Duane Morris Class Action Review - 2023 - Report - Page 314
CHAPTER 20
Settlement Approval Issues In Class Actions
I.
Executive Summary
Class actions typically are dismissed, settled, or tried to verdict. Trials are rare,
however, as the financial exposure in most class cases is vast and the possibility of an
adverse verdict may present unacceptable risks.
Often courts dismiss cases at the pleadings stage or grant summary judgment as to the
claims of the individual named plaintiff. Sometimes plaintiffs choose to dismiss their
cases rather than continuing to pursue them. Sometimes class actions settle on an
individual basis at an early stage. In those instances, the settlement binds only the
proposed class representative and the defendant. In such an instance, the claims of
absent members of the potential class are not affected.
The benefits of settling are obvious. Early settlements offer individual plaintiffs relatively
quick payments. They allow defendants the opportunity to end cases early without the
need to pay the high costs, including often burdensome discovery-related costs to
defend class litigation. Early settlements benefit the court system too by avoiding
needless litigation that can clog court dockets. When permitted by law, parties
frequently choose to settle on a confidential basis, thereby avoiding the risk of adverse
publicity, which is a dynamic that benefits both defendants and plaintiffs.
Settling a class action on a class-wide basis is entirely different. Most potential class
actions are resolved before or on the heels of a class certification order. Rule 23 not
only provides a process for certification of a class action, but also a procedure for
settlement of such claims. Rule 23(e) lays out a three-part settlement approval
process. It includes preliminary approval (described as approval to provide notice to
the class), notice to class members, and final settlement approval.
In order to secure the court’s approval to send notice to the class, the parties must
provide “sufficient” information for the court to determine whether it will likely be
able to approve the settlement and certify the class for purposes of entry of a
judgment. Rule 23(e) includes a detailed list of factors for consideration before final
approval of a class settlement, including the quality of class representation, whether
the negotiation took place at arm’s length, the adequacy of class relief, and
equitable treatment of class members.
Class notice is also governed by the rule. It specifies that notice may sent via email,
text, or social media, where appropriate. Case law on Rule 23 also establishes the
types of notice plans that are sufficient to afford “enough notice” to satisfy due
process and statutory requirements.
The rule likewise provides a process for individuals to object to a proposed classwide settlement. Objectors are required to assert with specificity the grounds for the
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Duane Morris Class Action Review – 2023
