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What's next for De Beers class-action suit?
After the whirlwind of news that was the last two weeks I feel compelled to circle back around and delve deeper into one of the big headliners: the decision on the De Beers class-action lawsuit. As many of you probably...
After the whirlwind of news that was the last two weeks I feel compelled to circle back around and delve deeper into one of the big headliners: the decision on the De Beers class-action lawsuit.
As many of you probably heard, on July 13 the U.S. Court of Appeals for the Third Circuit rejected the 2006 settlement De Beers reached with diamond buyers who sued the diamond giant based on allegations of price fixing, a violation of U.S. antitrust laws. Under the settlement, De Beers had established a $295 million fund to be distributed to millions of diamond buyers separated into two classes. Under the settlement, direct purchasers--companies that bought directly from De Beers or De Beers' mining competitors-were to share a pot of $22.5 million. Indirect purchasers, a group that includes retailers and consumers, were to divide up the remaining $272.5 million.
The court's latest decision likely leaves those with interest in this case (including interested consumers and retailers) with two main questions: Why was the settlement rejected? And, when will I ever get my money?
I'll attempt to answer these questions below, with input from Howard Bashman, the Pennsylvania attorney who filed the successful objection, and another class attorney in the case, Joe Tabacco of Berman DeVallerio in San Francisco.
Why?
In filing his objection, the point Bashman made--which the Third Circuit Appeals Court in Philadelphia agreed with--is that under antitrust laws in some states, you can only sue if you're the direct purchaser of a product or service.
So, Bashman argued, it was unfair for indirect purchasers from certain states to receive a portion of the settlement, since antitrust recovery is limited to only direct purchasers in the states where they reside. (As a point of note, according to the suit, the states are divided on the issue: about 25 allow indirect purchasers to recover in antitrust suits and 25 don't.)
"In this settlement, everyone got to recover no matter what state you're in," Basman says. "The consequences are people like my client are going to get less."
Bashman represents a single individual in this case, a woman from Texas, one of the states that allows indirect purchasers to sue in antitrust cases. Bashman is based in Willow Grove, Pa.
This is a short, simple explanation of the 75-page ruling in the case, which you can read in its entirety by clicking here.
Look at pages 29-31 for a breakdown
on which states allow indirect purchases to recover in antitrust cases and which don't.
While much has been written and said about the attorneys involved in this case, particularly those for the objectors, I think two points need to be made here. One, like the delay or not, Bashman brought forward a valid point of law or the court never would have agreed with his objection. Two, the court ruling points out that this type of sweeping settlement has never been attempted in an antitrust case before. The lawyers in this case were trying something new that seems to have failed, at least for now.
What happens now?
Bashman said the attorneys in the case have until July 27 to ask the appeals court to reconsider their decision. If they chose not to, or if the appeals court denies the request, it returns to the trial court.
There, any number of things could happen. What Bashman would like to see is a new settlement organized on a state-by-state basis and limited to indirect purchasers who live in states with antitrust laws that allow them to sue, potentially meaning more money for those individuals.
Or, as Gemological Institute of America (GIA) diamond expert Russell Shor speculated in the July 16 GIA Insider e-newsletter, the case could splinter into separate lawsuits.
Will I ever get my money?
It's pretty widely known at this point that while the big diamond guys--the direct purchaser class --could net a substantial sum, the recovery for smaller players isn't going to be as much. But these days, money is money and I don't know many retailers that would turn down a check for any amount, no matter how miniscule.
Tabacco said the appeals court decision could delay the distribution of funds by four to 12 months or longer.
Stay tuned...
While much has been written and said about the attorneys involved in this case, particularly those for the objectors, I think two points need to be made here. One, like the delay or not, Bashman brought forward a valid point of law or the court never would have agreed with his objection. Two, the court ruling points out that this type of sweeping settlement has never been attempted in an antitrust case before. The lawyers in this case were trying something new that seems to have failed, at least for now.
What happens now?
Bashman said the attorneys in the case have until July 27 to ask the appeals court to reconsider their decision. If they chose not to, or if the appeals court denies the request, it returns to the trial court.
There, any number of things could happen. What Bashman would like to see is a new settlement organized on a state-by-state basis and limited to indirect purchasers who live in states with antitrust laws that allow them to sue, potentially meaning more money for those individuals.
Or, as Gemological Institute of America (GIA) diamond expert Russell Shor speculated in the July 16 GIA Insider e-newsletter, the case could splinter into separate lawsuits.
Will I ever get my money?
It's pretty widely known at this point that while the big diamond guys--the direct purchaser class --could net a substantial sum, the recovery for smaller players isn't going to be as much. But these days, money is money and I don't know many retailers that would turn down a check for any amount, no matter how miniscule.
Tabacco said the appeals court decision could delay the distribution of funds by four to 12 months or longer.
Stay tuned...
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