Managing Class Action Litigation: 

A Pocket Guide for Judges

Third Edition

Barbara J. Rothstein & Thomas E. Willging

Federal Judicial Center 

2010

This Federal Judicial Center publication was undertaken in furtherance of the Center’s statutory mission to develop educational materials for the judicial branch. While the Center 

regards the content as responsible and valuable, it does not refl ect policy or recommendations of the Board of the Federal Judicial Center.

iii

Contents

Preface, v

Introduction, 1

I. Determining Federal Jurisdiction, 3

 A. Burdens of proof, 4

B. Amount in controversy, 4

 C. Home-state exception, 5

D. Local-controversy exception, 5

 E. Discretionary jurisdiction, 6

II. Selection of Counsel, 6

 A. Single-lawyer model, 7

B. Private ordering, 7

 C. Selection by the judge, 8

D. Empowered plaintiff model, 8

 E. Competitive bidding, 8

III. Timing and Signifi cance of Class Certifi cation, 9

 A. Timing, 9

B. Class certifi cation, 9

 C. Defi ning the class, 9

D. Multiple class actions, 10

 E. Notice, 11

IV. Settlement Review: Risks and Issues, 11

 A. Judge’s role, 12

B. Obtaining information about the settlement, 13

 C. Hot button indicators, 17

D. Preliminary review of the proposed settlement, 23

 E. Warning about claims services, 25

F. Notice issues, 26

 G. Claims processes and response handling, 30

 H. Fairness hearing, 31

V. Attorney Fee Issues, 33

 A. Evaluating monetary and nonmonetary results achieved, 33

B. Methods of calculating fees, 35

 C. “Mega” cases, 36

D. Objectors, 36

 E. Role of government actors, 36

VI. Coordination with State Judges, 38

VII. Use of Special Masters and Court-Appointed Experts, 39

Conclusion, 39

Bibliography, 40

Case Annotations by Topic, 42

v

Preface

This pocket guide is designed to help federal judges manage the increased number of class action cases fi led in or removed to federal 

courts as a result of the Class Action Fairness Act of 2005 (CAFA). 

The 2005 legislation expresses congressional confi dence in the 

abilities of federal judges to ensure “fair and prompt recoveries for 

class members with legitimate claims” and to provide appropriate 

“consideration of interstate cases of national importance under 

diversity jurisdiction.” CAFA § 2(b). This third edition includes an 

expanded treatment of the notice and claims processes. Revisions 

are concentrated in parts III and IV.

 CAFA also calls on the judiciary to develop and implement “best 

practices” for achieving the goals of ensuring that settlements are 

fair to class members and ensuring that class members are the 

primary benefi ciaries of any settlement. This guide is part of the 

federal judiciary’s continuing effort to achieve those goals. This 

edition also carries over from the second edition suggestions based 

on recent empirical research indicating that the administration of 

settlements has been less than transparent, especially regarding the 

disclosure of claims rates and actual payments to class members, 

to the detriment of litigants and policy makers. 

 A note of appreciation goes to Judge D. Brock Hornby (D. Me.) 

for his detailed suggestions and outline of topics, which served as 

a catalyst and road map for the original publication. Todd Hilsee, a class action notices expert with The Hilsee Group, supplied 

pro bono assistance in improving the sections on notices and on 

claims processes. We are also grateful to Jared Bataillon, who contributed valuable research assistance for this third edition.

 I hope you fi nd this guide useful in meeting the challenges Congress has entrusted to us in managing class action litigation.

Barbara Jacobs Rothstein

Director, Federal Judicial Center

1

Introduction

Federal Judicial Center materials, particularly the Manual for 

Complex Litigation, Fourth (MCL 4th), have devoted considerable 

attention to class actions, perhaps yielding more information than 

busy judges can absorb. Hence, the need for a pocket guide. In 

enacting the Class Action Fairness Act of 2005 (CAFA) (Pub. L. 

No. 109-2, 119 Stat. 4 (2005)), Congress found both that class actions “are an important and valuable part of the legal system when 

they permit the fair and effi cient resolution of legitimate claims 

of numerous parties” and that “abuses in class actions undermine 

the National judicial system . . . in that State and local courts are 

. . . keeping cases of national importance out of Federal courts.” 

28 U.S.C. § 1711 note (2009). This guide can assist you in discharging the responsibilities those cases entail. The guide distills 

the elements of CAFA’s federal jurisdictional changes and many 

of the most important practices for managing class actions found 

in the MCL 4th, and it provides citations to cases decided after 

publication of the MCL 4th to illustrate many points. For your 

convenience, cross-references to the MCL 4th are also provided in 

the guide. Cases and other references are presented in the Bibliography and Case Annotations by Topic at the end of the guide. 

 As Congress found, class action litigation allows for the resolution of many claims that might otherwise evade legal enforcement. Class actions may also help regulators control conduct that 

threatens to harm various markets. Securities and other consumer 

class actions serve to enforce regulatory standards designed to deter fraudulent marketplace conduct that might otherwise escape 

regulation. Members of Congress and others who assert class actions’ general utility also point, however, to abuses that threaten to 

undermine their usefulness. Critics single out cases in which the 

benefi ts accruing to the class as a whole and to the public seem 

minimal. 

 Class actions demand that judges play a unique role. There is 

no such thing as a simple class action. Every class action has hidden hazards that can surface without warning. Your role includes 

anticipating the consequences of poorly equipped class represen-
Class Action Pocket Guide (3d ed.)

2

tatives or attorneys, inadequate class settlement provisions, and 

overly generous fee stipulations. The high stakes of the litigation 

heighten your responsibility, and what’s more, you cannot rely on 

the adversaries to shape the issues that you must resolve in the 

class context. Indeed, you have to decide fi rst which individuals 

on the plaintiff side—class representatives and class counsel—can 

represent the class adequately and whom you should appoint to 

do so. And, once the adversaries agree on a settlement, you must 

decide—largely without any clash of views from class counsel, 

class representatives, or the defendant—whether that settlement 

is fair, reasonable, and adequate to satisfy the interests of the class 

as a whole. This guide attempts to clarify the class action standards 

that inform those decisions and to make the application of those 

standards more transparent and available to judges and to policy 

makers faced with the task of improving them. It is designed to 

help you determine when class representatives and counsel are 

“adequate” and whether a settlement’s terms are “fair” to the class 

as a whole, “reasonable” in relation to the class’s legitimate claims, 

and “adequate” to redress class members’ actual losses. 

 Recent empirical research indicates that class action settlement 

administration has often not produced the transparent information that judges and policy makers need for reviewing class action 

settlements and setting clear standards for such reviews. Nicholas M. Pace & William B. Rubenstein, How Transparent Are Case 

Outcomes: Empirical Research on the Availability of Class Action 

Claims Data (RAND Corp. 2008). Not only are data about class 

member claims rates and actual recoveries not available to judges 

attempting to evaluate the benefi ts of a settlement to the class, but 

information needed to determine which claims rates are acceptable is not available to judges and policy makers concerned with 

setting standards for future cases. This guide discusses remedies 

for these defi ciencies.

 Now that CAFA is on the books and Federal Rule of Civil Procedure 23 has been amended, you can expect to encounter the following class action responsibilities: 

 • applying CAFA’s federal jurisdiction and removal rules, 

such as its $5 million amount in controversy for the class 
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Class Action Pocket Guide (3d ed.)

as a whole, minimum diversity of citizenship between class 

members and defendants, and complex set of rules regarding federal jurisdiction when the “primary” or “signifi cant” 

defendants are local citizens (discussed in part I);

 • appointing counsel who have the professional skills, legal 

support staff, and fi nancial resources needed to provide the 

class with adequate representation (discussed in part II); 

 • determining when and how to decide class certifi cation motions (discussed in part III); 

 • establishing effective standards and procedures for evaluating the actual value to the class of proposed settlements and 

for determining whether the settlements are fair, reasonable, 

and adequate for class members (discussed in part IV);

 • assessing reasonable attorney fees for class counsel by ensuring that fee awards are commensurate with the value of the 

results to the class as a whole (discussed in part V);

 • coordinating with state judges the management of competing and overlapping class actions (discussed in part VI); and

 • deciding when to use special masters and court-appointed 

experts to assist in managing class actions and reviewing 

settlements (discussed in part VII).

I. Determining Federal Jurisdiction

CAFA provides expanded, but not unlimited, federal jurisdiction 

over class actions. See 28 U.S.C. § 1332(d). Before you invest time 

and energy in managing a class action, your fi rst order of business 

is to determine whether you have jurisdiction. For a comprehensive show cause order form with a checklist of jurisdictional and 

removal issues, see Tam v. Indymac Bank, No. 2:8CV06458, 2008 

WL 4793676 (C.D. Cal. Oct. 30, 2008). 

 Under CAFA, federal district courts have original jurisdiction 

over class actions in which the aggregate amount in controversy 

exceeds $5 million and in which there is “minimal diversity of citizenship,” which means whenever “any member of a class of plaintiffs is a citizen of a State different from [that of] any defendant.” 

28 U.S.C. § 1332(d)(2). But federal jurisdiction is not available if 
Class Action Pocket Guide (3d ed.)

4

“the number of members of all proposed plaintiff classes in the 

aggregate is less than 100,” 28 U.S.C. § 1332(d)(5)(B), or if “the 

primary defendants are states, state offi cials, or other government 

entities against whom the district court may be foreclosed from 

ordering relief,” 28 U.S.C. § 1332(d)(5)(A), presumably because 

the sovereign immunity defense may preclude federal judicial 

remedies. Moreover, for cases that do meet CAFA’s jurisdictional 

standards, exceptions may apply, as discussed below.

A. Burdens of proof

Courts have generally ruled that even under CAFA, the proponent 

of federal jurisdiction—the plaintiff in original federal fi lings and 

the defendant in removed actions—bears the burden of demonstrating federal jurisdiction.

 CAFA, which was a product of congressional compromise, sets 

out a number of exceptions to federal jurisdiction. Courts have 

been clear that the party opposing federal jurisdiction has the burden of establishing that the case falls within a statutory exception. 

B. Amount in controversy 

In an original federal action, the plaintiff need only show the possibility that the amount in controversy, including statutory and 

punitive damages as well as statutory attorney fees, will exceed $5 

million. Once the proponent of federal jurisdiction has established 

the possibility that the amount in controversy exceeds $5 million, 

only legal certainty that the judgment will be less precludes federal 

jurisdiction. So, unless there is a dispute regarding the amount in 

controversy or it is evident that the $5 million amount could not 

possibly be satisfi ed, you can accept well-pleaded allegations that 

$5 million or more is at stake. 

In a case removed from a state court, courts continue to hold 

that the plaintiff is the master of the complaint and courts are 

compelled to accept a plaintiff’s allegations that the amount in 

controversy is less than $5 million unless a defendant shows to 

a legal certainty that damages of more than that amount will be 

established. Moreover, the party challenging federal jurisdiction 

generally has to provide more than allegations; indeed, that party 
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Class Action Pocket Guide (3d ed.)

must provide competent evidence of the facts supporting the challenge. 

 Where the plaintiff has not pleaded a cap on damages, costs, 

and attorney fees, the court may have to resolve disputes about the 

amount in controversy. A defendant who removes a case has the 

burden of showing not only the possible stakes of the litigation 

but also a reasonable probability that the stakes exceed the $5 million mark. Generally, information alleged in the notice of removal, 

perhaps supplemented by declarations or affi davits, will suffi ce. 

