2014.10.31 Robins Kaplan File Stamped Opening Brief

In The United States Court of Appeals For the Eighth Circuit
James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini, Plaintiffs Appellants Fred Barnett et al., on behalf of themselves and all others similarly situated Plaintiffs Appellees John Frederick Dryer et al. Plaintiffs v. National Football League. Appellee ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA Case No. 0:09CV02182PAMAJB ____________________________________
____________________________________
Appeal No. 133581
BRIEF OF APPELLANTS JAMES LAWRENCE MARSHALL, JOSEPH MICHAEL SENSER, AND DANTE ANTHONY PASTORINI
ROBINS, KAPLAN, MILLER & CIRESI L.L.P. Michael V. Ciresi (No. 16949) Jan M. Conlin (No. 192697) Eric J. Magnuson (No. 66412) 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 554022015 Tel: 6123498500 Fax: 6123394181 BOB STEIN LLC Robert A. Stein (No. 104930) 6473 Beach Road Eden Prairie, MN 55344 Tel: 9528291043 WARD & WARD, PLLC Thomas J. Ward 2020 N Street NW Washington D.C., 20036 Tel: 2023318160
Attorneys for Appellants Marshall, Senser, and Pastorini

Appellate Case: 13-3581 Page: 1 Date Filed: 02/03/2014 Entry ID: 4120132
Summary and Request for Oral Argument

The district court approved a class-action settlement that lacks any certain economic benefit direct or indirect to class members. Instead, the settlement distributes all funds to third-party organizations, who may or may not distribute the settlement funds to charities that, in turn, may or may not provide benefits to some of the class members. The district courts approval of the settlement was erroneous in at least three respects: First, Rule 23 and class-action principles do not allow distribution of class-settlement proceeds to third parties instead of class members outside of narrow circumstances not present here. Second, the settlement does not guarantee any benefit to class members. Third, the district court approved the settlement without any evidence or analysis of the value of the claims the class was surrendering, or any consideration of the value to the defendant of the rights it was allegedly misappropriating. The district court approved the settlement despite prohibiting discovery on damages. Thus, neither the court nor the parties were able to state with any assurance whether the amount the settlement is reasonable, adequate, and fair. Oral argument will assist the court in considering the issues presented by the district courts approval of this unprecedented class-action settlement. Appellants request thirty minutes to present their case.
Appellate Case: 13-3581
Page: 2
Date Filed: 02/03/2014 Entry ID: 4120132
Table of Contents
Jurisdictional Statement ....................................................................................1 Statement of Issues ............................................................................................2 Statement of Case..............................................................................................4 A. NFLs use of retired players identities in videos..................................5 B. Retired players claims: Lanham Act, publicity rights, and unjust enrichment. ...........................................................................................6 C. Settlement by certain plaintiffs: all funds would go to third parties, the remedies do not relate to publicity rights, and the record lacks evidence of damages. ........................................................7 1. Terms of the settlement..................................................................9 (a) Common Good Entity .......................................................... 10 (b) Licensing Agency ...................................................................12 2. Value of the settlement ................................................................ 14 (a) The retired players release past and future publicity-rights claims against the NFL. ......................................................... 14 (b) The district court prohibited damages discovery, leaving the value of the class members released claims unknown. .. 16 3. Lead Settlement Counsel ignored the Appellants expressed concerns. ....................................................................................... 17 4. The district court approved the settlement, despite acknowledging that this unique agreement has little precedent..................................................................................... 18 Summary of Argument .................................................................................... 21 Argument ........................................................................................................ 22 I. Rule 23 does not allow the distribution of class-settlement funds to third parties except in limited circumstances not present here. .. 23
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II. The settlement is not fair, reasonable, and adequate under Rule 23 because it does not guarantee a benefit to each or any class member in exchange for releasing his claims. ........................... 31 A. The class members claims have value. ....................................... 32 B. The Common Good Entity does not guarantee any economic benefit to any class member. ........................................................34 C. The Licensing Agency does not guarantee that any class members will receive an economic benefit. ................................. 37 1. The Licensing Agency provides no direct benefit to class members. ................................................................................ 37 2. The Licensing Agency lacks the authority to fully license publicity rights. ..................................................................... 39 3. The Licensing Agency is not a unique proposal; it would duplicate a program that already exists. ............................... 39 D. The settlement permits disparate treatment of class members with identical claims..................................................................... 41 E. The district court did not properly balance the merits of the plaintiffs claims against the amount offered in the settlement. 43 F. The recent denial of preliminary approval for the NFLs concussion settlement highlights the deficiencies in the settlement here. ........................................................................... 44 G. The district court erred in approving the settlement. ................ 46 III. The record does not contain sufficient information relating to the value of the released claims to determine whether the settlement is fair, reasonable, and adequate. ........................................................... 47 A. Measures of the value of the released claims exist....................... 47 B. The district court had no information on these measures, and no basis to place a value on the released claims. ........................ 48 C. Lead settlement counsel shirked his duty to evaluate and disclose the released claims value. .............................................. 51 Conclusion ..................................................................................................... 53
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Table of Authorities
Cases Airline Ticket Commn Antitrust Litig. Travel Network v. United Air Lines, 268 F.3d 619 (8th Cir. 2001) ........................................................... 24, 26 Alexander v. Natl Football League, No. 476Civil123, 1977 U.S. Dist. LEXIS 14685, (D. Minn. 1977) ..................................................................................... 49 Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ..................................................................................2 City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974) ........................................................ 3, 48, 49 Contreras v. PM Beef Holdings, LLC, No. 07CV3087, 2008 U.S. Dist. LEXIS 73800, (D. Minn. Sept. 18, 2008) ...................................................................... 49 Day v. Persels & Assocs., LLC, 729 F.3d 1309 (11th Cir. 2013) .............................................................. 37 Ferrington v. McAfee, Inc., No. 10CV01455LHK, 2012 U.S. Dist. LEXIS 49160, (N.D. Cal. Apr. 6, 2012) .................................................................. 42, 43 Free v. Abbott Lab., 953 F. Supp. 751 (M.D. La. 1997) ....................................................44, 51 Grunin v. Intl House of Pancakes, 513 F.2d 114 (8th Cir. 1975) .................................................. 3, 22, 31, 46 In re Airline Ticket Commn Antitrust Litig., 307 F.3d 679 (8th Cir. 2002) ............................................................. 2, 26 In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) ............................................................ 24, 30 In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995) .................................................................... 42 In re Pet Food Prods. Liab. Litig., 629 F.3d 333 (3d Cir. 2010) .....................................................................3
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In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24 (1st Cir. 2009).................................................................... 26 In re Uponor, Inc., 716 F.3d 1057 (8th Cir. 2013) ................................................................ 22 In re: NFL Players Concussion Injury Litig., MDL No. 2323, 2014 U.S. Dist. LEXIS 4300, (E.D. Pa. Jan. 14, 2014) .......................................................................... 45 Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011) ...........................................................passim Lane v. Facebook, 696 F.3d 811 (9th Cir. 2012) .................................................................. 27 Marek v. Lane 134 S. Ct. 8 (2013) ..................................................................... 24, 25, 27 Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781 (7th Cir. 2004) ............................................................. 3, 43 Oglala Sioux Tribe v. C & W Enters., Inc., 542 F.3d 224 (8th Cir. 2008) ................................................................. 22 Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) ............................................................................... 26 Powell v. Georgia-Pacific Corp., 119 F.3d 703 (8th Cir. 1997) ............................................................. 2, 26 Powell v. Georgia-Pacific Corp., 119 F.3d 703 (8th Cir. 1997) ................................................................. 26 Six Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) ......................................................... 26, 30 Sobel v. The Hertz Corp., No. 3:06CV00545LRHRAM, 2011 U.S. Dist. LEXIS 68984, (D. Nev. June 27, 2011) .......................................................................... 48 Van Horn v. Trickey, 840 F.2d 604 (8th Cir. 1988) ........................................................... 22, 48 Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005) .................................................................... 23
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Rules Fed. R. Civ. App. P. 4 ........................................................................................1 Fed. R. Civ. P. 23 ......................................................................................passim Statutes 15 U.S.C. 1525 .............................................................................. 1, 7, 29, 48 28 U.S.C. 1291 ...............................................................................................1 28 U.S.C. 1331 ...............................................................................................1 28 U.S.C. 1332 ...............................................................................................1 28 U.S.C. 1367 ...............................................................................................1 28 U.S.C. 2072 .................................................................................. 2, 28, 29 Other Authorities 2 J. THOMAS MCCARTHY, THE RIGHTS OF PUBLICITY & PRIVACY, 11:34 ..................................................................................................... 47 AM. LAW INST., PRINCIPLES OF THE LAW OF AGGREGATE LITIG. 3.07 (2010)............................................................................................ 24 M. Redish et al., Cy Pres Relief & The Pathologies of the Modern Class Action, 62 FLA. L. REV. 617 (2010) ..................................................................... 29 RESTATEMENT (THIRD), UNFAIR COMPETITION 49 (1995) .......................... 47
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Jurisdictional Statement
Appellants James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini appeal from an order of the United States District Court for the District of Minnesota, the Honorable Paul A. Magnuson, granting Lead Settlement Counsels Motion for Final Approval of Settlement dated November 4, 2013, as well as the final judgment also entered on November 4, 2013. The district court had diversity jurisdiction pursuant to 28 U.S.C. 1332; subject-matter jurisdiction pursuant to 28 U.S.C. 1331 because this action arose under the Lanham Act, 15 U.S.C. 1525; and jurisdiction over plaintiffs state and common-law claims under 28 U.S.C. 1367 because those claims were so related to the federal claims that they formed part of the same case or controversy. Appellants filed a timely appeal on November 22, 2013. Fed. R. Civ. App. P. 4 (a)(1). This Court has jurisdiction pursuant to 28 U.S.C. 1291.
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Statement of Issues
1. Does Rule 23 permit a class-action settlement where all settlement funds are distributed to third parties, but with no finding that settlement funds could not have been distributed to class members?
The district court approved a settlement that it described as unique and with little precedent. Under that settlement, class members cannot receive direct compensation, and all funds are instead distributed to third parties. The district court made no finding that the funds could not be distributed to class members.
Apposite Authorities:
Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). Airline Ticket Commn Antitrust Litig. Travel Network v. United Air Lines, 307 F.3d 679 (8th Cir. 2002). Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011). Powell v. Georgia-Pacific Corp., 119 F.3d 703 (8th Cir. 1997). Rules Enabling Act, 28 U.S.C. 2072
2.
Is a class settlement fair, reasonable, and adequate under Rule 23 where it does not guarantee any benefit to class members?
The distribution of the settlement funds to third parties does not guarantee benefits to class members. Moreover, the charitable purposes for which the funds may be used do not relate to the class members publicity claims released in the settlement, and class members with otherwise identical claims have no guarantee of equal treatment.
Grunin v. Intl House of Pancakes, 513 F.2d 114 (8th Cir. 1975). Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781 (7th Cir. 2004).
3.
Does Rule 23 allow approval of a class settlement without an evaluation of the potential value of the claims released by the class members?
The district court prevented class members from obtaining discovery regarding the NFLs profits from using the players images. The court nonetheless approved the settlement, releasing all class members past and future claims without any record evidence of the value of those claims.
In re Pet Food Prods. Liab. Litig., 629 F.3d 333 (3d Cir. 2010). City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974). Grunin v. Intl House of Pancakes, 513 F.2d 114 (8th Cir. 1975).
Statement of Case
Overview This case turns upon whether Rule 23 permits a class-action settlement that provides for no direct benefit to any class members, but instead provides solely for distributions to third parties without safeguarding class members right to any compensation for releasing their claims. Over the objection of Appellants, named plaintiffs in the litigation, the district court approved a settlement that it acknowledges was unique and without precedent. Proceedings Below Appellants are class-action plaintiffs former professional football players who claimed that the National Football League (NFL) illegally used players identities to promote the NFL, violating the players commonlaw and statutory rights of publicity.1 The NFL used the players names and likenesses from archival video footage, particularly in NFL Films productions,2 the promotional videos deemed the most effective propaganda organ in the history of corporate America.3 Nearly all of the putative class members played long before the days of multimillion-dollar contracts. The NFL earns record revenues by continuing
1 2 3
A67; A165. A165; A123 A131. A124 23.
to use their identities in media presentations and promotions. This classaction suit sought to right a fundamental wrong: the NFL uses its retired players identities to bolster its profits without providing the players fair compensation.
A.
NFLs use of retired players identities in videos.

