Opposition Brief — Hospitality Management Associates, Inc. v. Shell Oil Co., Dba Shell Chemical Co.
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Pa Supreme Court. U.S
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No. 03-1431 JUN 17 2004
OFFICE OF THE CLERK
In The
Supreme Court of the Anited States
¢
HOSPITALITY MANAGEMENT
ASSOCIATES, Inc., et al.,
Petitioners,
V.
SHELL OIL COMPANY d/b/a SHELL CHEMICAL
COMPANY, HOECHST CELANESE CORPORATION,
and E.1. DuPONT de NEMOURS AND COMPANY,
Respondents.
,
wv
On Petition For Writ Of Certiorari
To The Supreme Court Of South Carolina
4
v
SHELL OIL COMPANY’S
BRIEF IN OPPOSITION
——
Davip T. HARVIN
Counsel of Record
ERICA L. KRENNERICH
VINSON & ELKINS L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
(713) 758-2368
TIMOTHY W. BOUCH
G. HAMLIN O’KELLEY, Ill
LEATH BOUCH & CRAWFORD, LLP
134 Meeting Street, 5th Floor
Charleston, South Carolina 294(2
(843) 937-8811
Attorneys for Respondent Shell Oil
Company d/b/a Shell Chemical
Company
COCKLE LAW BRIEF PRINTING CO (800) 225-6964
GR CALL COLLECT (402) 342-2831
QUESTION PRESENTED
Whether the South Carolina Supreme Court properly
affirmed the granting of full faith and credit to the final
judgments of the Tennessee and Alabama state courts in,
respectively, Cox v. Shell Oil Co., Case No. 18,844, Chan-
cery Court, Obion County, Tennessee (“Cox”); Spencer uv.
Shell Oil Co., Case No. CV-94-047, Circuit Court. Ureene
County, Alabama (“Spencer”).
PARTIES TO THE PROCEEDING AND
RULE 29.6 STATEMENT
Petitioners have identified all parties in this proceed-
ing.
Pursuant to Supreme Court Rule 29.6, Respondent
Shell Oil Company advises the Court that Shell Oil Com-
pany is a wholly-owned subsidiary of Shell Petroleum,
Inc., a Delaware corporation. Shell Petroleum, Inc. is
directly or indirectly owned 60% by Royal Dutch Petro-
leum Company and 40% by The “Shell” Transport and
Trading Company, p.l.c.
iii
TABLE OF CONTENTS
Page
eT FINITE GED vc evcessccsesscsvcccnesvesesesivesessves i
PARTIES TO THE PROCEEDING AND RULE 29.6
ae silinceinadbewaneidarersssesnsdasshavensy ; &
Ge FER Be Ce ie cecveescsceverecscvccssoesoessecess Vv
EXPLANATION OF RECORD CITEG...................004. vii
SHELL OIL COMPANY ’S BRIEF IN OPPOSITION....... 1
STAT eet © OF THE CAGE. ....00cccrccssosescossessesssssoees 3
Bi, FRCEUR BOCRATOUNG 00.600 0000ccccsrsscessssescse000 3
B. Procedural Background.................:.ccsseeee 7
REASONS THE PETITION SHOULD BE DENIED...... 8
I. There Is No Conflict Among the Circuits or
State Courts of Last Resort Regarding
Proper Application of Full Faith and Credit
Principles to Class Action Judgments ............ 8
A. The South Carolina Supreme Court
Properly Followed the Full Faith and
Credit Principles Enunciated by This
ides Ricekarectidasensnbniabsansdivanestkstie® 9
B. The Stephenson and Homeside Lending De-
cisions Do Not Conflict With the South
Carolina Supreme Court Decision ............... 13
II. The South Carolina Supreme Court Correctly
Held That the Cox Judgment Was Entitled to
rs ares padsadpentnees 16
A. The South Carolina Supreme Court
Properly Rejected Petitioners’ Chal-
lenges to the Manner of Giving Notice to
Ge See BOUT can ccsccescessssreccvescesnceceess 16
TABLE OF CONTENTS -— Continued
Page
B. The South Carolina Supreme Court
E.
There Is No Due Process Requirement
That Notice Actually Be Received............
The South Carolina Supreme Court
Properly Held That the Cox Court Ad-
dressed Adequacy of Representation Is-
1. There Was No Conflict Between Class
Counsel and the Class .......ccccssssecccseses
2. Cox Class Counsel Conducted Them-
selves Properly ..........:::scccsssseeeeeeeseeeees
Petitioners’ Amchem Arguments Are Ir-
relevant to This Case. ..........ssccccsecsecseeeeees
CONCLUSION. ..........ccscccssscecseeeeessecssceeseuseceeeeaeeesans
19
21
22
TABLE OF AUTHORITIES
Page
CASES
Amchem Products v. Windsor, 521 U.S. 591 (1997) .. 27, 28, 29
Califano v. Yamasaki, 442 U.S. 682 (1979)........::ccccceeeeees 27
Cox v. Shell Oil Co., Case No. 18,844 (Chancery Ct.,
Obion Cty., Tenn. Nov. 17, 1995) .........ccccccsererees passim
Durfee v. Duke, 375 U.S. 106 (1963) ..2...... ce cceeeeeteeeeees 9, 10
Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974).......... 17
Epstein v. MCA, Inc., 179 F.3d 641 (9th Cir.), cert.
denied, 528 U.S. 1004 (1999)...............04 11, 13, 22, 27, 29
Fine v. America Online, Inc., 743 N.E.2d 416 (Ohio
Ct. App. 2000), cert. denied, 532 U.S. 942 (2001) ... 11, 28
Greenspun v. Bogan, 492 F.2d 375 (1st Cir. 1974)............ 21
Hansberry v. Lee, 311 U.S. 32 (1940) ......eeeeeeeeeeeeeeeeeeeenes 22
Hospitality Management Associations, Inc. v. Shell
Oil Co., 356 S.C. 644, 591 S.E.2d 611 (S.C. 2004) ....8, 12
In Re Agent Orange Prod. Liab. Litig., 818 F.2d 145
(58 Cle TBF vincivdéstscrsiscscsvssctinecaeenanneaien 13
Ivy v. Diamond Shamrock Chem. Co. (In re Agent
Orange Prod. Liab. Litig.), 996 F.2d 1425 (2d Cir.
DOD iveviierssciivessssssetinvernsseemcneanmananeael 14
James B. Beam Distilling Co. v. Georgia, 501 U.S.
DID CIGD E) esis isidarceccscnessssersretpnessticsaseecnieneenel 27
Matsushita Elec. Indus. Co. v. Epstein, 516 U.S.
BOT CIGD vcissenersestinatncicinicammnnnnenamennene passim
Mullane v. Central Hanover Bank & Trust Co., 339
SF BO FI ov oincccncsiceccanversisteiss eee 17
vi
TABLE OF AUTHORITIES — Continued
Page
Phillips Petroleum Co. v. Shutts, 472 U.S. 797
(1985) ........sscccsssrcccsssorsssseecessncesssssssscessnsssssesssocnecssees passim
Reiter v. Sonotone Corp., 442 U.S. 330 (1979) ......eseser 27
Reynoldsville Casket Co. v. Hyde, 514 U.S. 749
6 :):):) Pee 27
State of Vermont v. Homeside Lending, Inc., 826
A.2d 997 (Vt. 2008) ........cceeeeesseeeeeeesererreeeeeeeeneeereeey 14, 15
Stephenson v. Dow Chemical Co., 273 F.3d 249 (2d
Cir. 2001), aff’d, 5389 U.S. 111 (2003)... 13, 14
Silber v. Mabon, 18 F.3d 1449 (9th Cir. SED ccctsscsncevseiie 22
Spencer v. Shell Oil Co., Case No. CV-94-047
(Circuit Ct., Greene Cty., Ala. Nov. 17, 1995) ........ passim
Underwriters Nat'l Assurance Co. v. North Carolina
Life & Accident & Health Ins. Guar. Ass’n, 455
U.S. 691 (1982) ....cecccccccccccsseceeeeeesssseesneettsasseseeeoees .passim
STATUTES
U.S. CONST. art. IV, §1 (codified at 28 U.S.C.
$ 17BB)......c.csrvecerosrssrosoersessesessessssesosossrosossoasoreasanssssronserees 9
OTHER AUTHORITIES
7B Wright, Miller, & Kane, Federal Practice and
Procedure § 1789 at 238 (2d ed. 1986) .......cserererrerees 22
EXPLANATION OF RECORD CITES
“Pet.” refers to the Petition for Writ of Certiorari.
“Pet. App. __” refers to the Appendix attached to the
Petition for Writ of Certiorari.
“Shell App. __” refers to the Appendix attached to Re-
spondent Shell Oil Company’s Brief in Opposition to Writ
of Certiorari.
“R. _” refers to the Record on Appeal filed with the South
Carolina Supreme Court cited by specific page number.
arn
pee sin A ae Be
et
SHELL OIL COMPANY’S BRIEF IN OPPOSITION
This case involves a collateral attack on the 1995 final
judgments of Tennessee (Cox) and Alabama (Spencer)
approving two nationwide class action settlements.’ No
exceptional circumstances are present here. Petitioners
are members of the Cox and Spencer settlement classes
who did not opt out. They could have obtained the sub-
stantial relief offered by the Cox and Spencer settlements.
Instead, they sued Respondents Shell Oil Company
(“Sheil”), Hoechst Celanese Corporation (“Celanese”), and
E.1. DuPont de Nemours & Co. (“DuPont”) in the hope
they would obtain greater relief through litigation. The
South Carolina Supreme Court affirmed a summary
judgment in favor of Respondents. The issue Petitioners’
case raises is the full faith and credit the United States
Constitution guarantees to the final judgments of the
sister states.
Petitioners seek to avoid the preclusive effect of the
Cox and Spencer settlements by claiming that the notices
provided to absent class members in 1995 were inadequate
and the classes were inadequately represented. All of
Petitioners’ objections about the manner of giving notice,
the content of the notice, and the conduct of class counsel
could have been presented to the Cox and Spencer courts
in 1995. In fact, many of Petitioners’ specific complaints
mimic objections that were actually made in the Cox
proceeding and ruled on by the Cox court. No theory of
collateral review would allow Petitioners to relitigate
these objections.
' Final Judgment in Cox v. Shell Oil Co., Case No. 18,844 (Chan-
cery Ct., Obion Cty., Tenn. Nov. 17, 1995) (Shell App. 40-44) and Final
Order Approving the Class Action Settlement, Attorneys’ Fees and
Expenses, and Awards to Representative Plaintiffs in Cox (filed Nov. 17,
1995) (Shell App. 11-39) (collectively “Cox”); Spencer v. Shell Oil Co.,
Case No. CV-94-047 (Circuit Ct., Greene Cty., Ala. Nov. 17, 1995) (R.
4385-4390) (“Spencer”).
2
The decision of the South Carolina Supreme Court
represents an unexceptional application of traditional full
faith and credit principles. Mindful of this Court’s admoni-
tion that class action judgments are subject to the same
full faith and credit analysis as other judgments, the
South Carolina Supreme Court carefully reviewed the
settlement approval procedures employed by the Tennes-
see and Alabama courts and determined vhat those courts
had scrupulously ensured that absent class members were
accorded the due process this Court requires. As a result,
the South Carolina Supreme Court held, the Cox and
Spencer judgments were entitled to full faith and credit in
the courts of South Carolina. South Carolina is not the
first, but simply the most recent, state that has granted
full faith and credit to the Cox and Spencer final judg-
ments.”
Petitioners ask this Court to rule that they were
entitled to litigate in the South Carolina courts their
objections to the adequacy of notice and the adequacy of
representation as if they were making them for the first
time to the Cox and Spencer courts. (Pet. 14, 29-30).
Notably, however, Petitioners cannot — and do not — cite
any authority for such an extreme proposition. If Petition-
ers’ theory prevailed, it would be virtually impossible for
defendants ever to compromise class action litigation.
Every class settlement would be subject to endless reliti-
gation as absent class members paraded one by one
through every court in this country demanding de novo
review of every class judgment. Fortunately, that is not the
law. To the contrary, where the state court approving a
class action settlement has squarely addressed the due
process issues, absent class members are not entitled
subsequently to relitigate those issues. Labeling those
issues “jurisdictional” does not expand the permissible
? E.g., the Tennessee court’s judgment in Cox has also been given
full faith and credit by courts in Alabama, Arizona, Florida, and
Wisconsin. (R. 3583; R: 3571-3574; R. 3944-3946; R. 3947-3955).
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3
scope of review because, as this Court has held, full faith
and credit principles apply equally to questions of jurisdic-
tion. Underwriters Nat'l Assurance Co. v. North Carolina
Life & Accident & Health Ins. Guar. Ass’n, 455 U.S. 691,
706 (1982).
Because the South Carolina Supreme Court conscien-
tiously applied to the Cox and Spencer judgments the
principles of full faith and credit previously announced by
this Court, Petitioners’ application for writ or certiorari
should be denied.
STATEMENT OF THE CASE
A. Factual Background
Petitioners are all members of the 1995 Cox and
Spencer nationwide settlement classes who did not opt out.
Instead, they sought damages from Shell, Celanese, and
DuPont for allegedly defective polybutylene (“PB”) plumb-
ing systems installed in structures they own.”
PB plumbing systems are comprised of PB pipe and
various “fittings” that join sections of the pipe. These
fittings are made from different raw materials and differ-
ent designs. Respondents did not manufacture or sell the
PB piumbing systems or the component parts of those
systems. Rather, Shell manufactured the PB resin that
was sold to third parties who extruded it into PB plumbing
pipes, and Celanese and DuPont manufactured and sold
acetal resins named Celcon and Delrin, respectively, which
were molded into the plastic fittings used to join the pipes
together.
By 1995, litigation over PB plumbing systems had
been pending in many courts around the country for
* Because Petitioners’ Statement of Facts is simply a self-serving
recitation of their allegations, replete with misstatements and mischar-
acterizations of fact and law, Shell respectfully presents its own
Statement of Facts.
4
almost a decade. (Shell App. 18, J 1). In November 1994,
the Spencer lawsuit — a putative nationwide class action —
was filed in Alabama state court against Shell, Celanese,
and DuPont. At that time Respondents were actively
negotiating the settlement of another nationwide <class
action previously filed in Texas state court (“Beeman”).
(Shell App. 18, 7] 2-3). Although the parties reached a
settlement in Beeman, it ultimately fell through when the
Texas court denied preliminary approval in February
1995. (Shell App. 18, J 3). In May 1995, DuPont reached a
settlement in Spencer, and the A!abama court preliminar-
ily approved it. (R. 4155-4169).