C. Home-state exception 

Section 1332(d)(4)(B) of title 28 of the U.S. Code provides that 

a court must decline to exercise jurisdiction over a class action in 

which “two-thirds or more of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens 

of the State in which the action was originally fi led.” As discussed 

above, the objecting party, typically the plaintiff, has the burden 

of proving that this exception applies. Proof of an exception, however, requires more than an allegation and may require affi davits 

and evidence. For an example of an apparently effi cient way of 

producing proof of citizenship for class members in the form of 

a questionnaire, see Martin v. Lafon Nursing Facility of the Holy 

Family, Inc., 548 F. Supp. 2d 268, 273–78 (E.D. La. 2008). CAFA 

states that for the exception to apply, all primary defendants must 

be citizens of the home state, but does not defi ne the term “primary defendant.”

D. Local-controversy exception

Section 1332(d)(4)(A) of title 28 of the U.S. Code creates what has 

been called the “local-controversy exception” to CAFA jurisdiction. CAFA spells out four elements that make up the exception: 

 1. two-thirds of the class members are citizens of the original forum state; 

 2. plaintiffs seek “signifi cant relief” (another undefi ned 

term) from at least one defendant who is a citizen of the 

forum state;
Class Action Pocket Guide (3d ed.)

6

 3. “principal injuries resulting from the alleged conduct . . . 

were incurred” in the forum state; and 

 4. no other class action asserting similar allegations against 

any of the defendants has been fi led within three years 

preceding the fi ling.

Few appellate opinions apply or interpret the above terms, but the 

exception as a whole has been viewed narrowly. A defendant from 

whom “signifi cant relief” is sought appears to be less central to the 

litigation than a “primary defendant” referred to in the home-state 

exception. Likewise, the term “principal injuries” calls for an interpretation that almost all of the injuries occurred within the state.

E. Discretionary jurisdiction

Under CAFA, a federal court may “in the interests of justice and 

looking at the totality of the circumstances, decline to exercise jurisdiction” over a class action in which more than one-third but 

less than two-thirds of the class members are citizens of the original forum state. 28 U.S.C. § 1332(d)(3). The Act lays out six factors for a court to consider before exercising its discretion, starting 

with “whether the claims asserted involve matters of national or 

interstate interest” and proceeding to factors related to the forum 

state’s legal self-interest and nexus to the class members and harms 

alleged. Like the other exceptions, these provisions have been interpreted and applied by few appellate courts. One of the few cases 

to expand on the statutory language is Preston v. Tenet Healthsystem Memorial Medical Center, Inc., 485 F.3d 804, 822–24 (5th Cir. 

2007), which concluded that a class action lawsuit involving Hurricane Katrina-related injuries did not affect a “national interest.” 

II. Selection of Counsel

Attorneys representing classes are in a position to control the litigation process far more than attorneys representing individual clients. The class action device enhances the role of such lawyers by 

virtue of the fact that even the approved class representatives do 

not have legal control over the litigation. Your power to appoint 
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Class Action Pocket Guide (3d ed.)

counsel and approve or reject a class settlement may be the only 

checks and balances on the power of attorneys for the class.

 There are at least fi ve approaches to selection of counsel in 

class action litigation. Note that in multidistrict litigation (MDL), 

the transferee judge has the authority to appoint lead and liaison 

counsel regardless of whether class claims are involved. See MCL 

4th § 10.22. Whatever approach you use, it is important to make 

clear to counsel at the outset the content and form of records you 

require to support applications for awards of fees and expenses 

or for a lodestar cross-check. See part V, “Attorney Fee Issues,” below, and MCL 4th § 14.21. You may fi nd it useful to instruct class 

counsel that all lawyers should submit fee and expense requests in 

a similar format—one that will be accessible to the court.

A. Single-lawyer model

In the typical class action, the lawyer who fi led the case will be the 

only logical choice for appointment as class counsel. That lawyer 

may have investigated the case independently or may have spoken with government regulators, investigative journalists, or other 

public information sources. In those cases, the task of selecting 

counsel consists of determining that the fi ling attorney satisfi es 

Rule 23(g) standards, that is, has the requisite knowledge of the 

substantive law, class action legal experience, and fi nancial and 

staff resources to represent the class adequately. That attorney, of 

course, must not have a confl ict of interest with the class.

B. Private ordering

In high-stakes, high-profi le class action litigation, entrepreneurial 

plaintiff attorneys often compete to play the lead role. This competition may be heightened when the case piggybacks on a case 

investigated and perhaps litigated or prosecuted by a governmental entity. Nonetheless, substantial resources may be necessary to 

fi nance the expenses of the litigation. Most often, attorneys in such 

cases attempt to resolve the competition by “private ordering,” that 

is, by agreeing to divide the labor, expenses, and fees. To safeguard 

the interests of the class and to prevent unnecessary litigation and 

overstaffi ng, you may want to review those agreements (which will 
Class Action Pocket Guide (3d ed.)

8

be subject to disclosure upon settlement in any event). MCL 4th 

§ 21.272. 

C. Selection by the judge

In the absence of private ordering, you will have to select among 

competing counsel by reviewing submissions based on the factors 

identifi ed in Federal Rule of Civil Procedure 23(g)(1)(C). That 

section explicitly permits you to include in the order of appointment “provisions about the award of attorney fees or nontaxable 

costs.” Few judges have unilaterally imposed strict limits on fees 

in the order of appointment. Consider, however, requesting that 

counsel submit ex parte or under seal a proposed budget for fees 

in the case. The budget would serve as an ex ante record of the projected time and expense the case might require; judicial review of a 

proposed fee award at the end of the case would still be necessary, 

but would most likely be easier.

D. Empowered plaintiff model

As mentioned earlier, Rule 23(g) presents explicit criteria and a 

procedure for appointing counsel to represent the class. For securities class actions, the Private Securities Litigation Reform Act 

(PSLRA) directs you to employ a special procedure for selecting 

an “empowered” lead plaintiff (presumptively one with sizable 

claims), who, in turn, has the right to select and retain class counsel, subject to your approval. 

E. Competitive bidding

In a very narrow set of cases, a few courts have used competitive 

bidding to select counsel. After an intensive study, a task force in 

the Third Circuit concluded that competitive bidding “should be 

an exception to the rule that qualifi ed counsel can be selected either by private ordering or by judicial selection of qualifi ed counsel . . . .” Third Circuit Task Force, Report on Selection of Counsel, 74 

Temp. L. Rev. 689, 741 (2001).
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Class Action Pocket Guide (3d ed.)

III. Timing and Signifi cance of 

Class Certifi cation

A. Timing

The 2003 amendments to Rule 23(c)(1) give you fl exibility by allowing you to consider class certifi cation “at an early practicable 

time.” Considering this rule, you should feel free to ignore local 

rules calling for specifi c time limits; such local rules appear to be 

inconsistent with the federal rules and, as such, obsolete. See MCL 

4th § 21.133. The amended rule allows you to rule on motions to 

dismiss or for summary judgment before ruling on class certifi cation.

B. Class certifi cation 

Given the fl exibility in the rules, the most effi cient practice is to 

rule on motions to dismiss or for summary judgment before addressing class certifi cation.

 Determining whether a proposed class meets Rule 23 certifi -

cation requirements demands a rigorous analysis. You have discretion to decide on both the extent of discovery and whether or 

not to hold a hearing to determine whether the requirements have 

been met. You need to make factual and legal determinations with 

respect to the requirements of Rule 23. 

 Ruling on class certifi cation may prove to be unnecessary. The 

most important actions you can take to promote settlement are 

to rule on dispositive motions and then, if necessary, rule on class 

certifi cation.

 If the parties decide to talk about settlement before you make 

any ruling on class certifi cation, they may urge you to certify a 

class for settlement purposes only—a settlement class—as opposed 

to certifying a litigation class for a possible trial. See section IV.C.8 

below; see also MCL 4th § 21.131–.132. 

C. Defi ning the class

Defi ning the class is of critical importance because it identifi es the 

persons (1) entitled to relief, (2) bound by a fi nal judgment, and 
Class Action Pocket Guide (3d ed.)

10

(3) entitled to notice in a Rule 23(b)(3) action. The defi nition must 

be precise, objective, and ascertainable. For example, the class may 

consist of those persons and companies that purchased specifi ed 

products or securities from the defendants during a specifi ed period, or it may consist of all persons who sought employment with, 

or who were employed by, the defendant during a fi xed period. See

MCL 4th § 21.222. Your certifi cation order should specify those 

who are excluded from the class, such as residents of particular 

states, persons who have fi led their own actions or are members of 

another class, and offi cers and directors of the defendants.

 Consider also whether the class defi nition captures all individuals or entities necessary for the effi cient and fair resolution of common questions of fact and law in a single proceeding. If the class 

defi nition fails to include a substantial number of persons with 

claims similar to those of the class members, it is questionable. A 

broader class defi nition or defi nition of a separate class might be 

more appropriate. Feel free to suggest broader or narrower defi nitions that would make a proposed class more manageable. If the 

class defi nition includes people with similar claims but divergent 

interests or positions, subclasses with separate class representatives 

and counsel might suffi ce. See MCL 4th § 21.23. 

Issues classes are classes certifi ed for particular issues or elements of claims or defenses. Though controversial and subject to 

confl icting rules in different circuits, issues classes “may enable a 

court to achieve economies of class action treatment for a portion 

of a case, the rest of which may either not qualify under Rule 23(a) 

or may be unmanageable as a class action.” MCL 4th § 21.24. The 

test is whether the resolution of common issues advances the litigation as a whole, as opposed to leaving a large number of issues 

for case-by-case adjudication.

D. Multiple class actions

Finally, consider class certifi cation in the context of duplicative or 

overlapping class action litigation pending in other federal and 

state courts. Be sure to “obtain complete information from the 

parties about other pending or terminated actions in federal or 

state courts relating to the claims presented.” MCL 4th § 21.25. At 
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Class Action Pocket Guide (3d ed.)

the outset of any class action, consider entering a standing order 

that requires counsel to inform the court promptly of any related 

class actions. Communication and administrative coordination 

with other judges will often be necessary. Other things being equal, 

federal judges should exercise federal jurisdiction over classes of 

nationwide scope; actions limited to single states can be carved out 

of any national certifi cation.

E. Notice

If you certify a class for litigation purposes, be prepared to decide 

on notice and allow members of Rule 23(b)(3) classes the opportunity to opt out before the trial. In fact, whether adequate notice 

can be given may be a signifi cant factor in determining manageability as part of your class certifi cation decision. See In re Vivendi 

Universal, S.A. Securities Litigation, 242 F.R.D. 76, 107–09 (2007). 

Class members, particularly unknown ones, must be able to understand that they are included. This could be a problem, for example, 

if the class member must recall making modest retail purchases in 

certain places, or know that a certain component is contained in 

a product. For a discussion of general notice and communication 

factors, see section IV.F, “Notice issues,” below, as well as the “Notice 

Checklist and Plain Language Guide” available at the Class Action 

Notices Page at www.fjc.gov. The Federal Judicial Center provides 

examples of illustrative class certifi cation notices on our website. 

IV. Settlement Review: Risks and Issues

Reviewing proposed settlements and awarding fees are usually the 

most important and challenging assignments judges face in the 

class action arena. Unlike settlements in other types of litigation, 

class action settlements are not an unequivocal blessing for judges. 

