Hohenberg v. Ferrero USA, Inc

Filing 147

Reply in Support re 140 MOTION for Order Imposing Appeal Bond filed by Athena Hohenberg, Laura Rude-Barbato. (Attachments: # 1 Declaration of Jack Fitzgerald in Further Support of Motion for Appeal Bond, # 2 Proof of Service)(Fitzgerald, John) (ag).

1 THE WESTON FIRM
GREGORY S. WESTON (239944)
2 [e-mail]
3 JACK FITZGERALD (257370)
[e-mail]
4 MELANIE PERSINGER (275423)
[e-mail]
5 COURTLAND CREEKMORE (182018)
[e-mail]
6 1405 Morena Blvd. Suite 201
7 San Diego, CA 92110
Telephone: [phone]
8 Facsimile: [phone]

LAW OFFICES OF RONALD A.
MARRON, APLC
RONALD A. MARRON (175650)
[e-mail]
B. SKYE RESENDES (278511)
[e-mail]
3636 4th Avenue, Suite 202
San Diego, California 92103
Telephone: [phone]
Facsimile: [phone]

9 Class Counsel
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
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Case No. 3:11-cv-00205 H KSC
Pleading Type: Class Action

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IN RE FERRERO LITIGATION

REPLY IN SUPPORT OF PLAINTIFFS’
MOTION FOR APPEAL BOND
Judge: The Honorable Marilyn L. Huff
Hearing: November 13, 2012
Time: 10:30 a.m.
Location: Courtroom 13

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

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TABLE OF CONTENTS

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3 TABLE OF AUTHORITIES ..................................................................................................................... ii
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I.

INTRODUCTION ....................................................................................................................... 1

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6 II.

ARGUMENT ............................................................................................................................... 1

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A.

The Court May Evaluate the Merits of the Appeal ............................................................ 1

B.

The Court May Consider Objectors’ Bad Faith and Vexatious Conduct .......................... 3

C.

The Requested Bond is Not Punitive ................................................................................. 6

D.

The Composition of the Requested Bond is Proper ........................................................... 7

E.

The Requested Bond Promotes Good Public Policy.......................................................... 8

F.

Drey and Pridham Have Demonstrated an Ability to Pay the Bond.................................. 9

G.

The Risk of Non-Payment is Great Because Most of Drey and Pridham’s Counsel
Practice Outside California .............................................................................................. 10

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19 III.

CONCLUSION .......................................................................................................................... 10

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

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TABLE OF AUTHORITIES

2 CASES
3 Adsani v. Miller,
139 F.3d 67 (2d Cir. 1998)............................................................................................................... 2, 7
4
5 Astiana v. Ben & Jerry’s Homemade, Inc.,
10-cv-4387-PJH (N.D. Cal.) ................................................................................................................ 4
6
Azizian v. Federated Dep’t Stores, Inc.,
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499 F.3d 950 (9th Cir. 2007) ....................................................................................................... 1, 2, 7
8

Barnes v. Fleetboston Fin. Corp.,
2006 U.S. Dist. LEXIS 71072 (D. Mass. Aug. 22, 2006).................................................................... 4
9
10 Devlin v. Scardelletti,
536 U.S. 1 (2002) ........................................................................................................................... 8, 10
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Embry v. ACER Am. Corp.,
2012 U.S. Dist. LEXIS 78068 (N.D. Cal. June 5, 2012) ................................................................. 2, 9

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Fleury v. Richemont N. Am., Inc.,
2008 U.S. Dist. LEXIS 88166 (N.D. Cal. Oct. 21, 2008)........................................................... passim

15 Gemelas v. Dannon Co.,
2010 U.S. Dist. LEXIS 99503 (E.D. Ohio Aug. 31, 2010).................................................................. 4
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17 Hall v. AT&T Mobility LLC,
2010 U.S. Dist. LEXIS 109355 (D.N.J. Oct. 13, 2010)....................................................................... 5
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In re Bluetooth Headset Prods. Liab. Litig.,
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654 F.3d 935 (9th Cir. 2011) ............................................................................................................... 3
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In re Diet Drugs Prods. Liab. Litig.,
2000 U.S. Dist. LEXIS 16085 (E.D. Pa. Nov. 6, 2000)....................................................................... 7
21
22 In re Groupon Mktg. & Sales Practices Litig.,
No. 11-md-2238-DMS (S.D. Cal.)....................................................................................................... 4
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In re Initial Pub. Offering Sec. Litig.,
728 F. Supp. 2d 289 (S.D.N.Y. 2010).............................................................................................. 4, 6

