Boyd v. Bell-Atlantic
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In the Circu it Court for P rince Geo rge s Cou nty Case No. CAL 99-21004 IN THE COURT OF APPEALS OF MARYLAND No. 11 September Term, 2005 ______________________________________ TAMALA BOYD, ET AL. v. BELL ATLANTIC-MARYLAND, INC., ET AL. ______________________________________ Bell, C.J. Raker Wilner Harrell Greene Eldridge, Jo hn C. (Re tired, Specially Assigned) Rodowsky, Lawrence F. (Retired, (Specially Assigned), JJ. ______________________________________ Opinion by Wilner, J. ______________________________________ Filed: December 8, 2005 This appeal arise s out of tw o class action suits in the C ircuit Court for Prince Georg e s County the Dotson and the Scrocco cases. Both actions, which were consolidated in the Circuit Court, are against Bell Atlantic-Maryland, Inc. (now known as Verizon) and the Marylan d Pub lic Serv ice Co mmiss ion (PS C). Over the objection of some members of the Dotson class, the court, on November 22, 2004, gave final approval to a settlement of the two actions, subject to certain further proceedings that would determine how a reserved amount of $12,500,000 would be divided between (1) a cy pres group of Bell Atlantic customers that likely includes most of the class members, and (2) th e atto rneys for the class and attorneys for certain objecting members of the class. The objecting Dotson class members noted this appeal from the order approving the settlement. T he Cou rt of Specia l Appeals dismissed th e appeal as one not allowed by law, and we granted certiorari to review that decision. W e agree in part and disagre e in part with the judgment of the Court of Special Appeals. In response to motions to dismiss the appeal, the appellants contend that the November 22 order is appealable because, notwithstanding that it does not finally resolve how much the class m embers (or anyone else) w ill actually receive from the settlemen t, it nonetheless constitutes a final judgment in the matter. Alternatively, they note that one aspect of the order was a directive barring class members from asserting claims encompassed by the settle ment in any othe r court o r tribuna l. They regard that directive as being in the nature of an injun ction whic h, even if inte rlocutory in natu re, is immed iately appealab le under Maryland Code, § 12-303(3)(i) of the Cts. & Jud. Proc. A rticle. We sha ll hold that, whatever may have been the intention of the Circuit Court, the November 22 order does not constitute an appea lable final jud gment. A s to the directiv e, we shall c onclude th at it is, indeed, in the nature of an interlocutory injunction that may be immediately appealed, but that it was an abuse of discretion for the court to enter that directive as part of what we conclude was an interlocutory order. BACKGROUND In the 1980's and 1990's, it beca me fashio nable for s ellers of goo ds, services, o r credit to impose a late f ee w hen the ir custom ers faile d to pay a moun ts due o n time. The ration ale often expressed for those fees, in addition to permitting the seller to recover the time value of the money not paid when du e, was that, when cu stomers defaulted in that m anner, collection efforts of one kind or another were often nece ssary, that the cost o f those eff orts should fall directly on the defaulting customers rather than indirectly on the larger base of compliant customers through higher charges for the goods or services provided, and that late fees were an appropriate way of so directing that burden. There never w as a legal imp ediment to the charging of late fees. In United Cable v. Burch, 354 Md. 65 8, 732 A .2d 887 (1 999), how ever, we p ointed out th at late fees w ere in the nature of interest on the unpaid amount due, that Article III, § 57 of the Maryland Constitution limited the legal rate of interest to 6% per annum unless otherwise provided by the General A ssembly, and th at, absent statu tory authority to the co ntrary, any late fee in -2- excess of that a moun t constitu ted an u nlawf ul pena lty. Because almost all late fees then charged by merchants exceeded the 6% per annum Constitutional limit, that decision sparked not only an imm ediate legislativ e response permitting such higher fees but a host of additional opportunistic class action lawsuits, including the ones now before us. Unlike the merchant involved in United C able a largely unregulated cable television company Bell Atla ntic, a provid er of teleph one service , was a pu blic utility subject to extensive regulation by the PSC. See Maryland Code, Public Utility Companies Article, §§ 2-112 (general jurisdiction and pow ers of the PSC), 2-1 13 (general supervisory and regulatory power of PSC), 4-201 (requiring a public service company to charge just and reasonab le rates for the utility services it renders), and 4-102 (empowering the Commission to set just and reaso nable rates o f public service comp anies). See also § 4-301, permitting the Commission to regulate a telephone company through alternative forms of regulati on. As early as 1982, the PSC, by a formally adopted regulation, had authorized gas and electric utilities to charge a late fee to re sidential and business cu stomers who did not pay within a fixed number of days after rendition of the monthly bill. The late fee initially authorized was 3% of the net bill, although that was lowered in 1985 to 1.5%.1 See 9:16 Md. 1 For residential customers, the 1.5% late fee applied to the amount of the current bill (Bill 1) if not paid within 20 days. The regulation permitted an additional charge of 1.5% on the amount of that bill remaining unpaid after the next bill (Bill 2) was rendered and a further charge of 2% on the amount remaining unpaid on Bill 1 after the second succee ding bi ll (Bill 3) w as rend ered, fo r a max imum of 5% on unp aid por tions of Bill 1. Late fees wer e also authorized for b usin ess c usto mers wh o did not p ay within 15 days (contin ued...) -3- Reg. 1608 (Aug. 6, 1982) and 12:23 Md. Reg. 2223 (Nov. 8, 1985). In 1995, the Commission amended the regulation to generally permit telephone compan ies to charge their customers such a late fee as well. See 22:15 Md. Reg. 1120 (July 21, 1995); COMAR 20.30.03.01. Another part of the regulation, COMAR 20.30.03.03, required that the collection of late fee charges be consiste nt with th e tari ff provision s of the partic ular utility, howev er, which m eant that it wa s subject to C ommissio n approv al. In June, 1995, Bell Atlantic sought PSC approval of an am ended tarif f that wou ld permit the charging of late fees to business customers, a nd, in Septe mber of th at year, it sought approva l to charge late fees to residential customers. The amended tariffs were stated to be reve nue-ne utral, i.e., the addition al revenue expected to be earned by Bell Atlantic from the late fees would be offset by reductions in other charges. In July, 1995, the Commission approved the amended tariff for business customers. It initially rejected the proposed changes in the residential tariff but, in January, 1996, approved a revised application. Those approva ls permitted Bell Atlantic, insofar as the PSC wa s concerned, to charge bo th residential and business customers the late fees authorized by the COMAR