UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


IN RE: VITAMINS


99-7256a

D.C. Cir. 2000


*	*	*


Williams, Circuit Judge: Over the 1990s, and even farther  back,
vitamin manufacturers allegedly fixed prices on bulk  vitamin sales in
violation of the antitrust laws. By September  1999 a Department of
Justice investigation had secured guilty  pleas from several major
suppliers. Dozens of private anti- trust actions followed, and by late
November 1999 approxi- mately 49 cases were pending before the


At a status conference for all interested parties on Novem- ber 3,
1999, counsel for the proposed representatives of a  broad class of
purchasers revealed that they had reached a  tentative settlement that
would dispose of the class's claims  against seven of the defendants
(who together with their  affiliates account for more than 90 percent
of the bulk vita- mins market). The then-draft agreement contained a
so- called "most favored nation" ("MFN") clause, requiring de-
fendants to hike their payments to the class in the event that  within
two years of that date they reached a more favorable  settlement with
a plaintiff who had opted out of the class.  See Settlement Agreement
p p 1, 22. Appellants--who were  then presumptive members of the class
but who have since  opted out--moved to intervene under Federal Rule
of Civil  Procedure 24 for the limited purpose of opposing the MFN 
clause. They argued--reasonably enough--that the clause  would make it
harder for them to arrive at an independent  settlement, because it
would raise the cost to defendants of  any more favorable agreement.
The district court denied the  appellants' motion to intervene but
granted them leave to  participate as amici curiae. Appellants filed
timely notices of  appeal from denial of the motion to intervene.


While this appeal was pending, appellants all chose to opt  out of the
class action. See Tr. of Oral Arg. (Apr. 3, 2000), at  4. The district
court held its final hearing regarding class  certification and the
proposed settlement, and on March 31,  2000 certified the class and
approved the settlement. Neither  of those decisions is at issue in
this appeal.


In rejecting appellants' motion for intervention, the district  court
reasoned that they lacked standing to challenge the  settlement
agreement on the grounds asserted. We agree.


* * *


Appellants focus on their claim to intervention as of right.  Federal
Rule of Civil Procedure 24(a)(2) allows such interven- tion for anyone
who "claims an interest relating to the ...  transaction which is the
subject of the action and ... is so  situated that the disposition of
the action may as a practical  matter impair or impede [his] ability
to protect that interest,  unless [his] interest is adequately
represented by existing  parties." Id. Appellants argue that their
interest in being  able to opt out of the class and to " 'go it alone'
unhampered  by any judgment in the class action" qualifies as "an
interest  relating to the ... transaction which is the subject of the 
action." Fed. R. Civ. P. 24(a).


But appellants trip immediately over our decision in May- field v.
Barr, 985 F.2d 1090 (D.C. Cir. 1993). There we held  that class
members who have opted out of a 23(b)(3) class  action have no
standing to object to a subsequent class  settlement; by opting out
they "escape the binding effect of  the class settlement." Id. at
1093. We distinguished cases in  which plaintiffs lost claims


Our decision rests on the principle that those who fully  preserve
their legal rights cannot challenge an order  approving an agreement
resolving the legal rights of  others.


Id. Compare New Mexico ex rel. Energy & Minerals Dep't  v. United
States Dep't of the Interior, 820 F.2d 441 (D.C. Cir.  1987), in which
we concluded that dismissal of the intervening 


Navajo Tribe's complaint was proper because the settlement  reached by
the other parties "d[id] not serve to dispose of the  Tribe's claims."
Id. at 445.


Appellants point to a number of cases in which we indicated  a
willingness to construe Rule 24(a)'s "interest" requirement 
liberally. See Cook v. Boorstin, 763 F.2d 1462, 1466 (D.C.  Cir.
1985); Foster v. Gueory, 655 F.2d 1319, 1324-25 (D.C.  Cir. 1981);
Smuck v. Hobson, 408 F.2d 175, 179 (D.C. Cir.  1969) (plurality
opinion); Nuesse v. Camp, 385 F.2d 694, 700  (D.C. Cir. 1967). But of
all these, only Nuesse even ad- dressed the issue of standing. Thus,
because decisions that  depend on a merely assumed jurisdiction have
no precedential  value on the jurisdictional issue, Steel Co. v.
Citizens for a  Better Environment, 523 U.S. 83, 91 (1998); Lewis v.
Casey,  518 U.S. 343, 352 n.2 (1996), only Nuesse could assist appel-
lants. But Nuesse affords them no help, as there the court  found on
the specific facts a sufficient interest for standing in  the stare
decisis effect of a judgment, an analysis that has no  parallel


Standing, of course, is issue-specific. See Lujan v. Defend- ers of
Wildlife, 504 U.S. 555, 571-78 & nn.7-8 (1992). And as  we noted in
Mova Pharmaceutical Corp. v. Shalala, 140 F.3d  1060 (D.C. Cir. 1998),
potential intervenors must demonstrate  "prudential" as well as
constitutional standing. Id. at 1074- 76. In the case of statutory
rights, this requires would-be  intervenors to show that their
interests are "arguably within  the zone of interests to be protected
or regulated by the  statute." Association of Data Processing Serv.
Orgs., Inc. v.  Camp, 397 U.S. 150, 153 (1970). Even if a particular
litigant  is outside the class for whose benefit the statute was
enacted,  that litigant retains prudential standing so long as "its
inter- ests are sufficiently congruent with those of the intended 
beneficiaries that the litigants are not more likely to frustrate 
than to further ... statutory objectives." Mova Pharmaceu- tical, 140
F.3d at 1075 (internal quotation marks omitted).