Rule changes, precedent, recent legislation, and elemental fairness 

to class members direct you not to rubber-stamp negotiated settlements on the basis of a cursory review. Current rules, particularly 

Federal Rule of Civil Procedure 23, unambiguously place you in 

the position of safeguarding the interests of absent class members 

by scrutinizing settlements approved by class counsel. Recognizing 
Class Action Pocket Guide (3d ed.)

12

the importance of this, the California panel dealing with complex 

litigation has drafted guidelines specifying content for motions for 

preliminary and fi nal approval of proposed class settlements. See

California Superior Court, Guidelines for Motions for Preliminary 

and Final Approval of Class Settlement (Draft May 3, 2010).

Be aware that adversarial clashes usually end with the settlement. Indeed, most settlements preclude the parties and attorneys 

from opposing the settlement’s provisions, especially the stipulations about attorney fees. Thus, you need to take independent 

steps to get the information you will undoubtedly need to review 

a settlement agreement. 

A. Judge’s role

The judge’s assigned task of approving or disapproving a class settlement presents exceptional challenges. Some courts “have gone 

so far as to term the district judge in the settlement phase of a class 

action suit a fi duciary of the class” and to impose “the high duty 

of care that the law requires of fi duciaries.” Reynolds v. Benefi cial 

National Bank, 288 F.3d 277, 280 (7th Cir. 2002). 

 Because the class itself typically lacks the motivation, knowledge, and resources to protect its own interests, and because settling counsel for both plaintiff and defendant have little or no incentive to offer information adverse to the settlement, you need 

to examine critically the class certifi cation elements, the proposed 

settlement terms, the proposed notice plan, and the procedures 

set out for implementing the proposed settlement. See MCL 4th 

§ 21.61. You need to identify possible sources of information about 

the settlement and use them to obtain, for example, agreements or 

understandings among counsel, the views and experiences of objectors, and the complete terms of the settlement. The next section 

(IV.B) discusses all of those informational sources.

 Reviewing a proposed settlement calls for you to use your traditional judging skills. The central questions relate to the merits of 

the claims and defenses:

 • What are the class claims?

 • How strong are they?
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Class Action Pocket Guide (3d ed.)

 • What is the range of values of a successful claim?

 • How likely is the class to succeed on each claim in further

litigation, including trial?

You may decide to avoid a defi nitive statement on the merits 

because the settlement may fail and the case may come to trial. 

Nonetheless, it seems absolutely necessary to obtain information 

and arguments from the parties about their assessment of the 

probabilities of success and their projection of a realistic range 

of possible recoveries. Reynolds, 288 F.3d at 284–85, discusses this 

approach further. While party submissions may infl uence your 

judgment about the merits, keep in mind that the parties have 

their own interests in supporting the settlement. You may need to 

search elsewhere for information that will allow you to take an independent and hard look at the merits of the claims and defenses. 

B. Obtaining information about the settlement

The key to reviewing a settlement is to obtain information about 

 • the settlement’s terms;

 • the merits of the class members’ claims;

 • the reasons for settling those claims;

 • the settlement’s benefi ts to the class;

 • the number of claims actually fi led by class members;

 • the amount of the settlement that is likely to be distributed

to class members;

 • the reasons for any opposition to the settlement; and

 • the effect of the settlement on other pending litigation.

 This section presents a number of suggestions for gathering 

settlement information, starting with a provision from amended 

Rule 23.

1. Rule 23(e)(3) agreements and prior individual settlements

Federal Rule of Civil Procedure 23(e)(3) directs the parties to “fi le 

a statement identifying any agreement made in connection with 

the proposed settlement.” Let the settling parties know that you 

expect them to provide the full settlement agreement as well as 

an informative summary of other agreements, such as settlement 

agreements for claims similar to those of class members; side un-
Class Action Pocket Guide (3d ed.)

14

derstandings about attorney fees; and agreements about fi ling future cases, sealing of discovery, and the like. See MCL 4th § 21.631. 

The idea is to identify documents that directly or implicitly suggest 

the attorneys’ perceptions of the value of the class claims and that 

may point to funds that might otherwise be available to compensate the class, including attorney fees and payments to objectors.

 Consider directing the parties to provide additional information to aid your assessment of the settlement. Often, information 

about related parallel and overlapping cases, including amounts 

paid to individual plaintiffs or claimants, will shed light on the 

value of the class’s claims. If prior settlements were confi dential, 

direct the parties to provide information for you to review in camera. Pressing the parties to provide objective information about 

the merits and value of the individual claims should advance your 

effort to pin down the merits and value of the class claims. Make 

sure the parties identify and justify any differences in treatment 

of various types of class members. Expert evaluations of the costs 

and present monetary value of all aspects of the settlement to the 

class may be available. Ask counsel what information they used to 

satisfy their professional obligation to advise their clients about 

the value of the proposed settlement. 

2. Preliminary review hearing

Holding a preliminary review hearing will afford you another opportunity to obtain information. If you are deciding whether to 

certify a class at this stage, direct the parties to give you all the 

information and arguments needed to apply the Rule 23(a) and 

(b) criteria. How numerous is the class? What are the common

questions of law and fact, and do they predominate? Why is the

class action superior to other forms of adjudication?

 At the preliminary hearing stage, determine whether the notice to the class will reach a high percentage of the members (see 

section IV.F below), and whether it should include claims forms 

and instructions for completing the claims process before the fi nal 

hearing. Establishing a claims procedure at this stage can provide 

you with valuable information about class members’ rate of presenting claims, information that is often essential in identifying 
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Class Action Pocket Guide (3d ed.)

the true size of the settlement fund, and in making your fairness 

determination. An early claims procedure might also simplify administrative costs, as discussed below in section IV.B.4. The benefi ts of any early claims procedure need to be weighed against the 

possibility that you will decide not to approve the settlement. 

3. Subclasses

Information gleaned from reviewing class certifi cation papers 

should also inform you about any need for subclasses to represent 

separate interests. See MCL 4th § 21.23. The preliminary review 

hearing is usually the last practical opportunity to create subclasses. Appointing counsel for subclasses will generally have the practical effect of sending the parties back to the negotiating table to 

deal with the interests of the new subclasses.

4. Prior action by government entities

When a government regulator has sought or obtained a monetary 

remedy for a class, examine the description of the intended benefi -

ciaries of the government’s action and decide whether you should 

defi ne the class to be certifi ed in the same way. Aligning the class 

defi nition with the description of the benefi ciaries in the governmental action will most likely produce effi ciencies in notifying 

the class, reviewing the settlement, distributing the proceeds, and 

evaluating requests for fees.

 Typically, public enforcement actions result in a consent decree, 

but the government agency may have the statutory power to order 

rescission of agreements and restitution or disgorgement of profits from illegal activities, as the court recognized in In re First Databank Antitrust Litigation, 209 F. Supp. 2d 96, 98 (D.D.C. 2002). 

When an agency action or criminal prosecution against a business 

or its offi cers is successful, a private class action may well follow 

on its heels. In the context of an agency action, the class action can 

serve as the vehicle for distributing monetary relief to the class. In 

In re First Databank, for example, the Federal Trade Commission 

(FTC) got the defendant to agree to a $16–19 million fi gure for 

the disgorgement remedy. Private plaintiffs increased that amount 

by $8 million, and the fi nal disgorgement fi gure was expressly 
Class Action Pocket Guide (3d ed.)

16

declared to be for the purpose of settling the private class action 

lawsuits. As discussed in connection with attorney fees below in 

section V.E, asking the parties to be clear about which entity produced which portion of the award will simplify your decisions on 

attorney fees.

5. Appraisal of settlement

Your appraisal of the settlement should focus on the value actually distributed to the class—based on the number and percentage of class members who have fi led a claim. As discussed below 

in section IV.C.4, strict eligibility requirements and cumbersome 

claims procedures often discourage class claims and might reduce 

the total amount paid to class members, making the stated value of 

the settlement fund illusory. Because there is no clear standard for 

predicting class response rates, consider calculating any attorney 

fee award as a percentage of the amount of the settlement fund 

that has already been distributed to the claimants—even if that 

means deferring fi nal determination of all or part of the fee award 

until the claims process is complete.

 At or after the preliminary review hearing and after reviewing 

the sources of information discussed above, consider whether you 

need an expert’s appraisal of the value of nonmonetary or contingent monetary components of the settlement. If so, this is the time 

to appoint an expert, special master, magistrate judge, or other judicial adjunct, as discussed below in part VII. As a practical matter, 

waiting for objections or for the settling parties’ presentations at 

the fairness hearing will be too late. See MCL 4th § 21.644.

6. Information from objectors

Before and during the fairness hearing, you might receive written 

objections and testimony from objectors. Objectors might contribute to your review in various ways. Attorneys who represent 

competing or overlapping classes, such as those in state actions, 

may have useful information on the value of the underlying claims. 

Similarly, attorneys representing individual claimants who seek a 

better recovery for their alleged injuries may help you identify the 
17

Class Action Pocket Guide (3d ed.)

strengths and weaknesses of the settlement and the trade-offs that 

led to the agreement. They may represent class members in state 

court actions with strong state law claims, which would be released 

by the settlement you are faced with. 

 Be sure to monitor any separate agreements to settle the claims 

of these objectors. If objectors settle for the same per capita 

amount as the class, that tends to validate the settlement (assuming that other factors are equal). If they settle for more than the 

class members, ask the settling parties to justify the differential. A 

higher settlement for objectors with similar damage claims might 

signify that the class members did not receive full value for their 

claims. 

 Institutional “public interest” objectors may bring a different 

perspective. Watch out, though, for canned objections from professional objectors who seek out class actions to extract a fee by 

lodging generic, unhelpful protests. Rule 23 gives you authority 

to scrutinize as part of the overall class settlement any side agreements to “buy out” such objectors.

 Generally, government bodies such as the FTC and state attorneys general, as well as nonprofi t entities, have the class-oriented 

goal of ensuring that class members receive fair, reasonable, and 

adequate compensation for any injuries suffered. They tend to 

pursue that objective by policing abuses in class action litigation. 

Consider allowing such entities to participate actively in the fairness hearing. See MCL 4th § 21.643. 

C. Hot button indicators

Some settlement terms show their potential unfairness on their 

face; we call them “hot button indicators.” At the preliminary review stage, signaling your concerns about a proposal containing 

one or more of such indicators may allow you and the parties to 

create a notice and hearing process that will correct any defi ciencies without the need for multiple hearings. Hot button indicators 

include any remedy to which you cannot confi dently assign a cash 

value.
Class Action Pocket Guide (3d ed.)

18

1. Coupons

CAFA calls for judicial scrutiny of coupon settlements and restricts the use of unredeemed coupons in calculating fees for class 

counsel. See 28 U.S.C. § 1712 (2008). It is important to discern 

whether attorney fees are being calculated using the face value of 

the coupons instead of the value of coupons actually redeemed. 

Determine whether the proposed coupons 

 • are transferable;

 • have a secondary market in which they can be discounted

and converted to cash; 

 • compare favorably with bargains generally available to a frugal shopper; and 

 • are likely to be redeemed by class members.

Coupon settlements were rare even before the passage of CAFA. 

Occasionally, you may fi nd that transferable coupons have some 

value to a class of repeat users of a product or service, as they did 

in In re Mexico Money Transfer Litigation, 267 F.3d 743, 748 (7th 

Cir. 2001). Determining the precise value to the class of the rare 

benefi cial coupon settlement, though, calls for hard data on class 

members’ redemption of the coupons.