regulation, and the company proceeded to impose those fees. Betwe en 1996 and 200 0, Bell Atlan tic collected nearly $59.1 million in late fees fro m residen tial custome rs and app roximately $27.4 million from business customers. There is no contention that those additional revenues 1 (...continued) after a bill was rendered. -4- were not fully offset by the reductions specified in the amended tariffs.2 It has been estimated that approx imately $64 m illion of that am ount was in excess of the 6% Constitution al limit. In September, 1999, less than two months after our decision in United C able was filed, four plaintiffs the Dotson plaintiffs filed the first of these actions on behalf of an alleged class of residential customers of Bell Atlantic. They averred that the 1.5% late fee charged by the company pursuant to the PSC -approve d tariff wa s unlawf ul to the exten t it exceeded the 6% per annum limitation set forth in Art. III, § 57 of the State Constitution. In their second amend ed complaint filed three m onths later, they sought (1) a declaratory judgment that the 1995 amendment to the COMAR regulation, permitting late fees to be charged by telephone co mpanies, was inv alid under Art. III, § 57 of the C onstitution, (2) a judgment in favor of the plaintiff class in the amo unt of all late f ees paid and the amount of profit earned by Bell Atlantic on those late fees, plus pre-judgment interest, and (3) an injunction prohibiting Bell Atlantic from collecting late fees in excess of 6% per annum. The counts seeking a monetary award were based on a claim for restitution of unlawful penalties (Count I) and unjust enrichment (Count II). The declaratory judgment action was in Count III. 2 In connection with motions filed in the Dotson case, the plaintiffs contended that the incom e received by Bell Atlan tic from the late fees w as not reven ue neutral as to the plaintiff class that the late fees they paid exceeded any reduction in cost for other services but it does not appear that they ever asserted or produced evidence to show that the late fee revenue was not fully offset as to Bell Atlantic. -5- In Decem ber, 1999, B ell Atlantic an d the PSC moved to dismiss the a ction on a number of grounds, including that (1) the late fee did not violate Art. III, § 57 because it was approved by the PSC pursuant to power d elegated to that agency by the Gen eral A ssem bly, (2) Count I, for restitution, failed to state a cause of action, (3) because the tariff allowing the late fee was revenue-n eutral, there w as no unju st enrichme nt of Bell A tlantic, and (4) the plaintiffs failed to challenge the COMAR regulation or the tariff before the PSC and therefore failed to exhaust available administrative remedies. A month later, the plaintiffs moved for partial summary judgment. In February, 2000, and in accordance with a stipulation, the court certified the Dotson class as consisting of all persons, other than the trial judge and members of his immediate family, who were current or former residential subscribers of telephone services provided by Bell Atlan tic in Marylan d and w ho paid to Bell Atlantic a late fe e that ex ceede d 6% per ann um w ithin the applica ble limita tions pe riod. On April 21, 2000, a separate class action was filed in the Circuit Court on behalf of the business customers of Bell Atlantic who had paid late fees. That is the Scrocco action. The same kinds of claims were made in that action as in Dotson. While those proceedings were pending, the General Assembly, in its 2000 Session, enacted 2000 Md. Laws, ch. 59, which, through the addition of new § 14-1315 to the Commercial Law Article, expressly permitted the imposition of late fees, subject to ce rtain limits and conditions. Under § 1 of ch. 59, effective June 1, 2000, late f ees impos ed in consumer contracts were limited to $10.00 per month or 10% per month of the payment -6- amount that was past d ue, which ever was greater. Tha t provision w ould rema in in effect for only four months. U nder § 2 of ch. 59, effective October 1, 2000, a c onsume r contract co uld provide, in the alternative, (1) a late fee of up to $5.00 per month or 10% of the amou nt past due, with a limit of three such late fees for an y single payment amount pas t due, or (2) a late fee of 1.5% per month on the amoun t past due, with no limit on the number of times such fee could be cha rged on a single amou nt rema ining p ast due . A late fee imposed under the new § 14-1315 was made subject to any additional limitations or conditions prescribed by any Federal, State, or local regulatory agency having jurisdiction over entities imposing the fee. It is not entirely clear whether or how the caps were to apply to late fees charged by regulated utilities under residential tariffs.3 The Legislature declared the law, which took effect June 1, 2000, applicable retroactively to all late fees provided for in contracts entered into, or in effect, on or after 3 Section 14-1315(a)(4) defined a late fee as any charge or fee imposed because a payment is not made when the payment is due under the terms of a contract. (Emph asis added). Section 14-1315(b) permitted parties to a contract to agree to require the payment of a late fee when a party fails to make a payment when the payment is due. The caps were provided for in § 14-1315(f), which applied only to late fees included in a consumer contract. That term was defined as a contract involving the sale, lease, or provision of goods or services which are for personal, family, or household purposes. The term contract was defined as including consumer, commercial, and business contracts, covenants, leases of any kind, and tariffs on file with any regulatory agency. In light of that definition, the late fee charged by Bell Atlantic pursuant to its amended tariffs was clearly imposed pursuant to a contract. It does not appear that the tariff allowing late fees to be charged to business customers would constitute a consumer contract to which the caps would apply. Whether the residential tariffs constituted a consumer contract, for the sale of services for family or household purposes is not altogether clear. It is not an issue we need address in this case. -7- November 5, 1995 and to any case pending or filed on or after June 1, 2000. See ch. 59, §§ 5, 6. In Dua v. C omcast C able, 370 Md. 604, 805 A.2d 1061 (2002), we declared the retroac tive app lication o f that law uncon stitutiona l. In May, 2000, after ch. 59 was enacted but before it took effect, the court ruled upon the pending motions to dismiss and for summary judgment. Dealing first with the motions to dismiss, the court found no merit in the general failure-to-exhaust-administrative-remedy defense. As to the 1995 amendment to the COMAR regulation, the court concluded that the attack was on the Constitutional authority of the PSC to a dopt the am endmen t and that a declaratory judgment action was appropriate to make that kind of attack. As to the tariff, the court held that the jurisdiction of the PSC extended to rates charged by regulated utilities and that a late fee was not a rate. Dealing then with the spec ific counts, the court dismissed the restitution claim in Count I o n the grou nd that restitutio n is not a sep arately recognized cause of action but denied the motion to d ismiss the un just enrichm ent claim in Count II, on the ground that the revenue-n eutral nature of the am endmen t to the tariff did not preclude a finding th at it would b e inequitab le for Bell A tlantic to retain an otherwise illegal penalty. On the motion for summ ary judgmen t, the court concluded that the imposition of a late fee was in the nature of interest, that the Legislature had never delegated to the PSC the authority to modify the 6% per annum interest rate set in the Constitution, and that the 1995 amendment to the COMAR regulation was therefore invalid. In light of ch. 59, expressly -8- permitting late fees in excess of the Constitutional rate, at least from and after June 1, 2000, the court denied the request for prospective injunctive relief. It left open the issue of monetary relief under Co unt II (unjust enrichment). 