In June 1995, the Cox action was filed against Shell
and Celanese in Tennessee.* (R. 4040-4059). After the Cox
court certified a national class,’ Beeman class counsel
joined with Cox class counsel to prosecute the Cox action
on beha!f of owners of structures containing PB plumbing
systems. (Shell App. 19, J 4; R. 2377-2379). Meanwhile the
Spencer court certified a class action against the non-
settling defendants Shell and Celanese. At that point Shell
and Celanese faced two competing nationwide class
actions.
On July 31, 1995, Shell and Celanese reached a
settlement with the Co:: plaintiffs. (Shell App. 20, J 19).
On August 9, 1995, the Cox court heard arguments from
the objectors to the settlement, including Spencer class
counsel, on the adequacy of the proposed notice, the
applicable due process requirements, and the adequacy of
class representation. (R. 3725-3743; R. 3746-3754). On
August 30, 1995, the Cox court heard further arguments
‘ There is no truth to Petitioners’ assertion that Respondents Shell
and Celanese had anything to do with the filing of the Cox case. (Pet. 4-
5).
* It is similarly false that Respondents acquiesced in the Tennessee
class certification. (Pet. 5 n.1). In fact, the Cox court itself noted that
Shell and Celanese contested certification and ultimately agreed to it
for settlement purposes only. (Shell App. 28, 7 35).
;
ae at hE REUSED FA Re ee Se hon.
5
and evidence in favor of, and objections to, the notice
program. (R. 2922-3050). Then, on September 22, 1995,
the Cox court gave final approval! to the forms of notice,
scheduled a fairness hearing, and set opt-out and objection
dates. (R. 3092-3096).
The original Cox settlement required Shell and
Celanese to provide $850 million to pay for replumbs’ for
those claimants who had a qualifying plumbing leak and
for the repair of physical damage to property resulting
from a leak. (Shell App. 30, 7 45, 46). The settlement
created a centralized facility, the Consumer Plumbing
Recovery Center (CPRC), to administer the replumb
program, which was to run until 2009. (Shell App. 21,
q 12(e); R. 4467, §§ 1.1-1.3). The Cox class included not
only past and present owners of structures with PB
plumbing, but also future owners. (Shell App. 36). The
settlement provided for notice to be given to class mem-
bers every three years and for the right of subsequent
purchasers of structures with PB plumbing to opt out
following receipt of these notices. (Shell App. 21, 7 12(e);
R. 2288-2290, § 9). If at any time there were insufficient
funds to pay valid claims, Shell and Celanese had the
option to contribute additional funds to pay those clans.
If they did not elect to do so, those class members whose
claims were not paid were not barred, and they remained
free to sue Shell and Celanese with all applicable statutes
of limitations and/or repose tolled. (R. 2246, 7 12(c); R.
2280-2281, §§ 4.5.2, 4.5.3; R. 2300, § 22.2).
In October/November 1995, class counsel for both Cox
and Spencer, class counsel for cther putative classes, and
Respondents participated in two weeks of lengthy and
intense negotiations under the supervision of Judge
Richard M. Silver of the California Superior Court, who
was presiding over yet another putative class action
* A “replumb” is the replacement of a class member’s leaking PB
plumbing system with a new copper or CPVC plumbing system.
6
brought against Respondents. (Shell App. 19-20, qi 7-9).
Ultimately, the parties agreed upon a joint national
settlement. The global settlement enhanced in several
respects the benefits available to class members under the
original Cox settlement - Shell and Celanese agreed to
increase the settlement fund to $950 million; interest on
the funds would be deposited for the benefit of class
members (and not credited toward the settlement
amount); and the window within which a leak would
entitle a claimant to a replumb without regard to the age
of his plumbing system was increased from one year to two
years. (R. 2516-2518; R. 2572-2577; R. 2646-2655). Judge
Silver issued a report on the settlement negotiations, in
which he recommended that the settlement be approved
and that all courts concerned afford it full faith and credit.
(Shell App. 1-10).
On November 17, 1995, the Cox court entered a final
order approving the class action settlement with Shell and
Celanese, which included $45 million for class counsel and
$3,000 for the class representatives. (Shell App. 38, q 12).
The funds for notice and attorneys’ fees were in addition to
the $950 million in settlement funds, ie., the entire
settlement fund was reserved for class relief. (Shell App.
21, 9 12(f; R. 4468, § 2.1). In addition, the settlement
provided that the CPRC would be governed by an eight-
member board of directors, equally representing the
plaintiffs and Shell and Celanese, subject to removal and
supervision by the court. (R. 2518; R. 2655-2657; R. 4467,
§§ 1.1-1.3). Moreover, the settlement provided for a struc-
tured claims and appeals process, as well as an avenue for
accelerated relief. (R. 2655-2657; R. 2315-2317, § IV; R.
2320-2321, § VID).
In approving the Cox settlement, the Tennessee court
scrupulously followed the requirements of Rule 23 of the
Tennessee Rules of Civil Procedure and due process. First,
the court directed that notice of the settlement be given to
the class. (R. 2380-2384). In two separate hearings, the
court addressed the issues related to adequacy of notice.
ni i Raat. x
2 AEE Dee haa
7
(R. 2922-3050; R. 3684-3943). The approved notice cam-
paign cost over $12 million and was described by the
experienced professionals who designed the program as
one of the most comprehensive notice campaigns ever
undertaken in class action litigation. (R. 3002; R. 3097-
3210; R. 4456-4465). The Tennessee court a‘forded class
members notice of the fairness hearing and an opportunity
to exclude themselves from the class or object to the
settlement (See R. 2504-2760). On November 8 a::d 9,
1995, the court held an evidentiary hearing on the fairness
of the proposed settlement that was open to all parties and
class members. (See R. 2504-2760). Finally, on November
17, 1995, the Cox court approved the settlement, finding
that the notice campaign was “unprecedented” in scope
and effectiveness and that the settlement was fair, ade-
quate and reasonable in all respects. (Shell App. 22, { 16
and 28, J 38).
On the same day, the Spencer court gave final ap-
proval to the class action settlement against DuPont.
Simultaneously, Shell, Celanese, and DuPont entered into
an agreement coordinating the two settlements. (R. 1756-
1760). DuPont agreed to pay 10% of all CPRC costs associ-
ated with claims arising from PB plumbing systems with
acetal insert fittings, and 10% of CPRC administrative
expenses (excluding costs for Cox attorneys’ fees or notice).
(R. 1756). These payments by DuPont were to come out of
the Spencer settlement fund. This coordination allows
class members to file a single claim with the CPRC and
obtain relief from both settlements.
B. Procedural Background
In 2002 the trial court in South Carolina granted
Respondents’ motion for summary judgment and dis-
missed Petitioners’ claims. The trial court held that the
Tennessee and Alabama judgments were entitled to full
faith and credit and thus precluded Petitioners’ claims.
With respect to Petitioners’ due process arguments, the
trial court found that “the record unmistakably shows that
8
the [Cox and Spencer] courts fully considered all due
process issues relating to [their] jurisdiction over absent
class members and determined that jurisdiction existed.”
(Pet. 42a). Reviewing the record, the trial court stressed
that “the Cox and Spencer judgments were fully litigated
and decided — after several adversarial proceedings and on
a voluminous record — by the respective Tennessee and
Alabama courts.” (Pet. 46a). Thus, it determined that “the
judgments are entitled to full faith and credit in this court
as guaranteed by the Constitution.” (Pet. 47a). Petitioners
appealed directly to the South Carolina Supreme Court.
On January 12, 2004, the South Carolina Supreme
Court affirmed the decision of the trial court in Hospitality
Management Associations, Inc. v. Shell Oil Co., 356 S.C.
644, 591 S.E.2d 611 (S.C. 2004). The South Carolina
Supreme Court found that procedures to ensure due
process to absent class members “were not only in place in
Spencer and Cox, but were also consciously and steadfastly
utilized.” (Pet. App. 26a). Consequently, the South Caro-
lina Supreme Court agreed that “the trial court correctly
accorded full faith and credit to the Spencer and Cox
orders approving the nationwide settlements and properly
granted summary judgment to respondents.” (Pet. App.
27a).
REASONS THE PETITION SHOULD BE DENIED
I. There Is No Conflict Among the Circuits or
State Courts of Last Resort Regarding Proper
Application of Full Faith and Credit Princi-
ples to Class Action Judgments
Petitioners assert that a conflict exists among the
federal circuits and/or state courts of last resort regarding
the proper approach to the full faith and credit issue when
a judgment approving a class action settlement is subse-
quently collaterally attacked. (Pet. 1-2). Petitioners are
wrong.
9
It is well-established by this Court that, to grant full
faith and credit to another court’s judgment, the reviewing
court must find that the procedures in the prior litigation
afforded a full and fair opportunity to litigate the relevant
jurisdictional issues. The South Carolina Supreme Court
carefully determined that the Cox and Spencer courts fully
and fairly considered the due process requirements neces-
sary to exercise jurisdiction over Petitioners and other
absent class members. Consequently, it correctly held that
the final judgments of the Tennessee and Alabama courts
were entitled to full faith and credit in South Carolina.
A. The South Carolina Supreme Court Prop-
erly Followed the Full Faith and Credit
Principles Enunciated by This Court
Full faith and credit is a Constitutional guarantee for
all state court judgments in which the rendering court had
jurisdiction. U.S. CONST. art. IV, § 1 (codified at 28 U.S.C.
§ 1738); Underwriters Nat'l Assurance Co. v. North Caro-
lina Life & Accident & Health Ins. Guar. Ass’n, 455 U.S.
691, 704 (1982) (citing Durfee v. Duke, 375 U.S. 106, 110
(1963)). The full faith and credit analysis does not change
for class action cases or judgments incorporating a class
action settlement. To the contrary, in Matsushita Elec.
Indus. Co. v. Epstein, £16 U.S. 367, 374 (1996), this Court
held that class action judgments, like all other judgments,
are “presumptively entitled to full faith and credit.”
By its very nature, the issue of whether another
court’s judgment is entitled to full faith and credit involves
some level of collateral review by a second court of the
rendering court’s judgment. In Underwriters this Court
specified the precise inquiry the reviewing court is to
make when determining whether full faith and credit is
due another court’s judgment — even when a party chal-
lenges the jurisdiction of the court rendering the judg-
ment:
10
[A] judgment is entitled to full faith and credit —
even as to questions of jurisdiction — when the
second court’s inquiry discloses that those ques-
tions have been fully and fairly litigated and fi-
nally decided in the court which rendered the
original judgment. The [second court], therefore,
should have determined in the first instance
whether the [original court] fully and fairly con-
sidered the question of . . . jurisdiction. .. . If the
matter was fully considered and finally deter-
mined in the [original] proceedings, the judgment
was entitled to full faith and credit in the [second
court].
Underwriters, 455 U.S. at 706-07 (citing Durfee, 375 U.S.
at 111) and at 709 n.16 (emphasis added).
This Court applied the rule of Underwriters in a class
action context in Matsushita when it found that a Dela-
ware judgment approving a nationwide class settlement
was entitled to preclusive effect. In Matsushita the Court
assured itself that the due process requirements of Shutts'
had been met merely by referencing the Delaware court’s
findings on these matters (notice, the opportunity to be
heard, and adequacy of representation), which revealed
they had been fully and fairly litigated in the rendering
court. Matsushita, 516 U.S. at 378-79. Having verified that
the Delaware court had addressed the relevant due proc-
ess elements, this Court delved no further.
On remand, the Ninth Circuit rejected the exact
argument Petitioners make here — that absent class
7 A state court class action judgment involving non-resident,
absent class members is entitled to full faith and credit elsewhere when
the rendering state court had jurisdiction. Phillips Petroleum Co. v.
Shutts, 472 U.S. 797, 811 (1985). To exercise jurisdiction over absent
class members, a state court must provide them with minimum due
process: (1) reasonable notice, (2) an opportunity to be heard and
participate, (3) the right to opt out, and (4) adequate representation. Jd.
at 811-12.
11
members have a largely unfettered right to challenge
collaterally the adequacy of representation in class ac-
tions. Epstein v. MCA, Inc., 179 F.3d 641, 647-48 (9th Cir.
1999). To the contrary, relying on Matsushita, the Ninth
Circuit held that “broad collateral review of the adequacy
of representation (or of the other due process requirements
for binding absent class members) is not available.” Id. at
649. Absent class members’ due process rights are pro-
tected, not by collateral review, but by the original certify-
ing court. Jd. Collateral review is limited to considering
whether the procedures used by the rendering court
afforded absent class members a “full and fair opportu-
nity” to litigate any due process concerns. That review
does not include any reconsideration of the merits of the
due process issues. Jd. at 648-49. In short, due process
does not allow “collateral second-guessing” of the certify-
ing court’s determinations. Jd. at 648. This Court then
denied certiorari. 528 U.S. 1004 (1999).
Similarly, in Fine v. America Online, Inc., 743 N.E.2d
416 (Ohio Ct. App. 2000), an Ohio court rejected plaintiffs’
collateral attack on an Illinois nationwide class action
settlement. Relying on Matsushita, Shutts, and Epstein,
the Ohio court held that “the appropriate collateral review
involves an examination of procedural due process and
nothing more” because “to hold otherwise would create a
form of collateral review that is inconsistent with both the
spirit of the class action mechanism and the principles at
the very core of the Full Faith and Credit Doctrine.” Id. at
421. To satisfy itself that plaintiffs received the required
due process in Illinois, the Ohio court looked at the Illinois
court’s express findings, determined that it considered the
necessary factors, and held that any further inquiry was
inappropriate. Id. at 422-23. This Court denied certiorari
in that case as well. 532 U.S. 942 (2001).
Carefully adhering to the principles this Court out-
lined in Underwriters, Matsushita, and Shutts, the South
Carolina Supreme Court — like the Epstein and Fine courts
— held that proper review of another state’s class action
12
judgment is limited to determining whether the due
process issues were fully considered i* the original litiga-
tion. Any other level of collateral review would be inappro-
priate because “it would run counter to the class action
goals of efficiency and finality to allow successive reviews
of issues that were, in fact, fully and fairly litigated in the
rendering court.” (Pet. App. 18a). As the South Carolina
Supreme Court stressed, “second guessing the fully-
litigated decisions of our sister courts would violate the
spirit of full faith and credit.” (Pet. App. 18a).