The NFL has used players identities in NFL Films videos including
its History series that included videos called The Fabulous Fifties and Sensational 60s to build the NFLs brand, sell products, and otherwise generate revenue. 4 The NFL has promoted itself by using the retired players names and images from their playing days. 5 One of the NFLs key marketing strategies has been to appeal to consumers sense of nostalgia through retired players.6 Using the retired players identities, the NFL has bolstered its brand by reminding consumers of the leagues history. The NFLs primary use of retired players identities has been through its NFL Films division, 7 which markets the NFL in documentary-style films that convert raw game footage into promotional films.8 The videos stars are
4 5 6 7 8
A67. A67 A68. A116; A123 A128; A140 A141. A123 A141; A139 A141. A124 A125; A140 A141.
retired players: the NFL uses their names to sell its products and to strengthen its brand.9 The NFL disseminates these promotional films in many ways, including through its own NFL Network. 10 NFL Films selfdescribed mission is promoting the NFL,11 a mission that generates substantial revenues. 12 In 2008 alone, the NFLs revenues were estimated to be $6.9 billion.13 To the extent the retired players contracts even addressed publicity rights, they excluded endorsement of commercial products, and no contract permitted the NFL to use any players publicity rights after the contractual expiration date. 14
B.
Retired players claims: Lanham Act, publicity rights, and unjust enrichment.
In 2009, the retired players sued the NFL in this class action, seeking to
stop the NFLs continued unauthorized use of their identities. 15 The retired
A116; A123 A127. A126, A131. A124. A124 A127. A134. A170. A117.
10 11 12 13 14 15
players claims included false endorsement under the Lanham Act, violations of the players rights of publicity, and unjust enrichment. 16 The NFL sought to defeat the retired players claims through two dispositive motions. But the district court first denied the NFLs motion for judgment on the pleadings, 17 and later denied the NFLs motion for summary judgment. 18 In both motions, all class-action plaintiffs were represented by a group of three Co-Lead Plaintiffs Counsel.19
C.
Settlement by certain plaintiffs: all funds would go to third parties, the remedies do not relate to publicity rights, and the record lacks evidence of damages.
On December 12, 2012 the day after the district court denied the
NFLs request for summary judgment Chief Magistrate Judge Arthur Boylan appointed a single attorney 20 as Plaintiffs Lead Settlement Counsel to negotiate a potential settlement with the NFL. That counsel worked independently of the Co-Lead Plaintiffs Counsel. 21 The magistrate judge
16 17 18 19
A68. A83 A84. A165 A172.
See A110 A114 (Appointing as Plaintiffs Interim Co-Lead Class Counsel: Hausfeld LLP, Bob Stein LLC, and Zimmerman Reed PLLP)). A173 A174 (appointing Daniel E. Gustafson of Gustafson Gluek, PLLC as Plaintiffs Lead Settlement Counsel).
21 20
A173; A177.
refused to require Lead Settlement Counsel to advise, consult, or otherwise discuss the settlement with Co-Lead Plaintiffs Counsel. 22 On March 18, 2013, Lead Settlement Counsel filed an amended classaction complaint, naming 14 new plaintiffs not previously involved in the case.23 The same day, all of those 14 new plaintiffs and 3 others previously named (Settling Plaintiffs) asked the district court to approve a proposed settlement. 24 Five of those new plaintiffs ultimately opted out of the settlement. 25 All of the six named plaintiffs who had initiated the suit opposed preliminary approval of that settlement. 26 Their opposition included the issues now on appeal. Over the opposition, the district court granted preliminary approval of the proposed settlement and certified a settlement class under Rule 23(b)(3).27
A177 (stating Plaintiffs Lead Settlement Counsel shall not be required to consult, provide information to or solicit or secure approval from any other Plaintiffs counsel, including the three co-lead litigation counsel previously appointed).
23 24
22
A181.
A224; Memorandum in Support of Motion for Preliminary Approval of Settlement, Dkt. #261. Dkt. #4461 at 4 (Lemuel Barney), 38 (Paul Krause, Bruce Laird), 49 (Preston Pearson), 59 (Jim Ray Smith). Mem. in Oppn to Mot. for Prelim. Approval of Settlement, Dkt. #264; Letter to District Judge in Resp. to Settling Pls. Mar. 29, 2013 Submission, Dkt. #269.
27 26 25
A392 A412.
That settlement, discussed in more detail below, is significant in several respects. Foremost among those is the distribution of the settlement proceeds solely to third parties, without any safeguards that would ensure that class members receive compensation. Class members cannot seek direct compensation, and for any individual class member, compensation is not guaranteed. The benefits provided by the third parties do not relate to the class members claims, which seek to remedy violations of their publicity rights. And the record fails to reflect that the district court or any plaintiff has ever considered any evidence of the potential value of the claims released by the class in the settlement, such as the value of the NFLs film library, the NFLs profits, and other economic benefits from the promotional use of the films.
1.
Terms of the settlement
The settlement allocates up to $50 million among the following: (1) A 501(c)(3) organization called the Common Good Entity, (2) Costs for establishing a Licensing Agency, (3) Attorneys fees, (4) Settlement administration expenses, and (5) The NFLs fees and costs for litigation with class members who exclude themselves from the settlement class.28 A242 A244 ( II.A.1; II.A.3); A246 ( II.B.1); A261 ( IV.F.1); A267 ( IX).
28
The settlement does not allocate any of the funds for direct distributions to class members. Further, neither the Common Good Entity nor the Licensing Agency guarantees that any particular class member will receive any economic benefit.
(a) Common Good Entity

