Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-16-05086/USCOURTS-ca6-16-05086-0/pdf.json

Parties Involved:
Michael Brown
Appellee
Cordish Operating Ventures, LLC
Appellant
Entertainment Concepts Investors Services, LLC
Appellant
Entertainment Consulting Services, LLC
Appellant
FSH Management, LLC
Appellant
FSL Management, LLC
Appellant
Holly Goodman
Appellee
Kristin Moore
Appellee
Gary Muncy
Appellee
David Skyrm
Appellee
William Whitlock
Appellee

Document Text:

1 

RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 16a0287p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

_________________ 

WILLIAM WHITLOCK; DAVID SKYRM; KRISTIN 

MOORE; HOLLY GOODMAN; GARY MUNCY;

MICHAEL BROWN, 

Plaintiffs-Appellees, 

v. 

FSL MANAGEMENT, LLC; ENTERTAINMENT 

CONCEPTS INVESTORS SERVICES, LLC; CORDISH 

OPERATING VENTURES, LLC; ENTERTAINMENT 

CONSULTING SERVICES, LLC; FSH MANAGEMENT,

LLC, 

Defendants-Appellants. 

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No. 16-5086 

Appeal from the United States District Court 

for the Western District of Kentucky at Louisville. 

No. 3:10-cv-00562—Joseph H. McKinley, Jr., Chief District Judge. 

Argued: October 20, 2016 

Decided and Filed: December 14, 2016 

Before: GUY, BOGGS, and GRIFFIN, Circuit Judges. 

_________________ 

COUNSEL 

ARGUED: Clark C. Johnson, STITES & HARBISON PLLC, Louisville, Kentucky, for 

Appellants. Michele D. Henry, CRAIG HENRY PLC, Louisville, Kentucky, for Appellees. ON 

BRIEF: Clark C. Johnson, Chadwick A. McTighe, Jeffrey S. Moad, STITES & HARBISON 

PLLC, Louisville, Kentucky, for Appellants. Michele D. Henry, CRAIG HENRY PLC, 

Louisville, Kentucky, for Appellees. 

>

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_________________ 

OPINION 

_________________ 

BOGGS, Circuit Judge. This appeal arises out of a class certification and a courtapproved class-action settlement. The defendants-appellants, who were parties to the settlement, 

challenge both of these determinations, arguing that because the underlying Kentucky state-law 

cause of action does not support class relief, the district court was required to reject the 

settlement and decertify the class. Whatever the substance of Kentucky state law, a point which 

this court need not decide here, we hold that it does not affect the ability of the district court to 

enforce a binding settlement agreement. For this reason, we affirm the decision of the district 

court and uphold the disputed settlement agreement. 

I 

A 

 In 2010, plaintiffs William Whitlock, David Skyrm, James Middleton, and Kristin Moore 

brought suit in Kentucky state court against the defendants, FSL Management, LLC, 

Entertainment Concepts Investors, LLC, and Cordish Operating Ventures, LLC. The plaintiffs 

were former employees of various establishments that operate in “Fourth Street Live,” an 

entertainment district located in downtown Louisville, KY that was managed by the defendants. 

The plaintiffs individually alleged violations of the Kentucky Wage and Hour Act, KRS 

§ 337.385, against the defendants for their policies regarding off-the-clock work and mandatory 

tip-pooling. Citing proper diversity jurisdiction, defendants removed the action to federal court, 

whereupon the plaintiffs amended their complaint to include an additional defendant and to seek 

relief as a class. The court granted leave for the plaintiffs to amend their complaint, and the 

litigation proceeded as a class-action suit. 

 In 2012, the district court granted class certification to the plaintiffs, finding that they had 

both met the requirements of Rule 23(a) and fell within one of the enumerated subcategories of 

Rule 23(b). The defendants successfully stayed the class-action litigation while they pursued 

interlocutory review in this court, but their petition for review was denied. In re FSL Mgmt., 

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LLC, No. 12-0509 (6th Cir. Jan 31, 2013). In April 2013, the defendants filed a motion in the 

district court to reconsider its prior order certifying the class. Specifically, the defendants argued 

that the Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), coupled 

with its decision to vacate two related class-certification orders, see In re Whirlpool Corp. FrontLoading Washer Products Liability Lit., 678 F.3d 409 (6th Cir. 2012), vacated and remanded, 

133 S. Ct. 1722 (Apr. 1, 2013); Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012), vacated 

and remanded, 133 S. Ct. 1722 (Apr. 1, 2013), supported reconsideration of the plaintiffs’ class 

certification. The district court denied the motion to reconsider class certification, and the parties 

subsequently began settlement discussions. 