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In re MagSafe Apple Power Adapter Litig.,
2012 U.S. Dist. LEXIS 88549 (N.D. Cal. May 29, 2012) ..................................................... 2, 7, 9, 10

27 In re Nutella Mktg. & Sales Practices Litig.,
No. 11-1086-FLW (D.N.J.).............................................................................................................. 3, 9
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 In re Pharm. Indus. Avg. Wholesale Price Litig.,
520 F. Supp. 2d 274 (D. Mass. 2007) .................................................................................................. 4
2
3 In re Uponor, Inc.,
2012 U.S. Dist. LEXIS 130140 (D. Minn. Sept. 11, 2012) ............................................................. 3, 6
4
In re Wachovia Corp. “Pick-A-Payment” Mortgage Mktg. & Sales Practices Litig.,
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2011 U.S. Dist. LEXIS 92293 (N.D. Cal. Aug. 18, 2011)................................................................... 3
6 In re Wal-Mart Wage & Hour Employment Practices Litig.,
No. 10-15516 (9th Cir. June 3, 2010) .................................................................................................. 8
7
8 In re Wal-Mart Wage & Hour Employment Practices Litig.,
2010 U.S. Dist. LEXIS 21466 (D. Nev. Mar. 8, 2010)........................................................................ 2
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Larson v. AT&T Mobility LLC,
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No. 10-4349 (3d Cir. Sept. 9, 2011) .................................................................................................... 5
11

Lindsey v. Normet,
405 U.S. 56 (1972) ............................................................................................................................... 6
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13 Miletak v. Allstate Ins. Co.,
2012 U.S. Dist. LEXIS 125426 (N.D. Cal. Aug. 27, 2012)......................................................... 2, 8, 9
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Pedraza v. United Guar. Corp.,
313 F.3d 1323 (11th Cir. 2002) ........................................................................................................... 7

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Rodriguez v. W. Publ’g Corp.,
563 F.3d 948 (9th Cir. 2009) ............................................................................................................... 3

18 Shaw v. Toshiba Am. Info Sys., Inc.,
91 F. Supp. 2d 942 (E.D. Tex. 2000) ................................................................................................. 10
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20 Thalheimer v. City of San Diego,
2012 U.S. Dist. LEXIS 59315 (S.D. Cal. Apr. 26, 2012) .................................................................... 7
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Yingling v. eBay, Inc.,
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2011 U.S. Dist. LEXIS 79738 (N.D. Cal. July 5, 2011) ...................................................................... 2
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STATUTES
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28 U.S.C. § 1920 ........................................................................................................................................ 7

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 RULES
2 APPM § 2(f)(1) .......................................................................................................................................... 5
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Fed. R. App. P. 39(c) and (e) ..................................................................................................................... 7

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Fed. R. App. P. 7 ................................................................................................................................ 1, 6, 8
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S.D. Cal. Civ. L.R. 5.4(f) ........................................................................................................................... 5

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 I.

INTRODUCTION

2

Plaintiffs seek a modest appeal bond of $21,970.72 as security against their costs in opposing

3 the appeals of Michael Hale, Courtney Drey, and Andrea Pridham; the administrative costs of keeping
4 in contact with claimants about the status of their claims pending the appeals; and post-judgment
5 interest. (See Mot., Dkt. No. 140-1 at 1, 9-10.) Mr. Hale does not oppose the bond. 1 Drey and Pridham’s
6 Opposition (Opp., Dkt. No. 142) provides no salient reason to deny Plaintiffs’ request for this moderate
7 security against Objectors’ meritless appeals.
8 II.

ARGUMENT

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A.

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The Court May Evaluate the Merits of the Appeal

Drey and Pridham argue that frivolousness is an inappropriate ground on which to impose a

11 bond (Opp. at 4-6), but Plaintiffs’ use this descriptive only incidentally to their arguments directed
12 toward their burden under Rule 7 of the Federal Rules of Appellate Procedure. They do not request that
13 the Court make a finding of frivolousness, or impose attorneys’ fees and sanctions on Objectors.
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Instead, Plaintiffs have moved, as is their right under Rule 7, to secure a payment of the costs

15 their counsel will incur as a result of these appeals. In doing so, Plaintiffs discuss the factors laid out in
16 Fleury v. Richemont N. Am., Inc., 2008 U.S. Dist. LEXIS 88166 (N.D. Cal. Oct. 21, 2008) and its
17 progeny, and demonstrate why they weigh in favor of a bond here, namely: (1) the appellant’s financial
18 ability to post a bond; (2) the risk that the appellant would not pay the appellee’s costs if the appeal
19 loses; (3) the merits of the appeal; and (4) whether the appellant has shown bad faith or vexatious
20 conduct. Id. at *19. (Compare Mot. at 4-9.)
21

To the extent Drey and Pridham rely on the Ninth Circuit’s 2007 decision in Azizian v.

