Opinion

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 01-1172 & 01-1176
In the Matter of:
Mexico Money Transfer Litigation
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
Nos. 98 C 2407 & 98 C 2408--Rebecca R. Pallmeyer, Judge.
Argued September 7, 2001--Decided October 4, 2001
Before Bauer, Easterbrook, and Manion,
Circuit Judges.
Easterbrook, Circuit Judge. "Send $300 to
Mexico for $15." This tag line, typical
of promotions by the two defendants
(MoneyGram and Western Union, plus its
subsidiary Orlandi Valuta), is at the
core of these consolidated class actions.
Plaintiffs contend that "for $15" is
fraudulent because the wire transfer
companies collect for their services not
only cash paid over the counter (the $15)
but also the difference between the
retail currency exchange rate quoted to
customers and the wholesale (interbank)
rate, for transactions of $5 million or
more, at which the defendants buy pesos.
Plaintiffs believe that the quoted price
must include the difference in foreign
exchange rates (the "fx spread", which
averages about $25 per transaction) or
that the defendants must at least reveal
the price that they pay for pesos, so
that the customers may work out the
spread for themselves. The classes sought
treble damages under the Racketeer
Influenced and Corrupt Organizations Act
(rico), 18 U.S.C. sec.sec. 1961-68, and
state anti-fraud laws. Class
representatives estimated that defendants
make as much as $300 million per year
from the fx spread, and they sought
treble this sum, over many years, as
damages. The proposed recovery thus ran
into the billions of dollars.
The class got much less. The defendants-
-which contended that they have not
committed fraud because they reveal
exactly how many pesos will be delivered
in Mexico for exactly how many dollars--
were unwilling to pay very much on what

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they deemed a weak claim. Moreover, to
curtail the risk of fraud, they were
unwilling to pay any cash except to class
members who established their identities.
For many members of the class, who are
either not lawful residents of the United
States or otherwise unwilling to submit
personal details, mandatory
identification would block relief. So the
parties settled the case on other terms.
Defendants agreed to disclose in future
transactions and advertisements that
there is a fx spread and that each
defendant sets its own retail price of
pesos, and to provide a toll-free
telephone number from which customers can
learn the going retail exchange rate.
They also agreed to provide class members
with coupons entitling them to $6 off the
price of one future wire transfer for
every transfer made since November 1993.
(To simplify the exposition we disregard
some additional details, which may be
found in the district court’s opinion.)
The face value of coupons to be made
available approaches $400 million.
Finally, defendants agreed to pay about
$4.6 million to organizations that assist
the Mexican-American community; the
parties call this "cy pres relief" in
recognition of the fact that many class
members will prove to be unidentifiable,
will not claim their coupons, or will not
use all coupons they receive. Finally,
the defendants agreed to bear the expense
of notifying the class (which normally
must be borne by the representative
plaintiffs, see Eisen v. Carlisle &
Jacquelin, 417 U.S. 156 (1974); White v.
Sundstrand Corp., 256 F.3d 580 (7th Cir.
2001)) as well as the expense of
administering the settlement; these
outlays have been estimated at about $16
million, to which about $10 million in
attorneys’ fees will be added. After
receiving notice under Fed. R. Civ. P.
23(c)(2), about 2,800 class members opted
out, retaining their right to sue
independently. Raul Garcia and Lydia
Bueno intervened and objected to the
settlement. The district court held a
hearing under Rule 23(e), took testimony
from the objectors and several expert
witnesses, and later approved the
compromise and entered the proposed
consent decree. 2000 U.S. Dist. Lexis
18863 (N.D. Ill. Dec. 21, 2000).
According to the objectors, the court
should not have certified a nationwide

