Dennings v. Clearwire Corporation

Filing 152

ORDER denying Objectors' 151 Motion to Stay by Judge James L. Robart.(RS) Modified on 7/11/2013/cc Prior (RS).

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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ANGELO DENNINGS, KYLE
WILLIAMS, BRIAN CRAWFORD,
JOHANNA KOSKINEN, DAN
DAZELL, ROBERT PRIOR,
STEVEN COCKAYNE, CHEYENNE
FEGAN, ELAINE POWELL, ELENA
MUNOZ-ALAZAZI, MICHAEL
BOBOWSKI, ALIA TSANG,
GREGORY GUERRIER, ALYSON
BURN, SHARON FLOYD,

CASE NO. C10-1859JLR
ORDER DENYING MOTION TO
STAY

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Plaintiffs,
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v.
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CLEARWIRE CORPORATION,
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Defendant.
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I. INTRODUCTION
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This matter comes before the court on Objectors Gordan Morgan and Jeremy De
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La Garza’s motion (7/9/13 Mot. (Dkt. # 151)) to stay the court’s order (7/9/13 Order
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ORDER- 1

1 (Dkt. # 149)) requiring them to post an appeal bond before proceeding with their appeal
2 (6/3/13 Not. of Appeal (Dkt. # 132)) of the court’s order approving attorney’s fees in
3 connection with the final settlement (5/3/13 Order (Dkt. # 127)). The court DENIES the
4 motion.
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II. BACKGROUND

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The issue here arises from a class action against internet service provider

7 Clearwire brought by a putative class of Clearwire customers. The parties reached a
8 settlement and Objectors―who are both class members―challenged the class settlement,
9 claiming it was “illusory and violated Rule 23 and Ninth Circuit precedent.” (Obj. to Att.
10 Fee Mot. (Dkt. # 76 at 2)). After Plaintiffs accused the Objectors of being “professional
11 objectors,” this court determined that Plaintiffs had raised “legitimate concerns regarding
12 whether the objections made by Mr. Morgan and Mr. De La Garza [were] serious and
13 whether their attorney is a so-called ‘professional objector,’” (12/11/12 Order (Dkt.
14 # 84)), and granted Plaintiffs’ motion to depose the Objectors (id.). The depositions
15 revealed that Mr. Morgan had no personal objection to the settlement, neither of them had
16 read the settlement agreement or their own objections to it, and both had worked with the
17 same attorney on other class action cases. (See Memorandum (Dkt. # 97), Exs. A, B
18 (depositions of Mr. Morgan and Mr. De La Garza)). The court approved the proposed
19 settlement and rejected the challenges raised by the Objectors. (12/20/12 Order (Dkt.
20 # 99)).
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The Objectors appealed the order to the Ninth Circuit. (1/18/13 Not. of App. (Dkt.

22 # 101)). Plaintiffs moved to obtain an order requiring an appeal bond (2/20/13 Mot. (Dkt.
ORDER- 2

1 # 107)) and the court granted the motion (3/11/13 Order (Dkt. # 117)). The Objectors
2 proceeded with their appeal without complying with the bond order, and the Ninth Circuit
3 rejected the appeal and affirmed this court’s settlement order and final judgment. See
4 4/22/13 Order, Dennings v. Clearwire, No. 13-35038 (9th Cir. Apr. 22, 2013). The
5 Objectors petitioned for rehearing in the Ninth Circuit, see Petition for Rehearing,
6 Dennings v. Clearwire, No. 13-35038 (9th Cir. May 6, 2013), prompting the Plaintiffs to
7 move for contempt for violating this court’s bond order (5/9/13 Mot. (Dkt. # 128)). In
8 response, Objectors moved to dismiss their appeal voluntarily, see Mot. to Dismiss Case
9 Voluntarily, Dennings v. Clearwire, No. 13-35038 (9th Cir. May 15, 2013), and the Ninth
10 Circuit granted the motion, see 5/24/13 Order, Dennings v. Clearwire, No. 13-35038 (9th
11 Cir. May 24, 2013).
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This court also granted class counsel’s renewed motion (3/27/13 Mot. (Dkt. #

