class action

De Beers AntiTrust Lawsuit Deal Set Aside

Filed under: Jewelry

Big news in the De Beers antitrust deal which promised millions in damages to those who bought diamonds between 1994 and 2006. This week a U.S. federal appeals court rejected the De Beers antitrust deal on a major technical issue. The 3rd U.S. Circuit Court of Appeals ruled that the lower court had improperly certified a nationwide class of indirect purchasers. The $295 million ruling was for two types of claimants, direct purchasers that acquired rough gem diamonds directly from De Beers or one of its competitors and indirect purchasers,entities or individuals that acquired either rough or cut-and-polished gem diamonds but did not do so directly from De Beers or its competitors. Both consumers and jewelry retailers fall into this second category. The direct purchasers were to receive $22.5 million of the $295 million fund, while $272.5 million was allotted to the indirect purchaser claims so this ruling affects the bulk of the lawsuit. A website had been created to help those looking to to file claims.

In a 75-page ruling, Judge Kent A. Jordan accepted an appeal made by 34 of the indirect purchasers, which said that purchasers had claims under widely varying state laws and that some of those plaintiffs would be barred from pursuing the claims under the laws of their own states. A comprehensive piece on Law.com explains that a single objector from Texas had exposed a fatal flaw in the lower court's class certification analysis. The variation in state laws represents an "insurmountable hurdle to certification of the indirect purchaser class" according to Judge Jordan.

Under the terms of the indirect purchaser settlement, De Beers had agreed not to contest certification of a settlement class of indirect purchasers and promised to establish a settlement fund of $250 million to be paid to class members of that class. In May 2008, U.S. District Court Judge Stanley R. Chesler granted final approval to the settlement but the appeal said that Chesler had been too quick to certify the class as a whole, ignoring the various state laws that precluded some members for pursuing an indirect purchaser claim.The case has been returned to the U.S. District Court in New Jersey for further consideration which means that anyone expecting a payout in this case is going to have to wait a while longer.

Tags: class action, de beers, diamonds, lawsuit

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