The first third-party recipient of settlement funds is a new 501(c)(3) organization called the Common Good Entity, ostensibly dedicated to supporting and promoting the health and welfare of Retired Players and other similarly situated individuals.29 But the Common Good Entitys focus on promoting health and welfare will not remedy violations of retired players claims: publicity rights. The amount available for use by the Common Good Entity is uncertain. The settlement provides that the NFL will pay $42 million over eight years to the Common Good Entity, but if the NFL incurs opt-out litigation expenses, the settlement permits the NFL to deduct up to $13.5 million of the $42 million leaving the Common Good Entity only $28.5 million. 30 If the Common Good Entity does not distribute all funds
29 30
A261 ( IV.F.1). A243 A246 ( II.A.14).
within ten years, then the remaining funds revert to the NFL to disburse for similar charitable purposes.31 Nor is the amount of the distribution to the Common Good Entity tied to the damages that the class members claim to have sustained. The Common Good Entitys authority is limited to distributing settlement funds only to other third-party organizations. 32 The Common Good Entitys proposed seven-member Board of Directors would have discretion to disburse funds to third-party charities for a group of approved uses such as medical research, housing, insurance, medical evaluations, mental health, wellness, and employment training. 33 But the approved uses do not include any compensation for the NFLs use of retired players images and other publicity rights. Further, the settlement does not guarantee that funds in the Common Good Entity will ever reach any class member. It contemplates that the funds received by the Common Good Fund may be disbursed for the charitable benefit of similarly situated individuals in addition to the benefit of retired players.34
31 32 33 34
A264 ( IV.F.9). A262 A263 ( IV.F.5). A263 ( IV.F.5.(c)). A262 ( IV.F.5).
This chart illustrates the distribution of the settlement. 35
Thus, people not in the class may end up receiving funds through the Common Good Entitys distributions, while class members may receive nothing if they do not qualify for the benefits offered by the charities that ultimately receive the money.
(b) Licensing Agency