4 The cases we nded their way through the litigation thicket for the next 31 months. On December 9, 2002, the named p laintiffs in the Dotson and Scrocco cases entered into a Stipulation of Settle ment w ith Bell A tlantic. The PSC was not a party to the Stipulation but did not opp ose it. Under the Stipula tion, Be ll Atlant ic agree d to ma ke ava ilable up to $51.9 million, exclusive of attorneys fees and expenses and the cost of administering the settlement. Apart from the named members of the classes, who were to receive a $500 incentive award, in order to receive a payment, the individual class members had to file a claim form with an Administrator who would be appointed to administer the settlement, and who, subject to fin al decision b y the court, cou ld reject a claim, or part of a claim in excess of $6.00, if it cou ld not be verif ied. All claim forms would have to be filed within a defined claims p eriod. If the claim form was not accompanied by a proof of payment (i.e., a statement under penalty of perjury identifying the late fees paid by the member) or documentary evidence that more than $5 0 was paid in la te fees, th e mem ber wo uld rece ive $6.0 0, regardless of how much in the way of late fees that member actually paid. If the member submitted a proof of 4 We recite these rulings as part of the procedural history of the case, not necessarily to indicate our agreement with them. -9- payment with the claim form and the claim (1) was not more than $50, and (2) was approved by the Administrator, he or she wou ld receive an amount e qual to 60% o f the late fee s paid by that member. If the member claimed more than $50, documentary evidence of the amount of late fees paid had to be submitted. Mem bers who w ere current c ustomers o f Bell Atlan tic would receive their p ayment in the form of a credit on their telephone bill. Former customers would receive a check. Because no minimum payment to class mem bers was required o nly the $6.00 or 60% based on approved claims any part of the $51.9 million not paid to class members pursuant to the claim procedure would be retained by Bell Atlantic. The Stipulation noted that class counsel had prosecuted the cases on a contingent fee basis. Bell Atlantic agreed to pay counsel, subject to the court s approval, fees and expenses not exceeding $13 million, stated to be 20% of the maximum total consideration made available by [Bell Atlantic] under this Settlement. Counsel would app ly to the court for approval of a $13 million award for fees and expenses, and Bell Atlantic agreed not to oppose that application. That, in the parlance of class action litigation, is known as a clear sailing provision. F inally, the Stipulation permitted cla ss memb ers, by April 11, 2003 (1) to opt out of th e settlement b y mailing to the A dministrator a request fo r exclusion , or (2) to file an objection to the fairness of the settlement with the court. On December 12, 2002, three days after the signing of the Stipulation, the court gave preliminary approval to the settleme nt and s et in mo tion the p rocess f or notif ying class memb ers. On April 11, 2 003, Tam ala Boyd and twelve other members of the Dotson settlement -10- class (the Boyd O bjectors), filed o bjections to th e settlement. They argued that (1) a claims process for compensa ting class members w as unnecessary and, based on the experienc e in other class action settlements and the lack of any minimu m paymen t, would likely produce a very small payout, which they estimated would not exceed $5 m illion, (2) given the expected small payout to class mem bers, the uno pposed $ 13 million c ounsel fee would probably constitute 70% or more of the total payout by Bell Atlantic and was unreason able for that reason, (3) the fee was also unreasonable in light of the work performed by counsel, (4) the notice to class members was deficient in failing to disclose the dollar amount of the counsel fee, and (5) in particular, for those members who were not current customers of Bell Atlantic and wh o did not receive the notice through an insert with their telephone bills, the published notice, consisting of one advertisement in USA Today and a posting on the Internet, was inadequate. Upon the filing of those objections, the judge handling the case recused himself, and the case was assigned to another judge. After a hearing on the objections, the court, on November 12, 2003, denied final appro val of the se ttlement. Th e court reco gnized tha t, although Maryland Rule 2-2 31 required court approval of any settlement of a class action, it did not articulate any standards for determining either the fairness or the adequacy of a settlement. The court decided to follow the approach taken by the U.S. District Court in In re Montg omery C ounty Re al Estate Antitrust Litigation, 83 F.R.D. 305, 315-17 (D. Md. 1979). As to fairness, it concluded that the focus was on the presence or absence of collusion -11- among the parties: Because of the danger of counsel s compromising a suit for an inadequa te amount for the sake of insuring a fee, the court is obligated to ascertain that the settlement w as reached as a result of good faith bargaining at arm s leng th. The go od faith of the parties is reflected in such factors as the posture of the case at the time settlement is proposed, the ex tent of discovery that has been conducted, the circumstances surrounding the negotiations and the experie nce of couns el. 83 F.R.D. at 315. (C itations omitted). With resp ect to adequacy, the court determined that the focus was on the likelihood of the plain tiff s recove ry on the merits a gainst the am ount offe red in settlem ent: In assessing adequacy of the proposed settlement, courts should weigh the amount tendered to the plaintiffs against such factors as (1) the relative strength of the plaintiff s case on the merits; (2) the existence of any difficulties of proof or strong defenses the plaintiffs are lik ely to encoun ter if the case goes to trial; (3) the anticipated duration and expense of additional litigation; (4) the solvency of the defendants and the likelihood of recovery on a litigated judgment; (5) the degree of opposition to the settleme nt. Id. at 316. (Citations omitted). Applying those standards, the court found the settlement agreement unacceptable. The court s objection was not based on the amount of payout to the class members but on the fee. One independent basis for that