22 Federated Dep’t Stores, Inc., 499 F.3d 950 (9th Cir. 2007) to assert that district courts are precluded
23 from considering the merits of an appeal in determining whether to impose a bond pursuant under
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Plaintiffs’ served their Motion on Mr. Hale’s counsel on October 11, 2012. (See Dkt. No. 144.) That
27 he failed to respond underscores the risk that Mr. Hale will not pay costs imposed against him after
appeal, which should therefore be secured by the imposition of the requested bond.
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 Appellate Rule 7, this is wrong. 2 Rather, it is well-established that district courts appropriately consider
2 the merits of an appeal, since “the merits . . . informs the likelihood that the appellant will lose and thus
3 be liable for costs.” Fleury, 2008 U.S. Dist. LEXIS 88166, at *20 (citing Adsani v. Miller, 139 F.3d 67,
4 79 (2d Cir. 1998) (“A district court, familiar with the contours of the case appealed, has the discretion to
5 impose a bond which reflects its determination of the likely outcome of the appeal.” (citation omitted))).
6

Accordingly, since Azizian, California district courts have repeatedly imposed bonds on the

7 basis that an appeal is meritless. See Miletak v. Allstate Ins. Co., 2012 U.S. Dist. LEXIS 125426, at *5
8 (N.D. Cal. Aug. 27, 2012) (“[T]he merits of Objector Wilens’ appeal weigh heavily in favor of
9 requiring a bond. . . . [T]he Court has thoroughly considered each of Objector Wilens’ objections to the
10 settlement, and has found them to be meritless. Thus, the Court finds that the posting of an appeal bond
11 is warranted.”); Embry v. ACER Am. Corp., 2012 U.S. Dist. LEXIS 78068, at *5 (N.D. Cal. June 5,
12 2012) (“[T]he Court finds that the merits of Objector’s appeal weigh heavily in favor of requiring a
13 bond, insofar as his objections to the settlement are lacking in merit. . . . [T]he Court carefully
14 considered each of [Objector’s] objections and overruled them prior to approving the settlement.”); In
15 re MagSafe Apple Power Adapter Litig., 2012 U.S. Dist. LEXIS 88549, at *7-8 (N.D. Cal. May 29,
16 2012) (“[T]he merits of the appeals at issue weigh heavily in favor of requiring a bond, as each is
17 lacking in merit” where the objections “were carefully evaluated by the Court before granting final
18 settlement approval.”); Yingling, 2011 U.S. Dist. LEXIS 79738, at *5 (Imposing bond where “the Court
19 has already considered Objector Balla’s objections and found them to be meritless, [and thus] the Court
20 finds that Objector Balla is unlikely to succeed on the merits of his appeal.”); In re Wal-Mart Wage &
21 Hour Employment Practices Litig., 2010 U.S. Dist. LEXIS 21466, at *18 (D. Nev. Mar. 8, 2010) (“The
22 Court further finds that the four Objectors should be required to file an appeal bond sufficient to secure
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The question of merits is different from the question of frivolity. See Yingling v. eBay, Inc., 2011 U.S.
Dist. LEXIS 79738, at *5-6 n.10 (N.D. Cal. July 5, 2011) (“In arriving at this conclusion about the
merits of the appeal, the Court does not reach the question of whether Objector Balla’s appeal is
frivolous.” (citing Azizian, 499 F.3d at 961)). Moreover, Drey and Pridham’s argument is misplaced,
since the portion of Azizian on which they rely is limited to the imposition of a bond for attorney’s fees,
which Plaintiffs do not seek. See 499 F.3d at 954. Curiously, Drey and Pridham admit that Azizian’s
holding is so limited, but assert that Plaintiffs “could have, and should have, been more forthcoming in
the way they cited Azizian.” (Opp. at 6.)
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 and ensure payment of costs on appeals which in the judgment of this Court are without merit and will
2 almost certainly be rejected by the Ninth Circuit Court of Appeal.”); In re Uponor, Inc., 2012 U.S. Dist.
3 LEXIS 130140, at *7-8 (D. Minn. Sept. 11, 2012) (“[T]he Court finds the bases for [objectors’] appeals
4 to be very weak. . . . None of these issues are likely to succeed on appeal, and this factor weighs in
5 favor of imposing a bond.”).
6

