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In re Dry Max Pampers Litigation

United States Court of Appeals, Sixth Circuit

August 2, 2013

In re: Dry Max Pampers Litigation.
v.
Procter & Gamble Company; Procter & Gamble Paper Products Company; Procter & Gamble Distributing LLC, Defendants-Appellees. Daniel Greenberg, Objector-Appellant, Angela Clark, et al., Plaintiffs-Appellees,

Argued: October 4, 2012

Appeal from the United States District Court for the Southern District of Ohio at Cincinnati. No. 1:10-cv-301—Timothy S. Black, District Judge.

COUNSEL

ARGUED:

Adam E. Schulman, CENTER FOR CLASS ACTION FAIRNESS LLC, Washington, D.C., for Appellant.

Lynn Lincoln Sarko, KELLER ROHRBACK L.L.P., Seattle, Washington, for Plaintiffs-Appellees.

D. Jeffrey Ireland, FARUKI IRELAND & COX P.L.L., Dayton, Ohio, for Defendants-Appellees.

ON BRIEF:

Adam E. Schulman, Theodore H. Frank, CENTER FOR CLASS ACTION FAIRNESS LLC, Washington, D.C., for Appellant.

Lynn Lincoln Sarko, Gretchen Freeman Cappio, Harry Williams IV, KELLER ROHRBACK L.L.P., Seattle, Washington, for Plaintiffs-Appellees.

D. Jeffrey Ireland, Brian D. Wright, FARUKI IRELAND & COX P.L.L., Dayton, Ohio, for Defendants-Appellees.

Before: COLE and KETHLEDGE, Circuit Judges; and THAPAR, District Judge. [*]

OPINION

KETHLEDGE, Circuit Judge.

Class-action settlements are different from other settlements. The parties to an ordinary settlement bargain away only their own rights-which is why ordinary settlements do not require court approval. In contrast, class-action settlements affect not only the interests of the parties and counsel who negotiate them, but also the interests of unnamed class members who by definition are not present during the negotiations. And thus there is always the danger that the parties and counsel will bargain away the interests of unnamed class members in order to maximize their own.

This case illustrates these dangers. The class is made up of consumers who purchased certain kinds of Pampers diapers between August 2008 and October 2011. The parties and their counsel negotiated a settlement that awards each of the named plaintiffs $1000 per "affected child, " awards class counsel $2.73 million, and provides the unnamed class members with nothing but nearly worthless injunctive relief The district court found that the settlement was fair and certified the settlement class. We disagree on both points, and reverse.

I.

The defendant Procter & Gamble Company ("P&G") manufactures Pampers brand diapers. In March 2010, P&G began marketing Pampers with so-called "Dry Max technology." Two months later, the Consumer Product Safety Commission began investigating whether Dry Max diapers tend to cause severe diaper rash. The Clark lawsuit and 11 others were filed very soon thereafter. The district court consolidated all 12 cases.

In August 2010, the Commission—along with a Canadian agency, Health Canada—released the results of its investigation. Based upon a review of 4, 700 incident reports, the Commission found no connection between the use of Dry Max diapers and diaper rash.

P&G then filed a motion to dismiss. Before Plaintiffs responded to the motion, however—and indeed before any formal discovery in the case—the parties began discussing settlement. By March 2011 they had reached a deal. Its essential terms were as follows: Although the plaintiffs had sought class certification under Federal Rule of Civil Procedure 23(b)(1) and (b)(3)—under which class members are free to opt out of the class, and thus out of the deal negotiated for them by class counsel—the parties agreed to seek ...


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