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Wednesday, June 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

End of the Road for Sirius XM Settlement Protest

WASHINGTON (CN) - A federal judge's unique attempt to match class counsel with class composition is questionable but not fit for Supreme Court review, one justice said Monday.

The dispute grew out of claims in Manhattan that Sirius Satellite Radio and XM Satellite Holdings violated antitrust law by merging in 2008.

When the class moved for certification, U.S. District Judge Harold Baer Jr. cited a provision of Federal Rule of Civil Procedure 23 that empowers him to "consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class."

Baer then ordered that the three law firms previously appointed to serve as class counsel

"ensure that the lawyers staffed on the case fairly reflect the class composition in terms of relevant race and gender metrics."

With the class certified, the parties reached a settlement that required Sirius to freeze its prices for five months and pay class counsel $13 million in attorneys' fees.

Class member Nicolas Martin objected to the deal, which left no cash for plaintiffs like him. He also took aim at the court's reliance on race and gender in assessing the adequacy of class counsel.

The 2nd Circuit refused, however, to set aside the settlement as the tainted product of an invalid certification order.

On Monday, the Supreme Court refused to grant Martin a writ of certiorari despite its misgivings on Baer's unique practice.

"Based on the materials now before us, I am hard-pressed to see any ground on which Judge Baer's practice can be defended," Justice Samuel Alito wrote in an opinion explaining the order. "This court has often stressed that '[r]acial discrimination has no place in the courtroom, whether the proceeding is civil or criminal.' Court-approved discrimination based on gender is similarly objectionable, and therefore it is doubtful that the practice in question could survive a constitutional challenge."

Ultimately the court must first "consider whether the challenged practice can be reconciled with Rule 23(g), which carefully regulates the appointment of class counsel," the opinion states.

"Because of the fees that class counsel may receive - witness the present case in which counsel was awarded $13 million for handling a case in which the class members received no compensation - any deviation from the criteria set out in the rule may give rise to suspicions about favoritism. There are more than 600 district judges, and it would be intolerable if each judge adopted a personalized version of the criteria set out in Rule 23(g)."

Alito added that he doubts whether the provision of Rule 23(g) Baer cited "can be stretched to justify the practice at issue here."

"It seems quite farfetched to argue that class counsel cannot fairly and adequately represent a class unless the race and gender of counsel mirror the demographics of the class," he wrote. "Indeed, if the District Court's rule were taken seriously, it would seriously complicate the appointment process and lead to truly bizarre results."

The six-page opinion describes several impracticalities associated with following Baer's order.

"Suppose, for example, that the class consisted of persons who had undergone a particular type of treatment for prostate cancer," he said. "Would it be proper for a district judge to favor law firms with a high percentage of male attorneys?"

In this case, however, the 2nd Circuit did not reach the constitutionality of the issue because it found that Martin lacked standing to challenge Baer's order.

Though Alito took issue with the lower court's reasoning, he said the case does not merit Supreme Court review because "we are not a court of error correction."

"If the challenged appointment practice continues and is not addressed by the Court of Appeals, future review may be warranted," he added.

Chief Justice John Roberts took no part in the consideration or decision of the petition.

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