Duane Morris Class Action Review - 2023 - Report - Page 319
One class member who was on the NDNC registry filed an objection to the proposed
settlement, arguing that she and other class members like her had materially stronger
and more valuable claims than other class members without NDNC registry claims. The
objector contended that class counsel was inadequate to represent the class of NDNC
because it led to an inequitable result in which all class members received equal
shares, even though some had more valuable claims. The district court overruled the
objection and certified the class for settlement purposes. On appeal, the First Circuit
reversed the district court's ruling. The First Circuit found that the certified class
consisted of class members with claims having significantly different elements and
facing different defenses. Id. at *26. The First Circuit further opined that the relative
values of all class members’ different claims were not sufficiently clear-cut so as to
enable approval of a proposed apportionment of a common fund in the absence of any
informed arm's-length negotiation. Id. at *26-27. For these reasons, the First Circuit
vacated and remanded the district court’s ruling.
B.
Rulings On Objections To Class-Wide Settlements
Standing concepts also underlie the propriety of challenges to class-wide settlements.
An illustrative decision in this regard is Saucillo, et al. v. Peck, 25 F.4th 1118 (9th Cir.
2022), where the Ninth Circuit held that a plaintiff - who was not a party to claims under
California’s Private Attorneys General Act (PAGA) representative action - lacked
standing to appeal the PAGA settlement. Plaintiffs brought class action claims and
representative claims under the PAGA on the basis of alleged violations of the
California Labor Code. After several years of litigation, the parties reached a settlement.
The district court overruled the objection of an objector who had filed a separate PAGA
claim in a different case, but was not a party to the underlying PAGA claims. On review,
the Ninth Circuit held that the objector did not have standing to appeal the PAGA
settlement because a representative action under PAGA is distinct from a class action.
In essence, the Ninth Circuit opined that the objector had no right to appeal in the action
to which he was not a party. In reaching this conclusion, the Ninth Circuit rejected the
objector’s contention that he could appeal because, ultimately, he might receive a
portion of the PAGA settlement. With respect to the class action settlement at issue in
the appeal, a different objector argued that, in evaluating the proposed, pre-certification
settlement, the district court erroneously applied a presumption of fairness. The district
court considered that “the parties engaged in arm’s-length, serious, informed and noncollusive negotiations between experienced and knowledgeable counsel,” and applied
the presumption of fairness. Id. at 1124. The Ninth Circuit reasoned that, in the precertification context, the district court should have employed a “higher standard of
fairness and a more probing inquiry than may normally be required under Rule 23(e).”
Id. at 1130. As a result, it remanded the case for further proceedings.
The burden of proof required of objectors also underlies the fairness of class settlement
evaluations. The Fourth Circuit addressed this in 2022 in the case of 1988 Trust Of
Allen Children, et al. v. Banner Life Insurance Co., 28 F.4th 513 (4th Cir. 2022), where it
elucidated the roles of parties and a district court in evaluating objections to class-wide
settlements. In 1988 Trust Of Allen Children, a putative class of life insurance
policyholders sued insurance companies to recover excess premiums they had paId.
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Duane Morris Class Action Review – 2023