Having carefully examined the law applicable to the
issue at hand, the South Carolina Supreme Court summed
up the standard by which it reviewed the procedures
employed in the Cox and Spencer actions and explained
why it reached the unremarkable conclusion that those
judgments were entitled to full faith and credit in South
Carolina:
(T]he proper scope of collateral review of a ren-
dering court’s rulings on the due process re-
quirements for binding absent class members is
one limited to a consideration of whether the
procedures in the prior litigation allowed a full
and fair opportunity to litigate the due process
issues. It is our opinion that such procedures
were not only in place in Spencer and Cox, but
were also consciously and steadfastly utilized to
accord minimum due process to the absent class
members. Consequently, we hold the trial court
correctly accorded full faith and credit to the
Spencer and Cox orders approving the nation-
wide settlements and properly granted summary
judgment to respondents.
(Pet. App. 26a-27a). This is precisely the full faith and
credit analysis this Court mandated in Underwriters.
Therefore the South Carolina Supreme Court did not err,
and there is no reason to grant a writ in this case.
13
B. The Stephenson and Homeside Lending
Decisions Do Not Conflict With the South
Carolina Supreme Court Decision
Petitioners contend that the judgment of the South
Carolina Supreme Court directly conflicts with the Second
Circuit’s decision in Stephenson v. Dow Chemical Co., 273
F.3d 249 (2d Cir. 2001), aff’d, 589 U.S. 111 (2003). (Pet.
16). However, Stephenson concerned an unusual situation
not present here. Contrary to Petitioners’ claim, Stephen-
son does not hold that broad collateral review of class
action judgments is generally available to absent class
members.
Stephenson concerned the Agent Orange nationwide
class settlement approved by a federal district court in
New York and affirmed by the Second Circuit. In Re Agent
Orange Prod. Liab. Litig., 818 F.2d 145 (2d Cir. 1987). It
was only after all the settlement funds had been paid out
to other class members that the Stephenson plaintiffs
learned for the first time of their allegedly Agent Orange-
related injuries and brought suit. The district court
dismissed their claims, holding that they were barred by
the settlement and their suit was an impermissible collat-
eral attack on the prior settlement. Stephenson, 273 F.3d
at 256.
On appeal, the Stephenson plaintiffs sought to avoid
the settlement’s preclusive effect by claiming that persons
whose injuries manifested themselves only after all the
settlement funds were depleted were inadequately repre-
sented in the class settlement. The Second Circuit allowed
them to collaterally attack the class settlement only
because there had been no prior determination by any
court that “addressed specifically the adequacy of repre-
sentation for those members of the class whose injuries
manifested after depletion of the [class] settlement funds.”
Id. at 257-58. The Second Circuit stressed that for this
reason its ruling was not inconsistent with the Ninth
Circuit’s Epstein decision:
14
Here, neither the district court nor this Court
has determined the adequacy of representation
with respect to these plaintiffs whose injuries did
not arise until after the settlement expired.
Without adopting the Ninth Circuit’s decision in
Epstein, we conclude that plaintiffs’ collateral at-
tack is proper even under its standard.
Id. at 258 n.6 (emphasis in original).
Nothing in Stephenson indicates broad collateral
review would be available generally to class members who
were aware of their injuries at a time when they could
make claims and obtain a share of the settlement. In fact,
the Second Circuit specifically noted that it had previously
rejected a collateral attack on the Agent Orange settle-
ment brought by absent class members who were eligible
for compensation under the settlement. Stephenson, 273
F.3d at 253-55 (citing Ivy v. Diamond Shamrock Chem. Co.
(In re Agent Orange Prod. Liab. Litig.), 996 F.2d 1425 (2d
Cir. 1993)), Petitioners here bear no resemblance to the
Stephenson plaintiffs whose collateral attack was allowed
only because their injuries manifested themselves for the
first time after all settlement funds had been depleted.
Rather, they are in the same position as the Juy plaintiffs
whose collateral attack was rejected by the Second Circuit.
Petitioners were fully aware of their claims and had every
opportunity to participate in the Cox settlement. They
simply choose not to avail themselves of that remedy. Even
the Second Circuit would not allow such absent class
members to collaterally attack the settlement.
Likewise, Petitioners assert that the Vermont Su-
preme Court’s decision in State of Vermont v. Homeside
Lending, Inc., 826 A.2d 997 (Vt. 2003) — in which that
court refused to grant full faith and credit to a class action
judgment rendered by an Alabama court — also conflicts
with the South Carolina ruling. (Pet. 9, 16). Petitioners’
reliance on Homeside Lending, however, is similarly
misplaced.
15
In Homeside Lending, the Vermont Supreme Court
held that Vermont mortgagors were not precluded from
challenging the notorious Hoffman decision —- where an
Alabama court approved a class action settlement that
resulted in absent class plaintiffs frequently “paying more
in attorneys’ fees to class counsel than the economic
benefit they received from ‘prevailing’ in the litigation.”
826 A.2d at 1002 n.4. Although the Vermont Supreme
Court gave three reasons for its decision, the common
thread among them was that the settlement transformed
the Hoffman class members into the functional equivalent
of defendants by effectively turning the “plaintiffs” into
actual or potential debtors to their own class counsel.” Id.
at 1008, 1010, 1015, 1017. Not only did the class members
lack adequate notice of their exposure to this liability, but
no one — class counsel, the defendants, or the Alabama
court ~ was looking out for the class members’ interests in
this regard.
Although the defendants urged the Vermont Supreme
Court to give full faith and credit to the Alabama judg-
ment, the court declined to do so because the Alabama
court in Hoffman never addressed the due process issues
associated with effectively converting plaintiff class
members into defendants and failing to warn them of their
exposure to liability. Jd. at 1019. Thus, the decision in
Homeside Lending has no relevance to the situation here.
The facts are completely different, and, as the South
Carolina Supreme Court correctly found, the Cox and
Spencer courts fully and fairly considered the relevant due
process issues about which Petitioners complain.
* The Vermont Supreme Court noted the case of one class member
whose only recovery as a result of the class settlement was $2.19 in
interest, but who paid an attorney’s fee of $91.33. Jd. at 1003, n.5.
16 ;
IL The South Carolina Supreme Court Correctly
Held That the Cox Judgment Was Entitled to
Full Faith and Credit Under the Constitution
Having correctly concluded that the full faith and
credit due state court class action judgments is determined
by examining the due process procedures utilized by the
rendering courts, the South Carolina Supreme Court then
turned “separately to a review of the procedures utilized
by the foreign courts to ensure proper notice and adequate
representation.” (Pet. App. 19a).
A. The South Carolina Supreme Court Prop-
erly Rejected Petitioners’ Challenges to
the Manner of Giving Notice to Cox Class
Members
Petitioners complain that the Cox notice program was
deficient because not all class members were given per-
sonal notice, as opposed to the multi-media notice-by-
publication campaign.” (Pet. 17-20). Both the trial court
and the South Carolina Supreme Court considered this
argument and properly rejected it.
First, as the tria! court held, “individual notice is not
necessarily required to meet the requirements of due
process.” (Pet. App. 50a). Rather, as the South Carolina
Supreme Court noted, the standard for notice established
by this Court is that it must be “the best practicable,
‘reasonably calculated, under all the circumstances, to
* Because Shell was not a party to the Spencer settlement, this
brief addresses primarily the procedures employed by the Cox court to
ensure that absent class members were accorded due process.
As the South Carolina Supreme Court noted, “over 5.6 million
individual mailed notices were sent; of those, 244,756 were mailed to
South Carolina addresses. In addition, there was a toll free 800
telephone number set up to field questions about the settlement. More
than 1 million calls were received and over 10,000 additional notices
were mailed out.” (Pet. App. 19a).
Neheeraials | ene ee,
17
apprise interested parties of the pendency of the action
and afford them an opportunity to present their objec-
tions.’” (Pet. App. 21a) (citing Shutts, 472 U.S. at 812,
quoting Mullane v. Central Hanover Bank & Trust Co., 339
U.S. 306, 314-15 (1950)); see also Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 173 (1974). Applying that stan-
dard, the trial court concluded:
The record clearly reveals that the Cox and
Spencer courts carefully considered the issue of
how to best provide notice to unknown class
members and that the issue was fully and fairly
litigated. As such, their decisions that the respec-
tive notice campaigns provided the best practica-
ble notice under all the circumstances are not
subject to relitigation in this Court, and the
Plaintiffs’ argument provides no basis for deny-
ing full faith and credit to the Cox or Spencer
judgments.
(Pet. App. 52a-53a). The South Carolina Supreme Court
agreed:
Clearly, the Cox court designed and utilized vari-
ous procedural safeguards to guarantee sufficient
notice under the circumstances. Pursuant to a
limited scope of review, we need go no further in
deciding the Cox court’s findings that notice met
due process are entitled to deference.
(Pet. App. 22a).
A review of the Cox court’s findings amply supports
these conclusions. First, the Cox court analyzed the
circumstances and made the determination that not all
Settlement Class members were readily identifiable:”
Since not all Settlement Class members were
known or readily identifiable, the notice program
implemented in this case combined multimedia
" Petitioners do not contend Cox class counsel or Respondents had
access to any readily available list of all class members.
18
publication (newspapers, magazines, radio and
television), indiviaaal mailed notice, ongoing
press and media outreach, and a toll-free tele-
phone information service. The purpose of the
program was to make potential Settlement Class
members aware of the Action and the Settle-
ment, and to encourage them to identify them-
selves to the notice providers, so they could
receive further written notices and information,
and be placed on the notice providers’ Settlement
Class member database.
(Shell App. 23, 119). Second, the Cox court reasonably
concluded that the multi-faceted, multi-media campaign
designed by experienced class notice experts complied with
the Shutts standard of giving “the best notice practicable
under the circumstances . . . to members of the Settlement
Class.” (Shell App. 27, { 33). In reaching that conclusion,
the Cox court noted that other courts had used success-
fully multi-faceted notice programs for large consumer or
product liability class actions where most class members
could not be identified at the outset. (Shell App. 27, { 31).
The Cox court carefully considered the adequacy of the
notice on four separate occasions — when it preliminarily
approved the settlement and the notice program. after
conducting two additional hearings and entertaining
objections to the forms of notice, and at the fairness
hearing itself. The Cox court's Final Order contains
detailed findings regarding the extensive scope and reach
of the notice campaign. (Shell App. 22-27, If 15-30). The
Cox court also found it significant that the settlement
provided for supplemental “notice every three years
through the life of the program.” (Shell App. 21, J 12(e)).
After considering all of the evidence, the Cox court found
that the notice campaign “as designed and implemented,
met and exceeded the requirements of the United States
Supreme Court, Tennessee’s Rule 23, due process and the
Constitution, as construed in [Shutts].” (Shell App. 27,
J 32). The Cox court concluded that “the notice program is
one of the most comprehensive class notice campaigns ever
19
undertaken,” that “all reasonable efforts have been made
to reach affected consumers,” and that “the best notice
practicable under the circumstances has been provided to
the settlement class.” (Shell App. 16; Shell App. 27, J 33).
Because the Cox court squarely addressed the notice
issue, this Court’s decision in Underwriters required the
South Carolina courts to give full faith and credit to the
Cox judgment.
B. The South Carolina Supreme Court Prop-
erly Rejected Petitioners’ Arguments
About the Content of the Cox Class Notice
Petitioners also contend that the Cox notice failed “to
make complete and adequate disclosure” of various things
they claim were wrong with the Cox settlement. (Pet. 20-
21). This contention too is foreclosed by the Cox court’s
findings.”
The Cox notice informed class members of the nature
of the pending litigation, including a description of the
lawsuit, the nature of PB plumbing, the criteria for being a
member of the Settlement Class, the plaintiffs’ allegations,
and the relief sought. (R. 3960-3961). Second, the notice
extensively described the terms of the proposed settle-
ment, including the settlement fund, eligible claimants,
the recovery program, the deadline for claims, the re-
quired releases and assignments, and attorneys’ fees.” (R.
3961-3963). Third, the notice informed class members that
complete information was available by calling a toll-free
number, by inspecting the court files, or by writing to class
2 The Cox court found that the “notice accurately and adequately
advised [class members] of this action; the proposed settlement and its
terms, features, and benefits; their rights and options; and the applica-
ble procedures and deadlines for exercising them.” (Shell App. 27, q 33).
* Contrary to Petitioners’ argument (Pet. 21), the notice did
disclose the amount of attorneys’ fees to be paid to Cox class counsel. (R
3963).
20
counsel. (R. 3965). Finally, the Cox notice informed class
members of the procedure for opting out and of the time
and place for the fairness hearing and their right to
participate and be heard. (R. 3964-3965). As a result, the
Cox court found that the notice “fully and accurately
informed Settlement Class members of all material ele-
ments of the proposed Settlement” and complied with all
applicable legai standards. (Shell App. 13; see also Shell
App. 27, 17 32, 33).
The South Carolina Supreme Court agreed, finding
that the notice in Cox “explained the terms of the settle-
ment, provided for the opportunity to participate (e.g., by
filing objections and appearing at the fairness hearing),
and gave information on how to opt out.” (Pet. App. 20a-
21a). As such, the South Carolina court found that the Cox
notice complied with due process. (Pet. App. ‘)2a).
Some of Petitioners’ specific criticisms about the
content of the notice mimic objections to the Cox settle-
ment filed by various parties, all of which were contested
by Cox class counsel and Shell and Celanese. (R. 2468-
2478; R. 3362-3385). For example, the objection was made
in Cox that the notice did not tell class members the
settlement was allegedly not commensurate with prior
jury verdicts and settlements. (R. 3378). Petitioners’ claim
that the notice did not tell class members “thousands of
objectors” were persuaded to drop their objections by the
payment of “disparate settlements” was also considered:
the Cox court found “there is no factual basis for the
asserted objection that settlements in individual cases are
improperly disparate from the Cox settlement.” (Shell App.
33, J 66). The Cox court considered and rejected objections
relating to the assignment to the defendants of class
members’ claims against DuPont. (Shell App. 30, If 42,
45, 46).* In response to these objections, the Cox court
“ The Cox court also anticipated and rejected Petitioners’ criticism
(Pet. 6) that the notice did not describe the results. of the further
settlement negotiations conducted under the supervision of Judge
(Continued on following page)
21
held that “[t]he notice provided to the Settlement Class
was neither misleading nor defective.” (Shell App. 31,
q 50).
Other of Petitioners’ complaints fundamentally
misconceive the function of a class notice. They argue that
the Cox notice also should have described various things
about the settlement they claim were objectionable, e.g.,
that the remedy offered was allegedly not as valuable as
that being provided by the defendants already under a
voluntary claims adjustment process. (Pet. 20). In other
words, the notice should have contained arguments
Petitioners think could have been made against the Cox
settlement. That is not the function of a class notice. There
is “no obligation to include arguments for or against the
settlement in the notice.” Greenspun v. Bogan, 492 F.2d
375, 382 (1st Cir. 1974).
