Opinion ID: 58599
Heading Depth: 2
Heading Rank: 1

Heading: Authority to Modify the Settlement Agreement

Text: Generally, courts may not modify the terms of the parties’ voluntary settlement in the class action context. While Rule 23(e) “wisely requires court approval of the terms of any settlement of a class action[,] . . . [t]he settlement must stand or fall as a whole.” Brooks v. Ga. St. Bd. of Elections, 59 F.3d 1114, 1119, 1120 (11th Cir. 1995). Courts are not free to modify or delete terms of the parties’ negotiated settlement. Id. at 1120. However, some of our sister circuits have held that to the extent a term, deadline, or condition is outside of the parties’ negotiated agreement and within the court’s control, the court may alter it. In re Agent Orange Product Liab. Litig., 821 F.2d 139, 145 (2nd Cir. 1987) (finding that because the parties’ settlement agreement did not mention the confidentiality of discovery materials, the district court had the authority to modify a protective order it had entered); Welch & Forbes, Inc. v. Cendant Corp. (In re Cendant Corp. Prides Litig.), 233 F.3d 188, 191, 195 (3rd Cir. 2000) (upholding the district court’s order allowing class members to cure late proofs of claim because the district court set the deadline and the parties’ agreement provided for the cure of deficient claims); see also In re 6 Crazy Eddie Sec. Litig., 906 F. Supp. 840, 844-45 (E.D.N.Y. 1995) (holding that the court could enlarge the time for filing claims because the parties’ agreement required the court to set the deadline for filing proofs of claim). Thus, if the court sets a deadline in a class action settlement agreement, the court retains the discretion to alter that deadline. In re Crazy Eddie, 906 F. Supp. at 844-45; In re Cendant, 233 F.3d at 191, 195. For example, in Cendant, the parties left the deadline date for the receipt of proofs of claim in their agreement blank with the expectation that the district court would select a date for them. In re Cendant, 233 F.3d at 191, 193. Because the deadline was court-ordered, and not bargained for, the district court had the authority to extend the deadline under Fed. R. Civ. Pro. 6(b). Id. at 193-195. Similarly, in Crazy Eddie, the court concluded that the deadline for submitting proofs of claim was not “an integral part of the [parties’] bargain” because the date had been set by the court. In re Crazy Eddie, 906 F. Supp. at 844, 845. District courts considering this issue have found that where the parties actually negotiated the deadline, the court must treat it as a contract term that cannot be altered. Dahingo v. Royal Caribbean Cruises, Ltd., 312 F. Supp. 2d 440, 447, 448; L.P. Sec. Litig. v. Lee (In re ML-Lee Acquisition Fund II), No. CIV.A.94722-JJF, 1999 WL 184135, at  (D. Del. March 23, 1999). In Dahingo, 7 the court refused to extend the filing deadline to allow inclusion of late claims, finding that the deadline was “the subject of negotiation and compromise by counsel,” and the court therefore could not disturb it. Dahingo, 312 F. Supp.2d at 447. The ML-Lee court similarly held that to accept late-filed proofs of claim would be equivalent to rewriting the settlement agreement, “a result that substantially modifies the understanding negotiated between Plaintiffs and Defendants.” In re ML-Lee, 1999 WL 184135 at . Thus, the few courts to consider this issue have concluded that the court’s authority to modify a term of the parties’ settlement agreement hinges on whether the term was set by the court or bargained for by the parties. Here, the Settlement Agreement makes clear that the district court had the responsibility to set the relevant aspect of the opt-out deadline in this case. Section I.JJ of the Agreement states: “‘TPP Opt-Out Deadline’ means the date set by the court as the deadline for Third Party Payer members of the IPP classes to file Notices of Exclusion from the IPP classes, which shall not be later than April 11, 2005.” The court’s subsequent order set April 11, 2005, as the deadline for receipt of opt-out notices. The order emphasizes “for receipt” in italicized type and with underlining, though the Agreement is silent as to whether April 11, 2005, is a postmark or actual receipt deadline. Additionally, the differences in language 8 regarding the opt-out deadline in the Notice of Proposed Settlement and Request for Exclusion form render the deadline ambiguous. As noted above, the former states that the opt-out form must be received on or before April 11; the latter states that the form must be mailed in time to be received on or before April 11. Whether the deadline was a postmark or receipt deadline is not clear from the parties’ negotiated documents. Indeed, the only clarity regarding the deadline is in the district court’s order, which emphasized that it was a deadline for actual receipt. Given the grant of discretion to the district court to set the precise deadline for opt-out forms and the court’s own emphasis on “for receipt” in the face of the Agreement’s silence, we conclude that the April 11, 2005, deadline for the actual receipt of the opt-out notices was not a negotiated term of the parties’ agreement. Rather, the district court set the term and accordingly has the discretion to modify it within the parameters of whether the deadline was actual receipt by April 11, 2005, or postmarked in time to be received by then. The court erred in concluding that it lacked such authority.