Opinion ID: 1357701
Heading Depth: 2
Heading Rank: 1

Heading: Requirements for Approving Class Settlements

Text: In order to approve a class settlement agreement, a district court must determine that the requirements for class certification under Federal Rule of Civil Procedure 23(a) and (b) are met and must determine that the settlement is fair to the class under Federal Rule of Civil Procedure 23(e). As the Supreme Court has made clear: Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial. But other specifications of [Rule 23]those designed to protect absentees by blocking unwarranted or overbroad class definitions demand undiluted, even heightened, attention in the settlement context. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (citation omitted). [I]f a fairness inquiry under Rule 23(e) controlled certification, eclipsing Rule 23(a) and (b), and permitting class designation despite the impossibility of litigation, both class counsel and court would be disarmed. Id. at 621, 117 S.Ct. 2231. Thus, it is important to apply[ ] the class certification requirements of Rules 23(a) and (b) separately from [the] fairness determination under Rule 23(e). In re Prudential Ins. Co., 148 F.3d at 308. The requirements of [Rule 23](a) and (b) are designed to insure that a proposed class has `sufficient unity so that absent class members can fairly be bound by decisions of class representatives.' Id. at 309 (quoting Amchem, 521 U.S. at 621, 117 S.Ct. 2231). Under Rule 23(a), the prerequisites to class certification are: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a); see Amchem, 521 U.S. at 613, 117 S.Ct. 2231. If all of the prerequisites of Rule 23(a) are satisfied, a class action may be maintained if the standards set forth in Rule 23(b) are satisfied as well. Fed.R.Civ.P. 23(b). Rule 23(b)(3) requires the court [to] find[ ] that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Fed.R.Civ.P. 23(b)(3); see also Amchem, 521 U.S. at 618, 117 S.Ct. 2231 (Among current applications of Rule 23(b)(3), the `settlement only' class has become a stock device.). The [f]actual determinations necessary to make Rule 23 findings must be made by a preponderance of the evidence. In other words, to certify a class the district court must find that the evidence more likely than not establishes each fact necessary to meet the requirements of Rule 23. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 320. Accordingly, [c]lass certification is proper only if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23 are met. Id. at 309 (internal quotation marks omitted). Even if it has satisfied the requirements for certification under Rule 23, a class action cannot be settled without the approval of the court and a determination that the proposed settlement is fair, reasonable and adequate. In re Prudential Ins. Co., 148 F.3d at 316 (internal quotation marks omitted); see Fed.R.Civ.P. 23(e)(2) (stating that a district court may approve a proposed settlement only after a hearing and on finding that it is fair, reasonable, and adequate). In Girsh v. Jepson, our Court articulated nine factors to be considered when determining the fairness of a proposed settlement: `(1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.' 521 F.2d 153, 157 (3d Cir.1975) (internal quotation marks and alterations omitted). [W]here settlement negotiations precede class certification, and approval for settlement and certification are sought simultaneously, we require district courts to be even more scrupulous than usual when examining the fairness of the proposed settlement. In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 534 (3d Cir. 2004) (internal quotation marks omitted).