C. There Is No Due Process Requirement
That Notice Actually Be Received
Petitioners argue that because they did not receive
notice” and never appeared in either Cox or Spencer, they
remain free to litigate anew their various due process
challenges to those settlements. (Pet. 15, 22). Not surpris-
ingly, Petitioners cite no authority for this proposition
Silver in California, which obviously it did not because the notice was
published prior to those negotiations:
There is no need to provide additional notice to the entire Settle-
ment Class by reason of the revised terms of the Settlement since
the Court approved the notices disseminated to the Settlement
Class. All changes have been to improve the Settlement over that
described in the notices, and none of the changes has an adverse
impact on any Class member.
(Sheil App. 33-34, J 67).
‘* For the purpose of summary judgment, Respondents accepted as
true Petitioners’ allegation that they never received notice of the Cox or
Spencer settlements.
22
because their argument runs counter to the very represen-
tational nature of a class action.
This Court long ago noted that a class action, or a
“representative” suit, is an exception to the rule that one
cannot be bound by a judgment in personam unless one
was made fully a party in the traditional sense. Shutts,
472 US. at 808 (citing Hansberry v. Lee, 311 U.S. 32, 40-
41 (1940)); see also 7B Wright, Miller, & Kane, Federal
Practice and Procedure § 1789 at 238 (2d ed. 1986). There
is no requirement that a class member must “appear” in a
class action to be bound by the resulting judgment. The
plaintiffs in Matsushita and Epstein did not appear in the
Delaware court proceedings they were trying to challenge
collaterally. Matsushita, 516 U.S. at 372. Both this Court
and the Ninth Circuit held they were bound by the Dela-
ware class settlement and could not attack it collaterally.
The whole point of the Shutts minimum due process
requirements is to establish when an absent class member
will be bound even though he does not appear. Moreover.
Shutts does not require that an otherwise constitutionally
sufficient notice be actually received. E.g., Silber v. Mabon,
18 F.3d 1449, 1454 (9th Cir. 1994).
D. The South Carolina Supreme Court Prop-
erly Held That the Cox Court Addressed
Adequacy of Representation Issues
Petitioners allege that, for a variety of reasons, the
representation of the class by Cox and Spencer class
counsel was inadequate. (Pet. 24-28). The South Carolina
Supreme Court did not find it necessary to address the
merits of these various objections. The court found it
“patent that both the Spencer and Cox courts had proce-
dures in place to ensure adequate representation.” (Pet.
App. 25a). Moreover, the court concluded, based on its
review of the record, that such procedures were imple-
mented throughout the Cox and Spencer proceedings. (Pet.
App. 26a). In fact, the Cox court specifically addressed
23
most of Petitioners’ complaints about the conduct of Cox
class counsel.
1. There Was No Conflict Between Class
Counsel and the Class
Petitioners claim that class counsel suffered two
“disabling conflicts” of interest with the class: First, they
say Spencer class counsel accepted a $30 million fee
payment allegedly in exchange for withdrawing their
objections to the Cox settlement and assigning $120
million of Spencer settlement proceeds to the Cox fund,
which allegedly reduced the amount of Shell and Cela-
nese’s commitment to the Cox settlement. Second, they
argue that, simultaneous with the class settlements,
Spencer class counsel Fleming settled separately his
individual clients’ claims at “greatly disparate amounts.”
(Pet. 24-28). However, the Cox court itself fully considered
and rejected similar objections.
For example, the Cox court addressed the objection
that the assignment to Shell and Celanese of class mem-
bers’ claims against DuPont had the effect of reducing the
value of the Cox settlement by the $120 million amount of
the Spencer settlement, (see R. 2469-2474, q{ 2B, 2F, 2L,
2X; R. 3362-3385), and held:
Certain objectors have asserted that the
proposed Settlement must be reduced by a pro-
posed settlement of claims against DuPont in the
Spencer case pending in the Circuit Court of
Greene County, Alabama, which the objectors
characterized as a $120 million settlement. ...
The Settlement before this Court, in the
minimum amount of $950 million, provides for
the assignment of Settlement Class members’
claims against DuPont and others to defendants
Shell and Celanese.
Objectors are incorrect in asserting that the
“credit” arising from the assignment reduces the
Defendants’ contribution to the Settlement. The
24
original Cox settlement was $850 million to be
paid by the Defendants. The revised Cox settle-
ment requires the Defendants to pay a minimum
of $950 million to consumers with assignment of
rights, against DuPont, regardless of whether
DuPont ultimately participates in the settle-
ment. The revised Cox settlement substantially
increases benefits to consumers.
(Shell App. 30, 1 42, 45, 46).
The issue of fees for Cox and Spencer class counsel
was scrutinized by not one, but two courts. Acting as a
settlement judge, Judge Richard Silver of the Monterey
Superior Court in California actively supervised the
negotiations among Cox counsel, Spencer counsel, and
Respondents. In recommending the final settlement, he
noted that he was especially vigilant in watching for
possible conflict between class counsel and the class over
the subject of attorneys fees. In his November 8, 1995
report he wrote:
Before I would agree to recommend the settle-
ment, it would have to meet a class fairness
standard. I felt this to be essential to insure that
the resolution of the differences did not turn on
attorneys fees....
* * KK *K
Regardless of the amount of fees, as I stated
above, I set my own standards of fairness for the
class and acted as a buffer against any claim that
the class would suffer on account of fees.
(Shell App. 2, 9). Thereafter the Cox court found, with
respect to the same concern about attorneys fees, that
“It]here is no factual basis for the asserted objection that
there is any conflict of interest with respect to the Cox
Class Counsel.” (Shell App. 33, J 64).
Judge Silver also rejected the claim that one of the
Spencer class counsel suffered a “disabling conflict” by
virtue of his simultaneous settlement of his individual
cases:
> 8 Mate ter Pec a ele Ae sii aad:
a ii
25
I was particularly sensitive to insuring inde-
pendent negotiation with the individual Texas
claimants and the class so that the former would
not control the latter. Although I was seeking
global settlement, I made it clear that if an ap-
propriate settlement was reached with the class,
and no settlement could be reached in Texas, so
be it. In fact Fleming had little or no participa-
tion in negotiating the class settlement. There
was absolutely NO “private inventory sale” con-
ditioned on class settlement. No doubt I was also
concerned that, because of previous animosity,
Fleming not be improperly “cut out”; however, in
no way would I permit him, nor did he ever try,
to condition class settlement on his settlement
I believe the individual settlement of his
claims is rational and reasonable and does not
provide inappropriate “betterments.”
(Shell App. 7). Similarly, the Cox court found that “[t]here
is no factual basis for the asserted objection that settle-
ments in individual cases are improperly disparate from
the Cox settlement.” (Shell App. 33, {| 66).
Because the Cox court addressed these issues, Peti-
tioners were not entitled to relitigate them.
2. Cox Class Counsel Conducted Them-
selves Properly
Petitioners also contend that the conduct of Cox class
counsel demonstrates inadequate representation. (Pet. 26-
27).
However, this issue was fully litigated in the underly-
ing litigation. The Cox court found that the settlement
resulted from good-faith, arms-length, non-collusive
negotiations (Shell App. 18), in which every aspect of the
Settlement Agreement was the “subject of intense prepa-
ration and negotiation, from the amounts, to the terms, to
the amount of leaks, to who was covered, to how long they
26
would be covered, [all of which] was gone over in detail.”
(R. 3723). In fact, the final settlement was the result of a
two-week settlement conference overseen by Judge Silver
in which numerous enhancements to the original settle-
ment were achieved for the benefit of the class. (R. 2516-
2518; R. 2572-2577; R. 2647-2655). Judge Silver’s report
verifies class counsel conducted themselves properly and
that no extraneous factors, such as attorneys fees or class
counsel’s individual cases, altered the negotiations. (Shell
App. 1-10).
Impressed by the procedures utilized in the rendering
court, the South Carolina Supreme Court stressed:
The Cox court responded specifically to various
objections to class counsel’s alleged conflicts of
interest and found such allegations to be without
factual support. Indeed, the court commented on
class counsel’s professionalism in protecting and
promoting the interests of the class. The [Cox]
court also found that the $45 million in attor-
neys’ fees represented only approximately 5% of
the settlement fund and were not deducted from
the settlement fund.
(Pet. App. 26a). After methodically examining the due
process measures employed by the Tennessee court, the
South Carolina Supreme Court reached the unremarkable
conclusion that the Cox judgment was entitled to full faith
and credit in South Carolina.
'* Petitioners’ argument that Cox class counsel failed to adequately
value the class claims is premised on a phony statistic. They claim Cox
class counsel settled for $150 per unit. (Pet. 26). This amount is the
result of dividing $950 million by the estimated 6,000,000 PB plumbing
units in the United States. But the resulting $150 figure is unrelated to
the relief given the class: an eligible class member is not limited to
recovering $150 for his unit. He gets a replumb of his unit no matter
how much it costs. (R. 2284, § 6.3). Appellants’ misuse of statistics
proves nothing and was properly ignored by the South Carolina courts.
27
E. Petitioners’ Amchem Arguments Are Ir-
relevant to This Case
Based on this Court’s decision in Amchem Products v.
Windsor, 521 U.S. 591 (1997), Petitioners argue that
adequacy of representation could be achieved in Cox and
Spencer only by dividing the class into sub-classes. (Pet. 8-
9, 23-25). However, there are two fundamental problems
with Petitioners’ reliance on Amchem.
First, Amchem was not decided until more than 18
months after the judgments in Cox and Spencer became
final. While Amchem might control the disposition of cases
open for direct review at the time of its issuance, judg-
ments open only to collateral attack are shielded from
such retroactive application. See, e.g., Reynoldsville Casket
Co. v. Hyde, 514 U.S. 749, 758 (1995). As this Court has
written, “retroactivity in civil cases must be limited by the
need for finality; once suit is barred by res judicata or by
statutes of limitations or repose, a new rule cannot reopen
the door already closed.” James B. Beam Distilling Co. v.
Georgia, 501 U.S. 529, 541 (1991).
Second, Petitioners’ Amchem argument ignores the
distinction between collateral and direct review of judg-
ment. Amchem was a direct appeal from a judgment
approving a class settiement. Direct review of class certifi-
cation orders involves a de novo review of the applicable
legal principles under an abuse of discretion standard. See
Califano v. Yamasaki, 442 U.S. 682, 703 (1979); Reiter v.
Sonotone Corp., 442 U.S. 330, 345 (1979); see also Am-
chem, 521 U.S. at 630 (Breyer, J., Stevens, J., concurring
in part, dissenting in part). On the other hand, Matsushita
and Epstein establish that a court entertaining a collateral
attack on a class settlement may not determine independ-
ently whether it believes the class was adequately repre-
sented. That determination is for the court rendering the
judgment and those courts to which a direct appeal to the
judgment would lie. The Cox court found that the ade-
quacy of representation requirement was met. Under
28
Matsushita and Epstein that determination is not subject
to “second-guessing.”
The South Carolina Supreme Court held it was not
necessary to address either Petitioners’ or Respondents’
arguments about Amchem. (Pet. App. 25a). Instead, the
South Carolina Supreme Court considered it dispositive
that “both the Spencer and Cox courts had procedures in
place to ensure adequate representation” and “that such
procedures were implemented throughout.” (Pet. App. 25a-
25b). Therefore, the South Carolina Supreme Court
reasoned, the Cox and Spencer judgments were entitled to
full faith and credit.
In any event, there is no merit to Petitioners’ conten-
tion that the interests of class members diverged in any
meaningful way. All Cox class members, whether owners
of a single family house or owners of multi-family units,
shared the same goal of getting relief for any plumbing
that leaked. The Cox settlement addresses that goal in a
common manner: dwelling units that have experienced
qualifying leaks gets replumbed. (R. 2284, § 6.3).
In reality, Petitioners’ complaint is about the substan-
tive terms of the Cox settlement: Petitioners believe that
the terms are not as generous as they should have been.
But the adequacy of the relief does not bear on the issue
whether the trial court correctly extended full faith and
credit to the Cox judgment. Matsushita and Epstein make
clear that full faith and credit analysis does not permit
any subsequent inquiry into the merits of a final class
settlement. The scope of collateral review is limited to
ascertaining whether the rendering court’s procedures
afforded class members due process. As the South Carolina
Supreme Court correctly observed, “‘[m]ere disagreements
with the terms of a settlement cannot provide grounds for
a collateral attack’ on a class settlement.” (Pet. App. 26a,
quoting Fine, 743 N.E.2d at 423).
a ee ee ee eS eee Sl
29
Finally, there is no merit to Petitioners’ complaints
about the inclusion in the Cox settlement class of future
claimants.” The Cox settlement, however, avoids any
Amchem notice issue by providing for successive notices to
class members — every three years until the end of the
program in 2009 — and giving class members who first
purchased a structure of PB plumbing since the last notice
the right to opt out. (Shell App. 21, 7 12(e); R. 2288-2290,
§ 9). In addition, the Cox settlement has several features
that ensure protection of future eligible claimants and
thereby eliminate any conflict between current and future
claimants. For example, there is no cap on the number of
claims payable. The $950 million settlement amount
represents only a minimum contribution by the Cox
defendants (i.e., Shell and Celanese may contribute more
if the number of claims so require it). (R. 2280, §§ 4.5.2,
4.5.3). And, if any future claimants are not afforded the
relief for which they are eligible under the Cox settlement,
they retain their rights to pursue their underlying claims
against Shell and Celanese with all applicable statutes of
limitations and repose tolled. (R. 2300, § 22.2).
Therefore, no conflict of interest existed in Cox that
would necessitate separate representation of sub-classes
under the Court’s reasoning in Amchem.
CONCLUSION
The petition for writ of certiorari should be denied. The
Tennessee court conscientiously followed the requirements
of due process in approving the Cox settlement. In granting
full faith and credit to the Cox final judgment, the South
Carolina courts properly applied the rules this Court
outlined in Shutts, Underwriters, and Matsushita. As a
result, Respondents were entitled to summary judgment
" Petitioners themselves are not members of this group of future
claimants for whom they express such solicitude. Accordingly, it is not
likely that Petitioners have any standing to assert this issue.
30
dismissing Petitioners’ collateral attack on the Cox settle-
ment.
