Federal judge pauses OK of tuna class settlements

A federal judge said Tuesday he would not, for the moment, approve class settlements of lawsuits tuna buyers brought against Chicken of the Sea alleging violations of antitrust law.

"I think we're close," Chief Judge Dana M. Sabraw of the Southern District of California said at the end of the hearing. "It seems to me the settlements are going to be compliant with Rule 23, but there are some deficiencies, and I highlighted those in the questions I asked today."

In 2015, packaged tuna buyers sued Chicken of the Sea, StarKist and now-defunct Bumble Bee Foods LLC, alleging the companies conspired to fix and maintain prices above competitive levels. The tuna buyers were divided into classes: direct purchasers, commercial food preparers and consumers. In re: Packaged Seafood Products Antitrust Litigation, 3:15-md-2670 (S.D. Cal., filed Dec. 9, 2015).

This summer, the 9th U.S. Circuit Court of Appeals vacated U.S. District Judge Janis L. Sammartino's certification of three classes. Sammartino did not analyze conflicting evidence from parties about how many consumers were harmed by the tuna makers, the panel said. A full panel of the 9th Circuit heard oral arguments in September.

But Sammartino recused herself in September from the Chicken of the Sea class litigation after a Wall Street Journal investigation found she repeatedly ruled in cases involving companies in which she had a financial interest.

At Tuesday's hearing, Sabraw appeared to have no issues with the proposed monetary figures of the three settlements. He said he had questions about procedural issues relating to the claims administration process, attorney fees, timing of settlement distribution and adequate notice to class members.

The direct purchaser class -- which includes retailers and distributors -- would receive $13 million, under the proposed deal. Attorney fees, which will be capped at $7 million, have been arbitrated before a neutral and will not be taken out of the settlement. Litigation costs are estimated to be $4.6 million.

Sabraw raised concerns of how settlement funds would be distributed to the direct buyer class, assuming that the $13 million would be held in escrow. Hausfeld LLP partner Michael Lehmann, who represents the direct buyers, said that issue depends on the pending en banc decision from the 9th Circuit. The intent is to distribute the money on a pro rata basis, Lehmann said.

For the consumers who bought tuna from grocery retailers there is a proposed settlement worth $20 million, and a separate $5 million to be paid for the claims administrator. Sabraw remarked that the claims administrator fund seemed "like a very large sum," and "greatly in excess of the $500,000 proposed by the direct purchaser plaintiffs."

Betsy C. Manifold, a partner at Wolf Haldenstein Adler Freeman and Herz, said it would be more difficult to get contact information for the class, which is much larger and could likely exceed 100 million members. Consumer class counsel are not asking for attorney fees, but are seeking up to $4.5 million in litigation costs to cover expert witnesses, Manifold said.

The commercial food preparer class -- which includes restaurants, caterers and food service providers -- agreed to settle with Chicken of the Sea for $6.5 million. About $3 million would be deducted for attorney fees. The vast majority of fees would reimburse expert witnesses, and the final settlement would be $3.5 million, according to class counsel Alec Blaine Finley of Cuneo Gilbert & LaDuca LLP.