Source: https://nclej.org/chapter-7-4
Timestamp: 2020-07-09 08:44:30
Document Index: 43592332

Matched Legal Cases: ['§ 21', '§ 13', '§ 21', '§ 21', '§ 1715', '§ 1715', '§ 1715', '§ 21', '§ 23', '§ 21', '§ 21']

7.4 Resolution of Class Actions - National Center for Law and Economic Justice
Counsel may seek to settle a putative class action prior to class certification. A “settlement class” is one that has been certified at the same time the settlement has been approved.6 Certification at the time of settlement approval binds all members of the class who have not opted out to the judgment.7 Settlement classes must satisfy all the requirements of Rule 23(a) and (b).8 Whether a class action would be manageable is not considered in settlement classes since the matter, by definition, does not proceed to trial.9 Because of increased possibilities of collusion, settlement classes are subject to more searching scrutiny.10
Rule 23(e)(1)(B) requires notice where the settlement binds the class through claim or issue preclusion and is not required when the settlement only binds the individual class members. Settlement notice must be prepared in a reasonable manner in all class action settlements, regardless of whether it is a (b)(1), (b)(2) or (b)(3) class.15 This notice must explain the proposed settlement or dismissal to the class members16 , specify a means for them to file objections to the proposed terms 17 , set forth any deadline for filing such objections, and inform them of the date of the hearing where their objections will be considered.18 The form of such a notice should be submitted to the court for approval either as part of the settlement agreement itself or by separate motion. “Reasonable” notice is most commonly notice by mail, but may be supplemented or, when appropriate, replaced by notice by publication. Rule 23 does not necessarily require the party sending the notice to “exhaust every conceivable method of identification.”19 This notice need not be individualized. Because both the class and the defendants seek approval of the settlement, courts have shifted the burdens and costs of providing notice to the defendants when appropriate.
The court is required to ensure that the settlement is fair, adequate, reasonable, and not based on collusion. Some courts also consider whether the settlement furthers the public interest.24 The court has a “heavy, independent duty” in making the approval as the settlement process is more susceptible to abuse than the “adversarial process.”25 As described by the Manual for Complex Litigation, the role of the court is to be a “skeptical client” as there is “typically no client with motivation, knowledge, and resources to protect its own interests.”26 The court must balance a variety of factors in reaching this determination of fairness. These standards are expressed in various ways by the courts but fundamentally involve the following inquiries27 : 1) a comparison of the strength of the plaintiff’s case against the recovery proposed in the settlement); 2) the complexity and risks of continued litigation; 3) the presence of collusion in reaching a settlement; 4) the comments of class members; and 5) the stage of the proceedings and the amount of discovery completed.28 Rule 23(h) sets forth in detail the requirements necessary for a court to award attorney fees in class actions.
1.Graham C. Lilly, Modeling Class Actions: The Representative Suit As an Analytic Tool, 81 Neb. L. Rev. 1008, 1032 (2003). See also Federal Judicial Center, Manual for Complex Litigation (Fourth) § 21.61 (2004).
2.Evans v. Jeff D., 475 U.S. 717 (1986). See Chapter 9.4 of this MANUAL.
3.Manual for Complex Litigation (Fourth), supra note 1, §§ 13.24 and 21.7.
4.In re Hager, 812 A.2d 904 (D.C. 2002). For a discussion of the ethical challenges in class action representation, see generally Julie Klusas, Saving the Class Action: Developing and Implementing a Model Rule of Professional Conduct for Class Action Litigation, 16 Geo. J. of Legal Ethics 353 (2003).
5.See In re Hager, 812 A.2d 904 (D.C. 2002); Griesz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1013 (7th Cir. 1999).
6.See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 618 (1997).
7.For a detailed discussion of settlement classes in a context in which approval of one was overturned, see In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir.), cert. denied, GMC v. French, 516 U.S. 824 (1995).
8.Amchem Products, Inc. v. Windsor, 521 U.S. 591, 621 (1997).
9.Id. at 629.
10.Id. at 620.
11.See, e.g., Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 279 (7th Cir. 2002) (citing In re Cendant Corp. Litig., 264 F.3d 201, 231 (3rd Cir. 2001).
12.Fed. R. Civ. P. 23(e)(1)(A) advisory committee’s notes, 2003 amends.
13.See, Gregory P. Joseph, 2003 Class Action Rules, in 2 Civil Practice and Litigation Techniques in Federal and State Courts 1 (A.L.I.-A.B.A. Course of Study 2003). See also Daniels v. Bursey, No. 03 C 1550, 2004 WL 2358291, 2004 U.S. Dist. LEXIS 20950 (N.D. Ill. Oct. 19, 2004, appeal dismissed 430 F.3d 424 (7th Cir. 2005), cert. denied sub nom. Koresko v. Bursey, 548 U.S. 904 (2006) (rejected claim that putative class action cannot be settled on an individual basis without court approval). But see Schick v. Berg, No. 1:03-cv-05513-LBS, 2004 U.S. Dist. LEXIS 6842 (S.D.N.Y. Apr. 20, 2004), aff’d, 430 F.3d 112 (2d Cir. 2005) (discussing policy protecting putative class member rights pre-certification). See also Manual for Complex Litigation (Fourth), supra note 1, § 21.61 (after describing potential abuses in pre-certification settlements states: “Use of the court’s supervisory authority to police the conduct of proposed class actions under Rule 23(d) may be appropriate in such circumstances”).
14.Manual for Complex Litigation (Fourth), supra note 1, § 21.632-.633.
15.Fed. R. Civ. P. 23(e)(1).
16.The notice need not explain all the details of the settlement so long as the agreement is otherwise made available on a website.
