Deloach v. Lorillard Tobacco Co.

391 F.3d 551, 2004 WL 2785104
CourtCourt of Appeals for the Fourth Circuit
DecidedDecember 6, 2004
DocketNo. 04-1923
StatusPublished
Cited by12 cases

This text of 391 F.3d 551 (Deloach v. Lorillard Tobacco Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deloach v. Lorillard Tobacco Co., 391 F.3d 551, 2004 WL 2785104 (4th Cir. 2004).

Opinion

Affirmed in part and reversed in part by published opinion. Judge NIEMEYER wrote the opinion, in which Judge MICHAEL and Judge MOTZ joined.

NIEMEYER, Circuit Judge:

In this appeal, we determine the impact on a settlement agreement, partially resolving a class action, of a second settlement agreement resolving the remainder of the same action.

Tobacco farmers commenced this antitrust class action against several tobacco manufacturers and dealers, alleging that the defendants conspired to violate the federal antitrust laws. The parties, except for R.J. Reynolds Tobacco Company (“RJR”), settled the case with a settlement agreement dated May 15, 2003 (the “First Settlement Agreement”). The First Settlement Agreement included two provisions for adjusting benefits to the plaintiff Class, and the triggering of these adjustments depended on the existence and timing of a later settlement agreement with RJR. The first provision adjusted the monetary payments that the settling defendants agreed to make to the Class based on the terms of any settlement that the Class might reach with RJR “on or before the day before the first day of trial.” The second provision adjusted the amounts of tobacco that the settling manufacturers agreed to purchase from Class members based on the terms of any settlement that the Class might enter into with RJR “before the beginning of trial.”

The tobacco farmer Class did subsequently enter into a settlement agreement with RJR dated April 22, 2004 (the “RJR Settlement” or the “Second Settlement”). The district court found that the RJR Settlement was “reached” when it was signed on April 22, 2004, which was also the date scheduled for the beginning of trial. On motions filed by settling defendants Philip Morris USA, Inc. (“Philip Morris”) and Lorillard Tobacco Company (“Lorillard”) to trigger the adjustments available in the First Settlement Agreement based on the RJR Settlement, the district court entered an order dated June 4, 2004, concluding that the settling defendants were not entitled to either of the adjustments because the RJR Settlement was not reached or entered into before the triggering times specified in the First Settlement Agreement. Philip Morris and Lorillard appealed.

[555]*555For the reasons given hereafter, we deny the Class’s motion to dismiss this appeal based on its assertions (1) that the language of the First Settlement Agreement made the district court’s resolution of the issues “non-appealable” and (2) that the district court’s order interpreting the First Settlement Agreement was not a final appealable order. Because we conclude that the district court was not clearly erroneous in finding as a fact that the RJR Settlement was “reached after the day before the first day of trial,” we affirm the district court’s denial of-the adjustment for any monetary payment required by the First Settlement Agreement. We reverse, however, the district court’s legal interpretation of the First Settlement Agreement that the RJR Settlement was not “entered before the beginning of trial.” Thus, we affirm in part and reverse in part.

I

In February 2000, seven tobacco farmers commenced this antitrust action against Philip Morris, Lorillard, Brown & Williamson Tobacco Corporation, RJR, and several leaf tobacco dealers, alleging that the defendants conspired to fix prices at tobacco auctions and to reduce tobacco growing quotas, in violation of the Sherman Act. The tobacco farmers purported to represent a class of hundreds of thousands of tobacco farmers that the district court certified as a class on April 3, 2002, describing the class as:

(1) all persons (including corporations and other entities) holding a quota [under the Federal Tobacco Program] to grow flue-cured or- burley tobacco in the United States at any time from February 1996 to the present and (2) all domestic producers of flue-cured or burley tobacco who sold such tobacco in'the United States at any time from February 1996 to the present.

On May 15, 2003, the tobacco farmers Class and all of the defendants, except RJR, entered into the First Settlement Agreement, and the district court approved that agreement on October 1, 2003.

The First Settlement Agreement provided two principal benefits to the tobacco farmers Class: (1) two cash payments consisting of a first installment of $135 million and a later conditional installment of $65 million, and (2) a commitment by the settling manufacturers to purchase U.S.grown leaf tobacco in specified amounts over specified years. Each of these commitments was subject to a reduction adjustment should the Class enter into a settlement with RJR during a specified period. The second payment of $65 million was subject to a proportionate reduction if the-plaintiff Class “ reached” settlement with RJR “on or before the day before the first day of trial.” And the manufacturers’ agreement to' purchase U.S.-grown tobacco was subject to a “most favored nations clause” under which the settling manufacturers’ obligations under the First Settlement Agreement would be “no less favorable” tó them “than those terms agreed to” in any agreement with RJR. The adjustment, however, applied only if a settlement with RJR was “entered before the beginning of trial.”

Following the district court’s approval of the First Settlement Agreement on October 1, 2003, the litigation continued against RJR,' and’ trial was ultimately scheduled to commence on April 22, 2004, at 9:00 a.m.

During a settlement conference between counsel for the Class, counsel for RJR, and the district judge on Friday, April 16, 2004, counsel for RJR explained that it had not settled the case earlier because “we assumed we were going to try the case because the settlement for us late would have been prohibitive. That clause [the most favored nations clause] ends, as I [556]*556understand it, the day before the trial.” The court recognized the problem for a settlement, explaining, “A final agreement, in my opinion, if you reach an agreement, should come only after the impaneling of the jury.” The court stated further that it saw “nothing wrong[] in an attempt to settle this case today, with an understanding that this case will not be settled, if it is settled, until next Thursday when we impanel a jury.” Later on April 16, after the court had left the attorneys to discuss settlement further, the parties indicated to the court that they had neared — if not reached — a tentative settlement. The district judge recalled, about that report:

I heard that there was some agreement, or each of the parties at least had indicated, and this was some time later, that an amount of poundage and an amount of payment was, in fact, within the realm of what each one of them thought they could do. I indicated that I thought one of those two figures was not what it should be, and I asked them to go back and talk.
And we came back and talked about the matter. And at that time, I think [Class counsel] indicated that is where they were at that point, and then [it] was a matter that he could take up with his clients.... And that after that, both sides indicated that they, I thought, said, I think we can work this out.

The following Monday, April 19, Class counsel assured counsel for Philip Morris that no settlement with RJR had been reached. Accordingly, as required by the First Settlement Agreement, on April 21— the day before the trial was scheduled to commence — Philip Morris wired the second installment of $65 million to the Class.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
391 F.3d 551, 2004 WL 2785104, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deloach-v-lorillard-tobacco-co-ca4-2004.