In May 2014, the parties reached an agreement as to the financial component of the 

settlement. It would take them almost another year, however, until the parties could reach an 

agreement regarding the settlement’s non-monetary terms. Emails between the parties suggest a 

final agreement was reached as to all of the settlement’s terms sometime around March 19 and 

March 20, 2015. On March 20, 2015, the parties filed a joint status report with the district court 

declaring that they had “agreed to the terms of a settlement agreement and anticipate filing the 

formal settlement documents . . . by April 17, 2015.” 

 Soon after this joint status report had been filed with the court, the defendants became 

aware of a February 27, 2015 decision by the Kentucky Court of Appeals, McCann v. Sullivan 

University Systems, Inc., No. 2014-CA-000392-ME, 2015 Ky. App. Unpub. LEXIS 862 (Ky. 

App. Feb. 27, 2015). McCann held that KRS § 337.385, the same provision under which the 

plaintiffs had brought suit in this case, could not support class-action claims. Id. at *9. On 

March 26, 2015, the plaintiffs in McCann filed a motion for discretionary review with the 

Kentucky Supreme Court. McCann v. Sullivan Univ. Sys. Inc., 2015-SC-000144. Buoyed by 

this discovery, the defendants filed a motion with the district court on April 15, 2015, seeking to 

stay approval of the settlement agreement in light of McCann. When the court denied this 

motion and granted preliminary approval of the settlement, the defendants again brought an 

appeal to this court. In an order dated October 27, 2015, we denied their second appeal as 

untimely, reasoning that the defendants had not challenged an appealable class-certification order 

in accordance with Rule 23(f). In our denial, we made it clear that while their appeal was 

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untimely, the defendants remained free to move the district court “to decertify the class on the 

basis of new developments.” In re FSL Mgmt., LLC, No. 15-0504 (6th Cir. Oct. 27, 2015) 

(order). 

 Following our advice, the defendants filed a motion with the district court, pursuant to 

Fed. R. Civ. P. 23(c)(1)(C), to decertify the class based on the rule and the Kentucky Court of 

Appeals decision in McCann. The plaintiffs urged the district court to maintain certification and 

grant final approval to the proposed class settlement. On December 22, 2015, the district court 

filed a memorandum opinion and order denying the defendants’ motion to decertify the class, 

and granting final approval of the plaintiffs’ proposed class action settlement. In its opinion, the 

district court concluded that, regardless of the present meaning of KRS § 337.385,1 it was bound 

to maintain class certification and enforce the settlement agreement as “a binding contract under 

Kentucky law.” In so doing, the court below rejected the defendants’ two arguments: 1) that 

both Rule 23 of the Federal Rules of Civil Procedure and the Rules Enabling Act require 

decertifying the class in light of KRS § 337.385’s prohibition against class-action litigation; and 

2) that Rule 23(e) requires the district court to refuse to enforce the class-action settlement in 

light of the same state statutory prohibition. Defendants raise both in this appeal. 

II 

 As a preliminary issue, we must first decide whether KRS § 337.385 prohibits classaction litigation. Although the district court did not definitively decide this point, we review the 

application of state law de novo. Matilla v. South Kentucky Rural Elec. Co-op. Corp., 240 F. 

App’x 35, 38 (6th Cir. 2007). 

A 

 When a federal court is required to apply state law, we are required to do so in 

accordance with the controlling decisions of that state’s highest court. See Allstate Ins. Co. v. 

 1

The district court suggested that the defendants had made a plausible case about the meaning of KRS 

§ 337.385, but chose not to reach the issue. “[H]ad the parties . . . not reached a settlement in this matter, the Court 

would stay the action pending resolution of this issue by the Kentucky Supreme Court, instead of decertifying the 

class as argued by the Defendants.” Whitlock v. FSL Mgmt., LLC, No. 3:10CV-00562-JHM, 2015 WL 9413142, at 

*3 (W.D. Ky. Dec. 22, 2015). 