In order to prevail on their appeal, Drey and Pridham will have to show that the Court’s Order

7 granting final approval was a “clear abuse of discretion.” In re Bluetooth Headset Prods. Liab. Litig.,
8 654 F.3d 935, 940 (9th Cir. 2011) (citing Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 963 (9th Cir.
9 2009)). As in the cases cited above, however, this Court carefully considered and overruled Drey and
10 Pridham’s objections. (See Dkt. No. 127 at 6-7 ¶ 13 (“The Court has considered the objections . . . After
11 careful consideration, the Court overrules the objections.”).) This by itself is strong evidence, but the
12 Court’s conclusion here is bolstered by the decision of another district court, separately evaluating very
13 similar settlement terms on behalf of a class of Nutella purchasers in the 49 states outside California, 3
14 which overruled identical objections raised by Drey and Pridham’s counsel. See In re Nutella Mktg. &
15 Sales Practices Litig., No. 11-1086-FLW (D.N.J.), Dkt. Nos. 76 (appeal filed by Mr. Langone on behalf
16 of certain objectors); 104 (Final Approval Order & Judgment).
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B.

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As Fleury and other cases make clear, in hearing a request for an appeal bond, district courts

The Court May Consider Objectors’ Bad Faith and Vexatious Conduct

19 may consider an objector’s bad faith or vexatious conduct without determining that her appeal is
20 frivolous. See Fleury, 2008 U.S. Dist. LEXIS 88166, at *19 (citations omitted); In re Wachovia Corp.
21 “Pick-A-Payment” Mortgage Mktg. & Sales Practices Litig., 2011 U.S. Dist. LEXIS 92293, at *5-6
22 (N.D. Cal. Aug. 18, 2011) (citing Fleury, 2008 U.S. Dist. LEXIS 88166, at *6)).
23

Where, as here, objections are filed by serial objectors and/or “professional objector” counsel,

24 courts are particularly concerned that appeals may be in bad faith. As the court in Barnes v. Fleetboston
25 Fin. Corp. explained:
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3

Though identical on most terms, the California settlement provides a larger fund for class members on
28 a per capita basis than the settlement covering the other 49 states. (See Dkt. No. 114-2 at 14-15.)
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

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Repeat objectors to class action settlements can make a living simply by filing frivolous
appeals and thereby slowing down the execution of settlements. The larger the settlement,
the more cost-effective it is to pay the objectors rather than suffer the delay of waiting for
an appeal to be resolved (even an expedited appeal). Because of these economic realities,
professional objectors can levy what is effectively a tax on class action settlements, a tax
that has no benefit to anyone other than to the objectors. Literally nothing is gained from
the cost: Settlements are not restructured and the class, on whose behalf the appeal is
purportedly raised, gains nothing.

6 2006 U.S. Dist. LEXIS 71072, at *3-4 (D. Mass. Aug. 22, 2006). See also In re Initial Pub. Offering
7 Sec. Litig., 728 F. Supp. 2d 289, 295 n.37 (S.D.N.Y. 2010) (“Federal courts are increasingly weary of
8 professional objectors . . . who seek out class actions to simply extract a fee by lodging generic,
9 unhelpful protests.” (citation and internal quotation marks omitted)); In re Pharm. Indus. Avg.
10 Wholesale Price Litig., 520 F. Supp. 2d 274, 279 (D. Mass. 2007) (“[T]he class is likely to be damaged
11 if the appeal is rejected and there are public policy reasons to prevent frivolous objectors from
12 threatening to hold up class distributions.”); Gemelas v. Dannon Co., 2010 U.S. Dist. LEXIS 99503, at
13 *5-8 (E.D. Ohio Aug. 31, 2010) (
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Plaintiffs have shown this is the fourth class action of which [an Objector] claims to be a
class member, has filed rote objections, does not appear at fairness hearing and then
appeals the district courts’ rulings granting final approval for class action settlements. . . .
The court finds that Padgett’s appeal is meritless. . . . In short, Mr. Padgett appears to be
making a business of objecting to, and appealing, class action settlements in order to
obtain some financial reward. . . . [C]ourts have discretion to impose appeal bonds to
prevent frivolous, unreasonable or groundless litigation. The Court finds Mr. Padgett’s
appeal to be frivolous, unreasonable and groundless. Finally, there are public policy
reasons to prevent frivolous objectors from threatening to hold up class distributions.
Serial objectors such as Mr. Padgett should not be encouraged to continue holding up
valuable settlements for class members by filing frivolous appeals. (internal citations and
quotation marks omitted)).

