Yesterday, Judge Shirley Wohl Kram filed a 58-page decision in the Grand Theft Auto class action. How did she decide?
The court decertified the class (via NY Times Bits Blog and a phone-call from Jonathan Glater) based on the Second Circuit precedent of McLaughlin v. American Tobacco Company, which was decided after the settlement in November. As I suggested last month, I think McLaughlin would certainly preclude a litigation class of the GTA claims, but the court’s decision may be an aggressive use of the precedent by the court to decertify the settlement class, where the certification standards are looser because there is no need to demonstrate that a class would be superior to individual litigation. Take Two spent about a million dollars negotiating and administering a settlement because the court refused to rule on its decertification motion last year; that wasted effort demonstrates why it is important for courts to resolve certification questions early in the case. But with no certified class, there can be no class settlement, and the court does not need to directly reach the issues in my brief.
I am encouraged by footnote 26 of the opinion, which, in dicta, suggests that the Court would have adopted at least some of the arguments in my brief regarding the untenability of the settlement. I am disappointed that there isn’t a more explicit precedent for these principles, which will make it easier for other class action attorneys to attempt to bring similar settlements that will freeze out the class and inflate the value of the settlement to rationalize high attorneys’ fees. On the other hand, the court’s stricter standard for settlement class certification serves a similar deterrent purpose against meritless strike suits filed in the hopes of such a settlement. And, of course, without my objection, the court very likely would have simply rubber-stamped the settlement and the plaintiffs’ attorneys would have walked away with a million dollars for nothing.
The interesting question will be whether there will be a Rule 23(f) appeal by the plaintiffs. If so, I may need to file a Second Circuit brief after all.
Also, I learned a new word: “asseveration.” (When you asseverate, you make an ass out of–oh, never mind.)