2. Negative options

Watch for a variant of the coupon settlement—the negative option, which is a gift or benefi t that requires the recipient to take 

affi rmative action to cancel it before a continuing obligation to 

pay arises. The FTC has aptly termed the negative option a “promotional gimmick.” For example, in a California state class action, 

plaintiffs alleged fraud and deceptive and unfair business practices 

against a company selling DVD subscription services. The parties 

agreed to settle these claims for a one-month membership upgrade for current members and a “free” one-month membership 

for past members who had canceled. The catch was that both of 

these “benefi ts” would continue until the class member took affi rmative steps to cancel the membership. In other words, the free 

service was converted automatically into an obligation to pay for 

future services. Apparently as a result of the FTC’s amicus curiae 

participation, the parties renegotiated the settlement to remove 
19

Class Action Pocket Guide (3d ed.)

the automatic renewal feature and the court approved a revised 

settlement. Chavez v. Netfl ix, Inc., 75 Cal. Rptr. 3d 413, 418–21 

(Cal. Ct. App. 2008). For a general defi nition of negative options 

and the FTC regulations governing them, see Use of Prenotifi cation 

Negative Option Plans, 16 C.F.R. pt. 425 (2008).

3. Cy pres relief (“fl uid recovery”)

The term “cy pres” has migrated from the trust fi eld into the sometimes less appropriate realm of class action litigation. Literally, cy 

pres means “as near as possible” to the original purpose. In the 

class action context, recovery for individual class members is 

sometimes not possible or practical. In these instances, the class is 

so large and the potential recovery per class member so small that 

the cost of administering a single claim would exceed the benefi t 

to any individual. Individual reimbursement for taxi fare overcharges is a classic example.

Cy pres relief must come as close as possible to the objective of 

the case and the interests of the class members. Question whether 

the class members might feasibly obtain a personal benefi t. Look 

for evidence that proof of individual claims would be burdensome 

or that distribution of damages would be costly. If individual recoveries do not seem feasible, examine the proximity or distance 

between the cy pres recipient’s interests or activities and the particular interests and claims of the class members. When cy pres 

relief consists of distributing products to charitable organizations 

or others, press for information about whether the products in 

question have retained their face value or might be out-of-date, 

duplicative, or of marginal value. In the end, cy pres awards may be 

an excellent way to avoid the restrictive claims processes and reversion clauses discussed in the next section. 

4. Restrictions on claims/reversion of unclaimed funds to 

defendants

Limits on the amount of recovery per claimant, strict eligibility 

criteria for claimants, or other procedural or substantive obstacles 

to honoring claims from class members may dramatically reduce 

the apparent value of a settlement. Coupled with a provision that 
Class Action Pocket Guide (3d ed.)

20

any unclaimed funds revert to the defendant at the end of the 

claims period (a provision that is generally disfavored, as discussed 

in the next paragraph), restrictions on eligibility are likely to substantially diminish the overall value of a settlement to the class. 

The addition of a “clear sailing” agreement (i.e., a stipulation that 

attorney fees based on the infl ated settlement fi gure will not be 

contested) to an agreement with a reversion clause adds decibels 

to the alarms set off by the reversion clause. Some courts treat the 

combination as creating a presumption of unfairness.

 A reversion clause creates perverse incentives for a defendant to 

impose restrictive eligibility conditions and for class counsel and 

defendants to use the artifi cially infl ated settlement amount as a 

basis for attorney fees. Instead of approving a settlement with a 

reversion clause, consider encouraging the parties to use an alternative approach, such as distributing the entire settlement fund 

to the class members who fi le claims. Prorating the fund in that 

way avoids the possibility of unclaimed funds and is a standard 

practice in securities class settlements. For a discussion of alternative ways of prorating a settlement fund, see Francis E. McGovern, 

Distribution of Funds in Class Actions-Claims Administration, 35 J. 

Corp. L. 123 (2009).

 To align plaintiff counsel’s interests with those of the class, to 

discourage the use of a reversion clause, and to negate the effect of 

a clear sailing agreement, consider linking the award of attorney 

fees to the value of the funds distributed to the class or the coupons redeemed by the class (see section V.B below).

5. Collusion: “Reverse auctions” and the like

An imbalance between the cash value of the settlement to the class 

as a whole and the agreed amount of attorney fees is a prime indicator of collusion by settling attorneys. For example, in a settlement with both monetary and nonmonetary relief, if the attorneys 

receive the lion’s share of the cash and the class receives primarily 

nonmonetary relief, including future warrants, coupons, and the 

like, you should look for solid information to justify the imbalance. Likewise, you should scrutinize an agreement that provides 

that attorneys receive a noncontingent cash award and that class 
21

Class Action Pocket Guide (3d ed.)

benefi ts are contingent on settlement approval and claims made. 

See MCL 4th § 21.71. 

 “Reverse auction” is the label for a defendant’s collusive selection of the weakest attorney among a number of plaintiff attorneys who have fi led lawsuits dealing with the same subject matter; 

in other words, a reverse auction is the “sale” of a settlement to the 

lowest bidder among counsel for competing or overlapping classes. 

See MCL 4th § 21.61, text at n.952 and sources cited therein. For 

a recent example of a district court’s thorough analysis of a proposed settlement with reverse auction principles at the forefront, 

see Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292, 1321 

(S.D. Fla. 2007). In Figueroa, the court rejected a “Third Amended 

Settlement Agreement” in part because the defendant “selected 

counsel confronted with a most precarious position . . . and then 

proceeded to offer and convince Class Counsel to accept highly 

undesirable terms to settle the case.” Determining whether a reverse auction might have occurred requires information about all 

litigation dealing with the subject of the dispute. 

 Another major indicator of a reverse auction is a difference between the apparent value of the class claims on the merits and the 

value of the settlement to class members. A typical element of a 

reverse auction is a promise to pay attorneys more than a reasonable value for the time they invested in negotiating the settlement. 

Generally, the overpayment of the attorneys originates in an underpayment of what the class should receive based on an objective 

assessment of the merits of the class claims. 

 Sometimes, the settlement will be with an attorney who has 

not been involved in litigating the class claims that other attorneys 

have been pursuing, an especially suspicious circumstance. Questionable settlements between class counsel and the same defendant 

in unrelated cases may suggest a continuing collusive relationship.

6. Injunctive relief

Question whether injunctive relief will truly benefi t class members 

in the case at hand. In many cases, by putting an end to illegal 

practices, an injunction will benefi t more class members than a 

small award. It will also avoid clogging the judicial system with 
Class Action Pocket Guide (3d ed.)

22

the administration of small awards to thousands of class members. 

But it is important to press the parties to identify such cases clearly 

and justify the remedy and fees. Ask yourself—and perhaps the 

parties—the following questions: 

 • How much is the injunction worth to the class as a practical

matter? 

 • What is the dollar value the relief might yield?

 • What is the real cost to the defendant?

 • Does the injunctive relief do more than restate the obligation that the defendant already has under existing law or 

under a decree entered by a regulatory body?

 • Are there viable damage claims that class counsel has not

pursued?

 • Might an emphasis on injunctive relief and proposed certifi -

cation of a Rule 23(b)(2) class amount to a tactical move to 

avoid more stringent certifi cation requirements and opt-out 

rights associated with a damages class under Rule 23(b)(3)?

Consider whether you need independent expert advice to place a 

value on the relief offered, as discussed below in part VII.

7. Release of liability without remedy

A natural impulse on the part of settling parties is to attempt to expand the class and release claims of those on the periphery of the 

class, such as the spouses and children of class members, without 

providing any direct benefi t to those individuals. At times parties 

have attempted to release a damages remedy without making any 

correlative payment to class members, as the parties attempted to 

do in Reynolds, 288 F.3d at 283–84. Unpled claims against outside 

parties (e.g., medical malpractice claims in a class action against 

a pharmaceutical manufacturer) are sometimes swept into the 

settlement. The settlement should compensate class members or 

their families for the value of such claims. As a general rule, the 

release of claims by a subclass should be linked with specifi c remedies, such as payments to the subclass or increased payments to 

class members based, for example, on their family status.
23

Class Action Pocket Guide (3d ed.)

8. Settlement class actions

Certifi cation of class actions solely for the purpose of settlement at 

an early stage of the litigation generally makes meaningful judicial 

review more diffi cult and more important. MCL 4th § 21.612. Parties frequently agree to settle class actions before a judge has decided that a class can be certifi ed under Rule 23. The parties then 

jointly seek certifi cation in the context of the settlement. Often, 

the parties’ agreement that a class can be certifi ed is conditioned 

on judicial approval of the settlement. The Supreme Court has 

ruled that agreement of the parties does not lessen the need for a 

judge to determine whether all of Rule 23’s certifi cation standards 

other than manageability have been met. Amchem Products, Inc. 

v. Windsor, 521 U.S. 591, 620 (1997); MCL 4th § 21.132.

D. Preliminary review of the proposed settlement 

Judicial review of a proposed class settlement generally requires 

two hearings: one preliminary and one fi nal. MCL 4th § 21.632. If 

you haven’t already certifi ed a class, you should determine during 

the preliminary fairness review whether the proposed class meets 

the standards of Rule 23(a) and (b). By doing this, you can avoid 

unnecessarily using scarce judicial and party resources to schedule 

a fairness hearing for a class that doesn’t meet Rule 23 certifi cation 

standards.

 If you decide to certify the proposed class, be aware that courts, 

following the Supreme Court’s lead in Amchem, have ruled that 

the settlement terms of a settlement class action need careful scrutiny. Often, such a settlement comes early in the litigation, so you 

may have to probe to uncover the strengths and weaknesses of the 

parties’ claims and defenses as well as the character of their negotiations. There may be confl icts among groups within the proposed 

class. Question whether the claims of class members are homogeneous. If they are not, explore the possibility of creating subclasses 

and sending the parties back to renegotiate and take into account 

the differing interests of class members.

 Preliminary review of the proposed settlement affords you an 

opportunity to express any concerns you may have about the “hot 

button indicators” discussed above in section IV.C. You don’t have 
Class Action Pocket Guide (3d ed.)

24

the power to decide what must be in a settlement agreement, but 

you do have the opportunity to state your concerns about provisions—or the absence of provisions—that would make a difference in your decision about whether to approve a proposed settlement. If you have such concerns, consider allowing the parties 

some time to respond to them by renegotiating the settlement so 

that the class notice can refer as closely as possible to a fi nal settlement. If you hold back your concerns and reject a settlement at the 

fi nal fairness hearing, the parties will most likely have to incur the 

considerable expense of sending new notices of any revised settlement to the class.

 Consider seeking preliminary input into the fairness, reasonableness, and adequacy of the proposed settlement. For example, 

one judge permitted counsel pursuing independent state class actions against the same defendants to intervene as “an offsetting 

infl uence” to the loss of adversarial opposition from the parties. 

In re Lupron Marketing & Sales Practices Litigation, 345 F. Supp. 

2d 135, 138 n.5 (D. Mass. 2004). Participation by such plaintiffs’ 

counsel provided the judge with a unique opportunity to receive 

an informed assessment by nonsettling plaintiffs of the value of 

the case and the prospects for success at trial. Absent such an opportunity, consider asking the parties or others to provide preliminary information supporting the proposal.