The second third-party recipient of settlement funds is a newly created Licensing Agency, which would seek to license class members publicity rights to third parties.36 The Licensing Agency can license retired players publicity rights to third parties, but not to the NFL, which receives a complete release under the settlement to use those rights in promoting the
35 36
A261 A265 ( IV.F.110). A254 ( IV.A).
NFL. 37 The actions of the Licensing Agency therefore do not relate to the NFLs use of class members publicity rights, and the agency will not generate or receive any compensation for the NFLs continued use of those rights.38 Under the settlement, the Licensing Agency lacks authority to license NFL game footage to third parties. 39 It also lacks authority to license any NFL intellectual-property rights, such as logos, to third parties without the NFLs consent.40 The NFL and its assigns receive the uncompensated, worldwide, perpetual right to commercially exploit Player Identity Elements 41 in any media or format, (whether now known or hereinafter developed) that publicize, promote, market or advertise the NFL. 42 This includes the personal identity rights of virtually all class members; the grant is not even limited to football-related rights. Thus, NFL sponsors and broadcasters, as Released Parties, 43 could use class members identity rights in competition with the Licensing Agency. The Licensing Agency and the Common Good Entity are closely tied. The Common Good Entitys Board of Directors and the Licensing Agencys
37 38 39 40 41 42 43
A248 ( III.A); A252 A253 ( III.C.4). Id. A252 ( III.C.4). A257 ( IV.C.3). A240 ( I.E.38); A249 ( III.A.2). A249 ( III.A.2). A241 ( I.E.43).
Board of Directors will share identical members.44 The proceeds that the Licensing Agency generates will be divided between the Common Good Entity and the class members whose rights are licensed. 45 The settlement does not contain any revenue projections, nor does the settlement ensure that the Licensing Agency will generate revenue or even have sufficient funding to remain in operation. The settlement does not guarantee that any class member will receive licensing revenue through the Licensing Agency.
2.
Value of the settlement (a) The retired players release past and future publicity-rights claims against the NFL.
In exchange for the creation of the third-party Common Good Entity and Licensing Agency, the settlement requires class members to abandon their claims and release the use of personal identity rights never before assigned to the NFL. Under the settlement, class members must release their claims against, and covenant not to sue, the NFL, or any third party authorized to use NFL game footage including all past and future claims regarding players publicity rights.46
44 45 46
Id. at 1920. Id. at IV.E.1.
A 241 ( I.E.43); A248 A250 ( III.A.13); A252 A253 ( III.C.4).
The settlements release is both broad and perpetual. The released publicity rights broadly include each players name, nickname, initials, likeness, image, picture, photograph, animation, persona, autograph/signature, appearance, voice, personal or biographical information, or any other identifying or personal characteristic. 47 The settlements release covers all of the class members claims in perpetuity. 48 The settlement also prohibits class members from contesting the NFLs exclusive right to broadcast, license, or otherwise disseminate NFL game footage. 49 As a result, the settlement secures the NFLs unfettered use of its game-footage library without fear that its use will be challenged by the retired players featured so prominently in that footage. Although the retired players released claims and covenant not to sue are broad, the settlement and the entire district-court record are silent about the value of those claims. Regarding future disputes, the settlement includes a fee-shifting provision that favors the NFL alone.50 If a class member sues any Released Party (that is, any NFL entity), and the Released Party prevails based on the Release or Covenant, then the class member must pay the Released Partys costs and expenses, including attorneys fees. 51 But if the class member
47 48 49 50 51
A240 ( I.E.38, I.E.40); A248 A250 ( III.A.13). A249 A250 ( III.A.2). A252 A253 ( III.C.4). A253 ( III.D). Id.
prevails, the fee-shifting provision does not apply. 52 This provision effectively ensures that in the future, retired players will not contest the NFLs use of their images, potentially even in contexts not contemplated by the settlement agreement.
(b) The district court prohibited damages discovery, leaving the value of the class members released claims unknown.
The district court approved the settlement of the class members claims even though the court barred the class members from obtaining damages discovery. Early in the case, the district court prohibited damages discovery until discovery on the named plaintiffs claims and class certification had been completed. 53 The NFL meticulously redacted its production to omit references to financial information. 54 The district court upheld the NFLs redactions when challenged by plaintiffs. 55 As a result of these actions, at the time of the settlement approval, the record contained no information relating to the potential damages for the claims released by the class.
52 53 54 55
Id. A86. A155, A163, A164. A153, A164.
3.
Lead Settlement Counsel ignored the Appellants expressed concerns.
After the class received notice of the settlement, Appellants counsel wrote to Lead Settlement Counsel, noting the risks of the settlement and requesting information about the settlements economics.56 That letter requested information regarding (1) certainty that class members would receive an economic benefit, (2) potential revenue of the Licensing Agency, and (3) the value of the class members released claims.57 The letter also raised concerns that the class had not received information about the settlements risks. 58 After seven weeks of non-response, followed by a reiterated request from Appellants counsel, 59 Lead Settlement Counsel still refused to provide any of the requested information, 60 writing that he saw little purpose in responding.61
56 57 58 59 60 61
A417 A423. Id. A421. A425 A427. A429 A430. A429.
4.
The district court approved the settlement, despite acknowledging that this unique agreement has little precedent.
In granting final approval, the district court acknowledged that this settlement was a unique and one-of-a-kind agreement that had little precedent.62 Indeed, the district court expressed uncertainty at both the preliminary and final approval hearings about whether several of the agreements deficiencies rendered the settlement unfair, unreasonable, or inadequate. At the preliminary approval hearing, the district court expressed concern that this Court would reject the settlement as violat[ing] the public policy issues that have been developed with respect to cy-pres funds. 63 It acknowledged that courts are not very excited about cy-pres funds. 64 At the final approval hearing, the district court again expressed doubts about the settlement, noting that it was struggling with the issue of whether a class settlement must provide direct benefit to class members.65 The district court then suggested that this could become the first settlement to be approved without guaranteeing any direct benefit to class members.66
62 63 64 65 66
A459 A460. Dkt. #267, Prelim. App. Tr. at 46:1319. Id. at 12:2021. Dkt. #426, Final App. Tr. at 34:2135:2. Id. at 34:2435:8.
The district court also said that it was struggling with whether it could approve the settlement despite not knowing the value of the claims.67 After hearing Appellants argument that the district court, as the class members fiduciary, must know the claims value before approving any settlement the district court indicated that it did not need to know the claims value, so long as some of the lawyers had made a decision that [the settlement amount] was sufficient. 68 The district court also appeared to indicate that it did not need to make an inquiry independently, but that it could merely be comfortable that the people that were looking at this had sufficient information to which they could make a knowledgeable decision. 69 Such information, whatever it may be, is not in the record. On November 4, 2013, the district court granted final approval and confirmed certification of the settlement class under Rule 23(b)(3). 70 In the memorandum accompanying its order, the court noted its role as a fiduciary and guardian of the absent class members rights.71 The court rejected objectors arguments regarding cy pres principles without explanation, simply stating that [t]he settlement is not a cy pres
67 68 69 70 71
Id. at 40:19. Id. at 40:813. Id. at 26:710. A472; A478 A479. A458.
distribution. 72 The court also rejected the idea that the settlement was unfair because it failed to guarantee any class member any direct benefit. 73 The court gave short shrift to the former players argument that a settlement that does not include direct financial benefit to the class is impermissible opining only that the objectors are wrong. 74 Lastly, the district court rejected the objectors argument that to evaluate the proposed settlement, the court must know the value of the claims. The district court relied upon the magistrate judges apparent satisfaction with damages representations; the district court did not state that it analyzed or even viewed any damages information to determine the claims value. 75 The district court acknowledged that if it granted final approval, not only would [the order] be appealed, it should be appealed, I dont make any bones about that. 76
72 73 74 75 76
A459. A459; A469. A459. A470. Dkt. #426 at 32:810 (emphasis added).
Summary of Argument
The settlement now before the Court is not reasonable, adequate, or fair; it should be rejected. The settlement provides no certainty that any class member will receive any economic benefit. It lacks any claims process that would permit class members to request settlement proceeds. Instead, all settlement funds go to third-party organizations, not class members. Equally problematic, the record contains no information about damages and the value of the released claims, preventing the district court from making the requisite assessment of whether the proposed settlement is reasonable, adequate, and fair. The district courts approval of the proposed settlement should be reversed, and the case should be remanded for further proceedings.
Argument
The payment of settlement proceeds only to third parties, the lack of direct compensation of any kind to class members, and the lack of a sufficient record upon which fairness can be evaluated make the settlement fundamentally unfair to the class and not lawful under Rule 23. Standard of Review A class settlement may not be approved unless it is fair, reasonable, and adequate. Fed. R. Civ. P. 23(e). [T]he district court acts as a fiduciary who must serve as a guardian of the rights of absent class members. Grunin v. Intl House of Pancakes, 513 F.2d 114, 123 (8th Cir. 1975). The district court must consider four factors in its analysis: [1] the merits of the plaintiffs case, weighed against the terms of the settlement; [2] the defendants financial condition; [3] the complexity and expense of further litigation; and [4] the amount of opposition to the settlement. Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988). The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in the settlement. Grunin, 513 F.2d at 124 (quotation omitted). The district courts decision to approve the settlement is reviewed for abuse of discretion. In re Uponor, Inc., 716 F.3d 1057, 1063 (8th Cir. 2013). A district court abuses its discretion when it rests its conclusion on clearly erroneous factual findings or erroneous legal conclusions. Oglala Sioux Tribe
v. C & W Enters., Inc., 542 F.3d 224, 229 (8th Cir. 2008). Circuit courts review both questions of law raised in an appeal and district court interpretations of settlement agreements de novo. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 106 n.12 (2d Cir. 2005); Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468, 474 (5th Cir. 2011). Under these standards, the district courts decision should be reversed.
I.
Rule 23 does not allow the distribution of class-settlement funds to third parties except in limited circumstances not present here.
No appellate court has approved a class settlement in which the settling
parties agreed to distribute all funds to third parties without seeking to compensate class members directly or demonstrating that such distribution would be impossible or infeasible. In this case, the settling parties have attempted exactly that. This case presents a significant test of the boundaries of Rule 23s mechanism for resolving class claims. Appellants respectfully submit that the settlement here has exceeded those boundaries and is impermissible under Rule 23. Cases addressing distributions of class funds to third parties have typically referred to such distributions as cy pres. That label, however, has not been applied consistently or given a specific definition. Rather, it is a term used for describing the very narrow circumstances in which courts have approved distributions to third parties instead of class members: where class members have been fully compensated, where they cannot be identified, or
where their individual distributions would be economically infeasible. It is an exception indeed, the only exception recognized in caselaw applying Rule 23 to the principle that class proceeds should compensate class members directly: If individual class members can be identified through reasonable effort, and the distributions are sufficiently large to make individual distributions economically viable, settlement proceeds should be distributed directly to class members. AM. LAW INST., PRINCIPLES OF THE LAW OF AGGREGATE LITIG. 3.07 (2010) Courts have criticized all varieties of third-party distributions as inferior to direct distributions to class members. See Airline Ticket Commn Antitrust Litig. Travel Network v. United Air Lines, 268 F.3d 619, 625 (8th Cir. 2001) (Airline I); In re Baby Prods. Antitrust Litig., 708 F.3d 163, 173 (3d Cir. Pa. 2013) (cautioning that direct distributions to the class are preferred over cy pres distributions, and that Congress created the class actions private causes of action to allow plaintiffs to recover compensatory damages for their injuries). The policy against third-party distributions protects class members from releasing their claims for a benefit that is at best attenuated and at worse illusory. In re Baby Prods., 708 F.3d at 173. The U.S. Supreme Court has not yet addressed the circumstances, if any, under which Rule 23 allows class-settlement distributions solely to third parties. The Supreme Court denied certiorari recently in Marek v. Lane, a case in which the Ninth Circuit approved a class settlement that distributed
the majority of the settlement funds to a newly created third-party entity. Marek v. Lane, 134 S. Ct. 8 (2013) (Roberts, C.J., denying certiorari). Chief Justice Roberts wrote a statement accompanying the denial of certiorari, explaining that the petitioners challenge was focused on the particular features of the specific cy pres settlement at issue, and further: Granting review of this case might not have afforded the Court an opportunity to address more fundamental concerns surrounding the use of such remedies in class action litigation, including when, if ever, such relief should be considered; how to assess its fairness as a general matter; whether new entities may be established as part of such relief; if not, how existing entities should be selected; what the respective roles of the judge and parties are in shaping a cy pres remedy; how closely the goals of any enlisted organization must correspond to the interests of the class; and so on. Id. at 9. Chief Justice Roberts concluded [i]n a suitable case, this Court may need to clarify the limits on the use of such remedies. Id. The present case presents the fundamental concerns identified by Chief Justice Roberts. The settlement distributes funds only to third parties. It makes no attempt to compensate class members directly. It establishes new third-party entities to receive the funds. The third-party recipients may distribute the funds only to other, unspecified third parties for charitable distribution. The funds may be used only for charitable purposes that have nothing to do with the class members released claims.
The courts of appeal have approved distributions of class-settlement proceeds to third parties only in narrow circumstances not present here. This Court has explained that class-settlement funds may be distributed to a third party only when such funds are unclaimed funds to which no party has a legal right. In re Airline Ticket Commn Antitrust Litig., 307 F.3d 679, 68083 (8th Cir. 2002) (Airline II). Such unclaimed funds generally arise only from two circumstances: (1) where class members are difficult to identify or change constantly, or (2) where funds remain after distributions to the class members. Airline I, 268 F.3d at 625 (citing Powell v. Georgia-Pacific Corp., 119 F.3d 703, 70607 (8th Cir. 1997)). Neither circumstance applies here. The reason that only unclaimed funds may be distributed to third parties is that class members have property rights in the proceeds, which serve as consideration for the class members release of their claims. Klier, 658 F.3d at 474 (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 80708, 81213 (1985)). When no party has a remaining legal right to settlement proceeds, the proceeds may be distributed to a third party. See Powell, 119 F.3d at 70607. Other courts of appeal have narrowly allowed distributions to third parties in circumstances where funds might be considered unclaimed, such as when class members cannot be identified or administration costs of distribution would exceed individual recoveries. In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24, 34 (1st Cir. 2009); see also Six Mexican
Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1305 (9th Cir. 1990). These conditions also are not present here. Marek v. Lane is an example of a case where distribution to third parties was approved because direct monetary payments to the class of remaining settlement funds would be infeasible given that each class members direct recovery would be de minimis. Lane v. Facebook, 696 F.3d 811, 821 (9th Cir. 2012). Thus, the petition for certiorari focused on the particular features of the specific cy pres settlement at issue rather than the broader concerns articulated by Chief Justice Roberts regarding the circumstances where Rule 23 allows distribution of class-settlement funds to a third party. Lane, 134 S. Ct. at 9. This case differs from Lane because the record here contains no indication that the settlement funds can be considered unclaimed. Over 24,000 class members have been identified.77 None will be compensated directly. All will release their past and future publicity-rights claims against the NFL. Nothing in the record suggests that administrative costs of direct distribution would exceed the awards. In these circumstances, Rule 23 does not allow the settlement funds to be distributed to the third-party Common Good Entity and Licensing Agency.
77
Dkt. #2622 at 4.
The district court stated that the settlement here is not a cy pres distribution. 78 Appellants wholeheartedly agree that the distribution here cannot be considered a proper cy pres distribution. A cy pres distribution is a last-step measure to which courts resort when they cannot provide any further compensation to class members. Cy pres principles provide a narrow justification for paying settlement proceeds to someone other than class members when there is no other alternative. And if a third-party distribution is not properly cy pres (that is, does not fit into the highly circumscribed justifications for a cy pres distribution), then it cannot be allowed under Rule 23 because it disposes of the class members property to a third party without any justification. Applying Rule 23 to distribute all class-settlement proceeds to third parties without attempting to compensate class members directly for releasing their claims violates the Rules Enabling Act, 28 U.S.C. 2072. Class members have a right to the settlement funds as compensation for their underlying substantive claims. See Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468, 474 (5th Cir. 2011). Procedural rules like Rule 23, promulgated under the Rules Enabling Act, may not abridge, enlarge, or modify any substantive right of any party. 28 U.S.C. 2072(b). Thus, Rule 23 . . . must be interpreted with fidelity to the Rules Enabling Act and applied with the interests of the absent class members in close view. Amchem Prods., Inc. v.
78
A460.
Windsor, 521 U.S. 591, 629 (1997). The Rules Enabling Act does not allow settling parties and the district court to modify class members rights by abridging their right to a remedy of compensation, instead creating a new remedy that does not exist in the underlying substantive law. See 28 U.S.C. 2072(b); M. Redish et al., Cy Pres Relief & the Pathologies of the Modern Class Action, 62 FLA. L. REV. 617, 64448 (2010). Here, the settlement creates a new remedy by directing compensation solely to two third parties: a charitable Common Good Entity and a Licensing Agency. These third parties have suffered no injury under the class members Lanham Act or publicity-rights claims; they have no standing in this lawsuit. This remedy would not be available through the class members substantive claims, and the class members available remedy compensation has not been fulfilled or shown to be impossible or infeasible. The Rules Enabling Act prohibits the creation of a new remedy through the procedural vehicle of Rule 23. The settlement here also brings into focus the reasons for prohibiting the distribution of funds to third parties before class members, as discussed in more detail below. It does not guarantee that any particular class member or any class member at all will receive an economic benefit after the funds are routed through multiple charitable organizations. It does not guarantee that the Licensing Agency will generate any revenue, nor does it guarantee any royalties for any particular class member. Because the
charitable purposes of the third-party charities bear no relation to the released publicity-rights claims, the settlement almost certainly will result in disparate treatment for class members with identical legal claims. Courts have relied upon similar considerations to deny approval to distributions of class funds to third parties, even where the prerequisite circumstances have been met. For example, the Third Circuit vacated approval of a settlement because of questions about the fairness of distributing $18 million to third parties while only distributing $3 million directly to class members. In re Baby Prods. Antitrust Litig., 708 F.3d 163, 173 (3d Cir. 2013). The Ninth Circuit set aside a distribution to a third party because there is no reasonable certainty that any [class] member will be benefited. Six Mexican Workers, 904 F.2d at 1308. The Fifth Circuit set aside a third-party distribution, explaining that unused funds should have been distributed directly to class members rather than to third parties. Klier, 658 F.3d at 474. Neither the district court nor the proponents of the settlement were able to cite a single case that has approved a class settlement that distributes funds to third parties in the first instance, without attempting to compensate class members or in the alternative determining that such compensation would be impossible, impracticable, or infeasible. This settlement lacks precedent because what it attempts to do cannot, and should not, be done.
Rule 23 cannot bear the burden that the Settling Parties have placed upon it: that rule does not permit this settlement. The district court abused its discretion by approving the class settlement, and the approval should be reversed and the judgment vacated.
II.
The settlement is not fair, reasonable, and adequate under Rule 23 because it does not guarantee a benefit to each or any class member in exchange for releasing his claims.
Beyond the impermissible distribution of settlement funds to third
parties, the district courts approval of the settlement should be reversed because the settlement does not guarantee an economic benefit to any class member, making it unfair under Rule 23. The district court and Settling Plaintiffs could not list a specific benefit that any individual class member would receive; the record lacks any evidence that eligible class members will receive any benefit at all. The record contains no evidence that the Licensing Agency will generate revenue at any point, nor does the record show which class members (if any) might expect royalties from the Licensing Agency. The amount offered in the settlement is effectively zero to the members of the class, because no class member is guaranteed to receive any benefit. Therefore, under the most important factor in the fairness evaluation the strength of the case for plaintiffs on the merits, balanced against the amount offered in the settlement, Grunin, 513 F.2d at 124 (quotation omitted) the balance cannot weigh in favor of approval. The settlement is fundamentally unfair.
A.
The class members claims have value.
The district court recognized that the claims released by the settlement agreement have value and are not worthless. The district court acknowledged that [e]ach individual appearing in a game clip has publicity rights in his or her image. 79 The district court further explained, using Fred Dryer as an example, that class members featured in NFL Films productions, if successful on their claims, could have relatively substantial damages.80 The district court also articulated potential difficulties with the claims released by the settlement, but did not conclude that the difficulties were insurmountable. 81 The primary difficulties identified were (1) statute of limitations and (2) manageability of a class action based on choice-of-law issues and proving damages.82 Neither of these provides a sufficient basis to conclude that the amount offered in the settlement effectively zero outweighs the value of the released claims. The district court suggested that, under the relevant limitations period, the class members claims could not go back farther than 2003. 83 This
79 80 81
A468. A467.
Indeed, the Court previously denied the NFLs motion for judgment on the pleadings and motion for partial summary judgment. See A67 A 84; A85 A109.
82 83
A463 A469. A463.
period, however, now includes more than ten years of potential damages. The district court did not find that the claims would be barred; instead, only that they might be limited in value. 84 But limited value is still value. Concerns relating to manageability of a class action also do not negate the value of the individual claims released under the terms of the settlement. The issues discussed by the district court choice of law and damages have not been resolved against the class members. Appellants described in their objections a basis upon which the law of a single state could be applied to all class members claims. 85 Appellants also submitted an expert declaration describing how a single apportionment methodology likely could be applied on a formulaic basis to distribute damages to each class member. 86 These issues have not yet been decided, and the district courts concerns about manageability do not establish that the released claims have no value. In sum, the district court recognized that the claims released in the settlement have value. While the district court stated that the claims have many difficulties, 87 it did not quantify those potential difficulties or attempt to balance the potential risk against the class members potential
84 85
Id.
Objection to the Fairness, Reasonableness, and Adequacy of the Proposed Settlement by Plaintiffs Marshall, Senser, and Pastorini, Dkt. #3271 at 3234.
86 87
A439 A444 ( 920). A463.
recovery. Under the proper balancing test, the settlement should not have been approved.
B.
The Common Good Entity does not guarantee any economic benefit to any class member.
The settlement does not guarantee that each identified class member or any individual class member will receive any benefit. No class member will receive a payment directly out of the settlement proceeds. The thirdparty Common Good Entity has discretion to distribute the proceeds for charitable uses but only to other third parties, not class members. If the Common Good Entity fails to distribute the settlement funds, they revert to the NFL to disburse for similar charitable purposes. The settlements distribution structure does not permit class members to request payment, and the settlement does not guarantee that any class member will receive any benefit; as a practical matter, the settlement guarantees that some class members will not. This is unfair to the class. All settlement funds initially go to the third-party Common Good Entity, then flow to other third-party charities. Under the settlement, class members may never see any proceeds. Instead, the proceeds may revert to the NFL for similar charitable purposes or may be distributed to charities that benefit only those similarly situated to class members, not class members
themselves. The settlements list of permitted charitable uses 88 shows that class members who do not qualify for benefits from various charities will never receive any benefit. The Common Good Entity selects charities to fund, and those charities will provide benefits consistent with their purposes but none of the charities limits its service to benefitting former NFL players. Instead, to receive benefits from the charity, a former player who has lost his claim under the settlement must first qualify for eligibility for a charitable benefit under the rules and bylaws of each charity. That former player has no guarantee that he will receive any benefit, or even if he does, that it will bear any relationship to the value of his claim. The Common Good Entity is not an administrative vehicle that distributes settlement funds to class members: it has no claims process, and it lacks authority to distribute funds to class members. The Common Good Entity is a charitable organization, not a settlement administrator. It does not assure that the settlement will compensate class members valid claims in any form. The record reflects the settlements uncertainty and risks. The Settling Plaintiffs argued that the settlement funds potentially will benefit all Retired
A263 ( IV.F.5.(c)) (listing permitted uses that include medical research, housing, insurance, medical evaluations, mental health, wellness, and employment training).
88
Players who are eligible for the support from the organizations supported by the Fund. 89 That promise is hardly compelling. Logically, the contributions also potentially will not benefit even those class members who are eligible. And they potentially will benefit individuals not in the class. Class members whom the Common Good Entity or its recipient charities decide are ineligible will receive nothing. Indeed, if the recipient charities are not restrained in their use of funds and there is no indication that they will be so restrained none of the funds may end up being distributed to class members. The district court erroneously concluded that the settlement guaranteed direct benefits to all class members.90 To support that conclusion, the district court cited no record evidence. Instead, the district court merely asserted that [The Common Good Fund] will provide substantial benefits to the class as a whole. 91 The district court also simply concluded, without evidence, that the Common Good Fund will give money to other charities for uses that will be directly beneficial to class members.92 The district courts failure to ground its interpretation of the settlement upon anything in the record raises red flags about the accuracy of
89 90 91 92
Dkt. #261 at 8 (emphasis added). A469 A471. A471. Id.
that interpretation. See, e.g., Day v. Persels & Assocs., LLC, 729 F.3d 1309, 1327 (11th Cir. 2013) (holding that granting final approval to class-action settlement constitutes reversible error, where record contains no support for district court findings). Under the settlement, any class member may get nothing in exchange for releasing his past and future claims. Indeed, all class members may get nothing. This risk makes the settlement unfair under Rule 23.
C.
The Licensing Agency does not guarantee that any class members will receive an economic benefit.
The settlement agreement also contemplates the formation of a new entity, the Licensing Agency, which will ostensibly facilitate the licensing of former players publicity rights.93 But like the Common Good Fund, the Licensing Agency also does not guarantee any economic benefit to class members in exchange for the release of their past and future claims.
1.
The Licensing Agency provides no direct benefit to class members.
The district court incorrectly suggested that the Licensing Agency constituted a direct benefit to class members, noting that the Licensing Agency could permit class members to be paid directly for their publicity rights.94 This is wrong, first because the Licensing Agency is a third party,
93 94
A254 ( IV.A.3). A470.
and no distribution to a third party can properly be considered a direct distribution to class members. Second, the Licensing Agency does not guarantee royalties to any class member, and the record contains no indication that it will be successful (despite Appellants requests for additional information 95) thus, its creation does not directly compensate class members for releasing their claims. Speculative and uncertain benefits cannot compensate class members for giving up their past and future rights. The Licensing Agency also is not a proxy for the value of the players released publicity-rights claims against the NFL. The Licensing Agency can license publicity rights only to non-NFL parties to promote non-NFL brands, products, and services. In contrast, the players released claims arise from the NFLs use of their publicity rights to promote NFL football a use to which retired NFL players publicity rights are uniquely suited. For example, if the NFL uses retired players likenesses to promote its upcoming 100th anniversary, the Licensing Agency will not compensate those players. The Licensing Agencys proposed, untested, and unguaranteed revenue has nothing to do with the players settled claims against the NFL.
95
A413 A430.
2.
The Licensing Agency lacks the authority to fully license publicity rights.
The Licensing Agency also lacks the authority to complement its licensing of retired players publicity rights with either (1) NFL intellectual property (IP), such as logos; or (2) NFL game footage.96 If a Licensing Agency customer wants to use NFL IP, the settlement provides only that the NFL will not unreasonably hold its consent and will apply in good faith the same standards that it ordinary employs in deciding whether to grant licenses for that type of NFL IP Rights. 97 In other words, the customer must pay the NFL at market rates. The settlement agreement does not provide Licensing Agency customers with any access to NFL game footage a right retained by the NFL for itself alone. 98
3.
The Licensing Agency is not a unique proposal; it would duplicate a program that already exists.
The Licensing Agencys model is not new, and it would not provide class members with any benefit beyond those that already exist. The district court believed that the Agency permits players to license their publicity rights
A239 ( I.E.28) (defining NFL IP Rights); A252 ( III.C.4) (articulating NFLs exclusive rights to license game footage); A257 ( IV.C.3.b) (specifying process for Licensing Agency customers to request NFL intellectual-property rights from NFL).
97 98
96
A257 ( IV.C.3.b). A252 ( III.C.4).
[f]or the first time.99 But the idea of creating a licensing program is not new; in fact, such a program already exists. And that already-existing program provides larger royalties than the newly formed Licensing Agency for which the retired players are giving up all of their past and future claims. In 2011, the NFL Alumni Association created a group-licensing program for retired players. 100 Like the Licensing Agency, the Alumni licensing program divides licensing revenue between players and charity but the amounts differ: Alumni Licensing Program 101 80 percent to players Settlement Licensing Agency 102 75 percent to participating players, minus operating expenses of up to 15% 25 percent to the Common Good Entity for charitable benefits