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Thrifty Rent-A-Car Sys., Inc., 249 F.3d 450, 453–54 (6th Cir. 2001). If the state’s highest court 

has not yet addressed the issue, “we must predict how that court would rule, by looking to ‘all 

available data.’” Prestige Cas. Co. v. Michigan Mut. Ins. Co., 99 F.3d 1340, 1348 (6th Cir. 

1996) (quoting Kingsley Assoc. v. Moll PlastiCrafters, Inc., 65 F.3d 498, 507 (6th Cir. 1995)). 

“Relevant data include decisions of the state appellate courts, and those decisions should not be 

disregarded unless we are presented with persuasive data that the [state supreme court] would 

decide otherwise.” Kinglsey Assoc., 65 F.3d at 507. 

 We are asked to exercise our powers of divination in this case. Neither party contends 

that the Kentucky Supreme Court has rendered a binding decision on this issue. See Appellants’ 

Br. at 14; Appellees’ Br. at 19. Rather, both parties recognize that the question will be 

definitively answered when the Kentucky Supreme Court hands down its decision in McCann v. 

Sullivan Univ. Sys., No. 2014-CA-000392-ME, 2015 Ky. App. Unpub. LEXIS 862 (Ky. App. 

Feb. 27, 2015), cert. granted, 2015-SC-000144-DG, 2015 Ky. LEXIS 1970 (Ky. Oct. 21, 2015). 

Consequently, they each point to a range of cases in order to persuade this court how the 

Kentucky Supreme Court will rule. Neither party makes a particularly compelling showing. 

 But we do not need to decide this issue today. Rather than venture into the wilderness of 

undecided Kentucky state law, a practice which is best left to the capable jurists of the Kentucky 

Supreme Court, we assume without deciding that the appellants’ view of Kentucky state law is 

correct. We nonetheless conclude that a post-settlement change in the law does not alter the 

binding nature of the parties’ settlement agreement, nor does it violate Rule 23 of the Federal 

Rules of Civil Procedure or the Rules Enabling Act. 

III 

 We review a district court’s decision to certify a class for abuse of discretion. See 

Randleman v. Fidelity Nat. Title Ins. Co., 646 F.3d 347, 351 (6th Cir. 2011). “A district court 

abuses its discretion ‘when [it] relies on erroneous findings of fact, applies the wrong legal 

standard, misapplies the correct legal standard when reaching a conclusion, or makes a clear 

error of judgment.’” Beattie v. CenturyTel, Inc., 511 F.3d 554, 560 (6th Cir. 2007) (alteration in 

original) (quoting Reeb v. Ohio Dep’t of Rehab. and Corr., 435 F.3d 639, 644 (6th Cir. 2006)). 

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A 

 The appellants first argue that continued certification of the class was improper under the 

terms of Rule 23 of the Federal Rules of Civil Procedure. Rule 23 regulates the procedural facets 

of class-action claims brought in federal court. It establishes strict requirements for class 

certification, obligating prospective class-action plaintiffs to satisfy all of the conditions of Rule 

23(a) and come within one provision of Rule 23(b). See Coleman v. General Motors Acceptance 

Corp., 296 F.3d 443, 446 (6th Cir. 2002). Rule 23(a) lists four “threshold requirements” that are 

applicable to all class actions: 

(1) numerosity (a class so large that joinder of all members is impracticable); 

(2) commonality (questions of law or fact common to the class); (3) typicality 

(named parties’ claims or defenses are typical of the class); and (4) adequacy of 

representation (representatives will fairly and adequately protect the interests of 

the class). 

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997) (internal quotation marks omitted). 

Rule 23(b) sets forth three types of class-action suits. The only type relevant to this litigation is 

Rule 23(b)(3), which permits a class to be certified where “the court finds that the questions of 

law or fact common to class members predominate over any questions affecting only individual 

members, and that a class action is superior to other available methods for fairly and efficiently 

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). This class-action was certified under 

both Rule 23(a) and (b)(3). 

 A district court “retains the ability to monitor the appropriateness of class certification 

throughout the proceedings and to modify or decertify a class at any time before final judgment.” 

