UPDATE: Please see Dec. 20 story, “De Beers Antitrust Claims May Finally Get Paid.”
UPDATE 2: For the latest twists and turns, see this post from March 3.
From time to time, we get questions on the now-five-year-old De Beers $300 million class action settlement, so I thought I would bring you up to date on recent events, based on what was said at Wednesday’s Diamond Manufacturers and Importers Association of America meeting and some reporting of my own:
– Three years ago, the settlement was appealed by a group of objectors. (To clarify, those objectors do not include De Beers, which agreed to the settlement in the first place.) At one point, the settlement was overturned, and it looked like all parties might go back to the drawing board. Then a panel of judges decided to hold an “en banc” hearing on the issues behind the appeal. That made it far more likely that the settlement would get reinstated, and the money handed out. The hearing on the issues took place in Feb. 2011; it was estimated the court would take six to 10 months to issue a judgment. Apparently, the questions involved are highly technical, about what constitutes a class action, and aren’t necessarily related to the case at hand.
– It’s September, and nothing has happened, and a lot of people in the industry are wondering where their money is. Partly at the request of the DMIA, the lead lawyers and the objectors engaged in mediation talks last month, to get all this settled once and for all. Those talks came close to reaching an agreement, but ultimately failed. Sources tell me one objecting lawyer refused to sign on. (That lawyer declined comment.) So now we are back to waiting to hear what the judges say.
– The $300 million remains in escrow, which is where it’s been for at least five years. It’s even grown a little, thanks to interest. But remember, no one should expect a lot of money here, save for a few rough buyers in the “direct” class, and of course the lawyers, who are splitting some $70 million.
– Much has changed in the diamond industry since these suits were launched in 2004 and 2005. There was always speculation in the diamond industry that De Beers wanted these cases settled before it launched the Forevermark in the U.S., but it seems to have launched the Forevermark regardless. Some of the class-action lawyers have already gotten their money, though they may have to give it back if the settlement is overturned. Overall, there just doesn’t seem to be much of a sense of urgency here.
Even so, this should be put to bed. This entire case has not shown the U.S. legal system in a particularly flattering light, both in the way it’s dragged on and how it’s basically worked to enrich the lawyers and no one else. Despite this, a lot of people, from inside the industry and out, are owed a little something, and all parties should increase their efforts to ensure they get it. Hey, $300 million is a decent-sized stimulus package! Even if a diamond is forever, legal cases about diamonds shouldn’t be.