OBJECTION TO CLASS ACTION SETTLEMENT AND APPROVAL OF ATTORNEYS FEES. COMES NOW, Bert Chapa, Objector, by and through counsel of record, files

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION ) ) IN RE: PRE-FILLED PROPANE ) MDL Docket No TANK MARKETING AND SALES ) Master Case No PRACTICES LITIGATION ) OBJECTION TO CLASS ACTION SETTLEMENT AND APPROVAL OF ATTORNEYS FEES COMES NOW, Bert Chapa, Objector, by and through counsel of record, files this his objection to the class action settlement as follows: According to the settlement website, [t]he lawsuit claims that Blue Rhino, together with certain competitors, reduced the amount of propane gas in the cylinders it sold to its customers without disclosing the reduced fill to its customers and by misrepresenting or failing to disclose the actual fill of the cylinders to its customers. The lawsuit seeks to recover the money that Plaintiffs allege customers were overcharged due to Blue Rhino s conduct. As set forth in more detail below, the proposed settlement is not fair, adequate and reasonable and, in addition, attorneys fees sought are excessive. Objector s address and phone number are: 5209 Tartan Street Corpus Christi, Texas T: The dates and locations at which Objector purchased or exchanged Blue Rhino propane tanks are as follows: May Stripes at 5529 Saratoga Blvd., Corpus Christi, Texas Objection is made to the extent an exact date of purchase or location of purchase, given that it does not matter for determining or asserting class membership, is Case 4:09-md GAF Document 263 Filed 01/10/12 Page 1 of 12

2 required to make an objection. All dates within the class period are sufficient for making one a class member. There is no location restriction in the class definition. Objection is also made to the extent an exact date, location or a Valid Proof of Purchase is required to file an objection, where it is not required to make a claim. The requirements to show class membership to make a claim should be no more onerous than to file an objection. Nevertheless, attached to Exhibit A, the Affidavit of Bert Chapa, are photographs of some of the Blue Rhino propane tanks Objector purchased. Objector purchased or exchanged one or more Blue Rhino propane gas cylinders between June 15, 2005 and October 11, 2011, not for purposes of resale. See Affidavit of Bert Chapa, Exhibit A. Objector is therefore a class member and has standing to object to the proposed settlement. The Eighth Circuit Court of Appeals has established the following analysis for determining the fairness, adequacy and reasonableness of a proposed class action settlement: Under Federal Rule of Civil Procedure 23(e), the district court acts as a fiduciary, serving as a guardian of the rights of absent class members. In light of the exposure to the litigants and litigation, we review a district court's approval of a class action settlement for an abuse of discretion. A district court is required to consider four factors in determining whether a settlement is fair, reasonable, and adequate: (1) the merits of the plaintiff's case, weighed against the terms of the settlement; (2) the defendant's financial condition; (3) the complexity and expense of further litigation; and (4) the amount of opposition to the settlement. The district court need not make a detailed investigation consonant with trying the case; it must, however, provide the appellate court with a basis for determining that its decision rests on well-reasoned conclusions and is not mere boilerplate. The most important consideration in deciding whether a settlement is 2 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 2 of 12

3 fair, reasonable, and adequate is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement. In re Wireless Telephone Federal Cost Recovery Fees Litigation, 396 F.3d 922, (8th Cir.), cert. denied, 546 U.S. 822 (2005) (citations omitted). Applying these criteria, the proposed settlement is not fair, adequate and reasonable. By all apparent measures, the case against the defendants is extremely strong. It appears established that the amount of propane gas in the 20-pound cylinders was reduced without disclosing, or perhaps even affirmatively misrepresenting, the actual net weight or level of propane in the cylinders. These facts, and more, have been already admitted by the defendants. The defendants appear to have a very strong financial condition. Ferrellgas Partners, L.P. (NYSE: FGP), for example, has a market capitalization approaching $1.5 billion. Moreover, it appears that the bulk of the discovery necessary has been completed in order to establish the underlying conduct complained of. Therefore, under the circumstances, one should expect an extraordinary settlement providing relief that would make the class nearly whole. The proposed settlement falls far short on virtually any measure. As an initial matter, this is not a $25 million settlement. It is highly unlikely that anywhere near this figure will actually be paid. Indeed, only $10 million has been funded and the settlement contemplates the likely scenario that the defendants will receive a reversion even for this minimal $10 million amount. The definition and requirement of a Valid Proof of Purchase and Ferrellgas broad Audit Rights, in addition to the low $7.50 minimum claim and the $ ceiling, will necessarily drive down any meaningful claims. Moreover, the reversionary interest retained by the defendants and 3 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 3 of 12