In re Integra Realty Resources, Inc., 354 F.3d 1246, 1261 (10th Cir. 2004). This includes the 

duty to decertify the class after a settlement agreement has been reached between the parties, but 

where the requirements of class certification had not been met. See Amchem Prods., Inc., 

521 U.S. at 620–28 (holding that courts are “bound to enforce” Rule 23’s certification 

requirements, even where it means decertifying a class after they had reached a settlement 

agreement and submitted it to the court for approval). The district court chose not to exercise 

this power, instead concluding that “the fact that the Defendants voluntarily settled this wage and 

hour class action” permitted it to maintain class certification and enforce the settlement. The 

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appellants argue that irrespective of the settlement agreement, the prohibition against class-action 

litigation in KRS § 337.385(2) required the district court to decertify the class, as the Supreme 

Court had done in Amchem. See Appellants’ Br. at 17. 

 The appellants fundamentally misread Amchem, however. Although the appellants are 

right to note that Amchem stands for the principle that the “dominant concern[s] [of Rule 23(a) 

and (b)] persist[] when settlement, rather than trial, is proposed,” Amchem Prods., Inc., 521 U.S. 

at 619–21, they fail to recognize the intended beneficiaries of Rule 23’s requirements. Amchem

makes clear that the certification provisions of Rule 23 are designed to “focus court attention on 

whether a proposed class has sufficient unity so that absent members can fairly be bound by 

decisions of class representatives.” Id. at 621 (emphasis added). Unlike in Amchem, where 

certification of the “sprawling” class was challenged by numerous objectors both in and out of 

the plaintiff class, id. at 624, the challenge to class certification in this case comes from the 

defendants-appellants. As Rule 23 was never designed to protect the interests of parties who 

were fairly represented throughout the class-action litigation process, the appellants’ reliance 

upon Amchem is misplaced. 

 But of course this puts the cart before the horse, as the appellants have failed to make any 

argument explaining why the prohibition against class-action litigation in KRS § 337.385(2) 

disturbs any of the class-certification requirements set forth in Rule 23(a) or (b). In fact, the 

appellants seem to hope that this court will fill in the gaps on their behalf. They only summarily 

analogize this case to Amchem, concluding that because certification in that case was improper, 

“the District Court here should have decertified the class and refused to approve a settlement 

because Kentucky substantive law prohibits class actions.” Appellants’ Br. at 17. Appellants’ 

blanket statement does not survive close scrutiny. Only two of the four threshold requirements 

in Rule 23(a), commonality and typicality, even reference substantive law, and neither appear to 

be impacted by the appellants’ proposed meaning of KRS § 337.385(2). Common sense reveals 

why this is the case: the purported bar against class-action litigation in KRS § 337.385(2) is a 

procedural element of the statute. Even if the statute is read to prohibit class-action suits, it in no 

way affects the ability of class-plaintiffs to individually bring claims under the statute for alleged 

wage and labor violations. So long as the substantive elements of a cause of action under the 

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statute remain unchanged, the ability of class plaintiffs to satisfy Rule 23(a)’s commonality and 

typicality requirements will similarly remain unaffected. 

 This subtle distinction is borne out in the sparse, but informative, case law that the 

appellants present to this court. Throughout their brief, the appellants cannot cite a single case 

that stands for the proposition that a state statutory provision prohibiting class-action suits results 

in a failure to meet Rule 23(a) or (b) certification requirements. Rather, the cases that the 

appellants do cite suggest that such a provision is fatal not to Rule 23’s certification 

requirements, but rather to Rule 23 more generally under the Rules Enabling Act. See, e.g., 

Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010) (controlling op.)2

(discussing a conflict between a New York rule prohibiting class-action suits and Rule 23 solely 

with regards to the Rules Enabling Act); Williams v. King Bee Delivery, LLC, No. 5:15-CV-306-

JMH, 2016 U.S. Dist. LEXIS 104001, at *19–*22 (E.D. Ky. Aug. 8, 2016) (holding that KRS 

§ 337.385(2) prevents class certification under Rule 23 in federal court because of the Rules 

Enabling Act); Anderson v. GCA Servs. Grp. of N.C., Inc., No. 1:15-CV-37-GNS, 2015 U.S. 

Dist. LEXIS 119742, at *6–*7 (W.D. Ky. Sept 9, 2015) (same); Green v. Platinum Rests. MidAmerica, LLC, No: 3:14-CV-439-GNS, 2015 U.S. Dist. LEXIS 171647, at *17–*23 (W.D. Ky. 