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class, or indeed allowed the litigation
to proceed in Illinois (rather than
California, where about a third of the
class members reside). They also think
that the class should have received more,
and in particular should have been
compensated in cash rather than coupons.
Most of the objectors’ arguments occasion
little or no discussion. For example,
their complaint about the location of the
court not only overlooks the fact that
rico authorizes nationwide service of
process, see 18 U.S.C. sec.1965; Lisak v.
Mercantile Bancorp, Inc., 834 F.2d 668,
671-72 (7th Cir. 1987), but also supposes
that this suit has proceeded "in
Illinois," as if the district court were
exercising the power of that state. A
state court might well have the necessary
authority, see Phillips Petroleum Co. v.
Shutts, 472 U.S. 797 (1985), but no
matter. This suit is in a United States
District Court, which exercises the
judicial power of the nation. All class
members and defendants live within the
territorial jurisdiction of the district
court, given sec.1965. If both the
representatives and the defendants are
satisfied with venue (which they are)
individual class members have no
complaint. Only two of the other
objections require treatment: the
propriety of class certification in light
of potential differences among state
laws, and the adequacy of the defendants’
payments.
The district court found that the class
meets all requirements of Rule 23(a)
(numerosity, commonality, typicality, and
adequacy of representation), plus the
requirements of Rule 23(b)(3)
(predominance of common over individual
disputes and superiority of class
disposition). It is hard to quarrel with
these conclusions. The class is very
large; each individual claim is small;
the defendants handled all wire transfers
the same way. Sometimes class treatment
will be inappropriate even if all of
these things are true, when recovery
depends on law that varies materially
from state to state. See, e.g., Isaacs v.
Sprint Corp., 2001 U.S. App. Lexis 18324
(7th Cir. Aug. 14, 2001); Szabo v.
Bridgeport Machines, Inc., 249 F.3d 672
(7th Cir. 2001); In re Rhone-Poulenc
Rorer Inc., 51 F.3d 1293 (7th Cir. 1995).
The class representatives avoided this
pitfall in two ways: first, they confined

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their theories to federal law plus
aspects of state law that are uniform;
second, they asked for certification of a
class for settlement only, a step that
the Supreme Court approved in Amchem
Products, Inc. v. Windsor, 521 U.S. 591
(1997). Given the settlement, no one need
draw fine lines among state-law theories
of relief. By relying principally on
federal substantive law, the
representative plaintiffs followed the
pattern of antitrust and securities
litigation, where nationwide classes are
certified routinely even though every
state has its own antitrust or securities
law, and even though these state laws may
differ in ways that could prevent class
treatment if they supplied the principal
theories of recovery. See, e.g., In re
Prudential Insurance Co. Sales Practice
Litigation, 148 F.3d 283, 314-15 (3d Cir.
1998). Many opinions, of which Amchem is
one, 521 U.S. at 625, give consumer fraud
as an example of a claim for which class
treatment is appropriate.
Nonetheless, the objectors imply, these
class representatives are inadequate
because they failed to investigate and
deploy every potential state-law theory.
Why they should have an obligation to
find some way to defeat class treatment
is a mystery. It is best to bypass
marginal theories if their presence would
spoil the use of an aggregation device
that on the whole is favorable to holders
of small claims. Instead of requiring the
plaintiffs to conduct what may be a snipe
hunt, district judges should do what the
court did here: Invite objectors to
identify an available state-law theory
that the representatives should have
raised, and that if presented would have
either increased the recovery or
demonstrated the inappropriateness of
class treatment.
Our objectors believe that they have
found such a theory, rooted in a
California statute regulating the
performance of financial intermediaries
that offer international money transfers.
See Cal. Fin. Code sec.sec. 1800-27. The
objectors see a plausible claim in almost
every subsection of this statute. The
district court analyzed them all and
found that none of the subsections gives
the class any advantage over rico. We
agree with that assessment. No purpose
would be served by an exhaustive

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analysis, for one appears in the district
judge’s careful opinion. An example will
suffice. Section 1810(a) states: "Every
licensee or its agent shall forward all
moneys received . . . or give
instructions committing equivalent funds
to the person designated by the
customer". The objectors see in this an
obligation to transfer funds at the
wholesale fx rate. We see no discussion
of the difference between wholesale and
retail prices for foreign currency; the
section seems designed instead to require
that the intermediary keep its promise to
transfer the funds. Of course we may have
missed some subtle interaction among the
sections of the California Financial
Code, but enforcement is not committed to
judges in the first instance. It is
committed to the California Department of
Financial Institutions, see Cal. Fin.
Code sec.sec. 1817-19, 1821, 1826, and
the Department has never considered it
necessary for regulated institutions to
disclose (or hand over to the customer)
the fx spread. We know this not only from
the absence of regulations (and
enforcement actions) but also from the
testimony in the Rule 23(e) hearing of
Stanley Cardenas, a former head of the
Department. California gives substantial
leeway to agencies in interpreting the
laws they administer, see Dobbins v. San
Diego County Civil Service Commission, 75
Cal. App. 4th 125, 131 (4th Dist. 1999),
and since the Department’s view
corresponds to an ordinary-language read
ing of the statute a claim under this law
could not do the plaintiffs much good.
(Plaintiffs responded to Cardenas’s
testimony with affidavits of legislators
who supported the statute, but those
views, offered away from the legislative
halls and long after the law’s enactment,
are worthless. See Lindland v. United
States Wrestling Association, Inc., 227
F.3d 1000, 1008 (7th Cir. 2000).) Any
invocation of sec.1810(a) and the rest of
California’s money-transfer legislation
would encounter another hurdle: The
statute does not appear to support a
private action, except for enforcement of
a single subsection. See Cal. Fin. Code
sec.1810.5(c). California respects a
legislative decision to commit
enforcement to an agency rather than
private plaintiffs, see Moradi-Shalal v.
Fireman’s Fund Insurance Cos., 46 Cal. 3d
287, 300, 758 P.2d 58 (1988), making it
hard to see how the class could have used