objection was the co urt s determination that the notice to class members was deficient in not containing sufficient information regarding the $13 million counsel fe e. With resp ect to the am ount of the fee, the cou rt rejected counsel s attempt to support the fee on the basis of the extraordinary effort allegedly expend ed in -12- opposing ch. 59, the co urt conclud ing that such lobbying activ ity may have been less for the benefit of the class th an to preserve p otential fees e arned in this and other cases. It rejected counsel s claim that the value of the settlement was $64.9 million (the $51.9 million set aside for class members and the $13 million set aside for the fee), calling that number a phan tom, and thus rejected as well the assertion that the $13 million fee represe nted only 20% of the value of the settlement. The essence of the court s objection was that the transactional cost particu larly the $13 million counsel fe e for res toring mon eys illegally charged and collected as late fees ranging from $6.00 to $50.00 by Bell Atlantic from individual and busin ess custom ers are not jus tified by the sm all benefit received be Mem bers of the C lasses o f custo mers af fected . . . Conco mitant with the order denying final approval of the settlement, the court, by separate order, grante d a motion by the Boyd Objectors to intervene in the action. It subseque ntly certified the Scrocco class, dealt w ith a number of other pending motions, and scheduled trial for late November, 2004. In the Sprin g of 2004, the parties asked retired Judge John McAuliffe to attempt to mediate the dispute. A mediation session was held on April 8, 2004, with all parties, including the Boyd Objectors, participating. As a result of Judge McA uliffe s eff orts and ne gotiations following the mediation session, the parties, other than the Boyd Objectors, reached a second settlement agreement on June 1, 2004, which, on June 23, 2004, over the objection of the B oyd Objectors, received preliminary approval of the cou rt. -13- The new agreement differed in a number of respects from the first one. It required Bell Atlantic to pay a minimum of $13.5 million, but not more than $52.9 million, plus any attorneys fees and e xpenses a warded by the court, up to $12.5 million. Any class member who timely submitted a valid claim pursuant to the first settlement agreement was excused from having to submit another claim. Payme nt to other clas s memb ers would be essentially as provided in the fir st settlem ent agre emen t, i.e., membe rs submitting a timely claim in proper form but without any proof of payment would receive $6.00, while those submitting a timely claim accompanied by a proof of payment would receive 60% of all late fees paid. If the claim was for more than $50, however, further documentation in the form of bills and checks was required. There appear to be four principal differences between the first and second settlements. The first difference was the minimum payment requirement of $13.5 million, which was to be impleme nted as follo ws: if the tota l amount o f valid claims timely filed by class members in both actions was less than $51.9 million, Bell Atlantic would distribute, as a cy pres benefit to its current customers, a minimum amount equal to $13.5 million less the cost of administering the settlement (the total cost of mail notice, publication notice, notice to first settlement claimants, website notice, and f ees and expense s of the Settlement A dministrator). That b enefit w as to be in the fo rm of a credit ap plied to t he cust omers telepho ne bills. The second major change dealt with counsel fees. Section III. B. of the agreement provided that, prior to the fairness hearing, class counsel would petition the court for -14- approval of an award not to exceed $12.5 million in fees and expenses and that the fee petition would be based on a percentage of the total settlement benefits obtained for the Settlement Class, not to exce ed one -third, or class counsel s lodestar with a reaso nable risk multiplier, plus reimbursement of counsel s costs and expenses, which the defendants, as before, agreed not to oppose. The agreement provided that Bell Atlantic would not be required to pay mo re than $ 12.5 million in counsel fees and expenses and that, if less than that amount was awarded by the court, the difference would be distributed to the cy pres group Bell Atla ntic s curren t customers on an eq ual basis in the form of a credit on the ir telephone bills. The third difference was a waiver by Bell Atlantic of its possible right to recoup the cost of the settlement by means of a rate increase. The traditional method by which the PSC regulated public utility rates was to (1) calculate the fair value of the utility s property used and useful in providing service to the public, (2) determine the utility s cost of capital its required rate of return, (3) multiply that rate of return against the value of the rate base to determine the amount of income to which the utility was entitled, and (4) require th e utility to file tariffs that would produce only that leve l of inco me. See Build ing Ow ners v. Pub lic Service Com n, 93 M d. App . 741, 75 3, 614 A .2d 100 6, 1012 (1992 ). In 1995, the General Assembly enacted what is now codified as § 4-301 of the Public Utility Companies Article, which allows the P SC to reg ulate the rates charged by telephone companies by alterna tive me ans. In November, 1996, the PSC, acting pursuant to that -15- auth ority, adopted an alternative form of regulating telephone compan y rates, what it termed a Price Cap Form of Alternative Regulation. See In the Matter of the Inquiry into Alternative Forms of Regulating Telephone Companies, Md. PSC, Case No. 8715, Order No. 73011 (1996). Under the Price Cap O rder, Bell Atlantic s then current rates for residential and business basic services were frozen for three years, following which they would be subject to an indexing formula that considered three factors: an upwa rd adju stment f or infla tion, a dow nwa rd ad justm ent f or increa sed p rodu ctivi ty, and an e xogeno us costs chang e facto r, which the order referred to as the Z f actor. Exogenou s changes involved factors that are out of [Bell Atlantic s] control and do not affect the entire economy . . . The order permitted Bell Atlantic to propose price adjustments to account for costs triggered by administrative, legislative or judicial action that are beyond the control of [Bell Atlantic] and not otherw ise included in the price ca p formu la. It specified , howev er, that: Before a cost item is eligible for Z factor treatment, the proponent must demons trate that: the cost is the result of an exogenous event; this event occurred after implementation of the price cap plan; the cost is clearly beyond manage ment s control; the cost is not a normal cost of doing business; the event has a disproportionate impact on telecommunications providers; the event has a major impact on [Bell Atlan tic s] costs; the co sts proposed are reason able; and that actual co sts can be u sed to measure the impact of the change, or the impact can be measu red wit h reaso nable c ertainty. The notion that amounts paid out in settlement of the class action suits qualified as an exogenous event