In Re: Stericycle, Inc., Sterisafe Contract Litigation

Filing 310

MEMORANDUM Opinion and Order: Hearing held. For the reasons stated at length in this Opinion: 1. "Plaintiffs' Unopposed Motion for Preliminary Approval of Class Settlement and Approval of Notice Plan" (Dkt. No. 304) is granted.2. By reason of that ruling, Stericycle's previously filed "Motion of Defendant Stericycle, Inc. for Reconsideration and Clarification" (Dkt. No. 273), which has lain fallow since it was filed on March 2, 2017, has been superseded and is the refore denied as moot. 3. As for "Alabama Plaintiffs' Motion To Review Proposed Settlement Agreement and Be Heard on Its Merits" (Dkt. No. 302), it is denied without prejudice to the Alabama Plaintiffs' later exercise of the right s granted in the Settlement Agreement's Section VI or Section VII. 4. Any exercise of rights by Class Members (including the Alabama Plaintiffs) under Section Vi or Section VII must be filed on or before January 22, 2018. Signed by the Honorable Milton I. Shadur on 10/26/2017:Mailed notice(clw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

IN RE: STERICYCLE, INC., STERI-SAFE
CONTRACT LITIGATION

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Case No. 13 C 5795
MDL No. 2455

MEMORANDUM OPINION AND ORDER 1
What is now the MDL Panel action designated as MDL 2455 stems from the original
filing of Lyndon Veterinary Clinic v. Stericycle, 13 C 2499 in this District Court on April 3,
2013. Telescoping the procedural steps that have led to the newly-filed (on October 17, 2017)
proposed Settlement Agreement and related documents in MDL 2455 reveals the following
relevant events:
1.

On August 6, 2013 the MDL Panel consolidated the Lyndon action for
pretrial proceedings with additional acts and individual actions alleging
similar or identical claims.

2.

On October 11, 2013 this Court entered an order appointing Hagens
Berman Sobol Shapiro LLP ("Hagens Berman") as interim lead counsel.

3.

On November 11, 2013 plaintiffs filed a First Amended Consolidated
Complaint.

1

All parenthetical references in this memorandum opinion and order (the "Opinion") are
to sections (designated by Roman numerals) and paragraphs (designated by capital letters or by
capital letters coupled with Arabic numerals) in the proposed Settlement Agreement tendered to
this Court for preliminary approval.

4.

After considerable activities in the consolidated actions, on March 8, 2016
plaintiffs filed the Second Amended Consolidated Complaint, which has
continued as the operative complaint in this action.

5.

On February 16, 2017 Hagens Berman was appointed as plaintiffs' Class
Counsel, and this Court certified a nationwide (except for the states of
Washington and Alaska) class of "Small Quantity" or "SQ" customers of
Stericycle.

6.

On March 2, 2017 Stericycle filed a motion for reconsideration of that
certification, a motion that has since then been continued by agreement of
the parties up to the current date.

Regrettably a combination of events beyond the control of this Court, which it has
detailed elsewhere on a number of occasions in a number of other cases, has left it without law
clerks or other legal staffing, so that its current consideration of the October 17 "Plaintiffs'
Unopposed Motion for Preliminary Approval of Class Settlement and Approval of Notice Plan"
(Dkt. No. 304) and its contemporaneously-filed supporting documents 2 cannot produce an
opinion replete with citations to supporting authorities. But the narrative that follows here is
based on the comprehensive nature of the parties' submissions, reflecting professionalism of the
highest order, when measured by the appropriate yardstick -- a yardstick with which this Court is
thoroughly familiar as the result of (1) its extensive experience with class actions (on both the
2

In addition to "Plaintiffs' Memorandum in Support of [That] Unopposed Motion"
(Dkt. No. 305), those supporting documents comprise Declarations of attorney Steve Berman
(Dkt. No. 306), former Judge Wayne Andersen of this District Court (Dkt. No. 307) and analyst
Patrick Kilbourne (Dkt. No. 308). More will be said about the first two of those declarants later
in this Opinion.