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Drey and Pridham have both filed multiple objections to class action settlements. 4 More

23 relevant, their counsel, Mark T. Lavery, Christopher Langone, and Grenville Pridham, together or in
24 combination, have objected, variously on behalf of themselves, family members, and others, in at least
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In addition to this action, Drey filed an objection in Astiana v. Ben & Jerry’s Homemade, Inc., 10-cv26 4387-PJH (N.D. Cal.), Dkt. No. 86. Pridham filed an objection in In re Groupon Mktg. & Sales
27 Practices Litig., No. 11-md-2238-DMS (S.D. Cal.), Dkt. No. 69; and In re TFT-LCD (Flat Panel)
Antitrust Litig., no. 07-md-1827-SI (N.D. Cal.), Dkt. No. 5461 (filed under Pridham’s maiden name,
28 Kane).

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 half-a-dozen cases other than this one. (See Dkt. No. 125-1 at 5-6 ¶ 15 (collecting cases).) By their
2 counsel, Drey and Pridham made similar objections in this case that the court in Hall v. AT&T Mobility,
3 methodically, and emphatically, overruled. See 2010 U.S. Dist. LEXIS 109355, at *21 n.6, *23-24, *324 34, *36-43 (D.N.J. Oct. 13, 2010). After the district court approved the settlement in Hall, Langone
5 appealed, but later withdrew it. See Larson v. AT&T Mobility LLC, No. 10-4349 (3d Cir. Sept. 9, 2011),
6 Dkt. No. 003110649682.
7

Further, when lodging their objection here, Drey and Pridham’s counsel ignored the Court’s

8 Preliminary Approval Order by failing to file objections “signed” by their clients (see Dkt. No. 108 at 6
9 ¶ 7(b)). Instead, Drey and Pridham’s counsel filed declarations with their clients’ “slash” signatures,
10 also in violation of the Local Rules and the Court’s Electronic Case Filing Administrative Policies and
11 Procedures Manual. (See Plaintiffs’ Response to Drey and Pridham Objection, Dkt. No. 125 at 4-5
12 (citing S.D. Cal. Civ. L.R. 5.4(f); APPM § 2(f)(1)).) In addition, Mssrs. Lavery and Langone appeared
13 on behalf of their clients in an unauthorized manner, having never sought pro hac vice admission, as
14 they were required. (See id. at 5.) Although since Plaintiffs raised this issue, Mr. Pridham alone has
15 appeared for Drey and Pridham on their appeal and in opposing this bond motion (see Dkt. Nos. 12916 30, 142), Mr. Langone continues to file papers purporting to represent Drey and Pridham in an “of
17 counsel” role despite his failure to seek admission. (See Dkt. No. 145-1 at 14.)
18

Drey and Pridham, through their counsel, have also acted vexatiously. As Plaintiffs previously

19 described, after lodging Drey and Pridham’s objection, one of their counsel acted unprofessionally in a
20 series of phone calls with Class Counsel and its staff, and promised to appeal their objections to the
21 Ninth Circuit, presumably in anticipation that the Court would overrule them. (See Dkt. No. 125-1 ¶¶ 622 13.) On November 3, 2012, Drey and Pridham’s counsel served Mr. Fitzgerald with a draft Rule 11
23 motion, asserting that “[t]he motion you filed to require a bond from Ms. Pridham violates Rule 11”
24 (Fitzgerald Decl. Ex. 1), and demanding its withdrawal before November 24, even though the Motion
25 was set for hearing on November 13 and is proper. On November 5, Drey and Pridham’s counsel
26 improperly filed a baseless “Motion to Vacate” the Court’s Order granting final approval and entering
27 judgment, and requesting a slew of other unreasonable relief, although the motion only rehashed the
28 same objections the Court overruled last July. (Dkt. No. 145.) That motion appears to be retaliation for
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 what Drey and Pridham perceive to be an unfair request for an appeal bond. 5
2

Finally, Drey and Pridham’s Opposition highlights the danger that their appeal is brought in bad

3 faith. Regardless of the price of the product at issue or amount of bond required, there is a strong
4 incentive for unsuccessful class action objectors to file meritorious appeals, since successful objector5 appellants will have their bonds returned and can often obtains fees and incentive awards for prevailing.
6 Drey and Pridham suggest, however, that if the Court imposes a bond, they will drop their appeal,
7 purportedly because “only a lunatic or a fanatic would post a $20,000 bond to proceed with an appeal
8 over $3.00 jars of Nutella” (Opp. at 3), but more likely because this logic applies to meritless appeals.
9