Respectfully submitted,
DAVID T. HARVIN
Counsel of Record
ERICA L. KRENNERICH
VINSON & ELKINS L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002
(713) 758-2368
TIMOTHY W. BOUCH
G. HAMLIN O’KELLEY, III
LEATH BOUCH & CRAWFORD, LLP
134 Meeting Street, 5th Floor
Charleston, South Carolina 29402
(843) 937-8811
Lp YES TEINS ME TITTY ISLE LIED AOE HE TS BRB EM Oe LT
APPENDIX
Shell App. 1
SUPERIOR COURT OF CALIFORNIA,
COUNTY OF MONTEREY
Date: November 8, 1995
Hon. Richard M. Silver Judge: Deputy Clerk
Bailiff: Reporter
HELEN MEERS et al No. M 30590
Plaintiffs, Minute Order:
vs RECOMMENDATION
SHELL OIL a
COMPANY, et al,
Defendants. RMS/bf
APPEARANCES
Pursuant to the joint order of SPENCER, COX, and
MEERS this court conducted a mandatory settlement
conference commencing October 23, 1996 and continuing
through November 7, 1996. At the beginning of the
sessions the court explained its role and the competing
interests. It is important to reiterate several of those
points in this minute order.
This litigation has been ongoing for almost 10 years.
Two national class actions are now pending with the
plaintiff consumers represented by different counsel. A
substantial number of individual cases are pending in
Texas. Settlements representing small groups of con-
sumer plaintiffs had been reached in the past. Two
settlements in San Diego County have been recently
consummated. if global agreement was net reached, this
litigation could continue for another 10 years. The
competing parties each had substantial disagreements
Shell App. 2
with settlements that had been reached in the two
national class actions. It was the stated purpose of these
settlement discussions to achieve global resolution of
the two national class actions and the individual cases
in Texas. If a fair and appropriate global settlement
could be reached, I indicated I would recommend its
approval to each of the courts presiding over the na-
tional class actions and also recommended that the
courts presiding over the numerous state class actions
accord the settlement full faith and credit.
In addition to the above I also defined my role. It
was important that everyone understood that settle-
ment, simply for the purpose of settlement, was not
appropriate. Before I would agree to recommend the
settlement, it would have to meet a class fairness stan-
dard. I felt this to be essential to insure that the resolu-
tion of the differences did not turn on attorney fees and,
just as significantly, to insure that there was a reason-
able relationship between the class settlement and the
settlement of the individual cases pending in Texas.
Obviously these are also matters to be considered by the
judges in the required fairness hearings. I reiterate
these points to assure all courts that these concerns
were not overlooked and, in fact, guided all my settle-
ment discussions and my recommendations.
I perceived several points of concern with respect to
both national class action settlements and the Texas
settlement. They related to the extent of the funding,
definitions of the class and qualifying leaks, monitoring
performance, and establishing an appropriate basis for
differentiating individual settlements in Texas. I also
wanted to make sure that any differences with the recent
settlements in San Diego were rationally distinguished.
]
a
4
:
4
4
Shell App. 3
Of great concern was finally reaching global settlement
so that the consumer plaintiffs across the nation could
receive similar relief and begin to receive it soon.
When the discussions started the animosity between
counsel and the parties was significant. It was clear that
I needed to deal with this issue in order to make signifi-
cant headway. For this reason I forced people to stay
together and continue to discuss the issues, notwith-
standing the intensity of these discussions. There is no
doubt that I disapproved of some of the discussions. As
people began to come together I let it be known, in no
uncertain words, that as we moved forward into the next
step in the negotiations that I would no longer tolerate
these animosities to control the discussions. The change
was significant, and we did move forward for purposes of
reaching global resolution.
All settlements, by definition, involve compromise.
In making these comments it is not my intent to suggest
that any counsel’s motivations were improper. Each had
valid arguments. In summary, it was my intent to aide
in finding a rational basis for compromise and at the
same time make sure that the settlement met class
fairness requirements. I believe it does do so for the
following reasons:
1. Funding: Under COX I questioned whether the
fund was sufficient to be a truly national class resolu-
tion. If it was insufficient, then the litigation would only
be delayed, not ended, and benefits to class members
who were not “first in line” could be non-existent. Un-
derfunding would also put those individuals and the
judicial system to a risk of 10 more years of litigation.
Under COX any funds paid by DUPONT in Spencer
Shell App. 4
would potentially reduce the fund. In addition the
agreement was unclear as to the disposition of any
funds received from ELGERS. This raised a possibility
of substantial potential reductions in the net “fund”. On
the other hand I also perceived that the funding de-
mands by SPENCER counsel and Fleming were best
case scenarios and subject to substantial contrary legal
arguments. I also had significant concerns with the
SPENCER/DUPONT settlement in that the 8% payment
on replumbs would require a consumer to completely
replumb and pay and pay [sic] the costs, only to receive
a small amount in return. As a result my goal was, if
possible, merge the two settlements, or, as a minimum,
achieve a funding level that would most probably ac-
commodate all persons who have had qualifying leaks,
pay persons unreimbursed damages they have suffered,
and provide an extended “warranty” period of time, with
sufficient probable funding, for those persons suffering
qualifying leaks during this period. Evaluating the
numbers of people responding to both notice programs,
the number of individual claimants in Texas, and the
numbers of persons already having received benefits
through other settlements or relief, I believe the funding
under these combined settlements meets this goal and
that the probability of further litigation, as a result of
underfunding, is minimal. In /act, with the increased
funding, addition of the contingent ELGER’s funding,
and the independent settlement of the substantial
number of claims in Texas, it eppears to at least triple
the net funds available. I realize that there was no limit
in San Diego. However you cannot compare a settlement
in a small area with a settlement for the nation. I
believe that the funding level here will mest probably
satisfy this problem. Althoug2 all plaintiffs counsel
———E—————————
we A te a hind te the tel wenn Put
Shell App. 5
wuld have liked more, it is unrealistic to believe that
the defendants would so agree and still give up the
substantial legal and factual arguments that are com-
promised in this agreement. I believe this settlement
represents a fair compromise and greatly diminishes the
chance that the fund will run out before completion of
its terms.
2. Class definitions and Time periods: COX had a
window period of one year. Other settlements had longer
periods of time. The definitions of qualifying leaks differ
in some of the settlements. COX does not count a hot
water leak within 6 feet of the water heater as a first
leak toward a replumb unless it requires cutting into a
wall, others do. Significantly, any such leak allows for a
claim for damages. There are significant factual dis-
putes as to this issue. The limitation is only as to a first
leak; it only applies if no cut into the wall is required;
the evidence suggests that if the system is defective
there is a probability of multiple leaks. This makes
sense. The modified settlement does provide for an
extended window period from one year to two years. The
remainder of the time periods are consistent with past
settlements. With the modification of the extended
window period, I believe the definition of the class and
the qualifications are fair to the consumer class and
represent a fair compromise of the competing legal and
factual disputes.
3. Monitoring: The settlement as modified creates
a new plumbing claims group that will have plaintiff
representations from both COX and SPENCER and the
defendants. If there are disputes, they are to be resolved
by the judges of the national class action or a special
master appointed by them. This process insures prompt
Shell App. 6
attention to replumbing and payment of damages, an
even handed evaluation of claims and requests for
treatment as “exceptional circumstances”, and a fair
method of resolution of disputes. Of significance is the
monitoring of the replumb procedures by plaintiffs
counsel and the court.
4. Plaintiff's counsel take -on the affirmative
obligation to seek the relief provided for in the EL-
GER/US Brass settlement and, in the event funding is
insufficient, to continue with the litigation. Although I
had no doubt that they would do so, I felt it important to
affirmatively so represent this in the agreement.
Many of the settlements in these actions have had
some differing provisions. In part they are “trade-offs”
depending on the particular situation. I believe this
settlement is as good as or better than the settlements
in San Diego. This settlement pays for unreimbursed
damages, San Diego dees not. The final date for submis-
sion of claims is significantly longer in this settlement
than in San Diego. This settlement includes metal
fittings; San Diego does not. Of great significance is the
fact that this settlement provides for ongoing monitor-
ing of claims by class counsel and court review in the
event of disputes, in addition to the ombudsmen process.
I am bothered by the failure to include that in San
Diego. In that settlement the ombudsmen review is very
limited, and in good part limited to the information
provided by defendants. Review and monitoring by class
counsel is also limited. The increased window period
here, although slightly less than San Diego, is adequate
and compensates for the qualifications on leaks. Overall,
the provisions of and improvements to COX/SPENCER,
Shell App. 7
as reflected in the this [sic] settlement, leads me clearly
to the above conclusion.
In addition to the above, it is important that lI
emphasize certain points. One lawyer continually
proposed that we create a national class action in
California and merge the other two into this new-action.
Although I considered his request, I continually told him
I saw no basis or need for this. I told him I was acting
only as a settlement judge. This role permitted me to
monitor the settlement process and still permit inde-
pendent review at the fairness hearing by the other
respective courts. The Alabama and Tennessee courts
are perfectly capable of monitoring the global settlement
and are the proper courts to do so. The expenses associ-
ated with a whole new notice program would be ill spent
and not necessary.
I was particularly sensitive to insuring independent
negotiation with the individual Texas claimants and the
class so that the former would not control the latter.
Although I was seeking global settlement, I made it
clear that if an appropriate settlement was reached with
the class, and no settlement could be reached in Texas,
so be it. In fact Fleming had little or no participation in
negotiating the class settlement. There was absolutely
NO “private inventory sale” conditioned on class settle-
ment. No doubt I was also concerned that, because of
previous animosity, Fleming not be improperly “cut out”;
however, in no way would I permit him, nor did he ever
try, to condition class settlement on his settlement. It
was I who always kept us concentrated on global settle-
ment.
Shell App. 8
i believe the individual settlement of his claims is
rational and reasonable and does not provide inappro-
priate “betterments”. As indicated above, because of the
law relating to class action, monitoring this issue was
one of my responsibilities. His clients that will receive
some greater relief are all persons who have actively
participated in the litigation process. They are all
named parties in lawsuits and have participated in some
significant way in the litigation, i.e., had their units
inspected and/or answered interrogatories or been
deposed. All settlements, including those negotiated by
attorneys in this case, have acknowledged greater
compensation for individuals who have been named
class representatives and/or actively participated in the
litigation.
I also monitored the proceedings to insure there was
no wrongful “trade of rights” between clients. I had a
specific discussion concerning some of the previous
demands with counsel. It was understood that some
demands were a “really best case scenario” that would
require extremely favorable findings of Aisputed facts
and law, and there was appropriate room for compro-
mise.
There appears to be a significant misunderstanding
of the modified agreements by some counsel. There is no
inappropriate switching of “opt outs”, nor would I allow
it. As noted above there are now substantial improve-
ments reflected in these settlements. With these im-
provements reflected in these settlements. With these
improvements there is nothing wrong with merging the
processes and allowing individuals another opportunity
to consider whether they really want to “opt out”.
si lt diet i Nee a AE i ELE LE
Shell App. 9
The fees and costs in this case are significant. Many
attorneys participated on all sides. The litigation was
hard fought and complex. The fees will be divided
between many attorneys and firms. I did not participate
in the setting of fees. They do not come out of the fund.
Regardless of the amount of fees, as I stated above, I set
my own standards of fairness for the class and acted as
a buffer against any claim that the class would suffer on
account of fees.
It was my intent to try to resolve all disputes.
Unfortunately we could not achieve settlement with
DUPONT, primarily as a result of their dispute with
SHELL and HOECHST CELANESE. I trust and hope
that matter can also be settled. As a result all actions
will remain pending against DUPONT, and it will be the
responsibility of Judge Hardaway to determine the
appropriateness of the proposed SPENCER/DUPONT
settlement at a fairness hearing.
I commend all counsel for their efforts and hard
work and their willingness to ultimately put aside the
strong feelings that had separated them and to bring
this matter to resolution. I regret that settlement could
not be reached with Dupont. I commend the attorneys
for Shell and Hoechst Celanese and those corporations
for their willingness to proceed with the settlements
with the class on the same terms and conditions and not
permit the difficulties with Dupont to prejudice the
class.
All of the above will be reviewed by Judge Maloan
and Judge Hardaway at the fairness hearing and by
each state court judge who considers these matters. All I
can say is that I was fully aware of my responsibilities
Shell App. 10
and do not make this recommendation lightly. As I told
all counsel, when I put my “stamp of approval” on this
settlement, and make this recommendation, it reflects
on my credibility. I would not and do not make this
recommendation “lightly”.
With the assumption that final settlement docu-
ment will be prepared reflecting the principles of
agreement, for the above reasons, I recommend approval
of the settlement and that all concerned courts accord it
full faith and credit.
A copy of the final principles of agreement and
settlement document, as reviewed by this court, will be
presented to all courts and counsel by the attorneys.
DATED: 11-8-95 /s/
RICHARD M. SILVER
Judge of the Superior Court
a
Shell App. 11
IN THE CHANCERY COURT
FOR OBION COUNTY, TENNESSEE
AT UNION CITY, TENNESSEE
TINA COX, CHARLES HOMER ) Civil Action No. 18,844
CLOAR, MARY H. CLOAR, )
MELODY ALFORD, COUNTRY ) CLASS ACTION
VILLAGE MOBILE HOME )
PARK, and PHYLLIS BIR- ) OBION COUNTY
MINGHAM, individually and on )
behalf of all other individuals )
and entities similarly situated,
Plaintiffs,
v.
)
)
)
)
SHELL OIL COMPANY, d/b/a?
SHELL CHEMICAL COMPANY, ?
and HOECHST CELANESE
CORPORATION, |
)
Defendants.
)
FINAL ORDER APPROVING THE CLASS
ACTION SETTLEMENT, ATTORNEYS’ FEES
AND EXPENSES, AND AWARDS TO
REPRESENTATIVE PLAINTIFFS
(Filed Nov. 17, 1995)
This matter is before the Court on motion by the
parties’ for final approval of their proposed settlement
' The parties are the named individual and representative Cox
plaintiffs, on behalf of the certified Settlement Class, and defendants
(Continued on following page)
Shell App. 12
(the “Settlement”) as set forth in the Settlement Agree-
ment filed July 31, 1995, as amended by an Amendment
dated October 6, 1995, a Second Amendment dated
October 24, 1995, and a Third Amendment dated No-
vember 9, 1995 (the “Agreement”). Also before the Court
is the Application of Class Counsel for Award of Attor-
neys «ees and Expenses, and Awards to the Represen-
tative Plaintiffs (the “Application”). A duly noticed
hearing on the motion and Application was held on
November 8 and 9, 1995, (the “Fairness Hearing”)
pursuant to the Court’s Order of July 31, 1995, granting
preliminary approval of the Settlement and the August
7, 1995, order conforming the class definition (collec-
tively the “Preliminary Approval Order”), under proce-
dures set forth in the August 24, 1995, Order Approving
Forms of Notice, Scheduling Fairness Hearing and
Setting Opt-out and Objection Dates.