that would permit Bell Atlantic to receive a rate increase under the Price -16- Cap Order was not mentioned in the first settlement agreement. The second agreement noted that Bell Atlantic had asserted that prospect throughout the litigation, however, and, as part of the second settlement agreement, Bell Atlantic agreed to forbear from pursuing such recoupment right as well as from exercising any legal or equitable right that [Bell Atlantic] has to recoup the cost of this Settlement by invoking the exogenous change provisions of the Price C ap Ord er. Finally, unlike the first settlement, PSC was a party to this one. The prelimin ary approval of the second settlement agreement triggered the sending of new no tices to the class members and, like the order giving preliminary approval to the earlier settlement, made provision for class members, by October 14, 2004, to opt out of the settlement or to object to it. The Notice also stated that [o]nce the Court has entered a nonappealab le final judgment approving this Settlement, Settlement Class Members will release, and be forever barred from suing, [Bell Atlantic] and other Released Persons for all Released Claims as those terms are defined in the Stipulation of Settlement. At the end of the claims period, a total of 24,108 claims had been filed by residential and business customers, 17,569 of which had been filed pursuant to the first settlement and were grandfathered by the second settlement agreement, and 6,539 of which were filed pursuant to the second round of notices. The total amount of those claims, residential and business, from the first and second round of notices, was $227,334. Among the 24,108 claims filed, 3,027 were regarded by the Administrator as potentially duplicate or invalid for -17- some reason. Because the validity of those claims had yet to be resolved, the actual value of the claims remained, at the time, still uncertain. During this period, two of the Boyd Objectors, Kamuhanda and M itchell, decided to obtain their own counsel, and the y began f iling sep arate pa pers an d plead ings. In October, 2004, both the Boyd Objectors and the Kamuhanda O bjectors filed objections to the proposed settlement. They argued that the requested fee was excessive, that class counsel had done insu fficient disco very in order to d etermine w hich Bell A tlantic custom ers actually paid late fees, and that counsel did not adequately represent the class. The Boyd O bjectors sought to remove class cou nsel for those reasons. Their major objection was that the requested fee of $12.5 million was excessive in relation to the benefit conferred on the class. In that regard, they took special aim at class counsel s and Bell Atlantic s assertion that (1) because, under the a greemen t, a maxim um of $51.9 million was set aside for claims, even though only $227,334 in claims had been filed, the settlement had a v alue of $51.9 million, and (2) alternatively, in ligh t of Bell Atlantic s waiver of its right to seek recoupment of the settleme nt payou t as an ex ogeno us cost, th e true va lue of th e settlem ent wa s $52 m illion. Given the relatively small amount of claims filed, the actual cash payout provided by the settlement was not $51.9 million but $26 million plus the amount of approved claims, which will not exceed $227,334. The $26 million consisted of (1) the cost of notice and administration, (2) the difference between that cost and $13.5 million, to be paid to the cy pres customers, and (3) $12.5 million, to be allocated between counsel and the cy pres -18- customers, some significant portion of who m were no doub t also claiman ts. Class cou nsel, Bell Atlantic, and the PSC posited, however, that Bell Atlantic had the right to recoup that $26 million as an exogenous cost under the PSC Price Cap Order and that, by waiving that right, the actual value of the settlement was double the $26 million. The objectors regarded that as a phantom nu mber but pointed o ut that, if the waiver did have value, its absence from the first settlemen t would h ave mad e that propo sal a travesty. Not to be left behind in the fee chase, counsel for the Boyd and Kamuhanda Objectors indicated that they, too, would be petitioning for a fee, and counsel for the Bo yd Objectors subseq uently req uested a fee o f $3.9 million f or the w ork the y had do ne in op posing the settle ment. On November 22, 2004, following a hearing several days earlier, the court, over the objections of the Boyd and Kamuhanda Objectors, entered an Order and Judgment Approving Second and Final S ettlement. After some preliminary discussion, the co urt determine d, in some o f the OR DER ED pa ragraphs, th at: (1) the notice to class mem bers was sufficient in both form and conte nt; (2) the prop osed settlem ent was f air, reasonab le, adequate , and in the b est interests of the settlement class; (3) the Stipulation of Settlement is finally approved in all respects ; (4) all objections were overruled, for reasons to be stated in a later opinion; (5) class members wishing to submit a proof of claim must do so by December 5, 2004; -19- (6) upon the effective date, the class members, by operation o f that Orde r, shall have fully, fina lly, and forever released and discharged Bell Atlantic and all released persons; and (7) except for proceedings related to the enforcement of that order, settlement class members are barred from co mmencing o r continuing any action or proce eding in any court or tribun al assertin g any claim s encom passed by the Stip ulation o f Settlem ent. The court also dealt with the fee question. In that regard, it approved the sum of $12,500,000.00" for attorneys fees, expenses, and any charitable donations counsel chose to make out of the fee award,5 and it directed Bell Atlantic to pay that amount to counsel within seve n days after the Effe ctive D ate. Counse l was orde red to place that amou nt in their escrow account for Distribution at a later date after the completion of further proceedings before the Special M aster and this C ourt in acco rdance w ith this and all other consiste nt Ord ers of th is Cou rt. That provision was in implementation of an earlier provision in the Order in which the court made clear that it was making no final determination of a fee award, either to class counsel or to counsel for the Boyd or Kamuhanda Objectors, each of whom had also indicated an intent to petition for counsel fees. It noted that it had considered class coun sel s fee petition and the objections, and 5 Paragrap h III. B. 2. of th e Stipulation of Settlem ent provide d that, as part o f their fee petition, counsel could, but was not required to, request that a portion of their fee and expense award be donated to a charitable institution of their choice. -20- further recognizing that Objectors have the rig ht to petition this Court for Attorney s Fees for their counsel w hen satisfactory evidentiary proof is produce d to show that their efforts produced an actual benefit to the Class, this Co urt concludes that a Special Master is, therefore, n ecessary to determine what is a fair award and allocation of Attorney s Fees in the above -caption ed case . By separate Order entered the same day, the court confirmed that it was unclear from the record what amount of attorney s fees should