Courts have often imposed bonds upon professional objectors, like Drey and Pridham’s counsel,

10 who so act in bad faith and vexatiously. See, e.g., In re Uponor, 2012 U.S. Dist. LEXIS 130140, at *8
11 (“bad faith and vexatious conduct” justified bond where “the Palmer Objectors appear to be represented
12 by an attorney who has not entered an appearance in this case and who is believed to be a serial objector
13 to other class-action settlements”); In re Initial Pub. Offering Sec. Litig., 728 F. Supp. 2d at 294
14 (imposing bond after finding bad faith and vexatious conduct where “counsel for the . . . Objectors are
15 serial objectors,” counsel “holds personal, documented animus toward” a party, and where they
16 “refus[ed] to comply with th[e] Court’s Orders”).
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C.

18

Relying on the Supreme Court’s decision in Lindsey v. Normet, 405 U.S. 56 (1972), Drey and

The Requested Bond is Not Punitive

19 Pridham argue that a bond may not be punitive. Lindsey is easily distinguishable, since it concerned an
20 Oregon statute that automatically imposed a bond on unsuccessful parties in eviction suits “of twice the
21 rental value of the property from the time of commencement of the action to final judgment.” Id. at 6322 64. This violated equal protection because the statutory scheme imposed “requirements that in [the
23 Court’s] judgment bear no reasonable relationship to any valid state objective and that arbitrarily
24 discriminate against tenants appealing from adverse decisions” in such actions. Id. at 76-77.
25

By contrast, the purpose of the appeal bond authorized under Rule 7 of the Federal Rule of

26 Appellate procedure is “to ensure payment of costs on appeal.” Fed. R. App. P. 7; see also Adsani, 139
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Plaintiffs will shortly file their full response to Drey and Pridham’s vacatur motion.
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 F.3d at 75 (purpose of Rule 7 bond is to protect appellee against risk of non-payment by unsuccessful
2 appellants); Pedraza v. United Guar. Corp., 313 F.3d 1323, 1333 (11th Cir. 2002) (same). Such a bond
3 is not unconstitutional. See generally Azizian, 499 F.3d 950.
4

Finally, Drey and Pridham take issue with Class Counsel’s estimate of $15,000 in costs pursuant

5 to 28 U.S.C. § 1920 and Fed. R. App. P. 39(c) and (e), e.g., the costs of preparation of and transmission
6 of the record, the costs of obtaining any necessary transcripts, printing costs and other copying costs.
7 See Thalheimer v. City of San Diego, 2012 U.S. Dist. LEXIS 59315, at *9 (S.D. Cal. Apr. 26, 2012). As
8 Plaintiffs demonstrated in the Motion, their $15,000 estimate is smaller than what courts frequently find
9 appropriate in such cases. (See Mot. at 9-10 (collecting cases).) Lacking legal citations, objectors resort
10 to sarcastic rhetorical questions in opposing the figure. (See Opp. at 7 (“Where did this number come
11 from? Did he pull it out of the air?”).) Yet Courts recognize the difficulty in estimating the costs in a
12 multi-objector appeal like this one: “Presumably, some of the objectors will utilize parts of the record
13 and reproduce exhibits that others will not. Also, some objectors will likely raise different issues in their
14 appeals than others, causing the class to incur either more or less expense than incurred defending the
15 appeals of other objectors.” In re Diet Drugs Prods. Liab. Litig., 2000 U.S. Dist. LEXIS 16085, at *1916 20 (E.D. Pa. Nov. 6, 2000) (imposing $25,000 bond). Objectors cite no authority that a motion for an
17 appeal bond must include a detailed itemization of estimated costs; and the fact that the many appeal
18 bond orders Plaintiffs cited imposed cost bonds of round numbers makes clear there is no such
19 requirement. See, e.g., In re MagSafe, 2012 U.S. Dist. LEXIS 88549 (imposing separate $15,000 appeal
20 bonds on each objector, for a total of $60,000).
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D.

22

Drey and Pridham argue that the “costs of delay” may not be included in an appeal bond. (Opp.

The Composition of the Requested Bond is Proper

23 at 8.) As Plaintiffs’ motion makes clear, however, the $5,573.80 estimate by Charlene Young (Dkt. No.
24 140-3), the settlement’s claims administrator, pertains to administrative costs of delay, not the delay
25 damages that are precluded under Fleury and other cases. (See Mot. at 10 (describing costs associated
26 with:
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administering the settlement, including costs of updating addresses and other information
needed to remain in contact with Class members, locating lost Class members, providing
notices to Class members to apprise them of Objectors’ appeal and keep them informed
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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1

about the status of the appeal, paying monthly fees for maintaining the website created to
inform class members, and providing phone support to answer inquiries from the Class
members).)