But as appellants' counsel admitted at oral argument, their  interests
are not congruent with the interests of the settling  class that were
in play at the time of their motion to 


intervene. See Tr. of Oral Arg. at 13-14. As opt-out plain- tiffs they
have no interest in the specifics of the settlement  except for their
desire to be free of a troublesome MFN  clause. Id. at 14.


Appellants' MFN objection is, moreover, incongruent with  the interests
that the rules charge the district court with  addressing. When
appellants moved to intervene, the court  had remaining before it the
questions of whether (1) the  proposed class satisfied the
prerequisites for certification  under Rule 23(a) and (b), (2) the
form and manner of notice  satisfied Rule 23(c), and (3) the proposed
settlement satisfied  the requirements of Rule 23(e). Appellants'
arguments  against the MFN clause have no logical relationship to any
of  these. The first two questions are clearly irrelevant to 
appellants' claims. Appellants do not seek to argue that the  proposed
class failed to satisfy the conditions for class certifi- cation. See
Fed. R. Civ. P. 23(a), (b)(3). And appellants'  Rule 23(c)
arguments--which are treated more fully below-- do not challenge the


On the subject of class viability an extra word is needed for 
appellant Nutra-Blend. According to its complaint, some of  the
settling defendants compete with Nutra-Blend, selling  mixed vitamin
products at retail prices below their wholesale  charges for the raw
components and thus subjecting Nutra- Blend to a "price squeeze."
Accordingly it has argued that  the class representatives do not
adequately represent its  interests. This of course sounds like the
inquiry under Rule  23(a)(4) as to adequacy of representation. But
Nutra-Blend's  objections were not made on the premise assumed by Rule
 23(a)--namely, that the prospective class member would be  bound by
the ensuing litigation supposedly conducted on its  behalf.1




__________

n 1 We have no occasion to decide whether a party must remain  within
the class to intervene for the purposes of challenging class 
certification under Rule 23(a), (b), or settlement under 23(e). Cf. In
 re Brand Name Prescription Drugs Antitrust Litig., 115 F.3d 456,  457
(7th Cir. 1997); 3 Herbert Newberg & Alba Conte, Newberg on  Class
Actions s 16.18, at 16-99 to 16-100 (3d ed. 1992).


Of course, in passing on the proposed settlement agree- ment, the
district court has a duty under Fed. R. Civ. P. 23(e)  to ensure that
it is fair, adequate, and reasonable and is not  the product of
collusion between the parties. See Pigford v.  Glickman, 206 F.3d
1212, 1215 (D.C. Cir. 2000); Thomas v.  Albright, 139 F.2d 227, 231
(D.C. Cir. 1998). Thus Rule 23(e)  provides a check against settlement
dynamics that may "lead  the negotiating parties--even those with the
best intentions-- to give insufficient weight to the interests of at
least some  class members." Manual for Complex Litigation (Third)  s
30.42, at 238-40 (1995); see also Amchem Prods., Inc. v.  Windsor, 521
U.S. 591, 621-22 (1997) (noting the dangers that  can arise owing to
the usually non-adversarial posture of a  Rule 23(e) hearing). But the
district court's duty is to the  class members themselves; it lacks
the power to conduct a  free-ranging analysis as to the broader
implications of the  proposed settlement agreement. Compare Agretti v.
ANR  Freight Sys., 982 F.2d 242, 248 (7th Cir. 1992) ("Nor do we  know
of any cases finding standing for a non-settling party  because a
settlement is allegedly illegal or against public  policy.") (cited
with approval in Mayfield v. Barr).


Appellants' only mention of the class's interests appears in  a
footnote in which they argue that the class will not actually  benefit
from the MFN clause. But even here they do not say  that its inclusion
actually harms the class members. Of  course they might argue that in
securing the MFN clause the  class representatives must have traded
away some alternative  (and real) advantage. But that argument's force
would turn  on a showing that defendants seriously resisted the
clause, on  which appellants offer no evidence. In fact the defendants
 may well not have much resisted, affirmatively liking a 
Ulysses-tied-to-the-mast arrangement that enables them to 
convincingly stiff opt-outs who demand more. Cf. Decl. of  William M.
Landes at 8-9 (excerpted at Joint Appendix 246).  In any event,
appellants do not deny that their sole actual  concern is that the MFN
clause limits their ability to reach a  settlement more lucrative than
that offered to the class.  Consequently, their arguments fall outside
of the zone of  interests protected by Rule 23(e).