 Though not necessarily unfair, conditional settlements present a 

special problem to the class and the judge. Sometimes, a defendant 

resists settlement unless it can be assured that the number of class 

members opting out of the proposed settlement will not exceed a 

certain number that is specifi ed but not widely disclosed. To avoid 

unduly delaying the settlement review, you may decide to press the 

parties to set a reasonable cutoff date for the defendant’s decision 

about whether to proceed with the settlement, say thirty days after 

the end of the opt-out period. MCL 4th § 21.652. In any event, you 

should require the defendant to make an election before the fairness hearing.

 Remember that any preliminary “approval” or other endorsement of the proposed settlement should not appear to be a commitment to approve the settlement in the end. Any preliminary 
25

Class Action Pocket Guide (3d ed.)

fi nding should be that the proposed settlement is within the range 

of reasonableness; such a fi nding is not a fi nal judgment that the 

proposal is fair, reasonable, and adequate as shown by evidence 

at the fairness hearing. Reserve that judgment and expect to be 

informed by counsel for the class and counsel for the defendants 

(maybe in response to your pointed questions), and by class members, objectors, lawyers from similar litigation, or, perhaps, your 

own expert or special master. Bring an inquiring mind to the preliminary review hearing and, as noted above, seek out the information you need to decide whether the settlement is fair, reasonable, and adequate.

 Once you are satisfi ed that the proposed settlement warrants 

your preliminary approval, review the parties’ proposed plan for 

notice and hearing. Generally, counsel will present the settlement 

proposal and a notice plan at the same time. The purpose for reviewing the notice plan at this stage is “to determine whether any 

defects in the proposed notice or other formal or substantive irregularities exist that warrant withholding notice.” American Law 

Institute, Principles of Aggregate Litigation § 3.03(a) (2010) Before reviewing the proposed notice plan, consider whether you 

want to direct that class members’ claims for monetary relief be 

fi led in response to the notice and before the fi nal review hearing 

(see section IV.B.2 above) The class’s response to the settlement 

will help you analyze the settlement’s value and evaluate its adequacy as seen through the eyes of class members deciding their 

own interests. Knowing the claims rate will also provide a basis 

for your assessment of requests for attorney fees. In any event, to 

remedy the current lack of knowledge about claims rates and class 

member recoveries, judges should routinely order the parties to 

report such information to the court and place it in the public 

record.

E. Warning about claims services

Consider also whether you want to direct the parties to include 

in the notice and claims form some provisions that warn class 

members about the potential pitfalls in dealing with claims fi ling 

services, a cottage industry that offers to gather and fi le claims for 
Class Action Pocket Guide (3d ed.)

26

class members. Such services can increase the claims rate and provide a service to class members, but they do not generally add any 

value to a claim. The worst pitfall is that some claims services have 

absconded with funds. Protections in the form of requiring claims 

fi ling services to register with the court and maintain funds in a 

trust account may be in order.

F. Notice issues 

Opt-out notice binds class members by their silence, so you will 

want to focus on ensuring adequate notice. This pocket guide emphasizes notice issues because notices that fail to reach class members, or that confuse them, are all too common. They result in very 

low participation rates and discredit the class action procedure. 

This section highlights some of the key notice issues. The “Notice Checklist and Plain Language Guide,” available at the Class Action Notices Page at www.fjc.gov, details important considerations 

for notice to class members in several areas.

1. Notice to government regulators

CAFA requires that within ten days after a proposed settlement is 

filed in court, each participating defendant must serve notice of 

specifi ed settlement-related papers on (1) the U.S. Attorney General or, in the case of a depository institution, the primary federal regulatory offi cial and (2) the primary state regulatory offi cial 

(or, if none, the attorney general) of each state in which a class 

member resides. 28 U.S.C. § 1715 (2008). The idea is to encourage 

government regulators to participate in reviewing settlements and 

lend their expertise (and perhaps an adversarial note) to the fairness hearing. You may want to consider extending an express invitation—to the preliminary approval hearing and to the fairness 

hearing—to any regulatory body you have found to be effective in 

dealing with the subject matter in question. 

 The Federal Trade Commission has extensive statutory authority and expertise in dealing with antitrust, unfair competition, and consumer protection matters. See generally FTC, Fulfi lling the Original Vision: The FTC at 90 (Apr. 2004) (available at 

http://ftc.gov/os/2004/04/040402abafi nal.pdf). CAFA does not 
27

Class Action Pocket Guide (3d ed.)

specify the FTC as an agency that must receive notice, but consider 

adding the FTC to the notice list in consumer and trade practice 

litigation, including antitrust actions. The FTC has created a “Class 

Action Fairness Project,” which channels FTC resources into reviewing proposed settlements as well as class counsel requests for 

attorney fees. Since defendants have made copies of—or electronic 

links to—the required settlement documents for other agencies, 

it will be no burden on them to send notice to the FTC or other 

consumer protection entities in appropriate cases. 

2. Notice to the class

Notices are usually the only way to communicate with unnamed 

class members and enable them to make informed decisions about 

whether to participate in a class action settlement, or to exercise 

their due process rights to be heard before fi nal approval of the 

settlement. Your primary goals are that the notice reach as many 

class members as possible, preferably by individual notifi cation 

(see Rules 23(c)(2) and 23(e)(1) and MCL 4th § 21.312), and that 

the recipients see it, recognize its connection to their lives and selfinterests, read it, and act on it. See Todd B. Hilsee et al., Do You 

Really Want Me To Know My Rights? 18 Geo. J. Legal Ethics 1359 

(2005).

 The fi rst challenge is to reach a high percentage of class members. Notice plans that appear reasonable may in fact reach only a 

small percentage of class members. Before approving a notice plan, 

consider asking for calculations to demonstrate the “reach”—i.e., 

the net percentage of class members who will receive or otherwise be exposed to a notice. You can use reach statistics to substantially improve the net reach to class members. The norm is in 

the 70–95% range. Consider asking whether the proposed notice 

plan was created by a vendor who will be paid to implement it 

if approved. If so, consider obtaining an independent analysis of 

the notice plan’s adequacy before approving the plan. Competing 

vendors may cut corners to win the business, but you must fi nd 

the “best notice that is practicable under the circumstances.” Rule 

23(c)(2)(B). To satisfy due process, the notice must refl ect a “de-
Class Action Pocket Guide (3d ed.)

28

sire to actually inform.” See Mullane v. Central Hanover Bank and 

Trust Co., 339 U.S. 306 (1950).

 Be certain the notice plan includes individual notice to all “reasonably identifi able” class members under Rule 23(c)(2). The plan 

should take steps to update addresses before mailing and provide 

for re-mailing notices to better addresses when returned as undeliverable. See Jones v. Flowers, 547 U.S. 220 (2006). The U.S. population is highly mobile today, so class lists compiled for business 

purposes may be out of date. 

 Next, it is important to give the class member a reason to read the 

notice. In a world in which junk mail and spam can easily drown 

out important messages, you may need to press the parties to look 

beyond the formal legal requirements and fi nd a way to communicate the gist of a class action notice in an attention-getting and 

understandable format. Rule 23(c)(2)(B) commands that notices 

“clearly and concisely state in plain, easily understood language” 

the elements of class action notices. Boilerplate legal language 

almost never does the job. With help from linguists, communications specialists, a notice expert, and focus groups, the Federal 

Judicial Center prepared several illustrative notices. See the Class 

Action Notices Page at www.fjc.gov; there you can also see the 

“Notice Checklist and Plain Language Guide,” which explains important features of the illustrative notices. For a handy booklet on 

notice principles, see Rust Consulting, Inc. & Kinsella Media, LLC, 

Plain Language Primer for Class Action Notice (undated) (available 

at http://www.kinsellamedia.com/Knowledge_Sharing.aspx). 

 The headline of a notice should tell potential class members at 

a glance why they should—or should not—bother to read the notice; what the notice is about; and what benefi t the reader might 

gain from reading the notice. For example, a notice of an asbestos 

settlement might start with this headline: “If you have been exposed to an asbestos product, you may have a claim in a proposed 

class action settlement” and provide enough information to identify potential benefi ts and options as well as referral to a website or 

a toll-free telephone number for additional information. The goal 

is to get class members to read the notice and make an informed 
29

Class Action Pocket Guide (3d ed.)

decision about exercising any of their rights before being bound by 

the court’s judgment. 

 A picture of asbestos insulation in a notice may trigger an association in the reader’s mind. Those who recognize their own 

circumstances are likely to read on, contact a website, or call a tollfree telephone number. Nonmembers of the class will have a good 

reason for adding the notice to the junk mail pile.

 A short-form, single-page (or shorter) “summary” notice with 

headlines can communicate all the required elements of Rule 23 

and can tell the reader how to get additional information. Formal 

case captions should not be used in the summary notice as they are 

a turn-off to lay people. Legal terms of the settlement tend to confuse lay readers and should be confi ned to the settlement agreement posted at the website. While “legalese” has been reduced in 

recent years, much improvement is still needed. See Shannon R. 

Wheatman & Terri R. LeClerq, Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements (2010).

 “Plain English” notices may not be enough. Truly global settlements will include class members whose native language is 

not English and who may not be citizens of an English-speaking 

country. Note that the FJC’s illustrative class action notices on its 

website include an example of a Spanish language notice. For a 

recent and colorful example of a global format for class settlements, which is translated into numerous languages and complete with fl ags for each country, see the settlement administration website for In re Royal Ahold Securities and Erisa Litigation,

http://www.aholdsettlement.com.

 Make sure the notice plan takes into account any cultural and 

language barriers to notifying class members. For example, the 

class actions involving assets of Holocaust victims demanded a farreaching notice campaign to notify the many dispersed Jewish survivors as well as gays, Jehovah’s Witnesses, and Romani (“gypsy”) 

migrants. The judge approved a “multifaceted plan” that included 

“worldwide publication, public relations (i.e., ‘earned media’), 

Internet, and grass roots community outreach.” In re Holocaust 

Victims Assets Litigation, 105 F. Supp. 2d 139, 144–45 (E.D.N.Y. 

2000). As the judge in the Holocaust victims’ class actions was, 
Class Action Pocket Guide (3d ed.)

30

be alert to cultural differences that might affect the attention recipients will give to the proposed notices. A class of migrant farm 

workers, for example, might rely on radio more often than urban 

factory workers would. A class of people challenging searches and 

seizures as unreasonable might respond differently to offi cial court 

notices than, say, people who have never been arrested.

G. Claims processes and response handling

If the claims process deters class members from fi ling claims, the 

settlement may have less value to the class than the parties assert. 

Obtaining complete information about claims presented via an 

unimpeded process will assist you in determining the full value of 

the settlement and hence its reasonableness, fairness, and adequacy to the class. Avoid imposing unnecessary hurdles on potential 

claimants.

 First, consider whether a claims process is necessary at all. The 

defendant may already have the data it needs to automatically pay 

the claims of at least a portion of class members who do not opt 

out. Necessary claim forms should be as simple and clear as possible and should avoid redundancy. Be careful to avoid claim forms 

that scare class members away with confusing questions and onerous proof requirements.

 If you anticipate or fi nd evidence of a low claims rate, ask counsel whether they have considered alternatives that might enhance 

the reach of the claims process and tailor it to the characteristics 

of class members, such as using surveys to determine reasons for 

nonresponses, improving the clarity of the claims forms, and adding outreach programs. See Francis E. McGovern, Distribution of 

Funds in Class Actions-Claims Administration, 35 J. Corp. L. 123 

(2009).

