Life May Not Be Fair, But Arizona Cannot Find Out Without Standing
The Sixth Circuit recently held that Arizona lacked standing to intervene in, and object to, a nationwide class settlement at the settlement fairness hearing. The underlying case involved Tristar Products’ defective pressure cookers. The district court had certified three state classes for trial – Ohio, Pennsylvania, and Colorado – but after the first day of trial, the parties entered into a nationwide class settlement. The settlement allowed class members to receive a purchase coupon for a different Tristar product and a warranty extension so long as they watched a safety video. The district court valued the coupons and extensions at $1,020,985, while approving an award of attorneys’ fees of $1,980,382.59.
At the settlement fairness hearing, Arizona, via its attorney general, appeared and argued that the settlement was unfair to the class, believing that a higher proportion of the funds should have gone to the class members rather than to class counsel. Before the court issued its opinion and order on the settlement, Arizona attempted to intervene. The district court rejected Arizona’s motion for lack of Article III standing.
On appeal, Arizona argued that it had standing (1) under the doctrine of parens patriae, (2) under the Class Action Fairness Act (CAFA), and (3) because it had a participatory interest as a “repeat player.” First, Arizona argued that it satisfied parens patriae because it acted on behalf of its citizens and had attempted to address unfair settlements through legislation. The Sixth Circuit rejected Arizona’s argument because two of Arizona’s three legislation examples arose out of the Arizona Supreme Court, not the legislative branch. Further, Arizona’s third example, Arizona’s consumer fraud statute, did not apply because Arizona “specifically disclaimed any objection to the proposed settlement on the grounds of fraud or collusion.” Thus, Arizona could not make objections indistinguishable from individual Arizonans’ objections, which merely made Arizona a nominal party without quasi-sovereign interests, as required by parens patriae.
Next, Arizona argued that CAFA’s legislative history provided that CAFA’s requirement that citizen class members notify their state attorneys general of class settlement terms gave Arizona’s attorney general standing to intervene in the litigation. The court rejected this argument, holding that CAFA’s plain text – which prevented the act from expanding the authority of state officials – foreclosed Arizona’s argument.
Finally, Arizona argued that it had standing because it “participated regularly in class action settlement proceedings to protect Arizona consumers and ensure statutory compliance.” Again, the court rejected this argument, holding that it solely established that Arizona had a “mere interest in the problem” of unfair class settlements and the only concrete harm Arizona experienced was “an outcome that is contrary to its own policy views.”
By dismissing Arizona’s appeal for lack of standing, the Sixth Circuit did not determine the merits of Arizona’s original objection to the fairness of the settlement. Yet, while this case did not address the substance behind the class settlement, this blog has discussed the heightened scrutiny that courts apply to coupon class settlements here and here, and the type of fairness analysis that might have occurred if Arizona had standing here.
Chapman v. Tristar Prods., Inc., Nos. 18-3847/3866 (6th Cir. Oct. 10, 2019).