Notice of the Fairness Hearing was given to poten-
tial class members nationwide in accordance with the
Preliminary Approval Order and the Court approved
notice program. Voluminous pleadings and briefs were
submitted by the settling parties in support of the
Settlement and in response to all objections and motions
filed regarding the Settlement, including the various
objections and related papers filed by objector Tony
Martin, et al., and affiliated objectors through their
attorneys (the “Martin Objectors”). The parties, numerous
interested members of the Settlement Class, and others
appeared at the Fairness Hearing, either individually or
Shell Oil Company d/b/a Shell Chemical Company and Hoechst
Celanese Corporation.
eee ewe Cre Seen Ei
Shell App. 13
by their respective attorneys. The Court heard and
considered evidence in support of the proposed Settle-
ment. This evidence included live testimony, affidavits,
documentary and video presentations, as well as oral
representations by various attorneys. The attorneys for
the parties and others were heard. An opportunity to be
heard was given to all other persons requesting to be
heard in accordance with the Preliminary Approval
Order. This included a significant number of members of
the Settlement Class who, in some instances, had
traveled great distances from other states to appear and
participate in the Fairness Hearing, who were invited to
and did make statements and ask questions regarding
the terms of the Settlement and the relief it provides.
As more fully set forth below, the Court has deter-
mined that the notice given to members of the Settle-
ment Class certified in the Preliminary Approval Order
fully and accurately informed the Settlement Class
members of all material elements of the proposed Set-
tlement; was the best notice practicable under the
circumstances; was valid, due, and sufficient notice to
all Settlement Class members; and complied fully with
Rule 23 of the Tennessee Rules of Civil Procedure, the
United States Constitution, and any other applicable
law.
OPINION
The Court has greatly benefited from the fine briefs
and oral arguments of the attorneys in this case, all of
whom are worthy adversaries, and appreciates the
manner in which they have conducted themselves in this
most difficult, complex, and hotly contested litigation.
Shell App. 14
Great credit must be given to Judge Richard Silver of
Monterey County, California for his initiative to coordi-
nate a settlement conference with the Cox and Spencer’
parties. The revised Cox Settlement is due, in no small
part, to his efforts. The Court also commends Judge
Hardaway of Greene County, Alabama, for his willing-
ness to join in this unprecedented effort by three state
courts to coordinate and settle competing national class
actions. As to the settling parties, the plaintiffs, the
plaintiff class, Shell Oil Co., and Hoechst Celanese
Corp., the Court acknowledges that if it were not for
your recognition of this opportunity to reach a global
settlement of these issues, all of these efforts would
have been in vain. You have put aside your armor and
your hardened positions from years of battle and have
finally made peace.
Compromises are favored in the law. Neither this
Court, nor any court, has the resources to fully litigate
all issues, nor is it always fair to the parties to do so.
The time, cost, and lack of finality of protracted litiga-
tion require certain matters to be settled. The polybuty-
lene plumbing litigation’s time has come. Closure is not
only appropriate, but timely. The parties to this and to
the many other individual and group cases that have
comprised the polybutylene plumbing litigation have
fought long and hard with varying degrees of success
and defeat; however, the affected party, the consumer,
has seen very little benefit from these efforts. The Cox
* Spencer, et al. v. Shell Oil, et al., Case No. CV 94-074, Circuit
Court of Greene County Alabama, Honorable Eddie Hardaway, Jr.,
presiding.
_——<
Shell App. 15
settlement agreement is a compromise. In every com-
promise, each side must abandon or set aside its ideal
position and reach an agreement that is fair and rea-
sonable to all concerned under the circumstances, and
not insist on terms only beneficial to one party. The Cox
settlement is not perfect. I would have preferred that
the Agreement include no leak requirements and a
larger claims “window” for class members. The Court
has some concern the $75 million cap on past damages
may not adequately pay all past damages in full; how-
ever, these concerns must be weighed in light of the
numerous unique advantages to the consumer that the
Cox settlement does provide.
The Court finds the Settlement is fair, adequate and
reasonable. The $950 million dollars is a minimum
contribution of the defendants to those who are affected
by polybutylene plumbing. When the court initially gave
preliminary approval to the proposed Settlement, this
factor was the leading factor in granting that approval.
As counsel for the parties have confirmed at various
times in open court as the hearings have progressed in
this matter, the initial funding commitment (now
increased to $950 million) may ultimately be more if
funds are expended and provided by the defendants and
if other responsible parties contribute to the fiind in the
future. Due to the uncertainty of the size of the class
and how many claims will ultimately be filed, this Court
would not have approved a “limited fund” which pro-
vided less than full relief while demanding full release.
If the worst case does present itself, that is, if the class
is as large as six million people, all claims are pre-
sented, and the fund is totally expended; the only
prejudice to the consumer will be the delay caused by
Shell App. 16
the filing of claims and payment of funds. The Agree-
ment tolls statutes of limitations for class members. The
Agreement provides that any consumers not fully
reimbursed or compensated under the terms of the
Agreement would be able to pursue all legal and equita-
ble claims and remedies (including punitive damages)
individually and as a class.
The Court finds the notice program is excellent. As
specified in the findings below, the evidence supports
the conclusion that the notice program is one of the most
comprehensive class notice campaigns ever undertaken.
The Court is satisfied that all reasonable efforts have
been made to reach affected consumers.
The Court must also consider the complexity, the
expense, and the likely duration of these proceedings if
settlement were not reached and approved. The Court
must weigh the benefits of settlement against the likely
outcome of litigation. As the Court has already stated,
much has been spent and much has been done over the
past years in group and individual polybutylene pipe
litigation across the country, but not much has been
accomplished for the benefit of the consumer. The claims
in Cox and Spencer each have their own legal problems,
which, if fully litigated, would delay the ultimate resolu-
tion of these cases for many years to come. If litigated,
complex legal issues would be presented, such as stat-
utes of limitations and repose, choice of appropriate
state laws, liability, and measure of damages. All of
these issues, if litigated and appealed, could clog the
courts across the country for years to come. There is a
question as to whether some state courts would give full
faith and credit to another state court’s determination of
these issues.
Shell App. 17
It is an important aspect of the Settlement that the
plaintiffs’ attorney’s fees and costs are paid by the
defendants in addition to the settlement fund, and are
not deducted from the settlement fund. In the absence of
a comprehensive Class Settlement now, as presented
here in Cox, after the resolution of the contentious
issues described above, any ultimate recovery available
for consumers would be reduced by attorney’s fees.
These normally range from a third to forty percent.
None of this delay, risk, mounting transaction costs and
reduction of recovery by individual fees would be in the
long-term interest of the consumer. In Cox, the attor-
ney’s fees requested are much less; approximately five
percent of the settlement fund; moreover, unlike a
typical contingent fee, they are not paid from the fund.
The request for fees in the case is approved. The Court
finds that they are reasonable under the circumstances,
and the Court is pleased to approve them.
Rees |< aml RNC eae aS,
ET RR ASIII BE Ye eb ia Sot FOLIO
The Court is pleased with the reaction of the class
members to the proposed Settlement. The Court is
greatly comforted by the small number of individual opt-
outs, the removal of objections by Spencer class counsel
and by Tony Martin, who is represented by the Fleming
group, and the support expressed by the consumers who
testified at the Fairness Hearing. The Court finds that
the Consumer Plumbing Recovery Center (“CPRC”)
claims facility procedures which have been outlined to
the Court and which are provided for in the Agreement,
appear to constitute a simple, consumer-friendly and
efficient method of adjusting the claims in this case.
The discussions and negotiations that ultimately
lead to the settlement presented for Court approval were,
from all reports and from the Court’s own observation,
Shell App. 18
intensive, exhaustive, and often heated. The Court finds
the Agreement is the result of good faith, arms-length,
and non-collusive negotiations. The Agreement is fair,
adequate, and reasonable under the circumstances, and
it is approved.
ADDITIONAL FINDINGS AND CONCLUSIONS
The entire matter of the proposed Settlement and
the Application having been fully heard and duly con-
sidered by the Court, the Court further FINDS and
CONCLUDES, in addition to the findings and conclu-
sions in the foregoing Opinion, as follows:
1. The polybutylene plumbing litigation has been
pending, in various forms and in various courts around
the country, for more than a decade. It has included
individual cases, cases with large numbers of individual
plaintiffs, and putative nationwide or statewide class
actions brought in federal court and in many state
courts.
2. The first nationwide polybutylene plumbing
class action was filed in September 1993 by lawyers who
are now members of the team of Cox Class Counsel. The
action, Robert Beeman, et al. v. Shell Oil Company, et
al., No. 93-047363, was filed in a state district court in
Harris County, Texas.
3. Over the course of many months of intensive
negotiations, involving a neutral mediator at many
critical junctures, a tentative settlement of the Beeman
case was achieved in October 1994. In February 1995,
however, the Texas state court denied preliminary
_approval of that settlement without comment.
Shell App. 19
4. After the Court in this case certified the na-
tionwide class on June 13, 1995, Cox Class Counsel
joined with the plaintiffs’ attorneys in the Beeman
action to prosecute this case for the benefit of mobile
and site-built homes with polybutylene plumbing across
the country.
5. Collectively, this combined team of Class Coun-
sel included highly qualified and well-regarded lawyers
with extensive class action and complex litigation
experience, as well as lawyers with vast experience in
polybutylene plumbing litigation.
6. Class Counsel then were able to negotiate a
settlement generally patterned after that originally
arrived in Beeman, although the minimum funding
commitment was $100 million greater, other features
were added, and only two of the three Beeman defen-
dants, Shell and Celanese, were involved.
7. Because of the pendency of a nationwide class
action in Greene County, Alabama, and of other polybu-
tylene actions around the country, with many brought
as class actions, including an uncertified case for a
putative statewide mobile homeowner class in the
Superior Court of Monterey County, California,’ Judge
Hardaway and this Court agreed that Judge Silver in
Monterey would further the cause of final resolution of
polybutylene plumbing litigation if he was appointed to
serve as a settlement judge for all three courts.
* Meers, et al vs. Shell Oil, et al, Case No. M 30590, Superior Court
of the State of California, County of Monterey, Honorable Richard M.
Silver, presiding.
Shell App. 20
8. Judge Silver issued an October 12, 1995 Order
Setting Settlement Conference with the endorsement of
this Court and Judge Hardaway, to convene the coordi-
nated settlement process. Other state courts with
proposed class sections were asked, by the parties and/or
by Judge Silver, to dismiss or stay their proceedings in
deference to the coordinated settlement effort in order to
give it an opportunity to succeed, undistracted by
collateral litigation.
9. Accordingly, from October 23, 1995, through
November 7, 1995, the day before the Fairness Hearing
in this Court, intensive and continuous global settle-
ment negotiations were conducted among Cox Class
Counsel, the Spencer counsel, and defendants’ counsel
and representatives through the mediation and supervi-
sion of Judge Silver.
10. As a result of these concentrated efforts, a
comprehensive settlement was reached, resulting in
significant enhancements to the Settlement as it was
originally presented to the Court and preliminarily
approved on July 31, 1995.
11. The resulting Settlement, documented and as
presented for final approval at the Fairness Hearing,
provides consumers with a recovery program consisting
of reimbursement of otherwise unréimbursed expenses
for repairs to and replacement of leaking polybutylene
plumbing systems and property damage caused by such
leaks, as well as an extensive program for replacement
of'such leaking plumbing systems.
12. Some of the features of this Settlement are
these: '
a le a i So eS.
OR CE BE EE BORN et Ee PR iS
Shell App. 21
a. Free replacement of polybutylene plumbing
systems installed since January 1, 1978, if two or more
qualifying leaks occurred before August 21, 1995, or if
only one such leak occurs either in the two years follow-
ing that date or during a period (of from 10 to 16 years,
depending on the type of structure) following installa-
tion of the system;
b. Reimbursement of the unreimbursed ex-
penses of plumbing repairs, replacements, and property
damage from January 1, 1978, to August 21, 1995, up to
$75 million will be distributed, pro rata if necessary, for
these expenses; and property damage after August 21,
1995, at 100 cents on the dollar;
c. An unlimited funding potential, with the
defendants committed to to [sic] initially provide up to
$950 million for the relief; if additional funds are re-
quired, the defendants will either provide them, or
litigation will be resumed with all applicable statutes of
limitations and repose tolled in the interim;
d. Provision for additional relief to eligible
members of the Settlement Class who experience special
needs in connection with qualifying leaks;
e. A comprehensive notice program, including
notice every three years through the life of the program,
which ends in 2009; and
f. The payment of class counsel’s attorneys’
fees and expenses in addition to the $950 million re-
served for relief for the Settlement Class.
13. The Court is not aware of any other class
action settlement with successive notice as provided in
the Cox Settlement.
Shell App. 22
14. In reaching this Settlement, the defendants
have foregone very significant defenses and issues which
could have precluded or limited liability as to some or
many class members’ claims. These include the statutes
of limitations and repose, selection of the appropriate
states’ laws applicable to various issues, the “economic
loss” limitation on recoveries of the type sought here,
the lack of privity between the members of the Settle-
ment Class and the defendants, the fact that many of
the members of the Settlement Class purchased their
structures “as is,” and, of course, the risk that plaintiffs
would not be successful in preving their allegations. In
agreeing to this Settlement, the defendants-have dis-
played commendable corporate responsibility, respon-
siveness, and good will toward consumers.
15. The Court appointed Rust Consulting, Inc. and
Kinsella Communications Ltd. as class notice providers
in this case. Richard Redfern, president of Rust Consult-
ing, and Katherine Kinseila, president of the communi-
cations firm bearing her name, testified at the Fairness
Hearing. The Court also considered Ms. Kinsella’s
affidavit and the affidavit of Jeffrey Dahl, Executive
Vice President of Rust Consulting, in connection with
their activities as notice providers.
16. Cox Class Counsel and the notice providers
worked with Todd B. Hilsee, an experienced class action
notice consultant, to design a class notice program of
unprecedented reach, scope, and effectiveness. Mr.
Hilsee was accepted by the Court as a qualified class
notice expert at an earlier hearing to approve the com-
mencement of the notice program. He testified at the
Fairness Hearing, and his affidavit was also considered
S.-i ae
Shell App. 23
by the Court, as to the operation and outcome of this
program.
17. The above-mentioned individuals provided
documents, information, and affidavits at the outset of
the notice period that assisted the parties in designing,
and the court preliminarily approving for implementa-
tion, a singularly comprehensive and creative notice
program.
18. Beginning in August, 1995, and extending into
October, 1995, an extensive notice effort was under-
taken in this case to implement the Court approved
notice program specified in the Preliminary Approval
Order.