20 percent to promote the health and welfare of retired National Football League players
The settlement will provide the retired-player class an even smaller share of licensing revenue than the existing Alumni licensing program: at least 5% less. This settlements new option a lesser share of any licensing revenue, in exchange for releasing all past and future claims cannot constitute fair and adequate consideration.
99
A469 A470. A432. A434 ( 3). A260 ( IV.E.1.a).
100 101 102
The Licensing Agencys duplication of already-existing efforts provides class members with no new benefit; instead, its promised individual revenue is even smaller. It is not a fair trade for the retired players, who under the settlement will give up all of their past and future claims. The License Agencys creation does not constitute consideration that could justify the settlements approval. Like the Common Good Entity, the Licensing Agency allows the possibility that the class members will receive nothing. Indeed, the record contains no evidence suggesting that this will not occur. The Licensing Agency cannot cure the settlements many deficiencies.
D.
The settlement permits disparate treatment of class members with identical claims.
If the settlement provides class members with any benefit, it will almost certainly treat identically situated class members differently. Although all class members will release identical past and future claims, some class members might receive a benefit, while others will receive nothing. The Settling Plaintiffs acknowledge this disparate treatment, 103 which arises under the settlement because the permitted charitable uses and the class members underlying released publicity-rights claims have been completely untethered. Thus, when the district court approved the settlement, it discussed the purported benefits to the class, but did not link Dkt. #261 at 8 (admitting that the Common Good Entity will potentially benefit only eligible retired players).
103
those benefits to the class members publicity-rights claims. Instead, the district court stated that the third-party entities could help retired players who may suffer physical and mental injuries from their time in the NFL.104 This lack of connection between the class members publicity rights and the measuring stick for benefits almost certainly ensures that the settlement will provide class members with identical publicity-rights claims with disparate benefits. The settlements alleged benefits relate to individualized characteristics that bear no relation to the players claims. In class settlements, disparate treatment among identically situated class members reflects inherent unfairness. In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 80809 (3d Cir. 1995) ([T]he relative inability of class members to use the [settlement] militates against settlement approval.); Ferrington v. McAfee, Inc., No. 10CV01455LHK, 2012 U.S. Dist. LEXIS 49160, at *26 (N.D. Cal. Apr. 6, 2012) ([D]isparate treatment between class members increases the likelihood that the settlement agreement does not meet the Rule 23(e) standard.). Courts have refused to approve settlements under which some class members receive a benefit, while others receive nothing. For example, the Seventh Circuit reversed a negotiated settlement that benefited one subclass, while the other subclass received nothing yet both subclasses released all
104
A456.
their claims. Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781, 78286 (7th Cir. 2004). One reason that the court reversed the final approval was lack of parity: some class members claims had value, but they were released for essentially no consideration. Id. at 78385. This reasoning was also the basis for the rejection of another settlement, where a subclass releas[ed] all of their claims without any compensation, and the court held that lack of consideration to be unfair and unreasonable. Ferrington, 2012 U.S. Dist. LEXIS 49160 at *3032. Here, the class members releases are identical. But because the settlement untethers third-party distributions from released claims, similarly situated class members will be treated disparately. That result is unfair, unreasonable, and inadequate and makes the approval of the settlement inappropriate as well.
E.
The district court did not properly balance the merits of the plaintiffs claims against the amount offered in the settlement.
Although the district court acknowledged that the released claims had value, it discounted the retired players likelihood of success, stating the former players would face many difficulties if they continued to litigate. But the court failed to properly balance any potential risk with the retired players potential recovery. 105 A court cannot justify a class settlement by
105
A462 A468.
looking to the cases merits, essentially stating that settling under any terms is better than the possibility of losing the case. Free v. Abbott Lab., 953 F. Supp. 751, 753 (M.D. La. 1997). The possibility of no recovery is always present in litigation. Id. Pointing to that possibility without quantifying risk and discounting potential recovery adds nothing to the analysis. Id. at 75354. In sum, the record demonstrates (1) the class members released claims have value, (2) the Common Good Entity does not guarantee compensation to class members for releasing their claims, and (3) the Licensing Agency does not guarantee compensation to class members for releasing their claims. Therefore, the balance between the terms of the settlement and the merits of the released claims tilts entirely against approval under the requisite standards.
F.
The recent denial of preliminary approval for the NFLs concussion settlement highlights the deficiencies in the settlement here.
Class settlements should compensate individual class members for releasing their individual claims, but this settlement thwarts that basic objective. The district courts order acknowledged that the NFLs settlement here is not the usual resolution of class claims. 106 A recent proposed class settlement of the concussion cases against the NFL was denied preliminary
106
A460.
approval and yet still provides sharp contrast to the fundamentally unfair distribution of the settlement here. Class counsel recently moved for court approval of a settlement in the concussion lawsuits filed against the NFL. In re: NFL Players Concussion Injury Litig., MDL No. 2323, 2014 U.S. Dist. LEXIS 4300, at *58 (E.D. Pa. Jan. 14, 2014). That proposed settlement contained several hallmarks of classaction settlements, highlighting the deficiencies here: NFL Concussion Litigation Direct cash payments to qualifying class members (including at least $675 million to compensate individual class members)107 Claims process for class members submission to a settlement administrator Settlement covers costs of determining whether class members have compensable claims This Case: Publicity Rights Class members cannot receive direct payments
Class members cannot submit claims to any administrator (none exists) Settlement disposes of all class members past and future claims without guaranteed compensation
Only about 1% of settlement funds 100% of settlement funds go to $10 million out of $765 million go to third-party entities third-party entities for the indirect benefit of the class Even though the NFL concussion settlement provided for direct payment to class members based on the nature of their individual claims, the district court still denied preliminary approval. Id. at *1720. The courts order In re: NFL Players Concussion Injury Litig., 2014 U.S. Dist. LEXIS 4300, at *1720.
107
focused on its concern that not all Retired NFL Football Players who ultimately receive a Qualifying Diagnosis or their related claimants will be paid. Id. at *17. The court also found that the distributing entity may lack the necessary funds to pay Monetary Awards. Id. Noting that the record lacked any economic analysis justifying the sufficiency of class-member compensation, the court rejected the proposed settlement and ordered the parties to submit that analysis. Id. at *1819. The concussion settlement did not obtain even preliminary approval because the record did not demonstrate that all class members with qualifying claims would be compensated. Id. at *1719. In this case, there is no certainty that all or any class members will be compensated. The district courts approval should be reversed.
G.
The district court erred in approving the settlement.
Evaluating the strength of the case for plaintiffs on the merits, balanced against the amount offered in the settlement, Grunin, 513 F.2d at 124 (quotation omitted), the balance tips completely in favor of the strength of the case for plaintiffs because the class members release valuable claims but are guaranteed nothing. The district court therefore abused its discretion by concluding that the settlement provided benefits to class members and by approving the settlement.
III. The record does not contain sufficient information relating to the value of the released claims to determine whether the settlement is fair, reasonable, and adequate. A. Measures of the value of the released claims exist.
The district court could not properly approve the settlement because the record before it contained no information relating to the potential value of the class members released claims. In right-of-publicity cases, an ordinarily available remedy is monetary relief by recovering the infringers resultant profits. RESTATEMENT (THIRD), UNFAIR COMPETITION 49, cmt. d (1995); see id. at 40, cmt. d (noting that plaintiffs need only prove gross sales; defendants must establish what portions of profits do not stem from infringement); see also 2 J. THOMAS MCCARTHY, THE RIGHTS OF PUBLICITY & PRIVACY, 11:34, at 781 (Rev. 2013) (Recovery of the infringers profits is usually regarded as an option open to plaintiff, in addition to recovery of plaintiffs own losses and damages, so long as there is no double recovery.). If the plaintiffs identity (a property right) contributes to a defendants profits, then that share of the profits is the plaintiffs property so recapturing a defendants wrongful gains often requires an accounting of the defendants resultant profits. RESTATEMENT (THIRD), UNFAIR COMPETITION 49, cmt. c. This is true even if a defendants conduct has caused no identifiable loss to plaintiff, because the defendant has been unjustly enriched. MCCARTHY 11:34, at 780. Defendants profits also are available
as damages for the class members Lanham Act claims. Masters v. UHS of Del., Inc., 631 F.3d 464, 474 (8th Cir. 2011).
B.
The district court had no information on these measures, and no basis to place a value on the released claims.
Without any information relating to the value of the released claims, the district court cannot evaluate any balance between the merits of the plaintiffs claims and the amount offered in settlement; thus, before approving settlements, courts must have information about the released claims value. In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 350, 35556 (3d Cir. 2010) (vacating approval because the settling parties failed to provide the District Court with estimations of recoverable damages); accord Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988) (settlement approvals must rest on well-reasoned conclusions and not mere boilerplate). Failing to obtain critical damages discovery prevents settling plaintiffs and reviewing courts from evaluating whether a settlement is adequate and fair. Sobel v. The Hertz Corp., No. 3:06CV00545LRHRAM, 2011 U.S. Dist. LEXIS 68984 at *4243 (D. Nev. June 27, 2011) (noting courts inability to determine settlements reasonableness because the record lacked evidence regarding the claims value). A well-established method for evaluating settlements includes the best possible recovery metric, which is laid out in City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974). The Grinnell factors include: the range of
reasonableness of the settlement fund in light of the best possible recovery; [and] . . . the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Id. The factors have been applied by many courts across the country, including courts in this circuit. See, e.g., Alexander v. Natl Football League, No. 476Civil123, 1977 U.S. Dist. LEXIS 14685 at *36, n.9 (D. Minn. 1977); see also Contreras v. PM Beef Holdings, LLC, No. 07CV3087, 2008 U.S. Dist. LEXIS 73800, at *3 (D. Minn. Sept. 18, 2008) (approving a settlement in light of . . . the range of reasonableness of the settlement in light of the best possible recovery and other factors). Here, the district courts order approving the settlement conceded that [d]iscovery has not yet been fully accomplished. 108 That is because the district court prohibited the retired players from seeking any damages discovery.109 The NFL meticulously redacted relevant financial information in its document productions and refused to answer discovery relating to damages.110 As such, the record is barren of any discovery on damages. Therefore, the record is also devoid of information that would permit the district court and the parties to sufficiently analyze the settlements fairness.
108 109
A461.
See Dkt. #40 at 5; see also A86, A94 (As Judge Magnuson has directed, full damages discovery will occur later.); A164.
110
A87; A155, A163, A164.
The district courts order made no specific finding on damages, instead making the tenuous connection that if its magistrate judge did not admonish or sanction the NFL for failing to provide financial information, then the NFL must have fully complied with its obligation to disclose its finances.111 But the NFL never provided that financial information to Appellants for their review. More importantly, no such information is in the record.112 The district court could not have independently evaluated the settlement values fairness, reasonableness, and adequacy. Obtaining damages discovery including the NFLs profits is essential to determine the value of the retired players claims. Without damages discovery, the district court could not ascertain the true value of the class members released claims. Lead Settlement Counsel suggests that it once had access to some financial information, 113 but even if it did, none of this information was submitted to the Article III district court, and none of it is in the record. The record contains nothing that would allow a comparison between the settlement amount and the potential value of the retired players released past and future claims.
111 112
A461 A462.
A462 (implicitly acknowledging that the financial information was not filed with the district court). Mem. of Law in Supp. of Settling Pls. Mot. for Final Approval of Settlement and Class Certification, Dkt. #407 at 3, 32.
113
Properly measuring the damages stemming from the NFLs violation of class members publicity rights would require analyzing the NFLs profits that are directly and indirectly attributable to those publicity-right violations. As such, damages discovery and analysis must occur before the district court or class counsel would be able to evaluate whether the settlement is fair, compared to the potential value of the released existing and future claims. Without damages discovery from the NFL, the district court could not have properly evaluated the value of the settlements released claims.
C.
Lead settlement counsel shirked his duty to evaluate and disclose the released claims value.
Because class counsel is the main source of information about the settlement, a courts assessment of a settlement requires class counsel to furnish adequate information including information about the possible range of recovery. Free, 953 F. Supp. at 753. But here, Settlement Counsel claimed that the class members potential recovery was essentially irrelevant, 114 contending that given the litigation risks, the settlement is fair [n]o matter how large the perceived potential damages to the Class may be. 115 Cf. Free, 953 F. Supp. at 753 (rejecting this excuse for failing to provide necessary information about the value of class members claims). But Settling Pls. Reply in Supp. of Preliminary Approval of Settlement, Dkt. #268 at n.3.
115 114
Id.
neither the district court nor Settlement Counsel has indicated what this range might be; the record is silent. Lead Settlement Counsel also refused to satisfy his duty to provide class members with information about their claims value.116 In response to letter requests seeking information about the NFLs profits, Settlement Counsel responded that he saw little purpose in responding to Objecting Counsels letters117 In sum, Settlement Counsel refused to answer any questions about the released claims value. The district court and Settlement Counsel were both unable and unwilling to demonstrate that the settlement is fair. They have not compared the settlements value with the potential released claims potential value. Without knowing the value of the class members claims, neither the court nor the class members can properly evaluate the settlements adequacy.
116 117
A417 A430. A429 A430.
Conclusion
The district court improperly approved a unique, one-of-kind, and unprecedented settlement that eviscerates the class members protections under Rule 23. The settlement distributes funds only to third parties and not to class members. The third-party distribution does not guarantee compensation to class members. This remedy bears no relation to the class members publicity-rights claims. Lastly, the district courts prohibition on seeking damages discovery suppressed information about the released claims value preventing analysis of whether the settlement is reasonable, adequate, and fair. The district courts ruling should be reversed, the settlement should be rejected, and the case should be remanded for further proceedings.
February 3, 2014
By: ________________________________ ROBINS, KAPLAN, MILLER & CIRESI L.L.P. Michael V. Ciresi (No. 16949) Jan M. Conlin (No. 192697) Eric J. Magnuson (No. 66412) 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 554022015 Tel: 6123498500 BOB STEIN LLC Robert A. Stein (No. 104930) 6473 Beach Road Eden Prairie, MN 55344 Tel: 9528291043 WARD & WARD, PLLC Thomas J. Ward 2020 N Street NW Washington D.C., 20036 Tel: 2023318160 Attorneys for Appellants James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini.
Certificate of Brief Length