13 120)) for attorney’s fees and expenses (5/3/13 Order (Dkt. # 127)). Continuing their
14 pattern, Objectors appealed this order to the Ninth Circuit. (6/3/13 Not. of App. (Dkt.
15 # 132)). The Plaintiffs moved for another order requiring an appeal bond for Objectors to
16 proceed (6/3/13 Mot. (Dkt. # 134)) and this court granted the motion (7/9/13 Order (Dkt.
17 # 149)). Perhaps having learned from their prior attempt to proceed with their appeal
18 without complying with this court’s bond order, the Objectors have adopted a new
19 strategy to achieve the same result: filing an “Emergency Motion” to stay enforcement of
20 this court’s order “to allow the Ninth Circuit to decide the validity of the portion of the
21 bond amounting to $39,150,” (7/9/13 Mot. (Dkt. # 151)) and appealing the order to the
22 Ninth Circuit (7/9/13 Not. of App. (Dkt. # 150)).
ORDER- 3

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III. JURISDICTION

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Ordinarily, “[o]nce a notice of appeal is filed, the district court is divested of

3 jurisdiction over the matters being appealed.” Natural Res. Def. Counsel v. Sw. Marine
4 Inc., 242 F.3d 1163, 1166 (9th Cir. 2001). However, the “purpose [of this rule] is to
5 promote judicial economy and avoid the confusion that would ensue from having the
6 same issues before two courts simultaneously,” and it is not absolute. Id. “The district
7 court retains jurisdiction during the pendency of an appeal to act to preserve the status
8 quo.” Id. Thus, while this court “may not materially alter the status of the case on
9 appeal,” id. (internal citation omitted), it may act on a motion to stay its prior order to
10 “preserve the status quo,” see id.
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IV. ANALYSIS

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Objectors’ arguments are spurious and fail to show that the appeal bond or its

13 amount are inappropriate under these circumstances. The Objectors characterize the
14 “additional costs of settlement administration” as “costs of delay,” and contend that such
15 costs “are not available under Fed. R. App. Proc. 7,” but provide no binding authority to
16 support this contention. (See 7/9/13 Mot. (Dkt. # 151) at 2-3). The Objectors also fail to
17 provide any meaningful argument as to why these costs should be characterized as “costs
18 of delay,” which refer to the interest that accrues during the time between the settlement
19 agreement and its distribution when the distribution is delayed by an appeal. See Vaughn
20 v. Am. Honda Motor Co., Inc., 507 F.3d 295, 299 (5th Cir. 2007). The expenses used to
21 calculate the bond amount consist of the incremental increases in ongoing settlement
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ORDER- 4

1 administration fees and expenses during the appeal period. (2/20/13 Mot. (Dkt. # 107 at
2 8)). Delay expenses were explicitly excluded from the calculations. (Id. at 10).
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The remainder of Objectors’ arguments rely on a flawed interpretation of Azizian

4 v. Federated Dep’t Stores, Inc., 499 F.3d 950 (9th Cir. 2007). The Court in Azizian held
5 that appellate attorney’s fees should not be included in the amount of an appeal bond as a
6 way to deter frivolous appeals. Id. Attorney’s fees were expressly excluded from the
7 calculations here. (2/20/13 Mot. (Dkt. # 107) at 11). Additionally, this court’s order
8 requiring an appeal bond was put in place for the protection of the appellee and used the
9 merits of the appeal as a factor in determining whether a bond was appropriate. (See
10 3/11/13 Order (Dkt. # 117 (citing In re AOL Time Warner, Inc. Sec. & ERISA Litig., No.
11 02 Cv. 5575, 2007 WL 2741033 at *2 (S.D.N.Y. Sept. 20, 2007)))). Protection of the
12 appellee is the very purpose of Rule 7 and this is the purpose for which this court used it.
13 See Fed. R. App. P. 7.
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V. CONCLUSION

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The court DENIES Objectors’ motion (7/9/13 Mot. (Dkt. # 151)) to stay the

16 court’s order requiring an appeal bond (7/9/13 Order (Dkt. # 149)).
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Dated this 11th day of July.

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A

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JAMES L. ROBART
United States District Judge

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ORDER- 5