be awarded to class counsel or to counsel for the two groups of objectors, and it therefore appointed John Paul Davey as a special master to make recom mendations to the co urt as to fees and expenses to be awarded to class counsel. The master was given authority to issues subpoenas to compel the attendance of witnesses and the production of documents, administer oaths, rule upon the admissibility of evidence, examine witnesses, convene and adjourn a hearing, recommend contempt proceedings, and recommend findings of fact and conclusions of law. The sp ecial master was to make a report of his recommendations, to which exceptions could be filed in accordance with Maryland Rule 2-541. In the conclu ding parts o f its main ord er approv ing the settlement, the court (1) vacated the May, 2000 declaratory judgment invalidating the 1995 amendment to COMAR 20.30.03.01, (2) dismissed the two class actions in their entirety with prejudice and without costs, and (3) without affecting the finality of the O rder an d Judg ment h ereby en tered, reserved jurisdiction over the implementation of all of the terms of the Settlement, including distribution of the settlement benefits, attorney s fees and expenses, enforcement and administration of the S tipulatio n, includ ing any re leases in conne ction the rewith , and any -21- other m atters rela ted or an cillary to the forego ing. The order approving the settlement was filed November 22, 2004. On December 13, the Boyd Objectors noted an appeal, and on December 17, the Kamuhanda Objectors did likewise. On January 6, 2005, the Circuit Court filed an opinion explaining its reasoning and also an order denying the objectors motion for stay. The court rejected the objectors attack on assigning any value to Bell Atlantic s waiver of its supposed right of recoupment as disingenuous at best and presumptuous at worst. It declined to express any opinion on the value of that wa iver, leaving it to the special co unsel to dete rmine that issu e, but it did express the view that the waiver of the recoupment right does have some value to the Class and that value is not incons equen tial. 6 The cou rt made clea r that the spec ial master w as to 6 Because of the lac k of a final judgm ent, the question of wh ether Bell Atlantic s waiver had any value at all and, if so, what value, is not befo re us. We do no te, however, for the guidance of the court and the special master, that, notwithstanding PSC s joining in the settlement, under the PSC Price Cap Order, recoupment of exogenous costs is not automatic. Bell Atlantic would have to file a petition with the PSC and bear the burden of proving, among other things, that an agreed settlement on its part is, in fact, an exogenous ev ent, that the cost of the agreed settlem ent was beyond m anagement s control, that it was not a normal cost of doing business, that the event had a major impact on Bell Atlantic s costs, and that the costs proposed are reasonable. Presumably, the company s ratepayers would be entitled to contest such a request and trigger a contested case proceeding su bject to judicial review. We n ote, as well, that, if Bell Atlantic were successful in recouping its $26,227,334 payout from its ratepayers, most, if not all, of whom would be part of the cy pres group benefitted by the settlement and some unknown percentage of whom would be members of the actual class of late-fee-payers, the actual value of th e settlement w ould be clo se to zero. W hat Bell A tlantic gave w ith one han d it would take away with the other. If any significant value is ultimately assigned to that waiver, the court will have to explain its rationale in more detail than it did in its opinion of November 22, 2004. -22- recommend an award of attorneys fees based on a percentage of the Fund Method cross referenced with the Lodestar Method that are then checked against the factors in the Maryland Rules of Professional Conduct 1.5(a). The court rejected as well the a rgumen ts that class counsel had done insufficient discovery and that they had not properly represented the class . In discussing the value of th e settlement, the court concluded that the settlement had a maximum cash value to the Class of $51,900,000 for paym ent of claims (empha sis added), seemingly ignoring the likelihood (and subsequently the fact) that the total value of claims actually filed was less than 0.5% of that amount, plus $1,675,000 for the cost of notice and administratio n, and $12 .5 million to be allocated between counsel and the cy pres ratepayers. On that the ory, the court calculated the max imum po tential liability of B ell Atlantic as being $ 66,075,00 0, although it immediate ly recognized that the actu al liability and, the refore, t he valu e of the Settlem ent is dra matica lly less than this num ber. With its denial of a stay, some proceedings commenced before the special master. On February 4, 2005, the Court of Special A ppeals dismissed the appeals for lack of a final judgmen t. On Ap ril 7, 2005, we granted the Boyd and Kamuhanda Objectors petitions for certiorari and stayed further p roceeding s in the Circu it Court. The all ocation of the $ 12.5 million between class counsel and the cy pres group thus remains unresolved, as do the petitions for counsel fees filed by counsel for the two groups of objectors. -23- DISCUSSION This Court has made clear on many occasions that the right to seek appellate review of a trial court s ruling ordinarily must await the entry of a final judgment that disposes of all claims aga inst all parties, and that there are o nly three excep tions to that rule : appeals from interlocutory orders specifically allowed by statute, predominantly those kinds of orders enumerated in Maryland Code, § 12-303 of the Cts. & Ju d. Proc. A rticle; immed iate appeals permitted under Maryland R ule 2-602(b); and app eals from interlocutory rulings under the common law collateral order doctrine. Board of Educ. v. Bradford, 387 Md. 353, 382-83, 875 A.2d 703, 720 (200 5). We ha ve made equally clear tha t, for an order to constitute a final judgment for purpo ses of app eal, it must hav e at least three a ttributes: (1) it m ust be intended by the co urt as an unqua lified, fin al dispo sition of the ma tter in co ntrove rsy, (2) unless the court properly acts pursuant to Md. R ule 2-602 (b), it must adju dicate or co mplete the adjudication of all claims a gainst all parties, and (3) the clerk must make a p roper record of it in accordan ce with M d. Rule 2-601. Rohrbeck v. Rohrbeck, 318 Md. 28, 41, 566 A.2d 767, 773 (1989); Smith v. Lead, 386 Md. 12, 21 , 871 A.2d 545 , 550-51 (2005). Petitioners insist that the November 22, 2004 order satisfies those criteria and therefore constitutes a f inal judgm ent. Among other things, they point out, it stated that the Stipulation of Settlem ent is finally app roved in all re spects, it enjoined class mem bers from asserting claims encompassed by the settlement in any other forum , it declared class members who had not timely requested exclusion from the settlement to be bound by this final Order -24- and Judgment, and it reserved jurisdiction over the implementation of the settlement without affe cting the f inali ty of th e Or der a nd Ju dgm ent h ereb y ente red. Sub stantivel y, they add, the order