17.The notice need not offer all the reasons a class member might object to the settlement. Int’l Union v. Gen. Motors, 497 F.3d 615, 630 (6th Cir. 2007).
18.See In re Diet Drugs Prods. Liab. Litig., 226 F.R.D. 498, 517-18 (E.D. Pa. 2005). For an example of a notice found insufficient, see White v. Ala., 74 F.3d 1058, 1066 (11th Cir. 1996) (emphasizing that notice must be understandable and rejecting notice written in legalese so dense that even lawyers would have trouble understanding it).
19.Brecher v. St. Croix County, No. 02-C-0450-C (W.D. Wis. May 26, 2004); In re Prudential Ins. Co. of Am. Sales Practices Litig., 177 F.R.D. 216, 232 (D.N.J. 1997). See also Handschu v. Special Serv. Div., 787 F.2d 828, 832-33 (2d Cir. 1986) (publication over period of weeks in several newspapers was sufficient). But see Hecht v. United Collection Bureau, Inc., 691 F.3d 218, 224-225 (2d Cir. 2012) (finding that notice in the form of a one-time notice in a single publication was a ‘mere gesture’ that did not satisfy due process). See also ; Burns v. Elrod, 757 F.2d 151, 154 (7th Cir. 1985); Wyatt v. Sawyer, 105 F. Supp. 2d 1234, 1240 (M.D. Ala. 2000) (posting prominently in living areas of all facilities of mental institution, hand-delivered to residents and to advocates for whom hand-delivered deemed clinically inappropriate, mailed to legal guardians, mailed to consumer and advocacy organizations with statewide constituencies, and published in newspapers).
21.28 U.S.C. § 1715(a)(1).
22.28 U.S.C. § 1715(d).
23.28 U.S.C. § 1715(e)(1).
24.See Int’l Union, 497 F.3d at 631.
25.Laube v. Campbell, 333 F. Supp. 2d 1234, 1238 (M.D. Ala. 2004). See also, e.g., In re Dry Max Pampers Litigation, 724 F.3d 713, 715 (6th Cir. 2013) (noting that in class action settlements “there is always the danger that the parties and counsel will bargain away the interests of unnamed class members in order to maximize their own”).
26.Manual for Complex Litigation (Fourth), supra note 1, § 21.61.
27.For a detailed discussion of these various factors, see 5-23 James Wm. Moore et al., Moore’s Federal Practice – Civil § 23.164.
28.The advisory committee notes recommend the “helpful review of many factors that may deserve consideration” found in In re Prudential Ins. Co. America Sales Practice Litgation Agent Actions, 148 F.3d 283, 316-24 (3d Cir. 1998). See also Rutter & Willibanks Corp. v. Shell Oil Corp., 314 F.3d 1180, 1188 (10th Cir. 2002) (considering whether settlement was (1) fairly and honestly negotiated; (2) serious questions of law and fact exist and place ultimate outcome in doubt; (3) value of immediate recovery outweighs mere possibility of future relief after protracted and expensive litigation; and (4) parties judge settlement as fair and reasonable); D’Amato v. Deutsche Bank, 236 F.3d 78, 86 (2d Cir. 2001) ((1) complexity, expense, and likely duration of litigation; (2) reaction of class to settlement; (3) stage of proceedings and amount of discovery completed; (4) risks of establishing liability; (5) risks of establishing damages; (6) risk of maintaining class action through trial; (and in damage actions); (7) ability of defendants to withstand a greater judgment; (8) range of reasonableness of settlement fund in light of best possible recovery; and (9) range of reasonableness of settlement fund to possible recovery in light of all litigation risks); Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (evaluating (1) strength of plaintiffs’ case; (2) risk, expense, complexity, and likely duration of further litigation; (4) risk of maintaining class status throughout trial; (5) amount offered in settlement; (6) extent of discovery completed; (7) experience of counsel; (8) presence of a government participant; and (9) reactions of class members). See generally Manual for Complex Litigation (Fourth), supra note 1, § 21.62 (setting forth nonexhaustive list of fifteen potentially relevant factors, along with list of criteria courts have utilized in weighing those factors).
32. As indicated, the reaction of class members may be considered as a factor in the approval process. See supra note 28 and accompanying text. See Beavers v. Am. Cast Iron Pipe Co., 164 F. Supp. 2d 1290, 1297-98 (N.D. Ala. 2001) (approval of settlement terms by the named plaintiffs and class representatives another factor favoring approval of settlement); United States v. City of Montgomery, 948 F. Supp. 1553, 1568 (M.D. Ala. 1996). In one instance, the opposition by 70 percent of a subclass led the Fifth Circuit to reject a settlement. Pettaway v. Am. Cast Iron Pipe Co., 576 F.2d 1157, 1217 (5th Cir. 1978). Failure to allow intervention of right in the remedy stage may compel an appellate court to vacate approval of a settlement agreement. See Benjamin by and through Yock v. Department of Public Welfare of Pennsylvania, 701 F.3d 938, 948 (3d Cir. 2012).The 2003 Amendments now require that any objections to the settlement may only be withdrawn with the court’s approval. Fed. R. Civ. P. 23(e).
33.Manual for Complex Litigation (Fourth), supra note 1, § 21.61.
34.Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 106 n.12 (2d Cir. 2005); Joel A. v. Giuliani, 218 F.3d 132, 139 (2d Cir. 2000).
35.F.W.F., Inc. v Detroit Diesel Corp., 308 Fed. App’x 389, 390 (11th Cir. 2009);Waters v. Int’l Precious Metals Corp., 237 F.3d 1273, 1277 (11th Cir. 2001).
36. Moran v. Gannon (In re Touch Am. Holdings, Inc. ERISA Litig.), 563 F.3d 903(9th Cir. 2009).
37.Devlin v. Scardelletti, 536 U.S. 1 (2002).