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plaintiff's side and the defendant's side of the "v." sign) during its three decades of practice
before appointment as a District Judge and (2) then its extensive experience during its 37 years
as a District Judge (the last 22 as a Senior Judge) maintaining a full civil calendar in this District
Court. As indicated earlier in this paragraph, what the current submission contains is an
impeccable covering of all the necessary bases, demonstrating the type of high quality work
product that this Court anticipated when it designated Hagens Berman and its lead partner Steve
Berman as Class Counsel. 3 What follows in this Opinion, then, treats with the issues in this
action in the same sequence that they are dealt with in the Settlement Agreement. As the
analysis here will reflect, in every instance the Settlement Agreement is clearly entitled to
preliminary approval, with all relevant considerations having been anticipated by the parties and
dealt with in totally responsible fashion.
In Section II Paragraph 9 Garden City Group, LLC (referred to for convenience as
"GCG") is designated as the Class Action Settlement Administrator. Then Paragraph 12
identifies the "Class Period" as running from March 8, 2003 through the Preliminary Approval
date of October 26, 2017. Later, Paragraph 20 defines what will become the Final Effective Date
if the preconditions to final approval of the Settlement Agreement are satisfied. Even later,
Paragraph 39 identifies this Court's former colleague, the Honorable Wayne Andersen

3

It should of course be recognized that this Opinion addresses only the preliminary
approval of the Settlement Agreement. As the ensuing detailed analysis reflects, that preliminary
approval sets in motion a host of provisions that give full protection to every party in interest -the Class Members represented by counsel in the other 20 cases that have been transferred to this
Northern District of Illinois by the MDL Panel (see Ex. 1 to the Settlement Agreement) and all
other Class Members. And that full protection expressly includes the right to object to final
approval of the Settlement Agreement and, if final approval is granted hereafter, the right to opt
out of the settlement.

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("Andersen") as the Settlement Monitor referred to in Section III (he had previously assisted as
an attempted mediator in the proceedings that eventuated in the current motion for preliminary
approval).
Section III Paragraph A sets the proposed Settlement Amount at $295 million (including
all costs) if the conditions for final approval of the Settlement Agreement are hereafter met.
Then Paragraph D specifies that best efforts are to be exercised to begin payments to Class
Members within 180 days after the Final Effective Date, with those best efforts to continue
looking toward a completion of such payments within 270 days after the Final Effective Date.
Later, Paragraph D.3 addresses the possible redistribution of some Class Members' uncashed
checks to other Class Members who have received distributions, with a limited potential for
cy pres treatment of any still unclaimed funds. Later in Section III, its provisions in Paragraphs
E.1 through E.4 treat comprehensively with matters triggered by today's Preliminary Approval -first the discontinuation of the challenged pricing practices previously followed by Stericycle
must take place within 60 days after Preliminary Approval, then capped pricing increases are
established after such Preliminary Approval, and (of particular importance) future pricing
increases are limited for a period of three years after the Final Effective Date, with Andersen
designated as Settlement Monitor from today's Preliminary Approval Date through the end of
that three year period. In that respect Paragraph E.4 defines the responsibilities and procedures
to be followed by Andersen in that capacity. Lastly, Paragraph E.5 sets out an appropriate
arbitration provision to deal with the contingencies referred to in that paragraph.
Next, Section IV Paragraph A prescribes Service Awards to be paid to individual
plaintiffs for their time and effort expended in the course of this litigation (up to a maximum of
the greater of (1) $5,000 and (2) $100 per hour). Even more significantly, Paragraph IV.B
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provides that the maximum fees awardable to Hagens Berman, subject to this Court's approval,
may amount to $40 million, together with out-of-pocket costs up to a maximum of $2.8 million.
Although this Court has not yet had the parties' input looking toward such a fee award,
something that would take place only after final approval and the implementation of the
Settlement Agreement, it is noteworthy that the $40 million potential maximum would amount to
13.6% of the $295 million Settlement Amount, which compares very favorably with the
frequently approved fee awards in other class action matters ranging in the 30% through 33%
range. 4
Next, Section V Paragraph A.1 allocates $175,000 (an amount that may be increased if
necessary) to pay for the Notice and Administrative Costs required to move this action forward,
with that amount to be increased if it proves necessary. In that respect Paragraph A.2 specifies
that if no Final Effective Date were to be established, any portion of the designated amount that
had not been expended would be refunded to Stericycle. As for the notice to Class Members,
Paragraph C prescribes a Short Form Notice (see Settlement Agreement Ex. 4) to be transmitted
beginning 30 days after today's Preliminary Approval, looking toward completion of that
distribution within 51 days after the Preliminary Approval Date. Importantly, Paragraph E
follows that provision by setting out a Long Form Notice to be provided to any Class Member
who requests it. Section V concludes with two procedural requirements: Paragraph G, which
calls for the statutorily prescribed notice (28 U.S.C. § 1715) that the Class Action Fairness Act

4

This Court has long been concerned with the trend encountered in so many class
actions that approve awards in that higher range, which ignore the origin of such high percentage
awards -- awards predicated on a false analogy to percentage awards historically approved in
individual contingent fee arrangements.