2

3 Such costs have recently been upheld and imposed as part of an appeal bond. See Miletak, 2012 U.S.
4 Dist. LEXIS 125426, at *6 (“the Court finds that it may only award an appeal bond comprising . . .
5 appellate costs and administrative costs” which include “costs incurred in order ‘to continue to service
6 and respond to class members’ needs pending the appeal’” (record citation omitted)). 6
7

E.

8

Relying on the inapposite case of Devlin v. Scardelletti, 536 U.S. 1 (2002)—which did not even

The Requested Bond Promotes Good Public Policy

9 concern appeal bonds, but a circuit split on whether potential objectors must first intervene—Drey and
10 Pridham argue that the imposition of appeal bonds violates public policy in favor of hearing objections
11 to class action settlements. (Opp. at 8.) As Congress has decided in enacting Federal Rule of Appellate
12 Procedure 7, however, the imposition of an appeal bond does not “[c]reate [n]eedless [o]bstacles for
13 [o]bjectors” (id.), who are free to object long before an appeal bond is ever imposed, but exists for the
14 purpose of “ensur[ing] payment of costs on appeal.” Fed. R. App. P. 7. Devlin is not contrary.
15

Threatening to institute “a second appeal” if the Court imposes a bond (Opp. at 8), and relying

16 on the Ninth Circuit’s June 3, 2010 decision in In re Wal-Mart Wage & Hour Employment Practices
17 Litig., No. 10-15516 (9th Cir. June 3, 2010), Drey and Pridham also assert that the Court should decline
18 to impose a bond because the Ninth Circuit would likely stay the bond pending resolution of their
19 appeal. (See Opp. at 8.) In Wal-Mart, the district court had imposed a $2,000,000 bond upon expressly
20 finding the appeal was “frivolous” (different from meritless). The appellants had filed a number of
21 motions and gone through several rounds of review, in front of the district court and the Court of
22 Appeal, before the Ninth Circuit finally entered a one-page order staying the bond. (See Fitzgerald
23 Decl. Exs. 2-3 (Motion and Order).) Not only were the circumstances in Wal-Mart vastly different, but
24

6

Drey and Pridham’s suggestion that Class Counsel acted improperly in securing “a quick pay
25 provision that ensured that they themselves were paid” but “did not insist . . . on a parallel protection
for their fiduciaries” (Opp. at 8) is misplaced. In the unlikely event that the fees are overturned or
26
reduced on appeal, Class Counsel will be obligated to repay them to Ferrero, and are easily located. By
contrast, Ferrero would have no way to secure the small sums of money paid to over 50,000 Class
27
Members in the unlikely event that the Settlement is overturned on appeal, and thus a “quick pay” for
28 Class member claimants is impractical and unrealistic, even if desirable in the abstract.
8
In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 Drey and Pridham have not petitioned the Ninth Circuit for such relief. Moreover, their assertion that
2 the Ninth Circuit recently “did the same thing” in In re MagSafe, e.g., stayed an appeal bond (Opp. at
3 8), is flatly wrong. The Ninth Circuit, citing Azizian, actually held:
4
5

“Appellant Marie Gryphon’s motion to vacate the appeal bond order is denied without
prejudice to renewing the arguments in the opening brief.”

6 (See Fitzgerald Decl. Ex. 4, In re MagSafe, No. 12-15782 (9th Cir.), Dkt. No. 41 (emphasis added).)
7

Contrary to Drey and Pridham’s arguments and threats, appeal bonds promote the public interest

8 by ensuring costs incurred by successful parties on appeal are recoverable, obviating the need for
9 additional litigation to obtain those costs once awarded, and deterring meritless appeals filed for the
10 purpose of holding up good settlements. See generally cases cited supra Point B.
11

F.