 Class counsel should be available to answer class members’ 

questions. The parties commonly agree to seek the appointment 

of a qualifi ed claims administrator to receive and process claims 

and handle a toll-free telephone number call center staffed by 

trained agents. In less complex matters, settlement administrators 

can place scripted answers to callers’ frequently asked questions 
31

Class Action Pocket Guide (3d ed.)

about the settlement on an automated phone system and on the 

Internet.

H. Fairness hearing

1. Participation rates: opt-outs

The typical class action settlement notice will most likely yield an 

apathetic response, and few objectors or opt-outs. Two empirical 

studies found that about one in a thousand (0.1%) class members 

opted out of a proposed settlement. Theodore Eisenberg & Geoffrey P. Miller, The Role of Opt-Outs and Objectors in Class Action 

Litigation: Theoretical and Empirical Issues, 57 Vand. L. Rev. 1529 

(2004); Thomas E. Willging et al., Federal Judicial Center, Empirical Study of Class Actions in Four Federal District Courts: Final 

Report to the Advisory Committee on Civil Rules (1996) [hereinafter Willging et al., Empirical Study of Class Actions (1996)]. 

 Counsel may argue that a low percentage of opt-outs demonstrates class members’ agreement with the settlement, but in some 

cases that argument seems misplaced. Opt-out rates vary according to the type of case and the amount of the individual recovery. 

Class members are considerably more likely to opt out of mass 

tort, employment, and commercial litigation, where individual 

recoveries are generally higher, and less likely to opt out of consumer cases, where individual recoveries are generally lower and 

individual litigation less viable. 

2. Participation rates: objections

Do not expect class representatives or other class members to attend the fairness hearing or fi le written objections. A 1996 FJC 

study found that only about a quarter to a half of the class representatives attended the fairness hearing. Willging et al., Empirical 

Study of Class Actions (1996).

 The FJC study also found that in about half of the class actions, not a single member fi led a written objection. Written objections documented in the FJC study most frequently challenged 

the amount of the attorney fees requested. In second place was a 

related objection: that the settlement was inadequate to compensate class members for their losses, perhaps because the lawyers 
Class Action Pocket Guide (3d ed.)

32

received more than their fair share. Next in line was the objection that the settlement favored some subclasses over others. These 

fi ndings suggest that a substantial portion of the fairness hearing 

will focus on attorney fee issues. 

3. Conducting the fairness hearing

It is essential to conduct a hearing even if no one other than the attorneys for the settling parties participates, because the hearing is 

your primary opportunity to focus on the terms of the settlement. 

You alone are charged with deciding whether the settlement is fair 

to the class members, reasonable in relation to the merits of their 

claims, and adequate to redress any injuries suffered. Rule 23 and 

the MCL 4th call for the judge to conduct an independent analysis 

of the settlement terms. Review the list of “hot button indicators” 

discussed in section IV.C above and be prepared to ask counsel 

hard questions about the value of the settlement to the class. In 

addition, the MCL 4th contains a checklist of fi fteen more routine 

factors that might inform your decision about whether the settlement is superior to continued litigation of the class claims. MCL 

4th § 21.62. The manual also discusses benchmarks for applying 

the fi fteen factors.

 If objectors and unrepresented class members appear at the 

fairness hearing, it is important to permit them to fully voice their 

concerns. For class members who feel strongly enough about their 

injuries to appear, the fairness hearing is their “day in court.” Judges in settlements involving tort claims, such as the Agent Orange 

litigation and the silicone gel breast implant litigation, have held 

multiple days of hearings to accommodate the interests of class 

members.

 You will, of course, want to eliminate unnecessary repetition. 

Setting time limits is a must. Be sure to notify participants in advance about how much time they will have. Note that having a 

group of class members gives you a chance to ask questions of 

all present, akin to conducting a voir dire of a jury venire. Such a 

group examination may be an effi cient mechanism for getting a 

clear sense of the similarities and differences among class members’ claims.
33

Class Action Pocket Guide (3d ed.)

 Finally, Rule 23 and good practice both require specifi c fi ndings as to how the settlement meets or fails to meet the statutory 

requirements. In these times of heightened visibility of class action rulings, appellate review of settlements is not pro forma even 

when the court affi rms the district court’s fi ndings and conclusions.

V. Attorney Fee Issues 

As discussed in part II above, Rule 23(g) requires you to appoint 

class counsel at an early stage of the litigation. When appointing 

counsel, consider entering an order with express provisions about 

the standards and procedures you expect to use in reviewing requests for attorney fees and costs. Rule 23(g)(1)(C). At the least, 

you should inform counsel about whether to keep time records 

to support using a lodestar cross-check, as discussed below. In 

addition, appointing counsel gives you a natural opportunity to 

discuss cost-saving measures, such as limiting travel expenses and 

discouraging the use of senior partners to do legal research. See

MCL 4th § 14.21. Perhaps from the outset of the litigation, but at 

least at the fee determination stage, “the district judge must protect 

the class’s interest by acting as a fi duciary for the class.” In re Rite 

Aid Corp. Securities Litigation, 396 F.3d 294, 307 (3d Cir. 2005).

A. Evaluating monetary and nonmonetary results achieved 

The 2003 Committee Note to Rule 23(h) gives the following guidance for determining attorney fees based on the creation of a monetary fund for the common benefi t of the class: the “fundamental 

focus is the result actually achieved for class members.”

 In cases involving monetary benefi ts, do not be misled by party valuations of the settlement that presume a 100% claims rate 

by class members. Insist on actual information on claims fi led to 

determine the benefi t to class members and use that information 

both to place a value on the settlement and to award attorney fees, 

as the district judge did in Sylvester v. CIGNA Corp., 369 F. Supp. 

2d 34, 50–53 (D. Me. 2005). That value—plus the value of any 

nonmonetary relief—serves as the starting point for applying the 
Class Action Pocket Guide (3d ed.)

34

percentage-of-value method in determining appropriate attorney 

fees (discussed below).

 Likewise, in cases in which the benefi t to the class is nonmonetary (coupons, discounts, warrants, injunctions, and the like), 

determining the actual value to the class requires looking beyond 

the face value of nonmonetary or contingent benefi ts. Redemption data or other evidence of class use is essential. In some cases, 

particularly settlements involving injunctive or declaratory relief, 

you might use expert valuations based on reliable, objective standards. In other cases, perhaps a majority, the only reliable test of 

the benefi t to the class will be evidence of class members’ use or redemption of the coupons, warrants, or other nonmonetary scrip. 

See MCL 4th § 21.71; see also Class Action Fairness Act, 28 U.S.C. 

§ 1712(a) (2008) (coupon settlements). In such cases, it is especially important to link the amount of any attorney fees with the 

actual benefi t to the class. 

 A direct way to ensure that you have suffi cient information to 

determine attorney fees in cases with nonmonetary benefi ts is 

simply to hold back the portion of any attorney fee awards that 

is linked with coupons, discounts, or other nonmonetary benefi ts 

until after the redemption period has ended and the value of the 

benefi ts can be established by calculating class members’ actual 

use. For example, the court expressly reserved the determination 

of any attorney fees to be paid to plaintiffs’ counsel until after the 

parties had provided the court with information concerning the 

distribution of benefi ts in Strong v. BellSouth Telecommunications, 

Inc., 173 F.R.D. 167 (W.D. La. 1997), aff’d, 137 F.3d 844, 848 (5th 

Cir. 1998). Note that redemption of a coupon does not automatically mean the member received a benefi t. If similar discounts are 

provided to consumers outside of the class, the benefi t to the class 

might be less than the face amount of the coupon—or perhaps no 

benefi t at all.

 In some class actions involving injunctive relief, the injunctive 

relief can be assigned a monetary value on the basis of objective 

criteria. For example, an injunction against an overcharge may be 

valued at the amount of the overcharge multiplied by the number 

of people likely to be exposed to the overcharge in the near fu-
35

Class Action Pocket Guide (3d ed.)

ture. Or an injunction against a fraudulent sales practice might be 

valued by examining the amount of past sales attributable to the 

practice and projecting that value for a reasonable period of time, 

perhaps the life of the practice before the injunction. Other forms 

of injunctive relief, such as orders designed to end discrimination 

in public accommodations, may be more diffi cult to value. In such 

cases it may be necessary to calculate fees by using a lodestar approach.

 The take-away line is this: Do not award fees until you know the 

true value of the settlement.

B. Methods of calculating fees

Courts use two methods to calculate fees for cases in which the 

settlement is susceptible to an objective evaluation. The primary 

method is based on a percentage of the actual value to the class 

of any settlement fund plus the actual value of any nonmonetary 

relief. The second method is based on a lodestar calculation in 

which the court multiplies the reasonable number of attorney or 

paralegal hours actually expended by the hourly market rate for 

those services. For cases in which nonmonetary relief cannot be 

evaluated with confi dence, the lodestar method may be the only 

reasonable alternative.

 While most courts of appeals now permit district courts to use 

the percentage-of-value method (MCL 4th § 14.121), their decisions often direct district courts in their circuit to supplement the 

percentage method with a lodestar cross-check to see if the hourly 

rate is reasonable and to provide the appellate courts with a basis 

for reviewing the reasonableness of the fee award. The cross-check 

requires “neither mathematical precision nor bean-counting”; it 

allows you to “rely on summaries submitted by the attorneys and 

[you] need not review actual billing records.” In re Rite Aid Corp. 

Securities Litigation, 396 F.3d 294, 306–07 (3d Cir. 2005).

 Another type of cross-check involves examining the defendants’ 

attorney fee records as a measure of what might be a reasonable 

number of hours or a total payment. In general, judges should 

avoid rigid adherence to a benchmark percentage and instead 

tailor their fee award to the realities of the class litigation before 
Class Action Pocket Guide (3d ed.)

36

them. Sometimes huge settlements do not warrant a standard percentage, as the next section discusses.

C. “Mega” cases 

In “mega” cases, be prepared to see attorney requests for truly huge 

amounts, up to hundreds of millions of dollars. In such cases, of 

course, the monetary recovery to the class typically is also in the 

hundreds of millions of dollars, even in the billions. See, e.g., In 

re Prudential Insurance Co. of America Sales Practices Litigation, 

148 F.3d 283, 339–40 (3d Cir. 1998). In such cases, you should be 

looking at a percentage of recovery far less than the typical range 

and perhaps as low as 4%. MCL 4th § 14.121. Generally, as the 

total recovery increases the percentage allocated to fees should decrease. Consider using a sliding scale to advance the goal of awarding reasonable fees in relation to the hours expended. MCL 4th 

§ 14.121, text at nn.497–99; see also In re Rite Aid Corp., 396 F.3d 

at 302–03 (discussing the pros and cons of sliding scales). As noted 

above in part II, asking attorneys at the outset of the litigation to 

maintain time records will be helpful in implementing a lodestar 

cross-check for cases of this magnitude.

D. Objectors

Objectors may qualify for fees because of their contribution to 

the common fund available to the class. As occurred in Bowling 

v. Pfizer, 922 F. Supp. 1261, 1285 (S.D. Ohio 1996), by reducing 

attorney fees, objectors often increase funds available for the common settlement fund. The 2003 Committee Note to Rule 23(h) 

expressly recognizes the benefi ts that objectors may provide to the 

class. But be wary of self-interested professional objectors who often present rote objections to class counsel’s fee requests and add 

little or nothing to the fee proceedings. 