The undersigned counsel for Appellants James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini, certifies that this brief complies with the requirements of Fed. R. App. P. 32(a)(7)(B) in that it is printed in 14point, proportionately spaced typeface utilizing Microsoft Word 2010 and contains 10,735 words, including headings, footnotes, and quotations. February 3, 2014 By: _________________________________ ROBINS, KAPLAN, MILLER & CIRESI L.L.P. Michael V. Ciresi (No. 16949) Jan M. Conlin (No. 192697) Eric J. Magnuson (No. 66412) 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 554022015 Tel: 6123498500 BOB STEIN LLC Robert A. Stein (No. 104930) 6473 Beach Road Eden Prairie, MN 55344 Tel: 9528291043 WARD & WARD, PLLC Thomas J. Ward 2020 N Street NW Washington D.C., 20036 Tel: 2023318160 Attorneys for Appellants James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini.
Page: 62
Certificate of Service
I hereby certify that on the 3rd day of February, 2014, I electronically filed the Brief of Appellants with the Clerk of the Court for the United States Court of Appeals for the Eighth Circuit by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the CM/ECF system. The Brief of Appellants has been scanned for viruses and is virus-free.
February 3, 2014
By: _________________________________ ROBINS, KAPLAN, MILLER & CIRESI L.L.P. Michael V. Ciresi (No. 16949) Jan M. Conlin (No. 192697) Eric J. Magnuson (No. 66412) 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 554022015 Tel: 6123498500 Attorneys for Appellants James Lawrence Marshall, Joseph Michael Senser, and Dante Anthony Pastorini.
84426206.47
Page: 63

