Sirius XM Class Action Lawsuit Settlement Approved… It May Not Be Over Though
The news broke late this afternoon. The judge in the Blessing Class Action suit against Sirius XM has made his decision and the proposed settlement reached over a month ago is now approved. That is great news for investors in Sirius XM, but the process may not be over.
I have on decent authority that some of those that objected to the proposed settlement had already started work on a potential appeal even before judge Baer rendered his decision today. The question now is whether that appeal will continue given the stances outlined by the judge.
In his decision Judge Baer noted:
“One might conclude that class counsel did well to reach a settlement at all in view of the questionable liability in this case. More than one government agency assessed the merger and concluded that it did not have unlawful anti-competitive effects. The Department of Justice Antitrust Division closed its investigation by saying that “[a]fter a careful and thorough review of the proposed transaction, the Division concludes that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers.”
This is high praise on the class council, yet offers strong words that the merger was not, in his opinion, anti-competitive. One potential stumbling block was that this appeared to be a “coupon settlement” where the class gets no real relief. Judge Baer disagreed and stated:
“Many objectors argued that their award is similar to a disfavored “coupon” settlement. Unlike coupon settlements, however, it does not require class members to purchase something they might not otherwise purchase to enjoy its benefits; rather, the vast majority of class members will benefit in the course of their normal subscription payments, and former subscribers may benefit from a month of free radio or internet service. See Dupler v. Costco Wholesale Corp., 705 F. Supp. 2d 231, 237 (E.D.N.Y. 2010) (approving settlement that awarded additional months on existing Costco memberships or temporary membership for those whose Costco membership had expired).”
The issue of whether or not a $3 per month price increase across the board was ever going to be real was also considered. Judge Baer had this to say:
“Some object that the award is illusory because Sirius XM would not have raised prices even without the Settlement. This theory fails because the evidence demonstrates that Sirius XM had every intention of raising prices beginning in August of this year, and had the go-ahead from the FCC to do so. In fact, the Settlement Agreement requires Sirius XM to forego some $180 million in fees. See Langenfeld Decl.; Brooker Decl. Speculation to the contrary is not grounds to reject the Settlement. The declarations and other material submitted to this Court strongly suggest that the $180 million calculation is not illusory, and represents, at a conservative estimate, 40% of the Plaintiffs’ estimated best possible recovery – a result that is fair and reasonable in the antitrust context.4 See, e.g., In re Warfarin Sodium Anitrust Litig., 391 F.3d 561, 538 (3d Cir. 2004) (upholding approval of settlement equal to 33% of estimated damages).”
While this is indeed a major win for Sirius XM, the issue is not yet put to rest. Certainly the company can proceed with their plans now, but in a sense they are doing so at risk. If an appeal is filed there is a possibility that a higher court may not agree with Judge Baer.
While the chances of an appeal being successful are remote, there have been overturned decisions in the past. I am not trying to be bearish here, but simply outlining that an all out celebration of victory is just a bit premature. This is especially true as another class action suit, the Shenk matter, is still pending while awaiting the result of this matter. Until all avenues are exhausted by the objectioners there will still be a slight overhang.
The approval of the settlement in this case by Judge Baer comes at a key time for Sirius XM. The company can now proceed with pricing plans and have plenty of time to gauge how these plans will relate to 2012 guidance that they will issue in Q3. At this point I would put the odds of an overturn at between 1% and 5%. That should be enough to give the company as well as investors confidence in the future plans of SIRI as 2012 approaches.
Position – Long Sirius XM Radio
If an appeal is filed there is a possibility that a higher court may not agree with Judge Baer.
Hey spencer, why dont you crap in my cheerios too.. Thank god you reminded us that there is an appeal process. AHAHAHAHAHAHAHAHHAHHAHHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHH
FOR THE SETTLEMENT AGREEMENT!!!!!
AHAHHAHHAHAHAHAHAHAHAHHHAHAHAHAHHHHHHHAHHA
You cant appeal a settlement DUMBASS!!!
Relmor….
It is unfortunate that you went down this path and demonstrate once again a basic flaw in reading comprehension.
https://siriusbuzz.com/a-deeper-look-at-satellite-radio-blogs.php
Judge never ruled. Never went to trial.
Read the article genius….I stated that the judge reached a decision. Never said ruled. And before you make a fool of yourself and try to insinuate that I edited, the ORIGINAL article is cached in Google.
Let me try to explain this to you spencer. BOTH PARTIES AGREED. A judge has to approve the settlement and a third party tried to claim it was an unfair settlement (how nice of them.). Judge said nope, case over. Bye bye now.
Relmor…..
https://siriusbuzz.com/a-deeper-look-at-satellite-radio-blogs.php
Who would be appealing anyway? THE PLAITIFFS AGREED TO THE SETTLEMENT!!
Spencer,
Thank you for the news blitz. Concernig the “appeal” that you are suggesting, I would be very careful with stating even the possibility of that. Everything is of course possible in this world but the chances of an appeal in general and its sucess in particular are close to zero. This is why I would NOT spend so much time and energy on this matter. As I said earlier, you cannot be straighter than an arrow. You keep going out of your way to present yourself as a tertiary judge. You are not and should not even try. I can remind you of your unsubstantiated doubts about FCC lifting the price freeze on the 27th of July or how how difficult such action might be. You were flat out wrong about the complexity of the process. On the contrary, raising the price lift truned out to be a mundane matter of fact decision. Although I do respect very much your thoroughness and diligence, occasionally you sound like an analyst who tries to be so much on the safe side that his opinion becomes irrelevant and folks wonder if he is a pro. I would not take this personally. The case is over and you should direct your attention at what you understand and do best.
On a different subject. Remember Mel mentioned during the Q2 CC that sat radio 2.0 will be even installed in one auto OEM. My guess it is Audi. What is yours?
V….
Why be careful when I know that it is going to happen. I have spoken personally with one of those that objected and an appeal is in the works.
As for the chances of the appeal. I outlined how slim they were in the article.
A perfect example of what is wrong with the Class Action Lawsuit process. Here, lawyers receive $13 Million while the aggrieved parties get 30 days of free service. Sirius already will give away five months of service for $20 if you cancel or if they are trying to woo you back after being inactive. There’s another Class Action out there on a totally different matter and company that promises $2 or $3 to victims and the lawyers get millions of dollars. Seems like a scam!
As for you SIRI shareholders, good luck with your stock prices. I was just a subscriber,not a shareholder, but I just can’t see the value in pay radio when there are so many free options out there these days. Sorry!