E. Role of government actors

Often in consumer or commercial class action litigation, government regulators, such as the FTC, the Securities and Exchange 

Commission (SEC), or a state or the federal Attorney General’s offi ce, will lay the groundwork for class action litigation. In pursuing 
37

Class Action Pocket Guide (3d ed.)

public goals of advancing fair competition, protecting consumers, 

and policing the marketplace against false and misleading information, such agencies may invest substantial resources in investigating a defendant’s alleged malfeasance. For example, in In re 

First Databank Antitrust Litigation, 209 F. Supp. 2d 96, 97 (D.D.C. 

2002), the FTC “expended over 25,000 hours of investigators’ time, 

obtained production of and reviewed some 400 boxes of documents produced in response to approximately 40 subpoenas, and 

conducted 20 investigational hearings and over 60 interviews.”

 In quantifying the risk undertaken by plaintiffs’ counsel in 

bringing a class action, scrutinize the activities of government 

actors that may have facilitated or enhanced the outcome (see 

section IV.B.4 above). Where a government body has obtained a 

guilty plea, criminal conviction, or civil judgment against a defendant, class counsel in a “piggyback” class action arising out of the 

same set of facts face a reduced risk of loss and a reduced burden 

of discovery and trial. A reasonable attorney fee in such cases may 

be a percentage of the value that the class counsel adds to the settlement that would not have been available to the class but for the 

counsel’s work, as happened in Swedish Hospital Corp. v. Shalala, 1 

F.3d 1261, 1272 (D.C. Cir. 1993). Likewise, in In re First Databank, 

209 F. Supp. 2d at 98, the court limited the private plaintiff attorneys’ fee to a percentage of the value the attorneys added to the 

FTC’s proposed settlement. 

 In some cases, such as In re First Databank, the government actor might participate as an intervenor or as a friend of the court in 

addressing the attorney fee issues. If the agency does not intervene 

on its own initiative, consider inviting it to participate in the fee 

proceedings as an intervenor or friend of the court. 

 On the other hand, private class action litigation may pave the 

way for government enforcement or serve as a substantial deterrent in its own right. In such cases, take into account in awarding 

attorney fees any groundbreaking work of plaintiffs’ counsel.
Class Action Pocket Guide (3d ed.)

38

VI. Coordination with State Judges

Most class actions of any size and scope will have federal jurisdiction based on minimal diversity and, if originally fi led in state 

court, will most likely be removed to federal court. Coordination 

among federal courts will often, but not always, proceed through 

the MDL process, at least for major cases. Some overlapping class 

actions may be fi led in state courts (for example, in cases fi led on 

behalf of a class of primarily in-state plaintiffs against an in-state 

defendant), but federal courts lack jurisdiction only in cases in 

which a primary or signifi cant defendant is a citizen of the forum 

state. The fi rst step in determining jurisdiction is to ask the parties whether competing or overlapping proposed or certifi ed class 

actions exist in other courts. A defendant should be aware of any 

other litigation against it and should inform the court about competing or overlapping state class actions.

 Judges have developed various practices, with various levels 

of formality, for coordinating their efforts with their state judge 

counterparts. Informal practices include personal meetings, telephone calls, and e-mail communications to exchange information 

about scheduling and to coordinate discovery, rulings on class certifi cation, and other procedural matters. In more formal contexts, 

judges may share a special master with state judges, sit jointly and 

hear evidence and argument on motions, or even hold a national 

conference or a set of meetings about the litigation. 

 Generally, state judges have responded to requests for coordination in a spirit of cooperation. The key is to identify the cases 

and judges and initiate communication. Coordination in areas like 

discovery should take into account the pressure a state judge might 

experience from state lawyers eager to present their cases at trial 

or, at a minimum, to share in any common fund that their efforts 

help create. Only in the rarest instance will you ever need to issue 

an injunction to protect federal jurisdiction, usually when you are 

seeking to insulate a national settlement from contrary rulings in 

competing or overlapping class actions in state court. See MCL 4th 

§§ 21.42 and 20.32. 
39

Class Action Pocket Guide (3d ed.)

VII. Use of Special Masters and 

Court-Appointed Experts

Special masters, court-appointed experts, and other judicial adjuncts with special expertise may be useful in a variety of contexts 

in class action litigation. Specifi cally, judges have appointed special masters to oversee discovery and resolve disputes in cases in 

which the number and complexity of documents might generate 

a large number of disputes. See MCL 4th § 11.424. The emergence 

of electronic discovery and of a new industry of party experts on 

electronic discovery may increase the need for the court to appoint a discovery master. Judges have also used magistrate judges, 

special masters, court-appointed experts, technical advisors, and 

other adjuncts to assist them in evaluating class settlements (see

MCL 4th § 21.644) and have appointed special masters or other 

adjuncts to administer settlements and participate in resolving 

claims via alternative dispute resolution (ADR) or other methods 

(see MCL 4th § 21.661). 

 Occasionally, judges have appointed special masters to devise 

trial plans. See MCL 4th § 21.141. In class actions involving disputed scientifi c evidence, you may want to appoint an expert to present a perspective on disputed issues that is less adversarial than 

what the parties’ experts present. See, e.g., MCL 4th § 22.87. Federal Rules of Civil Procedure 23(h)(4) and 53(a)(1)(C) expressly 

authorize using special masters to review attorney fee requests. See

MCL 4th § 21.727. In many class actions, however, the trial judge 

may fi nd that the information learned by participating in pretrial 

matters, such as resolving discovery disputes, will greatly enhance 

the judge’s ability to make an informed assessment of a class settlement.

Conclusion

If this guide has served its purpose, it has helped you analyze and 

manage the major aspects of class action litigation. By anticipating 

and paying serious attention to reviewing settlements and requests 

for attorney fees, you should be able to fulfi ll your role as a fi du-
Class Action Pocket Guide (3d ed.)

40

ciary for a class whose counsel and representatives have decided to 

settle on a particular outcome.

Bibliography

American Law Institute, Principles of Aggregate Litigation (2010) 

California Superior Court, Guidelines for Motions for Preliminary 

and Final Approval of Class Settlement (Draft May 3, 2010)

Theodore Eisenberg & Geoffrey P. Miller, The Role of Opt-Outs and 

Objectors in Class Action Litigation: Theoretical and Empirical 

Issues, 57 Vand. L. Rev. 1529 (2004)

Federal Judicial Center, Manual for Complex Litigation, Fourth 

(MCL 4th) (2004)

Federal Trade Commission, Fulfi lling the Original Vision: The FTC 

at 90 (April 2004), http://ftc.gov/os/2004/04/040402abafinal.pdf

Deborah Hensler et al., Class Action Dilemmas: Pursuing Public 

Goals for Private Gain (RAND Corp. 2000)

Todd B. Hilsee, Shannon R. Wheatman & Gina M. Intrepido, Do 

You Really Want Me To Know My Rights? The Ethics Behind Due 

Process in Class Action Notice Is More Than Just Plain Language: 

A Desire to Actually Inform, 18 Geo. J. Legal Ethics 1359 (2005)

Alan Hirsch & Diane Sheehey, Federal Judicial Center, Awarding 

Attorneys’ Fees and Managing Fee Litigation (2d ed. 2005)

Laural L. Hooper & Marie Leary, Auctioning the Role of Class 

Counsel in Class Action Cases: A Descriptive Study, 209 F.R.D. 

519 (Federal Judicial Center 2001)

Emery G. Lee III & Thomas E. Willging, The Impact of the Class 

Action Fairness Act on the Federal Courts: An Empirical Analysis 

of Filings and Removals, 156 U. Pa. L. Rev. 1723 (2008)

Emery G. Lee III & Thomas E. Willging, Federal Judicial Center, 

Impact of the Class Action Fairness Act on the Federal Courts: 

Preliminary Findings from Phase Two’s Pre-CAFA Sample of 

Diversity Class Actions (2008)
41

Class Action Pocket Guide (3d ed.)

Francis E. McGovern, Distribution of Funds in Class ActionsClaims Administration, 35 J. Corp. L. 123 (2009)

Nicholas M. Pace & William B. Rubenstein, How Transparent Are 

Case Outcomes: Empirical Research on the Availability of Class 

Action Claims Data (RAND Corp. 2008)

Barbara J. Rothstein, John Beisner, Elizabeth J. Cabraser & Jay 

Tidmarsh, The Class Action Fairness Act of 2005: An Overview 

of Legal and Case Management Issues (Federal Judicial Center 

Broadcast, Apr. 1, 2005) (outline and videotape available from 

the FJC’s Information Services Offi ce)

Rust Consulting, Inc. & Kinsella Media, LLC, Plain Language 

Primer for Class Action Notice (undated), http://www.kinsella

media.com/Knowledge_Sharing.aspx

Rust Consulting, Inc., Class Action Settlements: What You Should 

Know About Claim Filing Services (undated), http://www.rust

consulting.com/pdfs/ClaimFilingServices.pdf

William W Schwarzer, Nancy E. Weiss & Alan Hirsch, Judicial Federalism in Action: Coordination of Litigation in State and Federal 

Courts, 78 Va. L. Rev. 1689 (1992)

Symposium, Fairness to Whom? Perspectives on the Class Action 

Fairness Act of 2005, 156 U. Pa. L. Rev. 1439 (2008)

Third Circuit Task Force, Report on Selection of Class Counsel, 74 

Temp. L. Rev. 689 (2001)

Sarah S. Vance, A Primer on the Class Action Fairness Act of 2005, 80 

Tul. L. Rev. 1617 (2006)

Shannon R. Wheatman & Terri R. LeClercq, Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements

(2010) (unpublished manuscript on fi le with the Federal Judicial Center)

Thomas E. Willging, Laural L. Hooper & Robert J. Niemic, Federal 

Judicial Center, Empirical Study of Class Actions in Four Federal District Courts: Final Report to the Advisory Committee 

on Civil Rules (1996); see also Thomas E. Willging, Laural L. 

Hooper & Robert J. Niemic, An Empirical Analysis of Rule 23 to 
Class Action Pocket Guide (3d ed.)

42

Address the Rulemaking Challenges, 71 N.Y.U. L. Rev. 74 (1996) 

(later version of same report with fewer tables and fi gures)

Thomas E. Willging & Shannon R. Wheatman, Federal Judicial 

Center, An Empirical Examination of Attorneys’ Choice of Forum in Class Action Litigation (2005)

Case Annotations by Topic

Determining federal jurisdiction

 Tam v. Indymac Bank, No. 2:8CV06458, 2008 WL 4793676 

(C.D. Cal. Oct. 30, 2008) (comprehensive show cause order 

with a checklist of jurisdictional and removal issues)

Burdens of proof

 Blockbuster v. Galeno, 472 F.3d 53, 56–58 (2d Cir. 2006) (CAFA 

did not alter long-standing burden-of-proof rule)

 Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 

804, 813 (5th Cir. 2007) (“‘once federal jurisdiction has been 

established [under CAFA] the objecting party bears the burden of proof as to the applicability of any express statutory 

exception under §§ 1332(d)(4)(A) and (B) [the local controversy and home state exceptions]’”) (quoting Serrano v. 180 

Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007) (alterations in original))

 Spivey v. Vertrue, Inc., 528 F.3d 982, 985–86 (7th Cir. 2008) (defendant satisfi ed its burden of proof by showing more than 

$5 million was at stake, or “in controversy”)

Amount in controversy

 Brill v. Countrywide Home Loans, 427 F.3d 446, 448 (7th Cir. 

2005) (“Once the proponent of jurisdiction has set out the 

amount in controversy, only a ‘legal certainty’ that the judgment will be less forecloses federal jurisdiction.”)

