The Latest Twist in the De Beers Class Action Saga

The De Beers anti-trust class action settlement has a better
chance of getting approved, now that a 15-judge panel will re-hear the case,
lawyers say. 

“We feel this is a significant development,” says plaintiff
attorney Joseph Tabacco, “that will pave the way for the settlement to
hopefully become final in the next few months.”

Still, the upshot is: No one is getting their money yet, and
nobody knows when the $300 million settlement will be distributed. It’s even
possible Tabacco’s optimism is misplaced.

Here is how it all breaks down:

– A 15-judge panel recently took a look at the ruling from one month ago that vacated the original settlement. Some eight out
of 15 members on that panel felt that the issues in this case should be aired by
at a special hearing called an “en banc.” It is relatively rare for an “en
banc” to be granted. So this means that the July ruling that vacated the
settlement has itself been struck down. However …

– One complicating factor (well, one of the complicating
factors) is that the “en banc” is held at the “convenience at the court.”  Which seems to mean, whenever they feel like it.  Tabacco thinks it might occur later this year, or next
year. Regardless, the fact that eight out of the 15 judges on the “en banc”
panel want to look at these issues again is seemingly a good omen for those who
want the settlement approved – a group which includes the plaintiff lawyers, De
Beers, the trade, as well as the occasional consumer who posts comments here
asking where their money is. “It is not so easy to get an en banc, so there
must be something the judges are thinking about,” says Cecilia Gardner of the
JVC.

– According to Tabacco, if the settlement had to be modified
by the lower court, as the three-judge panel wanted in July, that would have
been a very “complicated process.” But if the settlement is approved at the “en banc” hearing  — and, as I mentioned above, it is possible, perhaps even likely,
that it will be — then we are well on our way to final approval. So this recent
ruling will likely shorten things. (Unless, of course, the objectors appeal to
the Supreme Court. But let’s cast aside that possibility for now.)  

–  However,
according to Gardner, it’s also possible (if a little less likely) that the “en banc” may simply agree that the original settlement was flawed, and things
may end up going back down to the lower court anyway. So there is the
possibility that this new twist may draw things out further. 

– Most of this appeal involves esoteric questions about
state jurisdiction that don’t really concern people in the trade. But one aspect
that is interesting is that De Beers’ lack of a formal U.S. presence has been a complicating factor, leading to arguments over which state rules apply.
 “That’s raised a lot of legal
issues,” Tabacco says.

– I want to state again what I wrote in July: As hard as it
is for people to believe, De Beers actually wants to settle this case. If this
settlement is approved, it will no longer be legally liable for its past
conduct, and it may be able to set up a formal business presence in the United
States, after decades of staying away. And considering it’s paying $300 million
after decades of dominating the diamond business, it’s not really getting such
a bad deal. 

JCK News Director