in fact determined the rights of the parties the class plaintiffs, on the one hand, and B ell Atlan tic and th e PSC , on the o ther. In th at regar d, they view the class plaintiffs as limited to those members who filed timely and valid claims and as excluding the cy pres group whos e entitlem ent has not yet be en fina lly litigated. Ay, quotin g the un fortun ate Ha mlet, there s the rub. The Tra gedy of H amlet, Prince of Denmark, Wm. Shakespeare, Act III, scene i. There are two responses. The only action for monetary relief that survived the initial motions to dismiss was based on unjust enrichment. As we pointed out in Consumer Protection v. Consumer Pub., 304 Md. 731, 776, 501 A.2d 48, 71-72 (1985), the relief availab le for unjus t enrichme nt is not compensatory damages but restitution the disg orgemen t of the ben efits that it wo uld be unjust for th e defend ant to keep. Q uoting Dobb s, Law of Remedies, § 4.1 at 224 (1973), we noted that [t]he dam ages recov ery is to compensate the plaintiff and it pays him, theo retic ally, his losses, but [t]he restitution claim, on the other hand, is not aimed at compensating the plaintiff but at forcing the defendant to disgorge benefits it would be unjust for him to keep. See also Consumer Protection v. Morgan, 387 Md. 125, 168-69, 874 A.2d 919, 944-45 (2 005); Luskin s v. Consumer Protection, 353 Md. 335, 383-84, 726 A.2d 702, 726 (1999). The cy pres group was critical indeed indispensable to provide that kind of -25- restitutionary relief. The first settlement, rejected by the court, omitted that feature, which, apart from other problems, alone made the settlement unfair and inadequate.7 With evidence that Bell Atlantic had collected some $6 4 million in u nlawful la te fees ove r the requisite period, a payout of $227,334 to those late fee payers who filed claims, though perhaps adequate as compensatory damages, could hardly be regarded as anything approaching adequate restitutionary relief. Even if the actual class consisted only of the late fee payers, given the relatively small value of the claims filed by those members, the fairness and adequacy of the settlement hinged predom inantly on the amount that would be paid to the cy pres group. Class counsel s fee petition was based mostly on the value of the payout to the cy pres group, not the $227,334 slated to go to their actual clients, as, indeed, was the request of cou nsel fo r the Bo yd Obje ctors fo r a $3.9 m illion fee . Apart from th at, as the PSC points out in its brief, because Bell Atlantic (Verizon) supplies telephone service to approximately 90% of Maryland residen ts, it is highly likely that most customers who paid a late fee and who c ontinue to re side in M aryland rema in customers of Bell Atlantic and thus, whether or not they filed a claim, will be part of the cy pres group that will receive the bulk of the payout not allocated to the lawyers. To that extent, there is a very significant overlap between the late fee payers and the cy pres group, 7 It was stipulated that approximately $156,000 in claims were filed pursuant to the first settlement. It cannot seriously be suggested that the prospect of a $13 million couns el fee b ased on a $156 ,000 pa yout to clie nts wa s fair or a dequa te to the c lients. See Attorney Griev. Comm n v. Korotki, 318 Md. 646 , 569 A.2d 122 4 (1990). -26- and the two groups cannot be considered as entirely separate. Many, if not most, of the actual class members will be members of the cy pres group and will receive restitution benefits partly or entire ly in th at capaci ty. It may well be that, by using the word final in various places in its November 22 order, the court intended that the ord er be a final o ne. The court s intention, howev er, is only one of the fac tors to be ex amined. T he gover ning facto r is whether the order, in fact, completed the final adjudication of all claims against all par ties, and it clearly did not do so. Until the court enters a final order allocating the $12.5 million among counsel for the class, counsel for the various objectors, and the cy pres group, no one will know how much the cy pres group will receive as part of the settlement. Theoretically, the court could award anything from $1 to $12.5 million to counsel (and, conversely, anything from $1 to $12.5 million to the cy pres group), and there can be no reasonable determination of fairness and adequacy until that decision is made. In that regard, this case is much different than those cited by petitioners, in which attorney s fees we re award ed while the judgment on which they were based was under appeal or had alre ady been resolve d on ap peal. See Dent v. Simmons, 61 Md. App. 122, 485 A.2d 270 (1985); County Exec ., Prince Geo s Co. v. Doe, 300 Md. 445, 451 n.4, 479 A.2d 352, 355 n.4 (1984); Md.-Nat l Cap. P. & P. Comm n v. Crawford , 307 Md. 1, 511 A.2d 1079 (1986). In each of thos e cases , Dent involving an award of fees against a party for bringing an action without substantial justification and the other two involving fees recoverable under -27- 42 U.S.C. § 1988, the attorneys fees were entirely collateral to and did not affect the amount payable to the plaintiffs. As noted, any award of fees in this case does affect the amount receivable by the cy pres group, which includes class members, on a dollar for dollar basis. It is not collateral. This case also does not present the concern expressed by the Kamuhan da Objectors that a ruling by this Court that the approval order is not final would preclude review of actual adjudicatory judgments in class actions that involve a common fund to be allocated between the class and counsel until that allocation is made. Immediate review of such a judgment may or may not be precluded in that situation, but we need not address that issue here because that is not the situation now before us. This is a settlemen t, which is subject to court approval as to ad equac y and fair ness. The judg ment in this c ase will not be an adjudication on the merits or, indeed, on the proper amount of restitution, but simply whe ther the ultima te settlement is adequate and fair, an d, as we h ave indicate d, that determ ination can not finally be ma de until t he alloc ation of the $12 .5 million is resolv ed. We turn, therefore, to petitioners alternative argument that the order precluding them from commencing or continuing to assert claims covered by the settlement in any other tribunal constitutes an injunction immediately appealable under Maryland Code, § 12303(3)(i) of the Cts. & Jud. Proc. Article. That section expressly permits an appeal from an order that grants an injunction, even an interlocutory one, so long as the appellant has filed an answ er in the m atter. -28- The non-objecting class, citing LOO C v. Koh li, 347 M d. 258, 2 66, 701 A.2d 9 2, (1997) and Highfield Water Co. v. Wash. Co. San., 295 Md. 410, 417, 456 A.2d 371, 374-75 (1983), urge that an order barrin g overlapp ing litigation is n ot an injunction but rather a calendar order which the C ircuit Court has plenary po wer to issue in the man agemen t of its own docket and that such a stay is not immed iately app ealable . Highfield is not on po int, and LOOC actually su pports a contrar y position . Highfield involved a battle betwe en the Highfield W ater