4 the use of a cy pres distribution prior to making all class members whole renders the settlement unfair, inadequate and unreasonable. The claims process is unreasonable and will unnecessarily drive down claims and the amount paid by the defendants to class members. There should be no requirement of a Valid Proof of Purchase as that term is defined. This makes it extremely likely that the only claims for specific product that can be made by most class members are for the propane tanks they still have in their possession. The minimum amount distributed to the class should also be much higher. Assuming class counsel even chose to conduct this inquiry, the average number of propane tanks and re-fills during the class period is far more than one. Therefore, why should the minimum amount of a settlement check be more? The claims system is artificially rigged to reduce the amount paid to the class. The settlement indicates that state and federal anti-trust claims were asserted as well. Objection is also made to the extent that consumers in states with Illinois Brick repealer statutes were treated the same as consumers in states without such statutes. Objection is also made to the attorneys fees. In the Eighth Circuit, [t]here are two methods by which attorneys fees may be calculated: the lodestar method and the percentage-of-the-fund method. Johnston v. Comerica Mortgage Corp., 83 F.3d 241, 246 (8 th Cir. 1996). Objection is made to the proposed attorneys fees under both the lodestar and percentage-of-the-fund methodologies. Moreover, class counsel should have to wait until all claims are actually paid before attorneys fees are determined. Then it will be known for certain whether the actual claims will be as modest as Objector is suggesting. Objection is also made that bowing to the defendants request for a reversionary interest and in agreeing to the impossible claims process, class counsel has 4 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 4 of 12

5 abdicated its duty to represent the class and has created a conflict of interest by favoring their own attorneys fees without adequately protecting the class interests. This settlement should be disapproved in its entirety. If approved, class counsel s request for attorneys fees should be denied and, in any event, class counsel should be required to wait until the claims amount is actually known before any attorneys fees are decided. Objector s signature is contained on the attached affidavit. Respectfully submitted, By: _/s/ Jeffrey B. Tonkin JEFFREY B. TONKIN, MBN # Grand Boulevard, # 350 Kansas City, MO (816) Fax (816) E:Mail: j_tonkin@att.net 5 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 5 of 12

6 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument has been served upon all parties, as indicated below, on this the 10th day of July Via CM-ECF Filing Clerk of the Court United States District Court for the Western District of Missouri Charles Evans Whittaker Courthouse 400 East 9 th Street Kansas City, Missouri Via CM-ECF & Facsimile: (708) Elizabeth A. Fegan Hagens Berman Sobol Shapiro LLP 1144 W. Lake St., Ste. 400 Oak Park, IL beth@hbsslaw.com Via CM-ECF & Facsimile: (314) Peter W. Herzog, III Bryan Cave LLP 211 North Broadway, Ste St. Louis, Missouri pwherzog@bryancave.com _/s/ Jeffrey B. Tonkin JEFFREY B. TONKIN, MBN # Case 4:09-md GAF Document 263 Filed 01/10/12 Page 6 of 12

7 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 7 of 12

8 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 8 of 12

9 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 9 of 12

10 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 10 of 12

11 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 11 of 12

12 Case 4:09-md GAF Document 263 Filed 01/10/12 Page 12 of 12