19. Since not all Settlement Class members were
known or readily identifiable, the notice program im-
plemented in this case combined multimedia publication
(newspap2rs, magazines, radio and television), individ-
ual mailed notice, ongoing press and media outreach,
and a toll-free telephone information service. The
purpose of the program was to make potential Settle-
ment Class members aware of the Action and the Set-
tlement, and to encourage them to identify themselves
to the notice providers, as they could receive further
written notices and information, and be placed on the
notice providers’ Settlement Class member database.
20. Commencing on or before August 21, 1995,
which is the Initial Notice Date as specified in the
Agreement, more than 5.6 million copies of the Court
approved Notice of Class Action and Proposed Settle-
ment were mailed, by first class mail or overnight
service, to Settlement Class members in accordance
with the Preliminary Approval Order.
Shell App. 24
21. During September, 1995, the Court approved
summary notice was published in Parade Magazine,
USA Weekend, People Magazine, and TV Guide in
accordance with the Preliminary Approval Order. The
combined circulation of these consumer publications and
national magazines is over 73 million. During August
and September, 1995, Court approved notice appeared
twice in Friday editions of USA Today, with combined
circulation of over 4.7 million.
22. Also during September, 1995, the Court ap-
proved summary notice appeared in 201 daily and
weekly newspapers in 13 targeted states (Alabama,
Arizona, California, Colorado, Florida, Georgia, Louisi-
ana, Maryland, Nevada, North Carolina, South Caro-
lina, Texas, and Virginia) and the District of Columbia.
The combined circulation of these newspapers exceeds
23.6 million. In addition, the notice appeared in Spanish
in 38 Hispanic newspapers, with a combined circulation
over 3 million, in 29 media markets during September,
1995. Moreover, the notice appeared in 247 daily,
weekly, bi-monthly, and monthly African-American
newspapers with a combined circulation of nearly 6
million.
23. Notices were also published in the October,
1995, editions of various trade publications, comprising
a total circulation of 244,000.
24. A 30-second spot television notice was pro-
duced and appeared 213 times from August 21, 1995,
through September 3, 1995, on national and cable
television, including on such networks as ABC, NBC,
CBS, TNN, CNN, and TNT. During the same period, a
30-second Spanish language television notice appeared
Shell App. 25
18 times on the Univision Network, a popular Spanish
language network.
25. A press release, a media advisory, a public
service announcement, a video news release, a radio
news release, and a press kit were all prepared and
disseminated as part of the notice program in this case.
The press release went to 2,000 newspapers, wire
services, magazines, and broadcast points across the
United States through PR Newswire. The press release
and media advisory were also disseminated to 469
media outlets, specifically targeting consumer reporters
and media in the top 250 media markets and 84 local
daily newspapers in the 13 targeted states and the
District of Columbia. 142 outlets, with a combined
circulation of more than 14.5 million, have confirmed
using the press materials to publish articles. It is esti-
mated that the public service announcement was broad-
cast by radio stations yielding nearly 2.9 million gross
impressions; an additional 5.5 million impressions are
estimated from the broadcast of the radio news release.
The video news release was used by at least 21 outlets
with combined viewership of more than 1.7 million.
Finally, a two-column article was provided to 10,000
daily and weekly newspapers.
26. Court approved notice forms were dissemi-
nated through various online computer services, includ-
ing CompuServe, Prodigy, and America Online, and with
Legal Link on the Internet.
27. The various forms of published notice provided
recipients with a toll free “800” telephone number to
which potential Settlement Class members could call to
obtain further information and to request the full notice
la aaaaataiaaataa aia ai aca eect ii
Shell App. 26
packet to be mailed to them. The telephone message was
updated as the notice program progressed, and com-
monly raised questions were answered by live operators,
in English or Spanish as required by the caller. The
parties prepared and updated scripts and information by
which the operators were able to provide the general
information commonly requested by callers.
28. The toll-free telephone facility established for
notice purposes in this case received more than one
million telephone calls in response to the published
notice program. .
29. Over 195,000 requests for a claim form have
been received by the notice providers.
30. Mr. Hilsee demonstrated, by affidavit and in
live testimony at the Fairness Hearing, a number of
significant facts regarding the reach and effectiveness of
the notice. The national media campaign reached an
extraordinarily high percentage of United States adults
aged 35 years and over: approximately 114 million
individuals, or 92.11% of this population. Each of these
adults was exposed to the national media notice an
average of 4.01 times. The national media campaign also
reached approximately 151 million persons in the
United States aged 25 years and over, representing
90.88% of this population. Each of the individuals in
this larger, secondary target group was reached an
average of 3.76 times by the national media notice, a
frequency that also exceed [sic] the primary target reach
in other class actions. These are higher reach and
frequency statistics than have been found adequate by
courts in other class actions. These data do not include
the reach of the notice campaign through means other
Shell App. 27
than the national paid notice campaign, such as the
television and print notices targeted to Hispanic and
African-American media, the local newspaper notices,
the non-paid media and direct mail notices to millions of
Settlement Class members.
31. Multifaceted notice programs like that imple-
mented in this case have been approved by other courts
and utilized successfully for similar purposes in large
consumer or product class actions such as this one,
where most class members are not individually identi-
fied at the outset. See, e.g., In re Domestic Air Transpor-
tation Antitrust Litigation, 141 F.R.D. 534 (E.D. Pa.
1992); 148 F.R.D. 297 (E.D. Pa. 1992); In re Silicone Gel
Breast Implant Products Liability Litigation, MDL 926
(N.D. Ala. 1994); Roberts v. Bausch & Lomb, Inc., 94-C-
1144-W (N.D. Ala. 1995).
32. As other courts have done with respect to the
less comprehensive notice programs they approved, this
Court finds that the notice program described above, as
designed and implemented, met and exceeded the
requirements of the United States Supreme Court,
Tennessee’s Rule 23, due process and the Constitution,
as construed in Phillips Petroleum Co. v. Shutts, 472
U.S. 797 (1985) and its progeny.
33. Thus, the best notice practicable under the
circumstances has been provided to members of the
Settlement Class. That notice accurately and adequately
advised them of this action; the proposed Settlement
and its terms, features, and benefits; their rights and
options; and the applicable procedures and deadlines for
exercising them.
Shell App. 28
34. A full opportunity has been provided to the
members of the Settlement Class to participate in the
Fairness Hearing, both orally and by way of written
submission to the Court.
35. The Court previously found the requirements
of Rule 23 of the Tennessee Rules of Civil Procedure
were met and certified a nationwide class for litigation
and trial purposes in the Order of National Class Certi-
fication. While such certification was and is contested by
the defendants, they have agreed to class certification
for settlement purposes, to promote a comprehensive,
classwide resolution of polybutylene pipe litigation.
36. The numerosity, typicality, commonality, and
adequacy requirements of Rule 23.01 of the Tennessee
Rules of Civil Procedure are satisfied as to the Settle-
ment Class in connection with the Settlement in this
case.
37. In accordance with Rule 23.02(3), common
issues of fact and law predominate and make certifica-
tion of the Settlement Class for settlement purposes
efficient and appropriate. The members of the Settle-
ment Class have been afforded the right and opportu-
nity to exclude themselves from the Settlement Class.
38. The settlement encompassed within the
Agreement is in all respects fair, reasonable, and ade-
quate and in the best interests of the Settlement Class.
39 The Court-approved notice program provided
clear and simple procedures and instructions for the
submission of objections by or on behalf of Settlement
Class members. For example, paragraph 10 of the
Court-approved Notice of Class Action and Proposed
Shell App. 29
Settlement required objections to be submitted, in
writing, postmarked not later than October 20, 1995,
and further stated, “if you do not comply with the
procedure and the deadline stated herein, you may not
be entitled to be heard at the Fairness Hearing er to
otherwise contest the approval of the Settlement, or to
appeal from any orders or judgments of the Court
entered thereon.” All objections, however styled, that
failed to comply with the procedures and deadlines set
forth in the notice program, are hereby found to be
procedurally deficient and are disqualified in accordance
with the foregoing statement.
40. The Court has also reviewed the Principles of
Agreement dated November 7, 1995, executed by the
parties, including the terms applicable to U.S. Brass
Corp., Eljer Manufacturing, Inc., and Eljer Industries,
Inc. The terms of the Principles of Agreement appear to
be reasonable and in accordance with the efforts being
made to seek a global resolution of all litigation pertain-
ing to the issues among the parties. The prior Cox
settlement was unclear as to the effect of funds received
from U.S. Brass Corp., Eljer Manufacturing, Inc., and
Eljer Industries, Inc. The revised settlement makes
clear that amounts received from U.S. Brass and/or
Eljers will add to the minimum fund of $950 million. If
that settlement is perfected and approved by the United
States Bankruptcy Court, the minimum fund would
substantially increase.
41. In independently determining to approve the
Settlement and the Application, the Court has consid-
ered the substance of all objections to the Settlement,
whether timely, qualified or not, including those by the
Shell App. 30
Martin Objectors and others that have since been
withdrawn or stricken.
42. Certain objectors have asserted that the
proposed Settlement must be reduced by a proposed
settlement of claims against du Pont in the Spencer case
pending in the Circuit Court of Greene County, Alabama,
which the objectors characterized as a $120 million set-
tlement.
43. The proposed du Pont settlement has not been
approved by the Spencer court, and this Court may not
speculate whether it will be approved by the Spencer
court.
44. The proposed du Pont settlement in Spencer
purports to entitle a claimant to a rebate of 8% of monies
the claimant pays for replumbing his or her structure.
45. The Settlement before this Court, in the mini-
mum amount of $950 million, provides for the assignment
of Settlement Class members’ claims against du Pont and
others to defendants Shell and Celanese.
46. Objectors are incorrect in asserting that the
“credit” arising from the assignment reduces the Defen-
dants’ contribution to the Settlement. The original Cox
settlement was $850 million to be paid by the Defendants.
The revised Cox settlement requires the Defendants to pay
a minimum of $950 million to consumers with assignment
of rights, against du Pont, regardless of whether du Pont
ultimately participates in the settlement. The revised Cox
settlement substantially increases benefits to consumers.
47. Contrary to objectors’ assertions, all interest
earned on funds held by the CPRC will be for the benefit of
Shell App. 31
the Settlement Class and will not be credited against the
Defendants’ obligations under the Agreement.
48. Because of the structure of the Settlement, the
Defendants’ obligation to fund the CPRC on an ongoing,
as-needed basis, and the Defendants’ obligation to pay
reimbursement for Past Expenses in a reasonable time
after the close of the one year claim filing period on Au-
gust 21, 1996, and any related opt out period that may be .
necessary under § 4.5.1 of the Agreement, there is no
significant ability by the Defendants to delay payments
due under the Settlement.
49. Objectors are incorrect in asserting that, even
before the Defendants’ initial funding commitment was
increased from $850 million to $950 million, the “net
funding by Shell and Celanese under ... the agreement
[was] only $547 million.” a
50. The notice provided to the Settlement Class was
neither misleading nor defective.
51. The defendants are each responsible for one-half
of the settlement obligations as specified in the Settlement
Agreement unless and until the respective liabilities are
established by arbitration under the Funding Agreement.
52. The Cox Class Counsel have undertaken a
reasonable risk that each of the defendant companies will
be solvent and capable of fulfilling its obligations under
this agreement.
53. Had the plaintiffs settled at separate times with
Shell and Celanese, it is highly unlikely that there would
ever have been joint and several liability between them.
Shell App. 32
54. The Settlement is more favorable to the Settle-
ment Class than litigation if it is assumed that one of the
defendants will, some years from now, become unable to
pay all claims, since the class will receive payment under
the Settlement promptly, thereby reducing the number of
claimants who would be subjected to proving claims in a
bankruptcy.
55. The Agreement provides broad ranging powers
for the enforcement of a defaulting defendant’s obligations,
including the full panoply of equitable powers this Court
possesses.
56. The Agreement expressly provides that the
default of one defendant does not exonerate the other
defendant of its obligations under the Agreement.
57. Past expenses will be compensated after expira-
tion of one year from August 21, 1995, the Initial Notice
Date under the Agreement.
58. Claimants will not, contrary to an objection, be
required to wait 14 years to receive their entitled reim-
bursements or distributions under the Agreement.
59. The so-called exclusion of a “hot water heater
leak” — a leak occurring within six feet of piping measured
from the take-off at the unit’s hot water heater — does not
apply to any claim for reimbursement of repair costs and
property damage. Thus, the only exclusion is for eligibility
for a replumb, and even there, the exclusion applies only if
(1) it is the first leak in the unit and (2) it can be repaired
without cutting into the unit’s walls, ceilings, or floors.
60. Therefore, a replumb will be provided under the
Agreement even if the hot water heater leak is the first
leak, if to repair the leak would require cutting into the
Shell App. 33
walls, ceilings, or floors of the unit. Similarly, there will be
a replumb if the hot water heater leak is the second leak
in the system.
61. The claimant has the right to select the contrac-
tor to do the replumbing and property damage repair
work.
62. Nothing in the Agreement abrogates the war-
ranty of work done by the contractors and suppliers of pipe
and other components in the replumb.
63. The Agreement permits special relief involving
unusual hardship, so long as the CPRC Ombudsman and
President concur that such relief should be provided. This
provision allows the CPRC to provide relief from a breach
of warranty arising out of replumbing work, where the
warrantor fails to provide or cannot provide corrective
relief. CPRC § VI, E.
64. There is no factual basis for the asserted objec-
tion that there is any conflict of interest with respect to
the Cox Class Counsel.
65. The Cox Class Counsel maintained the highest
standards of professionalism and advocacy in protecting
and promoting the interests of the Class throughout the
prosecution and settlement of this case.
66. There is no factual basis for the asserted objec-
tion that settlements in individual cases are improperly
disparate from the Cox Settlement.
67. There is no need to provide additional notice to
the entire Settlement Class by reason of the revised terms
of the Settlement since the Court approved the notices
disseminated to the Settlement Class. All changes have
Shell App. 34
been to improve the Settlement over that described in the
notices, and none of the changes has an adverse impact on
any Class member.
68. As class action jurisprudence has accumulated,
various federal and state courts, in Tennessee and else-
where, have articulated criteria and factors that courts
may consider in evaluating proposed settlements for final
approval. See, e.g., Third Natl Bank v. Scribner, 212 Tenn.
400, 410, 370 S.W.2d 482 (1963); Clark Equip. Co. uv.
International Union, Allied Indus. Workers, 803 F.2d 878,
880 (6th Cir. 1986), cert. denied sub nom. Jones v. Clark
Equip. Co., 480 U.S. 934 (1987); Williams v. Vukovich, 720
F.2d 909, 922 (6th Cir. 1983); Bailey v. Great Lakes Can-
ning, Inc., 908 F.2d 38, 42 (6th Cir. 1990); In re Warner
Communications Sec. Litig., 618 F. Supp. 735 (S.D.N.Y.