12

Drey and Pridham have not submitted any evidence of their inability to pay the modest bond

Drey and Pridham Have Demonstrated an Ability to Pay the Bond

13 Plaintiffs request. Accordingly, this factor favors imposition of the bond. See Miletak, 2012 U.S. Dist.
14 LEXIS 125426, at *5 (“Objector Wilens has presented no evidence that she would be unable to pay an
15 appeal bond. Thus, this factor weighs in favor of imposing an appeal bond.” (citing Fleury, 2008 U.S.
16 Dist. LEXIS 88166)); Embry, 2012 U.S. Dist. LEXIS 78068, at *4-5 (“Objector has not submitted any
17 evidence or even contended that he is unable to post a bond. In the absence of evidence that posting a
18 bond will impose a substantial hardship, this favor weighs in favor of requiring a bond.”). But even if
19 Drey and Pridham had “submitted some evidence that they will have difficulty posting” the bond, “in
20 light of the significant risk of non-payment of costs and the lack of merit in Objectors’ appeals, this
21 factor nonetheless tips in favor of requiring a bond.” See In re MagSafe, 2012 U.S. Dist. LEXIS 88549,
22 at *7.
23

The evidence, however, suggests that Drey and Pridham are able to pay the modest bond

24 requested. Presumably, Drey and Pridham’s counsel are pursuing the appeal on contingency. Mr.
25 Langone also represents three objectors to the 49-state settlement in In re Nutella. When their
26 objections were overruled, they appealed. (See In re Nutella Dkt. No. 106.) The In re Nutella Plaintiffs
27 sought a $42,500 appeal bond. (Id. Dkt. No. 114.) As of the filing of this brief, Mr. Langone has not
28 opposed the imposition of a bond in that case, suggesting Drey and Pridham’s counsel are also able to
9
In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 pay the smaller bond Plaintiffs request here.
2
3
4

G.

The Risk of Non-Payment is Great Because Most of Drey and Pridham’s Counsel
Practice Outside California

Drey and Pridham argue that the risk of non-payment is low because they are California

5 residents, but ignore that Mssrs. Langone and Lavery—who are likely the real parties in interest if they
6 are pursuing the objection and appeals on contingency and may therefore have to indemnify Drey and
7 Pridham against any assessment of costs—reside and practice outside this state. Specifically, Mr.
8 Lavery practices in Illinois (see Drey and Pridham Objection Brief, Dkt. No. 123 at 15), and Mr.
9 Langone has listed his address variably in Illinois (see id.) and New York (see Drey and Pridham Mot.
10 to Vacate, Dkt. No. 145-1 at 14). Courts have consistently found this factor weighs in favor of imposing
11 a bond, since the alternative is that successful plaintiff-appellees may have to institute numerous
12 collection actions, including outside the jurisdiction, to recover their costs incurred on appeal. Accord In
13 re MagSafe, 2012 U.S. Dist. LEXIS 88549, at *7 (appeal bond warranted where, absent bond, if
14 appellees obtained costs on appeal they would “otherwise be forced to pursue collection actions in
15 multiple locations both within the United States and abroad”).
16 III.

CONCLUSION

17

Defending an appeal, even a meritless one, is time-consuming and expensive. More importantly,

18 distribution of the settlement proceeds to Class members will be delayed for months—or years—by
19 these appeals, resulting in substantial monthly expenses incurred by the settlement and claims
20 administrator. It is therefore appropriate to require the Objector-Appellants to post a bond to secure at
21 least a portion of the costs on appeal. Moreover, the reasonableness of this request is underscored by the
22 fact that both Objector-Appellants’ counsel are professional objectors attempting to disrupt the
23 settlement and “extract a fee by lodging generic, unhelpful protests.” Devlin, 536 U.S. at 23 n.5 (2002)
24 (Scalia, J., dissenting) (citing Shaw v. Toshiba Am. Info Sys., Inc., 91 F. Supp. 2d 942, 973-74 & n.18
25 (E.D. Tex. 2000)). By pursuing their intended appeals, the Objector-Appellants through their
26 professional objector counsel seek to hold hostage the significant settlement proceeds to be distributed
27 to the Settlement Class. Accordingly, it is appropriate for the Court to impose the appeal bond that
28 Plaintiffs request.
10
In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND

1 DATED: November 6, 2012

Respectfully Submitted,

2

/s/ Jack Fitzgerald
Jack Fitzgerald

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THE WESTON FIRM
GREGORY S. WESTON
JACK FITZGERALD
MELANIE PERSINGER
COURTLAND CREEKMORE
1405 Morena Blvd., Suite 201
San Diego, CA 92109
Telephone: [phone]
Facsimile: [phone]

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LAW OFFICES OF RONALD A.
MARRON, APLC
RONALD A. MARRON
B. SKYE RESENDES
3636 4th Street, Suite 202
San Diego, CA 92103
Telephone: [phone]
Facsimile: [phone]

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Class Counsel

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In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC
REPLY IN SUPPORT OF PLAINTIFFS’ MOTION FOR APPEAL BOND