Third Circuit upholds $295 million settlement in De Beers antitrust class action

January 11, 2012 by

The U.S. Court of Appeals for the Third Circuit issued an opinion upholding the settlement in the class action litigation against the South African company De Beers, the world’s largest diamond supplier, for allegedly conspiring to monopolize the sale of rough diamonds.

The appellate court affirmed an order by U.S. District Judge Stanley R. Chesler of the District of New Jersey that approved a settlement under which De Beers agreed to pay $295 million to U.S. jewelry makers, retailers, and consumers who purchased diamonds and diamond jewelry beginning in 1994.  The settlement also prevents De Beers from continuing its illegal business practices and requires De Beers to submit to the jurisdiction of the Court to enforce the settlement.

The significance of the decision includes:

* The opinion clarifies the law with respect to class certification standards generally and in antitrust cases in particular.  It similarly clarifies the law with respect to class certification requirements in the settlement context.

* In the antitrust area, the opinion reiterates the propriety of certification of proceeding on a class basis.  Where the claim is that there is a market wide restraint, like price-fixing or cartel behavior, and persons buy the price-fixed product, either directly or indirectly through middlemen, the predominance and other requirements of Rule 23 of the Federal Rules of Civil Procedure are readily satisfied.  There is no requirement that plaintiffs prove that every person is injured.  Issues regarding proof of damages are no impediment to class certification in this context.

* Variances in state law are similarly no impediment because the focus of answering the questions that state laws pose are common because they focus on the conduct of defendants and the fact that injured class members suffered injury when they purchased the product.  There is no requirement that the injury be uniform.  The opinion shows that this conclusion is entirely consistent with the U.S. Supreme Court’s decision in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011).  With respect to settlement classes, the result is even more clear because the manageability requirement under Rule 23 is inapplicable in the settlement context.

* Circuit Judge Scirica provided an important concurring opinion discussing the case in the wider context of evolving law on settlement classes.  Justice Scirica specifically noted that in antitrust cases “common issues tend to predominate because a major focus is the allegedly anticompetitive conduct of the defendant and its downstream effects on plaintiffs.”

To learn more about the De Beers Diamond antitrust litigation, click here.

Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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