Feb. 24, 2015) (same); Davenport v. Charter Commc’ns, LLC, 35 F. Supp. 3d 1040, 1049–51 

(E.D. Mo. 2014) (same). 

 In sum, though the appellants are right to suggest that Amchem requires a district court to 

evaluate whether the requirements of class certification have been met even where the parties 

have reached a settlement agreement, they have failed to show that their proposed meaning of 

KRS § 337.385(2) operates to prevent the plaintiffs from satisfying Rule 23’s certification 

requirements. Therefore, to the extent that the district court concluded that continued 

 2

This is an unusual case. While Justice Scalia delivered the opinion for a five-justice majority with respect 

to Parts I (procedural history) and II-A (finding a conflict between Rule 23 and the New York rule), the court 

splintered on the remaining issues. Justice Scalia wrote a four-justice plurality opinion explaining that Rule 23 

always superseded state class-action rules in federal court. Justice Ginsburg wrote a four-justice plurality opinion 

taking the opposite position. Justice Stevens wrote an opinion concurring in the judgment, but also agreeing with 

Justice Ginsburg that there are some instances where state procedural rules function as part of the state’s definition 

of substantive rights and remedies and thus must be applied in federal court. As Justice Stevens’s opinion is the 

narrowest in support of the judgment, it technically controls. See Marks v. United States, 430 U.S. 188, 193 (1977). 

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certification of the class was proper under Rule 23 of the Federal Rules of Civil Procedure, it did 

not abuse its discretion. 

B 

 The appellants also argue that the Rules Enabling Act required the district court to 

decertify the class. The Rules Enabling Act provides that court-created procedural rules, such as 

Rule 23 of the Federal Rules of Civil Procedure, “shall not abridge, enlarge, or modify any 

substantive right.” 28 U.S.C. § 2072(b). Here, the appellants argue that continued certification 

of the class under Rule 23 operates to modify the scope of the state substantive right defined in 

KRS § 337.385(2). 

Had the plaintiffs-appellees sought to litigate this case on the merits rather than settle, the 

appellants might have a strong case. They argue that permitting certification of a class-action 

suit pursuant to Rule 23 directly conflicts with the statutory prohibition against class-action 

litigation in KRS § 337.385(2). Further, they argue that because this prohibition “is procedural 

in the ordinary use of the term but . . . so intertwined with a state right or remedy that it functions 

to define the scope of the state-created right,” Shady Grove, 559 U.S. at 422, permitting class 

certification under Rule 23 would “modify [that] substantive right” in violation of the Rules 

Enabling Act. 28 U.S.C. § 2072(b). In Shady Grove, the Court dealt with a similar conflict 

between Rule 23 and a New York rule that prohibited certain class-action suits. In a uniquely 

splintered opinion, see supra n.2, the Court held that while the Rules Enabling Act was not 

violated in that case (because the New York rule was merely procedural), it would be violated 

where the rule was effectively part of the state substantive right. Shady Grove, 559 U.S. at 422. 

In making this distinction, Justice Stevens emphasized that the rule in that case “expressly and 

unambiguously applie[d] not only to claims based on New York law but also to claims based on 

federal law or the law of any other State.” Id. at 432. Here, the prohibition on class-action 

litigation only applies to claims brought under the Kentucky Wage and Hour Act, and it appears 

within the same statutory provision that creates the private cause of action. KRS § 337.385(2). 

Thus, as three district courts have concluded, we assume without deciding that the Kentucky 

statute’s purported prohibition against class-action litigation is substantive for the purposes of the 

Rules Enabling Act. See Williams, 2016 U.S. Dist. LEXIS 104001, at *19–22 (holding that KRS 

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§ 337.385(2) prevents class certification under Rule 23 in federal court because of the Rules 

Enabling Act); Green, 2015 U.S. Dist. LEXIS 171647, at *17–23 (same); Davenport, 35 F. 

Supp. 3d at 1049–51 (same). 

