had standing to sue because they couldn’t recover additional damages.

The plaintiffs, represented by lead counsel at Constantine Cannon and Gibbs & Brun (as well as a host of other firms on behalf of individual clients), appealed the dismissal to the 5th Circuit, arguing that the Clayton Act also provides for the recovery of legal fees and costs. Matthew Cantor of Constantine told me Friday that monetary damages available to antitrust plaintiffs — which consist of compensatory damages, legal fees and costs — have to be considered as a three-part whole. Cantor declined to discuss the specifics of the Stewart settlement, but said that “it did not satisfy all three buckets.”

The defendants argued that because legal fees and costs would go to the plaintiffs’ lawyers, and not to their clients, the plaintiffs themselves had no claims and therefore couldn’t continue the suit. That argument found traction with 5th Circuit Judge Edith Clement, who wrote a partial dissent from Thursday’s opinion. “Plaintiffs cannot demonstrate any personal stake in the continuance of the litigation following the Stewart settlement because they have none,” she wrote. “Their claimed damages have been met multiple times over by the Stewart settlement. The case, as it relates to the plaintiffs, is moot because their injury has been remedied … Any trial to award attorneys’ fees and costs would only exponentially increase the attorneys’ fees in question — with no more awarded to the plaintiffs.”

But Judge Stephen Higginson, writing for himself and Judge James Dennis, said that Congress included fees and costs as part of the recovery available to Clayton Act plaintiffs “to encourage individuals to bring suits to enforce the antitrust laws and to discourage potential defendants from violating antitrust laws.” So monetary damages under the Clayton Act must be construed to include those fees and costs, and not just compensatory damages, the opinion said. And since the settlement in this case didn’t cover all of the plaintiffs’ potential monetary damages, under the 5th Circuit’s 1990 precedent in Sciambra v. Graham News, the plaintiffs have standing to proceed to trial against the remaining defendants.

Plaintiffs’ lawyer Cantor told me that’s exactly what the casket buyers intend to do. Unlike in the Sciambra case, in which the defendant had defaulted, there’s been no finding of liability against Batesville and the other funeral chains, and the Stewart settlement included no admission of a conspiracy. That means the plaintiffs will have to prove liability before they even get to the question of legal fees and costs. But Cantor said they’re looking forward to the full-blown trial.

He also said that his team plans to revisit the question of class certification. In Thursday’s ruling the 5th Circuit upheld the denial of class certification in the case, ruling (among other things) that the plaintiffs hadn’t adequately defined the relevant market in their purported class. Cantor said that finding is at odds with decisions by the 3rd and 7th circuits, which have held that to win certification, an antitrust class must simply show that there’s common evidence to define the market. The plaintiffs, Cantor said, haven’t decided whether to seek en banc or Supreme Court review but are prepared to go to trial on the individuals’ claims while they appeal the class certification decision.

I left messages with Batesville counsel Richard Drubel of Boies, Schiller & Flexner and funeral home counsel Clifford Gunter of Bracewell & Giuliani but didn’t hear back.

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