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requires to be sent to appropriate state and federal officials, while Paragraph H details the Class
Action Settlement Administrator's duties. Again no detailed discussion is needed.
Section VI Paragraph A specifies appropriate procedures for exclusion from the class and
for individual opt-outs from class participation, available to any Class Members who choose not
to participate in the distribution of the proposed settlement amount. Those provisions are both
comprehensive and customary, so it is also unnecessary to discuss them in any detail.
Section VII contains the prescribed procedures for objections to the proposed settlement,
procedures that are made available to any Class Member who has not filed a timely written
request for exclusion from the class and who wishes to object to the fairness, reasonableness or
adequacy of the Settlement Agreement, or to the proposed settlement amount, or to the award of
attorney's fees and expenses, or to the individual Service Awards to plaintiffs under Section IV
Paragraph A. Any such objections are required to be filed on or before a date to be ordered by
this Court (it is expected that such date will be set at the time of today's hearing). In that respect,
certain plaintiffs included in the MDL group and calling themselves the "Alabama Plaintiffs"
have filed an October 16 motion (Dkt. No. 302) asking "to review proposed settlement
agreement and be heard on its merits." That threshold approach is inappropriate, for the
Alabama Plaintiffs are provided a full opportunity to raise their objections as specified in
Section VI or Section VII.
Next, Section VIII contains customary provisions as to release and waiver. There is no
need to deal with those in any detail either, for they are in the broad form appropriate to
situations of the nature addressed in the proposed Settlement Agreement and this Opinion.
Next, Section IX Paragraph A sets out detailed provisions for a Preliminary Approval
Order to be tendered by the parties to the Settlement Agreement, including the date and time for
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a Fairness Hearing to determine whether the proposed Settlement Agreement should be finally
approved by this Court. All of those provisions are classic ingredients of the procedures that
must be followed to comply with Fed. R. Civ. P. 23 and the Constitution's Due Process Clause.
Again there is no need to deal with those provisions with particularity, for they plainly provide
every appropriate protection for the Class Members. Then Paragraph B similarly contains all
appropriate provisions for a Final Order and Final Judgment if the Fairness Hearing results in a
determination that the settlement is fair, reasonable and adequate. And once more the detailed
provisions contained there could serve as a model prescribing the appropriate handling of a
settlement of the nature described in the Settlement Agreement.
Next, Section X contains a potential escape hatch for "Modification or Termination of
This Agreement" under the circumstances prescribed in that Section. Such a provision is
essential to and is regularly made a part of any proposed settlement of the nature dealt with in
this Opinion. Although this Court is frequently critical of the locution that a document "speaks
for itself," the detailed provisions in Section X deserve that approbation.
Finally, Section XI, captioned "General Matters and Reservations," is also entitled to the
same approbation referred to with respect to Section X. Once again those provisions represent
well-drafted class action treatment of the highest order and need no detailed discussion.
Conclusion
For the reasons stated at length in this Opinion:
1.

"Plaintiffs' Unopposed Motion for Preliminary Approval of Class
Settlement and Approval of Notice Plan" (Dkt. No. 304) is granted.

2.

By reason of that ruling, Stericycle's previously filed "Motion of
Defendant Stericycle, Inc. for Reconsideration and Clarification"
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(Dkt. No. 273), which has lain fallow since it was filed on March 2, 2017,
has been superseded and is therefore denied as moot.
3.

As for "Alabama Plaintiffs' Motion To Review Proposed Settlement
Agreement and Be Heard on Its Merits" (Dkt. No. 302), it is denied
without prejudice to the Alabama Plaintiffs' later exercise of the rights
granted in the Settlement Agreement's Section VI or Section VII.

4.

Any exercise of rights by Class Members (including the Alabama
Plaintiffs) under Section Vi or Section VII must be filed on or before
January 22, 2018.

This action will go forward on the basis previously set out in this Opinion as well as the detailed
basis spelled out in the proposed Preliminary Approval Order submitted by Hagens Berman on
October 17 (that Order is being issued contemporaneously with this Opinion).

__________________________________________
Milton I. Shadur
Senior United States District Judge
Date: October 26, 2017

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