 Gene & Gene LLC v. Biopay LLC, 541 F.3d 318, 324 (5th Cir. 

2008) (“Gene’s complaint held open the possibility of treble 

damages, depending on the state of the proof.”)
43

Class Action Pocket Guide (3d ed.)

 Hart v. FedEx Ground Package Sys., Inc., 457 F.3d 675, 682 (7th 

Cir. 2006) (party challenging federal jurisdiction must provide competent proof of the facts supporting the challenge)

 Lowdermilk v. United States Bank Nat’l Ass’n, 479 F.3d 994, 

999–1000 (9th Cir. 2007) (plaintiff is the master of its complaint, and courts must accept damages allegations unless 

defendant can show a legal certainty of greater damages)

Home-state exception

 Martin v. Lafon Nursing Facility of the Holy Family, Inc., 548 

F. Supp. 2d 268, 273–78 (E.D. La. 2008) (discussing use of a 

questionnaire to establish residence and intent)

 Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 

804, 813–18 (5th Cir. 2007) (discussing affi davits and evidence submitted to support proof of citizenship of class 

members in applying discretionary exception to CAFA)

 Summerhill v. Terminix, No. 4:08CV659, 2008 WL 4809448 

(E.D. Ark. Oct. 30, 2008) (applying statutory requirement 

that all primary defendants must be citizens of the home 

state for the exception to apply)

Discretionary jurisdiction

 Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 

804, 822–24 (5th Cir. 2007) (class action involving Hurricane Katrina-related injuries did not affect national interests 

under CAFA)

Timing and signifi cance of class certifi cation

Class certifi cation

 General Telephone Co. v. Falcon, 457 U.S. 147, 161 (1982) (“[A] 

class action may only be certifi ed if the trial judge is satisfi ed, 

after a vigorous analysis, that the prerequisites of Rule 23(a) 

have been satisfi ed.”) 

 Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 594 (9th Cir. 2010) 

(“[D]istrict courts are not only at liberty to but must perform 

a rigorous analysis to ensure that the prerequisites of Rule 

23 have been satisfi ed, and this analysis will often . . . require 
Class Action Pocket Guide (3d ed.)

44

looking behind the pleadings to issues overlapping with the 

merits of the underlying claims.”)

Notice

 In re Vivendi Universal, S.A. Securities Litigation, 242 F.R.D. 76, 

107–09 (2007)

 Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176 (1974)

Settlement review: risks and issues

Judge’s role

 Reynolds v. Benefi cial Nat’l Bank, 288 F.3d 277, 280 (7th Cir. 

2002)

Prior action by government entities

 In re First Databank Antitrust Litig., 209 F. Supp. 2d 96 (D.D.C. 

2002)

Appraisal of settlement

 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 391 (C.D. Cal. 

2007) (reducing the number of claims rendered a portion of 

the settlement “illusory”)

 Schwartz v. Dallas Cowboys Football Club, Ltd., 157 F. Supp. 

2d 561, 574–75 (E.D. Pa. 2001) (settlement appraisal focused 

on the value actually distributed to the class based on the 

number of claims actually fi led)

Information from objectors

 O’Keefe v. Mercedes-Benz USA, LLC, 214 F.R.D. 266, 295 (E.D. 

Pa. 2003) (referring to “‘canned objections fi led by professional objectors who seek out class actions to simply extract 

a fee by lodging generic, unhelpful protests’” (quoting Shaw 

v. Toshiba Am. Info. Sys., 91 F. Supp. 2d 942, 973 (S.D. Tex. 

2000))
45

Class Action Pocket Guide (3d ed.)

Hot button indicators

Coupons

 In re Compact Disc Minimum Advertised Price Antitrust Litig., 

292 F. Supp. 2d 184, 186–88 (D. Me. 2003) (comparing settlement discounts with discounts available to frugal shoppers)

 In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. 

Liab. Litig., 55 F.3d 768, 809–10 (3d Cir. 1995) (rejecting 

coupon settlement based in part on absence of a secondary 

market in which coupons could be converted to cash)

 In re Mexico Money Transfer Litig., 267 F.3d 743, 748 (7th Cir. 

2001) (coupons may be of value to repeat users of a product 

or service)

Negative options

 Chavez v. Netfl ix, Inc., 75 Cal. Rptr. 3d 413, 418–21 (Cal. Ct. 

App. 2008) (tying together a proposed “benefi t” with an automatic paid renewal of that “benefi t” is grounds for rejection of a proposed settlement)

Cy pres relief (“fl uid recovery”)

 Molski v. Gleich, 318 F.3d 937, 954 (9th Cir. 2003) (rejecting 

proposed cy pres award after examining proposed settlement 

for evidence that “proof of individual claims would be burdensome or that distribution of damages would be costly”)

 Powell v. Georgia-Pac. Corp., 119 F.3d 703 (8th Cir. 1997) (examining the relationship between the class members’ interests and those of the proposed cy pres recipient)

Restriction on claims/reversion of unclaimed funds to 

defendants

 Reynolds v. Benefi cial Nat’l Bank, 288 F.3d 277, 283 (7th Cir. 

2002) (restrictions on eligibility may diminish the value of 

the settlement to the class)

Collusion: “Reverse auctions” and the like

 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 399 (C.D. Cal. 

2007) (“The Court is hesitant to classify the Settlement as 

the product of a ‘reverse auction,’ but cannot avoid the con-
Class Action Pocket Guide (3d ed.)

46

clusion that the process by which it was reached is strikingly 

similar.”)

 Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292, 1321 

(S.D. Fla. 2007) (class settlement rejected where defendants 

selected the most vulnerable plaintiff attorney and convinced that attorney to accept terms unfavorable to the class)

Injunctive relief

 Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 615–23 (9th Cir. 

2010) (discussing injunctive relief)

Release of liability without remedy

 Reynolds v. Benefi cial Nat’l Bank, 288 F.3d 277, 283–84 (7th 

Cir. 2002) (releasing a damage remedy without payment to 

class members is not acceptable)

Settlement class actions

 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997) (Rule 

23 standards, with the exception of manageability, apply to 

certifi cation of settlement class actions)

Preliminary review of proposed settlement

 In re Lupron Mktg. & Sales Practices Litig., 345 F. Supp. 2d 

135, 138 n.5 (D. Mass. 2004) (permitting plaintiff counsel in 

independent state class actions against same defendants to 

intervene and provide adversarial opposition to a proposed 

settlement)

Notice to the Class

 Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974)

 Mullane v. Central Hanover Bank and Trust Co. 339 U.S. 306 

(1950)

 Jones v. Flowers, 547 U.S. 220 (2006)

 In re Holocaust Victims Assets Litig., 105 F. Supp. 2d 139, 144–

45 (E.D.N.Y. 2000) (describing multifaceted notice plan)
47

Class Action Pocket Guide (3d ed.)

Conducting the fairness hearing

 In re Cendant Corp. Litig., 264 F.3d 201 (3d Cir. 2001) (appellate review of class settlement)

Attorney fee issues

 In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 307 (3d Cir. 2005) 

(stating that “the district judge must protect the class’s interest by acting as a fi duciary for the class”)

Evaluating monetary and nonmonetary results achieved

 Bowling v. Pfizer, 132 F.3d 1147, 1151–52 (6th Cir. 1998) (reserving a portion of attorney fee decision until administration of the class settlement is complete)

 Fleury v. Richemont N. Am., Inc., No. 05-4525, 2008 WL 

3287154, at *6 (N.D. Cal. Aug. 6, 2008) (reserving attorney 

fee decision)

 In re Auction Houses Antitrust Litig., No. 00-Civ.-0648, 2001 

WL 170792, at *3–*5, *15–17 (S.D.N.Y. 2001) (awarding fees 

in part in the form of warrants)

 Schwartz v. Dallas Cowboys Football Club, Ltd., 157 F. Supp. 2d 

561 (E.D. Pa. 2001) (value distributed to the class based on 

the number of claims actually fi led represents the starting 

point for calculation of attorney fee award)

 Strong v. BellSouth Telecomm., Inc., 173 F.R.D. 167 (W.D. La. 

1997), aff’d, 137 F.3d 844, 848 (5th Cir. 1998) (reserving attorney fee decision until court receives information about 

actual distribution of settlement benefi ts to class members)

 Sylvester v. CIGNA Corp., 369 F. Supp. 2d 34, 50–53 (D. Me. 

2005) (using information about actual claims by class members to evaluate settlement and award attorney fees)

Methods of calculating fees

 In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306–07 (3d Cir. 

2005) (lodestar cross-check does not require actual billing 

records)
Class Action Pocket Guide (3d ed.)

48

“Mega” cases

 In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 

283, 339–40 (3d Cir. 1998) (describing large class settlements)

 In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 302–03 (3d Cir. 

2005) (discussing pros and cons of sliding scales for fee 

awards)

Objectors

 Bowling v. Pfizer, 922 F. Supp. 1261, 1285 (S.D. Ohio 1996) (objectors to fees were awarded fees for adding to the common 

fund)

Role of government actors

 In re First Databank Antitrust Litig., 209 F. Supp. 2d 96, 97–98 

(D.D.C. 2002) (documenting time and effort of government 

agency; participation in class litigation by government agency)

 Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1272 (D.C. Cir. 

1993) (reasonable attorney fee is a percentage of the value 

added to the class settlement beyond the amount attributable to the government agency)
The Federal Judicial Center

Board

The Chief Justice of the United States, Chair

Judge Susan H. Black, U.S. Court of Appeals for the Eleventh Circuit

Judge David O. Carter, U.S. District Court for the Central District of California

Magistrate Judge John Michael Facciola, U.S. District Court for the District of 

Columbia

Judge James B. Haines, Jr., U.S. Bankruptcy Court for the District of Maine

Judge Edward C. Prado, U.S. Court of Appeals for the Fifth Circuit 

Judge Loretta A. Preska, U.S. District Court for the Southern District of New York

Judge Philip M. Pro, U.S. District Court for the District of Nevada

James C. Duff, Director of the Administrative Offi ce of the U.S. Courts

Director

Judge Barbara J. Rothstein

Deputy Director

John S. Cooke

About the Federal Judicial Center

The Federal Judicial Center is the research and education agency of the federal 

judicial system. It was established by Congress in 1967 (28 U.S.C. §§ 620–629), on 

the recommendation of the Judicial Conference of the United States.

 By statute, the Chief Justice of the United States chairs the Center’s Board, 

which also includes the director of the Administrative Offi ce of the U.S. Courts 

and seven judges elected by the Judicial Conference.

 The organization of the Center refl ects its primary statutory mandates. The 

Education Division plans and produces education and training programs for 

judges and court staff, including satellite broadcasts, video programs, publications, curriculum packages for in-court training, and Web-based programs and 

resources. The Research Division examines and evaluates current and alternative federal court practices and policies. This research assists Judicial Conference 

committees, who request most Center research, in developing policy recommendations. The Center’s research also contributes substantially to its educational 

programs. The two divisions work closely with two units of the Director’s Offi ce—the Systems Innovations & Development Offi ce and Communications 

Policy & Design Offi ce—in using print, broadcast, and online media to deliver 

education and training and to disseminate the results of Center research. The 

Federal Judicial History Offi ce helps courts and others study and preserve federal 

judicial history. The International Judicial Relations Offi ce provides information 

to judicial and legal offi cials from foreign countries and assesses how to inform 

federal judicial personnel of developments in international law and other court 

systems that may affect their work.