(CN) - The 9th Circuit upheld a $49 million settlement against West Publishing and Kaplan, in an antitrust class action brought by law students who bought BAR/BRI review courses for state bar exams. A three-judge panel found the settlement "fair, adequate and reasonable," but reversed orders denying attorney fees to class members who opposed the settlement, because their objection to certain incentive agreements may have benefitted the class.
BAR/BRI cornered the market on bar preparation courses for decades, until the emergence of a competitor called West Bar Review in 1995. Kaplan was poised to buy West Bar Review in 1997, but BAR/BRI allegedly tried to thwart the sale by entering into a market division agreement with Kaplan. The plaintiffs said BAR/BRI agreed to pay Kaplan and withdraw from markets for other test preparation courses, in exchange for Kaplan's decision not to buy West Bar Review.
BAR/BRI then bought West Bar Review in 1997, and West Publishing acquired BAR/BRI in 2001.
The plaintiffs accused BAR/BRI of other anticompetitive behavior, including targeting first-year law students with a non-refundable option for BAR/BRI's course when they graduate, offering free access to its Westlaw service to students enrolled in a BAR/BRI course, and advertising constantly on Westlaw.
According to the class action, BAR/BRI also eliminated a competitor in New York, destroyed rivals' advertising, paid law schools for preferable access, offered a purported scholarship program that actually subsidized students considering a competitor's course, and paid a Louisiana competitor to discontinue its prep course.
In early 2007, West and Kaplan agreed to pay $49 million and cancel their marketing agreement. West added that it is "committed to accurate advertising" as required by federal regulations and rules. In exchange, class members agreed to drop all claims against Kaplan and West.
U.S. District Judge Manual Real approved the settlement.
Several class members objected, taking issue with incentive agreements between class counsel and five named plaintiffs. These agreements created a conflict of interest, opponents claimed, by tying incentives to a sliding scale based on the amount recovered. As a result, these plaintiffs were less motivated to go to trial, the objecting class members claimed.
They also said the judge failed to properly compare the settlement amount to the likely recovery of treble damages.
The federal appeals court in Pasadena, Calif., upheld the judge's view that the incentive agreements were "inappropriate," but noted that the plaintiffs had been adequately represented by two other class representatives who weren't swayed by incentives.
Similarly, the court said it does not have to reject the settlement even though the district judge failed to consider treble damages. Courts can consider treble damages if the case warrants it, Judge Rymer wrote, "but they are not obliged to do so in every antitrust class action."
"By any measure, this settlement is fair, adequate and reasonable," Rymer concluded.
But the 9th Circuit reversed denial of attorney fees, telling the lower court to reconsider how the objection to incentive agreements affected its decision to deny them, the court ruled.
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