 This does not settle the matter, however. Those cases involved parties that had not yet 

reached an agreement to settle their claims. Although a district court is duty bound to decertify a 

class, where necessary, until final judgment, see supra Part III.A, the Rules Enabling Act is not 

fatal to class certification where, as here, class certification is sought to enforce a settlement 

agreement. “[T]he proposed settlement could not violate the Rules Enabling Act since a ‘court’s 

approval of a voluntary settlement, by nature a compromise of rights, does not affect substantive 

state rights.’” Sullivan v. DB Investments, Inc., 667 F.3d 273, 312 (3d Cir. 2011) (quoting In re 

Prudential Ins. Co. Am. Sales Practice Litig., 962 F. Supp. 450, 561 (D.N.J. 1997), aff’d sub 

nom. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283 (3d Cir. 

1998)). Rather, “a district court’s certification of a settlement simply recognizes the parties’ 

deliberate decision to bind themselves according to mutually agreed-upon terms without 

engaging in any substantive adjudication of the underlying causes of action.” Sullivan, 667 F.3d 

at 312. As certification of the settlement class does not amount to “a finding that the plaintiffs 

are actually entitled to relief under substantive state law,” id. at 313, it cannot be the case that 

certification acts to “abridge, enlarge, or modify any substantive right” created by state law. 

28 U.S.C. § 2072(b). Therefore, certification of the settlement class in this case does not 

implicate the Rules Enabling Act, even where we assume that the appellants’ reading of KRS 

§ 337.385(2) is correct and that it constitutes a substantive provision of the Kentucky statute. 

IV 

 The appellants also argue that, irrespective of the propriety of class certification, the 

district court erred when it approved the settlement agreement under Rule 23(e) of the Federal 

Rules of Civil Procedure. Just as with the district court’s decision to maintain class certification, 

we review a district court’s decision to approve a class-action settlement agreement for abuse of 

discretion. Vassalle v. Midland Funding LLC, 708 F.3d 747, 754 (6th Cir. 2013). 

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A 

 Rule 23(e) establishes additional rules for the settlement, dismissal, or compromise of 

class claims. It requires that class-action claims “may be settled, voluntarily dismissed, or 

compromised only with the court’s approval.” Fed. R. Civ. P. 23(e) (emphasis added). 

Approval is only warranted where the court determines, inter alia, that the proposed class 

settlement would be “fair, reasonable, and adequate.” Id. Factors that guide this inquiry include: 

(1) the risk of fraud or collusion; (2) the complexity, expense and likely duration 

of the litigation; (3) the amount of discovery engaged in by the parties; (4) the 

likelihood of success on the merits; (5) the opinions of class counsel and class 

representatives; (6) the reaction of absent class members; and (7) the public 

interest. 

UAW v. GMC, 497 F.3d 615, 631 (6th Cir. 2007). Courts have also used Rule 23(e) to consider 

“legitimate concerns about federal-state relations.” Georgevich v. Strauss, 772 F.2d 1078, 1085 

(3d Cir. 1985). 

 The appellants argue that these factors require that the court refuse to enforce a proposed 

settlement under Rule 23(e) where, as here, substantive state law prohibits class-actions. 

Specifically, the appellants argue that approval of the proposed settlement violated Rule 

23(e)(2)'s “fairness” requirement because the proposed settlement contravened Kentucky public 

policy. See Appellants’ Br. at 17–20. To this end, the appellants cite to a range of cases 

involving consent decrees, which the appellants argue include a “fairness” requirement 

analogous to the kind in Rule 23(e). In these cases, courts have evaluated the public-interest 

component of the “fairness” inquiry by “consider[ing] whether the decree is ‘consistent with the 

public objectives sought to be attained by [the legislature].’” United States v. Lexington-Fayette 

Urban Cty. Gov’t, 591 F.3d 484, 489 (6th Cir. 2010) (quoting Williams v. Vukovich, 720 F.2d 

909, 923 (6th Cir. 1983) (citation omitted)). Thus, where “a change in law eliminates the rights 

and duties the consent decree is designed to enforce, then it should not be enforced simply 

because the parties agreed to it.” Brown v. Tenn. Dep’t of Fin. & Admin., 561 F.3d 542, 546 (6th 

Cir. 2009) (citation omitted). The appellants argue that the “new” meaning of KRS § 337.385(2) 

constitutes a change in law, and that just as with consent decrees, the court has an obligation 

under Rule 23(e) to refuse to enforce the proposed settlement agreement. 

