StarKist to 9th Circuit: Trial judge’s stock ownership dooms class cert rulings

The James R. Browning U.S. Court of Appeals Building, home of the 9th U.S. Circuit Court of Appeals, is pictured in San Francisco
The James R. Browning U.S. Court of Appeals Building, home of the 9th U.S. Circuit Court of Appeals, is pictured in San Francisco, California February 7, 2017. REUTERS/Noah Berger
  • Recusal brief
  • Judge recusal notice
  • Class decertification
  • En banc order

(Reuters) - Two months after the en banc 9th U.S. Circuit Court of Appeals heard oral arguments on a crucial and divisive class certification issue, the tuna fish producer StarKist Co and its parent, Dongwon Industries Ltd, told the appeals court there’s a completely independent reason to overturn the trial judge’s certification rulings: She violated the law by even hearing the case.

StarKist’s lawyers at Latham & Watkins filed a stunner of brief with the en banc court on Tuesday night, arguing that U.S. District Judge Janis Sammartino of San Diego breached judicial disqualification rules and the judicial code of ethics by presiding over multidistrict litigation against tuna producers even though she or her family members owned stock in at least two – and possibly as many as seven – public companies that are plaintiffs in the price-fixing MDL.

Allowing Sammartino’s class certification decisions to stand in the face of her disqualifying conflicts “would undermine public confidence in the impartiality of the judiciary and ultimately cast a cloud over any decision issued by this court,” StarKist argued. “Especially in a case of this magnitude, that should not be allowed.”

The judge recused herself from the long-running antitrust MDL on Aug. 31, the same day that the clerk’s office notified parties in the litigation that a member of Sammartino's family had owned shares in Target Corp and Sysco Corp – both of which are MDL plaintiffs – while the case was underway.

By then, the en banc 9th Circuit had already agreed to review three class certification rulings by Sammartino, with a focus on the vexatious question of whether the federal rules for class actions preclude the certification of classes in which more than a handful of class members might turn out not to have suffered an injury.

A divided three-judge 9th Circuit panel decertified the three tuna purchaser classes in April, explicitly holding that trial courts cannot certify classes that contain more than a minimal number of uninjured plaintiffs. The en banc court vacated the panel decision when it agreed in early August to rehear the appeal.

The en banc case, as StarKist acknowledged in its new brief, turned into a high-profile debate about class action membership. The U.S. Chamber of Commerce and other pro-business groups joined StarKist in arguing that both the U.S. Constitution and the Federal Rules of Civil Procedure bar certification of classes with uninjured members.

Class counsel from Wolf Haldenstein Adler Freeman & Herz, Cuneo Gilbert & LaDuca and Hausfeld rejected StarKist’s assertion that the tuna classes included uninjured plaintiffs, They and amici from public interest groups including Public Citizen, Public Justice and the Impact Fund also argued, more broadly, that when there’s a dispute over plaintiffs’ injuries, trial judges are not required to count noses but to determine if plaintiffs have sufficient evidence to prove classwide damages at trial.

The en banc 9th Circuit heard oral arguments on Sept. 22. So why did StarKist wait until now to argue that Sammartino’s class certification rulings cannot stand regardless of what the en banc court thinks about uninjured class members?

StarKist counsel Gregory Garre of Latham declined to provide a statement, but there were two important developments after oral argument before the en banc court.

The first was The Wall Street Journal’s bombshell Sept. 28 report that 131 federal judges – including Sammartino – broke disqualification rules and the judicial ethics code by presiding over cases involving companies in which they or family members owned stock. Based on the Journal's reporting and subsequent online postings of judges' financial disclosures by Free Law Project, a legal-research non-profit, StarKist identified five MDL plaintiffs in which Sammartino or family members owned shares, in addition to the two companies previously disclosed.

StarKist said in its new brief that four of the companies in which Sammartino or family members owned shares supplied data that assisted plaintiffs experts in creating damages models. Those models, StarKist said, informed the judge’s class certification decisions.

The other significant development that occurred after en banc arguments was an Oct. 19 ruling by U.S. District Judge Cathy Ann Bencivengo of San Diego in Driscoll v. Metlife Insurance. Bencivengo was assigned to the Metlife case after Sammartino recused herself in August because of a financial interest in Metlife. Sammartino had already granted summary judgment to the defendants in the case when Bencivengo got the case. Bencivengo vacated that judgment, finding that, regardless of whether Sammartino was aware of her conflict, she had been in violation of judicial qualification law for the entire duration of the case. To allow Sammartino's ruling for Metlife to stand, Bencivengo wrote, “risks undermining the public's confidence in the judicial process.”

In its new brief to the 9th Circuit, StarKist said the risk to public confidence is even more acute in the tuna antitrust case. Tuna purchasers are alleging hundreds of millions of dollars in damages, StarKist said, and the en banc appeal has been closely watched by the entire class action bar and business lobby.

Class counsel did not respond to my query about StarKist’s bid to vacate Sammartino’s rulings based her stock ownership. StarKist said in the brief that plaintiffs oppose the motion.

Sammartino did not respond to my phone message asking for comment on StarKist’s argument that she violated the law and the code of judicial ethics by presiding over the tuna MDL. A court spokesman told The Wall Street Journal that stock owned by Sammartino and her family members was in accounts managed by other people so the judge did not believe she was conflicted in overseeing cases involving companies in which she had a financial interest.

Read more:

Class lawyers defend certification order in tuna price-fixing case

StarKist, amici push standing arguments to en banc 9th Circ. in class cert challenge

En banc 9th Circuit takes up certification of classes with uninjured plaintiffs

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Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.