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CEI Takes Transpacific Class Action Settlement to the Supreme Court

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The Competitive Enterprise Institute (CEI) filed a petition for certiorari before the United States Supreme Court today, asking the court to take up Yang v. Wortman, previously captioned In Re: Transpacific Passenger Air Transportation Antitrust Litigation. Transpacific is a class action arising out of international airlines’ alleged price-fixing of transpacific flights.

CEI's Center for Class Action Fairness objected to settlements with several of the defendants in district court and then argued on appeal in the U.S. Court of Appeals for the Ninth Circuit that the settlements were unfair to class members and that the representation of class members was legally inadequate and failed to protect absent class members as Supreme Court precedent requires.

CEI Center for Class Action Fairness Director Ted Frank said, “For decades, the Supreme Court, across ideological lines, has repeatedly emphasized that class members' constitutional right to adequate representation free from intraclass conflicts of interest is paramount. Class counsel took, and the Ninth Circuit permitted, illegal shortcuts that unfairly cost class members millions of dollars. We hope the Supreme Court resolves this circuit split and vindicates its precedents.”

Though class members had claims of wildly differing values, each settlement created a single class that treated all class members the same, leaving a settlement that denied millions of dollars in damages to the class members with legitimate claims. The district court approved the settlements, but reduced class counsel's excessive request for attorneys' fees and expenses of $16 million by over $5.1 million, for the benefit of the class.

In a 2-1 split decision, a three-judge panel from the Ninth Circuit affirmed the district court judgment. The dissent noted that under Supreme Court precedent, such an apparent conflict within the class made it “virtually impossible” for the class members to be adequately represented and observed that the district court “took the easy way out” in approving the settlements without creating subclasses for the different interests.

See more about the case here.