Company (H WC) an d the Washington County Sanitary District (WCSD). In October, 1978, WCSD obtained an injunction from the C ircuit Court p ermitting it to op erate the w ater system for the town of Highfield. That w as not a ppeale d. In 1979, HWC sued the WCSD in Federal court claiming, among other things, that WCSD abused its administrative powers and seized HWC s property without due process. While that case was pendin g, WCS D filed a p etition in the C ircuit Court to condemn HWC s property. HWC responded with a motion challenging the jurisdiction of the court while the Federal action was pending and a motion to stay the condemnation proceeding. The court denied the stay, and HWC appealed, claiming that the request for stay was in the nature of a request for injunction and that the denial of that request was im media tely appea lable. We directed that the appeal be dismissed, concluding that a trial court s refusal to stay its own proceedings until the conclusion of another court case pending between the same p arties ordinarily do es not con stitute the denial of an injun ction. 295 Md at 416, 456 A.2d at 374. -29- LOOC involved an action for judicial review of an order of the Human Relations Commission directing a compa ny to revise a policy of refusing to employ men with beards. The company sought a stay of the administrative order, which the court denied. The court subseque ntly ordered the company to comply immediately with that administrative decision. The company appealed that second order, contending that it was in the nature of an improper ly entered interlocutory injun ction. The C ommissio n moved to dismiss the appeal on the ground that the order appealed from was no different from the earlier order denying a stay, and that the appeal should have been taken from the earlier order. We found a significant distinction between the two orders. The order denying a stay of the administrative ruling w as in no sen se an in junction , we held, as it was not a court order mandating or prohibiting a specified act. LOOC, 347 Md. at 265-66, 701 A.2d at 95-96. The later order, on the other hand, did constitute an injunction, as it did mandate a specified act. Id. at 26667, 701 A.2d at 96. The order barring class members from pursuing their claim s in any other fo rum clearly prohibits a specified act. Unlike a m ere stay (or denial of stay) of pend ing procee dings in the court that issued the order, it is in no way a calendar order entered for the purpose of docket management. It affects ne ither the cou rt s calendar n or its docke t but prohibits s pecific external conduct, presumably under penalty of contempt, that the class members might otherwise take. See State v. 91st Street Joint Venture, 330 Md. 620 , 625 A.2d 953 (1993). See also Charles A . Wright et al, 16 F EDERAL P RACTICE AND P ROCEDURE § 3923, at 123 (2 nd -30- ed. 1996) ( A n order that p rohibits a party from pursuing litigation in another forum unquestio nably is an injunction for purposes of [28 U.S.C.] § 1292(a)(1) [the Federal analog to Cts. & Jud. Proc. A rt. § 12-303(3)(i)]; Midwest Motor Express, Inc. v. Central States Southeast Pension Fd., 70 F.3d 1014 (8 th Cir. 199 5), cert. denied, 517 U.S . 1203, 116 S. Ct. 1704, 134 L. Ed.2d 803; Katz v. Lear Siegler, Inc., 909 F.2d 1459 (Fed. Cir. 1990). Because the November 22 order itself is not a final judgmen t, howeve r, no part of it is final. See Maryland Rule 2-602(a). The anti-suit provision is therefore in terlocutory in nature, and therein lies the problem. A similar provision a ppeared in the orders p reliminarily approv ing the f irst and s econd settleme nts. The order barring class members from pursuing claims encompassed by the settlement in any othe r forum is, in eff ect, an implementation of the com mon law doctrine of claim preclusion res judicata or its somewhat allied doctrine of release and settlement. Such an order is not necessary to implement those defenses if any class members were to pursue such a claim in any other forum once there has been a final settlement an d release, B ell Atlantic could certainly, and no doubt successfully, raise those defenses in that forum. One can imagine, ho wever, w hy Bell Atlantic, or any other defendant in its position, would want such a specific bar as part of a court order approving a settlement agreement: it acts as an in terrorem provision to preclude class m embers from k nowingly pursuing other actions and thereby lifts from the defendant the potential burden of having to defend those actions. The problem, however, is that claim preclusion and release the only legitimate bases for such -31- a provision cannot come into p lay until the settlement and releases are final, and, de spite some o f the lan guage in the or der, that h as not yet h appen ed. The Notice sent to the class members makes that clear. It advised the class members that they would be fore ver barred from suing Bell Atlantic on released claims [o]nce the Court has entered a non-ap pealable fin al judgment approving this Settlement. The order approving the settlemen t states that the cla ss plaintiffs w ill be regarded has having released Bell Atlantic u pon the ef fective date , which is d efined in th e settlement a greemen t, incorporated into the order, as requiring the entry of a judgm ent that must b e Final. Until there is a final judgment, no claims have been released, and there is no basis for barring, under threat of contempt, other litigation con cerning those claims. Th us, even if a bar provision such as that included in the order were gen erally permissible once the o rder is final, it is impermissible to purport to make such a bar effective prior to that time.8 It is evident, then, that the part of the order that bars class members from further pursuing claims cov ered und er the settleme nt in any other f orum is in th e nature of an immedia tely appealable injunction and that the Circuit Court erred in purporting to make 8 Some commentators have urged caution in issuing anti-suit injunctions, both for reasons of comity and because an injunction issued against class members who have not been se rved w ith proc ess mig ht prese nt due p rocess q uestion s. See Alba Conte and Herbert Newberg, 3 & 4 Newberg on Class Actions §§ 9:26 at 366-68 and 13:26 at 422 (4 th ed. 2002); Geoffrey P. Miller, Overlapping Class Actions, 71 N.Y.U. L. Rev. 514, 523-25 (1996). Whether that caution, or the basis for it, is valid at all or, if valid, has relevance in the context of a settlement as opposed to an adjudicatory judgment, has not been ra ised in th is appe al, and w e theref ore nee d not ad dress it. -32- such an injunctive order effective prior to the entry of a final judgment approving the settleme nt as ad equate and fa ir. JUDGMENT OF COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO EN TER JU DGM ENT (1) V ACAT ING ORDER OF CIR CUIT C OURT FOR PR INCE G EORG E S COUNTY BARRING CLASS MEMBERS FROM PURSUING CLAIMS IN OTHER FO RA, (2) OTHERWISE DISMISSING APPEAL, AND (3) REM AND ING CA SE TO C IRCUIT COURT FOR PRINCE GEORG E S COUNTY FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS IN THIS COURT AND IN COURT OF SPECIAL APPEALS TO BE PAID 3/4 BY PETITIONERS AND 1/4 BY RESPONDENTS. -33-
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