Appellants' alternative tack invokes their right to opt out,  starting
with the notice protections of Rule 23(c)(2). But the  rule by its
terms is purely procedural. Any substantive right  to be free of
ancillary effects flowing from a class settlement  must be found


Appellants next look to the Due Process Clause (presum- ably of the
Fifth Amendment) for their claimed right to be  free of any effects of
the class settlement. It is, of course,  not in dispute that notice
and an opportunity to opt out are  requirements of due process--for
any party to be bound by  the litigation. See Fed. R. Civ. P. 23,
Advisory Committee  Notes to the 1966 Amendment for Subdivision (d)(2)
("This  mandatory notice pursuant to subdivision (c)(2) ... is de-
signed to fulfill requirements of due process to which the  class
action procedure is of course subject."); Ortiz v. Fibre- board Corp.,
527 U.S. 817, ___, 119 S. Ct. 2295, 2314-15;  Hansberry v. Lee, 311
U.S. 32, 40 (1940).


Indeed, as Mayfield makes clear, one may challenge a  settlement
agreement to which he is not a party if the  agreement will cause him
" 'plain legal prejudice,' as when  'the settlement strips the party
of a legal claim or cause of  action.' " Mayfield, 985 F.2d at 1093
(quoting Agretti, 982  F.2d at 247); see also Alumax Mill Prods. v.
Congress Fin.  Corp., 912 F.2d 996, 1002 (8th Cir. 1990) (allowing
nonsettling  defendant to challenge a partial settlement that
dismissed  with prejudice its cross-claims and stripped it of
indemnity  and contribution rights). But the MFN clause here causes no
 plain legal prejudice. Although the alleged injury is more 
substantial than that claimed by the nonsettling plaintiffs in 
Mayfield, here as there the nonsettling plaintiffs have fully 
preserved their "right to litigate their claims independently."  985


Other cases have turned on a similar understanding of  "plain legal
prejudice." In Quad/Graphics, Inc. v. Fass, 724  F.2d 1230 (7th Cir.
1983), cited with approval in Mayfield, a  settlement required a
participant not to "voluntarily" partici- pate in the continuing
litigation. The court insisted that the  non-settling party show
"plain legal prejudice," a formula it 


took from its cases interpreting Federal Rule of Civil Proce- dure
41(a)(2). 724 F.2d at 1231. It found none, even though  that party
clearly had had reason to expect advantageous  cooperation from the
settling party, and the settlement re- striction would require it to
incur the burden of a lawsuit to  extract whatever cooperation it was
legally entitled to. Id. at  1234. Similarly, in Agretti, 982 F.2d at
247-48, the court  ruled that a party to a contract had no standing to
challenge a  settlement agreement in which a settling party on the
same  side agreed to declare the contract void. Because the nonset-
tling party retained the right to assert that the contract was  valid
and enforceable, it suffered no plain legal prejudice,  despite the
obvious practical burden of having its contractual  partner disavow
the contract. See id. at 248. The settlement  limitations imposed by
the MFN clause are no more onerous  than the burdens imposed on
non-settling parties in these  cases.


Finally, we turn to appellants' argument that the district  court
abused its discretion in denying them permissive inter- vention under
Rule 24(b)(2). Although the denial of a motion  for permissive
intervention is not normally appealable in  itself, see Twelve John
Does v. District of Columbia, 117 F.3d  571, 574 (D.C. Cir. 1997), we
may exercise our pendent  appellate jurisdiction to reach questions
that are "inextricably  intertwined with ones over which we have
direct jurisdiction."  Id. at 574-75. Here the basis for appellants'
motion for  permissive intervention is the same as the basis for its
quest  for intervention as of right. The two are in that respect 


But there is uncertainty over whether standing is neces- sary for
permissive intervention. Compare EEOC v. Nation- al Children's Ctr.,
Inc., 146 F.3d 1042, 1045-46 (D.C. Cir.  1998) (recounting that Rule
24(b) requires would-be interve- nors to have "an independent ground
for subject matter  jurisdiction" on a claim or defense that shares a
common  question with the claims of the original parties), and Dia-
mond v. Charles, 476 U.S. 54, 76 (1986) (O'Connor, J., concur- ring)
("The words 'claim or defense' manifestly refer to the  kinds of
claims or defenses that can be raised in courts of law 


as part of an actual or impending lawsuit"); with National  Children's
Ctr., 146 F.3d at 1045-46 (noting that our circuit  precedent avoids
"strict readings of the phrase 'claim or  defense,' allowing
intervention even in 'situations where the  existence of any nominate
'claim' or 'defense' is difficult to  find.' " (quoting Nuesse, 385
F.2d at 704)). And Steel Co.  precludes us from reaching merits issues
in the absence of  jurisdiction. See 523 U.S. at 94. Of course if
standing is  required, then what we have said above clearly precludes 
appellants' success on this theory as well. If it is not, then 
appellants would have to show that the trial court abused its 
discretion in denying intervention but granting them amicus 
status--enabling them to elucidate the court on their position  with
less risk of delaying the settlement. In view of the  unresolved
standing issue, however, we think it inappropriate  to exercise our


* * *


The district court's decision is


Affirmed.