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2014.10.31 Robins Kaplan File Stamped Opening Brief

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In The United States Court of Appeals For the Eighth Circuit

Appeal No. 133581

Attorneys for Appellants Marshall, Senser, and Pastorini

Summary and Request for Oral Argument

Appellate Case: 13-3581

Date Filed: 02/03/2014 Entry ID: 4120132

A67; A165. A165; A123 A131. A124 23.

NFLs use of retired players identities in videos.

A68. A83 A84. A165 A172.

Terms of the settlement

(a) Common Good Entity

A261 ( IV.F.1). A243 A246 ( II.A.14).

A264 ( IV.F.9). A262 A263 ( IV.F.5). A263 ( IV.F.5.(c)). A262 ( IV.F.5).

This chart illustrates the distribution of the settlement. 35

(b) Licensing Agency

A261 A265 ( IV.F.110). A254 ( IV.A).

Id. at 1920. Id. at IV.E.1.

A 241 ( I.E.43); A248 A250 ( III.A.13); A252 A253 ( III.C.4).

Id. A86. A155, A163, A164. A153, A164.

Lead Settlement Counsel ignored the Appellants expressed concerns.

A417 A423. Id. A421. A425 A427. A429 A430. A429.

The class members claims have value.

A463 A469. A463.

A439 A444 ( 920). A463.

Dkt. #261 at 8 (emphasis added). A469 A471. A471. Id.

The Licensing Agency provides no direct benefit to class members.

A254 ( IV.A.3). A470.

A257 ( IV.C.3.b). A252 ( III.C.4).

A469 A470. A432. A434 ( 3). A260 ( IV.E.1.a).

100 101 102

The district court erred in approving the settlement.

A87; A155, A163, A164.

A417 A430. A429 A430.

Certificate of Brief Length

Appellate Case: 13-3581

Date Filed: 02/03/2014 Entry ID: 4120132

Appellate Case: 13-3581

Date Filed: 02/03/2014 Entry ID: 4120132

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