1985) affd, 798 F.2d 35 (2d Cir. 1986); Girsh v. Jepson,
521 F.2d 153, 157 (38d Cir. 1975). This Court has been
guided, generally, by the procedures and criteria recom-
mended in the Manual for Complex Litigation, 3d ed.
(Federal Judicial Center 1995), §§ 30.4 et seqg., since the
federal and Tennessee class action provisions and criteria
are consistent.
69. Factors that may be considered in assessing the
fairness, adequacy, and reasonableness of the proposed
settlement include: the plaintiffs’ likelihood of ultimate
success on the merits balanced against the amount and
form of relief offered in the settlement; the stage of the
proceedings at which the settlement is reached; the extent
of cumulative discovery or investigation; the nature of the
settlement negotiations; the costs, risks, and delays of
establishing liability and damages; the views of experi-
enced counsel; the reaction of the class members them-
selves; the comparison of the settlement’s benefits with
EEO —E—EEEEE——————————E——E—|
Shell App. 35
other settlements or with the alternative of continuing
litigation; and whether approval of the settlement is in the
class members’ and the public interest. As the above
opinion and findings demonstrate, consideration of these
and other recognized factors, such as the participation and
recoramendations of an experienced and able settlement
judge and the testing of the settlement’s merits in the
class of adversary proceedings, demonstrate the Settle-
ment’s entitlement to approval.
70. Expert opinions have been submitted in support
of the proposed Settlement. (See Opinion of Professor
David Rosenberg, Affidavit of Professor Paul H. Rubin). In
approving the Settlement, the Court has considered these
opinions.
71. The Court will retain jurisdiction and address a
supplemental notice program, on a joint motion of the
settling parties, to advise all members of the Settlement
Class on whose behalf a purported or actual request for
exclusion was received of the enhanced Settlement, provid-
ing those individuals with a new opportunity to request
exclusion from the Settlement Class in light of the en-
hanced Settlement.
72. There is no just reason for delay in the entry of a
final judgment and decree by reason of such supplemental
notice and related proceedings or of the retention by the
Court of continuing jurisdiction to oversee the implemen-
tation and enforcement of the Agreement and Settlement.
73. The Application is fair and should be granted.
Based upon the foregoing, it is hereby ORDERED,
ADJUDGED, and DECREED:
a
Shell App. 36
1. The Court has jurisdiction over all claims asserted
in the Action on behalf of all Settlement Class members
and over all parties to the Action, including all members of
the Settlement Class.
2. The Settlement Class is defined as follows:
All persons and entities that (1) own real prop-
erty or structures in the United States in which
there was installed between January 1, 1978 and
July 31, 1995, polybutylene plumbing with acetal
insert or metal insert fittings or a polybutylene
yard service line; (2) own or previously owned |
such real property or structures and have al-
ready incurred any cost or expense, by reason of
leakage from, or from failure, repair, or removal
of, all or any portion of such polybutylene plumb-
ing or yard service line which was installed be-
tween January 1, 1978 and July 31, 1995; or (3)
will own such real property or structures during
the term of entitlement to relief under the Set-
tlement Agreement.
The definition of the Settlement Class excludes:
(1) All persons who, in accordance with the terms
of the Settlement Agreement, execute a timely
request for exclusion from the Settlement Class;
(2) the Defendants; the Released Manufacturers;
the parent and any subsidiary, affiliate and con-
trolled entity of any of them; and the officers and
directors of each of them; and (3) all parties to
Geno Cioe, et al. v. Shell Oil Company, et al.,
Case No. 662214, and Robert L. Williams, et al. v.
Shell Oil Company, et al., Case No. 658403, and
related combined actions (Case Nos. 640245,
654709, 656787, 661372, 665521 and 665527) in
the Superior Court of the State of California in
Shell App. 37
and for the County of San Diego, and all mem-
bers of the certified classes in those lawsuits.
3. All members of the Settlement Class who have not
timely elected to be excluded from the Settlement Class
are members thereof and are bound by this Order and the
Final Judgment being entered herewith.
4. Pursuant to Rule 23.01, Rule 23.02, and Rule
23.03 of the Tennessee Rules of Civil Procedure, the Court
confirms the certification of the Settlement Class provided
in the Preliminary Approval Order and maintains such
certification for purposes of final approval of the settle-
ment.
5. The Class Representatives and Plaintiffs’ Class
Counsel designated in paragraph 8 of the Court-approved
Notice of Class Action and Proposed Settlement to repre-
sent the Settlement Class are hereby confirmed.
6. The Agreement and the Funding Agreement
entered into by the Defendants pursuant to the Agreement
are hereby made part of the record in this case and as such
shall have the full force and effect of an order of the Court.
7. Pursuant to Rule 23.05 of the Tennessee Rules of
Civil Procedure, the Court hereby grants final approval of
the Agreement and the Settlement set forth in the Agree-
ment and finds that it-is fair, adequate, and reasonable to
the members of the Settlement Class.
8. The objections that were filed, whether timely or
not, have been considered and are all overruled.
9. Accordingly, the Court directs that the Settlement
be consummated in accordance with the terms and condi-
tions of the Agreement.
Shell App. 38
10. Plaintiffs and all members of the Settlement
Class are-barred and permanently enjoined from prosecut-
ing (in any forum) against Sh» ll Oil Company and/or
Hoechst Celanese Corporation any and all claims, de-
mands, causes of action of every kind and nature, obliga-
tions, damages, losses, and costs, whether known or
unknown, actual or potential, suspected or unsuspected,
contingent or fixed, either arising out of or relating to any
of the facts, transactions, actions, or conduct alleged in
this action, or that were or could have been asserted or
sought in the action, other than any past, present, or
future claim for bodily injury (including wrongful death)
and associated emotional distress and mental anguish.
11. The Complaint as amended, and all claims and
causes of action asserted therein are dismissed with
prejudice and costs, as provided in the Agreement, to be
paid from the settlement fund.
12. The Application is hereby granted. In accordance
with the Funding Agreement referred to in the Agreement,
the defendants shall pay Plaintiffs’ Class Counsel, as
attorneys’ fees and expenses, the sum of $45 million plus
interest at the rate applicable to federal court judgments
entered on July 31, 1995, for the period from July 31,
1995, until the earlier of July 31, 1996, or when paid. In
addition, in accordance with Section 25.1 of the Agreement
and with the Funding Agreement referred to in the
Agreement, the defendants shall pay the sum of $3,000.00
to each single Representative Plaintiff or Representative
Plaintiff married couple.
13. In the event that the Settlement does not become
Final (as more fully defined in the Agreement) in accor-
dance with the terms of the Agreement, then this Order
Shell App. 39
and the Final Judgment and Decree being entered here-
with shall be rendered null and void and be vacated and
the Agreement shall be rendered null and void in accor-
dance with the provisions thereof.
14. Without affecting the finality of this Order or of
the Final Judgment being entered herewith, the Court
shall retain continuing jurisdiction over the Action and the
settling Parties (as more fully defined in the Agreement),
including all members of the Settlement Class; the ad-
ministration and enforcement of the Settlement; and the
benefits to the Settlement Class, including for such pur-
poses as supervising the implementation, enforcement,
construction, and interpretation of the Agreement.
15. Any disputes or controversies arising with
respect to the interpretation, enforcement, or implementa-
tion of the Agreement shall be presented by motion to the
Court.
16. Pursuant to Rule 54.02 of the Tennessee Rules of
Civil Procedure, the Court hereby directs the entry of this
judgment based upon the Court’s finding that there is no
just reason for delay notwithstanding the Court’s reten-
tion of jurisdiction to oversee implementation and en-
forcement of the Agreement and its continuing jurisdiction
to provide for supplemental notice (and related proceed-
ings) to potential members of the Settlement Class as to
whom the Court previously received requests for exclusion
from the Settlement Class.
/s/ W. Maloan
CHANCELLOR
ENTERED: November 17, 1995
Shell App. 40
IN THE CHANCERY COURT FOR OBION COUNTY,
TENNESSEE AT UNION CITY, TENNESSEE
TINA COX, CHARLES ) Civil Action No. 18,844
HOMER CLOAR, MARY H. _ )
CLOAR, MELODY ALFORD, ) CLASS ACTION
COUNTRY VILLAGE ) OBION COUNTY
MOBILE HOME PARK, and
PHYLLIS BIRMINGHAM,
individually and on behalf of
all other individuals and
entities similarly situated,
Plaintiffs,
Vv.
SHELL OIL COMPANY,
d/b/a SHELL CHEMICAL
COMPANY, and HOECHST
CELANESE CORPORATION,
Defendants.
a ae ae a a ae a a a a a
FINAL JUDGMENT
(Filed Nov. 17, 1995)
This matter is before the Court on motion by the
parties for final approval of their proposed settlement as
set forth in the Settlement Agreement filed July 31, 1995,
as amended by an Amendment dated October 6, 1995, a
Second Amendment dated October 24, 1995, and a Third
Amendment dated November 9, 1995 (the “Agreement”).
Also before the Court is the Application of Class Counsel
for Award of Attorneys’ Fees and Expenses, and Awards to
the Representative Plaintiffs (the “Application”).
A hearing on the motion and Application was held on
November 8 and 9, 1995, pursuant to the Court’s Order of
Shell App. 41
July 31, 1995, granting preliminary approval of the
settlement and the August 7, 1995, order conforming the
class definition, under procedures set forth in the August
24, 1995, Order Approving Forms of Notice, Scheduling
Fairness Hearing and Setting Opt-outs and Objection
Dates.
This Final Judgment is entered pursuant to a Final
Order Approving the Class Action Settlement, Attorneys’
Fees and Expenses, and Awards to Representative Plain-
tiffs (the “Final Order”) which is entered together here-
with. The Court has determined that the Class Action
Settlement, as encompassed within the Agreement, should
be approved as fair, adequate, and reasonable to the
Settlement Class under Rule 23.05 ot the Tennessee Rules
of Civil Procedure, and that the Application should be
granted.
The Court has further determined that there is no just
reason for delay in the entry of final judgment in accor-
dance with the Final Order pursuant to Rule 54.02 of the
Tennessee Rules of Civil Procedure.
Accoraingly, it is ORDERED that judgment is hereby
entered in accordance with the Final Order.
It is further ORDERED that the Settlement Class is
defined as follows:
All persons and entities that (1) own real prop-
erty or structures in the United States in which
there was installed between January 1, 1978 and
July 31, 1995, polybutylene plumbing with acetal
insert or metal insert fittings or a polybutylene
yard service line; (2) own or previously owned
such real property or structures and have al-
ready incurred any cost or expense, by reason of
Shell App. 42
leakage from, or from failure, repair, or removal
of, all or any portion of such polybutylene plumb-
ing or yard service line which was installed be-
tween January 1, 1978 and July 31, 1995; or (3)
will own such real property or structures during
the term of entitlement to relief under the Set-
tlement Agreement.
The definition of the Settlement Class excludes:
(1) All persons who, in accordance with the terms
of the Settlement Agreement, execute a timely
request for exclusion from the Settlement Class;
(2) the Defendants; the Released Manufacturers;
the parent and any subsidiary, affiliate and con-
trolled entity of any of them; and the officers and
directors of each of them; and (3) all parties to
Geno Cioe, et al. v. Shell Oil Company, et al.,
Case No. 662214, and Robert L. Williams, et al. v.
Shell Oil Company, et al., Case No. 658403, and
related combined actions (Case Nos. 640245,
654709, 656787, 661372, 665521 and 665527) in
the Superior Court of the State of California in
and for the County of San Diego, and all mem-
bers of the certified classes in those lawsuits.
It is further ORDERED that the Court directs that
the settlement be consummated in accordance with the
terms and conditions of the Agreement.
It is further ORDERED that the Amended Complaint
and all claims and causes of ection asserted therein are
dismissed with prejudice with costs to be paid from the
settlement fund in accordance with the terms of the
Settlement Agreement.
It is further ORDERED ‘hat, in the event that the
settlement does not become final (as more fully defined in
Shell App. 43
the Agreement) in accordance with the terms of the
Agreement, then this Final Judgment and the Final Order
shall be rendered null and void and be vacated, and the
Agreement shall be rendered null and void in accordance
with the provisions thereof.
It is further ORDERED that, without affecting the
finality of the Final Order and this Final Judgment, the
Court shall retain continuing jurisdiction over this action
and the settling Parties (as more fully defined in the
Agreement), including all members of the Settlement
Class; the administration and enforcement of the settle-
ment; and the benefits to the Settlement Class, including
for such purposes as supervising the implementation,
enforcement, construction, and interpretation of the
Settlement Agreement.
It_is further ORDERED that, subject and pursuant to
the terms and conditions of the Agreement, Plaintiffs and
all members of the Settlement Class are barred and
permanently enjoined from prosecuting (in any forum)
against Shell Oil Company and/or Hoechst Celanese
Corporation any and all claims, demands, causes of action
of every kind and nature, obligations, damages, losses, and
costs, whether known or unknown, actual or potential,
suspected or unsuspected, contingent or fixed, either
arising out of or relating to any of the facts, transactions,
actions, or conduct alleged in this action, or that were or
could have been asserted or sought in the action, other
than any past, present, or future claim for bodily injury
(including wrongful death) and associated emotional
distress and menial anguish.
It is further ORDERED that, in accordance with the
above-described Application and the Funding Agreement
Shell App. 44
referred to in the Agreement, the defendants shall pay
Plaintiffs’ Class Counsel, as attorneys’ fees and expenses,
the sum of $45 million, plus interest at the rate applicable
to federal court judgments entered on July 31, 1995, for
the period from July 31, 1995, until the earlier of July 31,
1996, or when paid.
It is further ORDERED that, in accordance with
Section 25.1 of the Agreement and with the Funding
Agreement referred to in the Agreement, the defendants
shall pay the sum of $3,000.00 to each single Representa-
tive Plaintiff or Representative Plaintiff married couple.
It is further ORDERED, pursuant to Rule 54.02 of the
Tennessee Rules of Civil Procedure, that the Court hereby
DIRECTS the entry of this judgment as a final judgment
based upon the Court’s finding that there is no just reason
for delay, notwithstanding the Court’s retention of juris-
diction to oversee implementation and enforcement of the
Agreement as set forth above, and the Court’s continuing
jurisdiction to provide for supplemental notice (and related
proceedings) to potential members of the Settlement Class
as to whom the Court previously received requests for
exclusion from the Settlement Class.
Dated at Union City, Tennessee, this 17 day of No-
vember, 1995.
/s/ W. Michael Maloan
W. MICHAEL MALOAN,
CHANCELLOR
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