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sec.1810 and its cousins to advantage.
The class representatives cannot be
branded as inadequate on account of their
decision to abjure reliance on California
law.
Let us turn, then, to the adequacy of
the settlement. This is one of many class
actions in which everyone other than the
plaintiffs has been paid in cash. The
attorneys got cash, the charitable
organizations got cash, and the customers
got coupons. That’s enough to raise
suspicions--especially because coupons
serve as a form of advertising for the
defendants, and their effect can be
offset (in whole or in part) by raising
prices during the period before the
coupons expire. Maybe class actions would
be prosecuted more vigorously if the
class and class counsel had to accept the
same coin. But the objectors do not say
that the lawyers have been overpaid; they
say that the customers have been
underpaid. And that contention cannot be
evaluated by stopping with the fact that
compensation in kind is worth less than
cash of the same nominal value. (Coupons
are stand-ins for the wire transfer
service, making them a form of in-kind
payment.) Instead one must ask whether
the value of relief in the aggregate is a
reasonable approximation of the value of
plaintiffs’ claim. Prospective relief to
which the defendants have agreed will
alert class members to the fx spread and
promote competition that may drive the
retail price of pesos closer to the
interbank price; that is not an outcome
to be sneered at. And the coupons, too,
have value.
Not the $400 million face value, surely.
Experts estimated that about half of the
coupons would be claimed, and 20% to 30%
of those claimed would be used, implying
a net value of $40 million to $60
million. That conclusion is supported by
the analysis of other coupon settlements
and some survey research exploring the
likely behavior of this class. Persons
who transfer money to Mexico do so an
average of 14 times annually, providing
ample opportunities to use the coupons
independent of their effect in
stimulating demand. The coupons can be
used throughout a 35-month period, and,
because they are transferable, even class
members who do not again use defendants’
services may obtain some value (if not by

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selling them, then by giving them to rel
atives).
Were the class’s claims worth more than
$40 million, plus the cy pres relief,
plus the value of the injunction? Like
the district court, we think not--indeed,
we think that the claims had only
nuisance value (including their value in
generating bad public relations for the
defendants). This settlement is more in
the nature of a PR gesture, coupled with
a goal of freedom from a drumbeat of
litigation (similar suits have been filed
in many state and federal courts across
the nation), than an exchange of money
(or coupons) for the release of valuable
legal rights. No state or federal law
requires either currency exchanges or
wire-transfer firms to disclose the
interbank rate at which they buy specie,
as opposed to the retail rate at which
they sell currency (and the retail price
is invariably disclosed). That is why the
plaintiffs have been driven to make
generic fraud claims. But since when is
failure to disclose the precise
difference between wholesale and retail
prices for any commodity "fraud"?
Money is just a commodity in an
international market. See Dunn v. CFTC,
519 U.S. 465 (1997). Pesos are for sale--
at one price for those who buy in bulk
(parcels of $5 million or more) and at
another, higher price for those who buy
at retail and must compensate the
middlemen for the expense of holding an
inventory, providing retail outlets,
keeping records, ensuring that the
recipient is the one designated by the
sender, and so on. Neiman Marcus does not
tell customers what it paid for the
clothes they buy, nor need an auto dealer
reveal rebates and incentives it receives
to sell cars. This is true in financial
markets no less than markets for physical
goods. The customer of a bank’s foreign-
exchange section (or an airport’s
currency kiosk) is quoted a retail rate,
not a wholesale rate, and must turn to
the newspapers or the Internet to
determine how much the bank has marked up
its Swiss Francs or Indian Rupees. The
holder of a checking account may be
promised a small interest rate (say, 2%)
on the balance and is not told at what
rate the bank lends these funds to its
own customers. Nor need the bank, or an
intermediary such as MoneyGram, explain

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to customers how it profits from the
float on funds it holds for a day or two
between receipt and delivery. MoneyGram
and Western Union revealed truthfully,
and separately, the exchange rate they
offered (the price per peso) and the rate
for the wire transfer to Mexico.
Eachcustomer was told how many dollars in
the United States would result in how
many pesos delivered in Mexico. Nothing
in this transaction smacks of fraud, so
the settlement cannot be attacked as too
low.
Affirmed

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