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The appellees argue, and the district court agreed, that nothing in Rule 23(e) prevents the 

district court from enforcing an agreed-upon settlement against defendants who were properly 

represented throughout settlement negotiations. The district court primarily relied upon the 

Third Circuit’s decision in Ehrheart v. Verizon Wireless, 609 F.3d 590 (3d Cir. 2010), a case in 

which the facts bear a startling resemblance to our present controversy. In Ehrheart, a group of 

plaintiffs brought suit against Verizon Wireless for alleged violations of the Fair and Accurate 

Credit Transaction Act (FACTA). Id. at 592. After successfully obtaining class certification, the 

parties began settlement negotiations that culminated in a proposed settlement agreement that 

was given preliminary approval by the district court. Ibid. After preliminary approval had been 

obtained, but before final approval had been given, Congress passed legislation that amended 

FACTA and eliminated the plaintiffs’ underlying cause of action. Ibid. Verizon swiftly filed a 

motion to vacate the district court’s preliminary approval of the parties’ proposed settlement, and 

award judgment to Verizon on the pleadings. Ibid.

 While the district court granted both of Verizon’s motions, the Third Circuit reversed. 

It reasoned that while Rule 23(e) imposed a duty upon the district court to evaluate proposed 

class-action settlements, “[t]he purpose of Rule 23 is to protect the unnamed members of the 

class from unjust or unfair settlements,” not the parties to the settlement who were represented 

by “experienced counsel.” Id. at 592–94. Furthermore, the Third Circuit rejected the notion that 

its obligation to evaluate the settlement under Rule 23(e) was antecedent to the enforcement of a 

binding settlement agreement. “The requirement that a district court review and approve a class 

action settlement before it binds all class members does not affect the binding nature of the 

parties’ underlying agreement.” Id. at 593 (citing In re Syncor ERISA Litig., 516 F.3d 1095, 

1100 (9th Cir. 2008)). In fact, the use of Rule 23(e) in such a way runs afoul of the “particularly 

muscular” presumption in favor of settlement in class-action litigation. Id. at 593–95. Stated 

more plainly, “the decision to settle a case is a considered one. . . . We will not relieve a party of 

that decision because hindsight reveals that its decision was, given later changes in the law, 

probably wrong.” Id. at 595–96. 

 We agree with the Third Circuit and hold that Rule 23(e) does not bar a district court 

from enforcing a class-action settlement agreement after a post-settlement change in substantive 

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No. 16-5086 Whitlock, et al. v FSL Management, et al. Page 13 

law. The appellants’ argument is a false analogy. Consent decrees differ from class-action 

settlements in numerous respects. To begin with, consent decrees are a prospective form of 

relief involving continuous court oversight. They are designed to be a flexible remedy, easily 

modifiable when the facts or law as to the parties change. See United States v. Swift & Co., 

286 U.S. 106, 115 (1932) (“The consent is to be read as directed towards events as they then 

were. It was not an abandonment of the right to exact revision in the future, if revision should 

become necessary in adaptation to events to be.”). Settlements, conversely, are designed to 

conclude litigable disputes. Finality, not modifiability, is the rule, and settlements are commonly 

treated as contractual agreements between the parties by the courts. See Cantrell Supply, Inc. v. 

Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky. App. 2002) (“An agreement to settle legal claims 

is essentially a contract subject to the rules of contract interpretation.”). Moreover, as the Third 

Circuit recognized, the court-approval mechanism contained in Rule 23(e) is designed to protect 

absent class members and other non-parties to the litigation, not the defendants who misread the 

law and agreed to an unfavorable settlement offer. Even if we agreed with the appellants’ 

consent-decree analogy and found class-action settlements to be modifiable in response to 

changes in substantive law, it would be perverse to the aims of Rule 23(e) to employ it in such a 

way as to rescue a litigating party from a bargain poorly struck. For these reasons, we hold that 

the district court did not abuse its discretion when it enforced the parties’ settlement agreement. 

V 

 The appellants seek to reverse the district court’s order to maintain class certification and 

enforce the proposed class settlement. They are not entitled to that relief because even if we 

assume that their proposed interpretation of Kentucky state law is correct, they fail to show that 

the district court abused its discretion. For this reason, we AFFIRM the decision of the district 

court to maintain class certification and to approve the parties’ settlement agreement. 

 Case: 16-5086 Document: 39-2 Filed: 12/14/2016 Page: 13