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Consumer Class Actions: 15.2.12 Eleventh Circuit

The Eleventh Circuit has articulated six “fairness” factors: (1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery; (4) the probability of the plaintiff’s success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel and representative, and the substance and amount of opposition to the settlement.92

Consumer Class Actions: 15.2.13 D.C. Circuit

The D.C. Circuit has not used a single test for determining whether a proposed class action settlement should be approved. In making this determination, courts have considered the following factors, among others: “(1) whether the settlement is the result of arm’s-length negotiations; (2) the terms of the settlement in relation to the strength of Plaintiffs’ case; (3) the stage of the litigation proceedings at the time of settlement; (4) the reaction of the class; and (5) the opinion of experienced counsel.”93

Consumer Class Actions: 15.2.14 Federal Circuit

The Federal Circuit does not have a definitive list of factors but has identified the following six as instructive: (1) the relative strengths of the plaintiffs’ case compared to the proposed settlement; (2) the recommendation of class counsel, taking into account the adequacy of class counsels’ representation; (3) the reaction of the class members to the proposed settlement, taking into account the adequacy of notice to the class members of the settlement terms; (4) the fairness of the settlement to the entire class; (5) the fairness of the provision for attorney fees; and (6) the ability

Consumer Class Actions: 15.3 The Final Approval Motion

Usually, a week or so before the fairness hearing, class counsel should file the motion for final approval of the settlement. Earlier filing may be required by the judge’s standing order, local rule or, in certain circuits, when the fee petition must be filed before the deadline for objections.95 The proposed final judgment and order should be submitted or re-submitted to the court.

Consumer Class Actions: 15.4 The Fairness Hearing

Federal Rule of Civil Procedure 23(e) requires that a fairness hearing be held before the court decides whether the proposed settlement should be entered. The Rule 23(e) notice of proposed settlement advises class members when the hearing will take place and of their right to object to the settlement. As the court has previously reviewed the proposed settlement and authorized the settlement notice to the class, the judge nearly always will enter the proposed settlement unless class members have made some meritorious objections after receiving notice.

Consumer Class Actions: 15.5.2 A Settling Defendant Cannot Object Based on a Change in the Law

In Ehrheart v. Verizon Wireless, the parties reached a class settlement relating to the plaintiff classes’ claims that the defendant had violated the Fair and Accurate Credit Transaction Act.112 Subsequent to executing a settlement agreement and obtaining preliminary approval of the settlement from the district court, legislation eliminating the plaintiffs’ cause of action was signed into law. The defendant moved to vacate the preliminary approval.

Consumer Class Actions: 15.5.3 Non-Settling Defendants Usually Cannot Object to Settlement

In the event of a partial settlement with fewer than all of the defendants, the non-settling defendants may not object in the absence of some “plain legal prejudice” in the settlement agreement.116 A non-settling defendant cannot complain about the fact that it is now the only defendant left in the case but may have standing to object to a provision barring claims by the non-settling defendant against the settling defendant117 or if the non-settling defendant can show that the settlement adv

Consumer Class Actions: 15.5.8 Restrictions on Communication Regarding Objections and Opt-Outs

Attorneys seeking clients may wish to contact class members to inform them of perceived weaknesses in a proposed settlement and encourage them to object or opt out. Such communication is not forbidden but is subject to restriction by applicable rules of ethics and by the court. Recognizing that unfettered communication with class members may involve abusive practices such as characterizing the case in a misleading way or soliciting business in an unethical manner, the Supreme Court in Gulf Oil Co. v.

Consumer Class Actions: 15.5.10.1 Filing the Objection

In addition to checking local rules or standing orders for filing objections, an objector should be sure to carefully follow the provisions for objecting that are contained in the order granting preliminary approval, and should also review the class notice and settlement agreement—even if these provisions go beyond local procedures (and they usually do)—in order not to lose an objection on a technical flaw, such as filing the objection too late. In some settlements, the class notice may require an objector to file a claim (in a claims-made settlement) in order to have the right to object.

Consumer Class Actions: 15.5.10.2 Objectors and Intervention

The Supreme Court has held that, at least in a mandatory class action with no right to opt out, class members who have objected in a timely manner to the approval of a class action settlement at a fairness hearing—and who are not named plaintiffs—have the right to bring an appeal without first intervening.181 Lower federal courts have extended this holding and concluded that a motion to intervene is not necessary to preserve the class member’s appeal rights even in an opt-out class action.182

Consumer Class Actions: 15.5.10.3 Objector’s Right to Discovery

If discovery is necessary, the objector should request such discovery by motion, setting forth with specificity why it is needed; fishing expeditions are not looked upon favorably.198 While not an absolute right, objectors are often given the opportunity to conduct independent discovery.199 For example, upon objection to a fee motion, the decision of whether to grant such discovery is left to the discretion of the court.200 The critical quest

Consumer Class Actions: 15.5.12 Withdrawal of Objections

In addition to evaluating objections, the court will also scrutinize the withdrawal of objections, but only if a payment or other consideration is “provided in connection with: (i) forgoing or withdrawing an objection, or (ii) forgoing, dismissing, or abandoning an appeal from a judgment approving the proposal.”231 Previously, Rule 23(e)(5) provided that no objection to a settlement could be withdrawn in a federal proceeding without court approval.232 The 2018 Advisory Committee Notes to Rul

Consumer Class Actions: 15.5.13 Attorney Fees for Objectors

Federal Rule of Civil Procedure 23(h), which addresses the award of attorney fees and non-taxable costs in class actions, is not limited to class counsel.240 The general rule is that an objector is entitled to attorney fees from the common fund, provided the objector demonstrates that the objection actually benefited the class.241 While some courts have stated that the benefit must consist of a larger ultimate class recovery than would have been achieved in the absence of the objector’s effo

Consumer Class Actions: 15.5.14.1 When Can an Objector Appeal?

An objector can only appeal after a judgment granting final approval of the settlement is entered. A district court’s order preliminarily approving a settlement and conditionally certifying the settlement class is not an “order granting or denying class-action certification” triggering the possibility of a Rule 23(f) interlocutory appeal by an objector.249

Consumer Class Actions: 15.5.14.2 Standing to Appeal

An objector must have suffered some sort of injury to their own interests to have standing to appeal.251 Thus, an objector whose motion for attorney fees is denied has standing to appeal the denial,252 provided the objector was a member of the class or at least sought to intervene.253 On the other hand, a class member who was not a member of a subgroup required to submit proofs of claim in order to receive payment does not have standing to ob

Consumer Class Actions: 15.5.14.3 Appeal Bonds for Objectors

Class counsel may request that a trial court require any objector filing a notice of appeal challenging the approval of a proposed class action settlement to post a bond. Ordinarily, the type of bond that should be sought is a “bond for costs on appeal” under Federal Rule of Appellate Procedure 7,258 as opposed to a supersedeas bond under Federal Rule of Appellate Procedure 8.

Consumer Class Actions: 15.5.14.4 Standard of Review on Appeal

On appeal, the reviewing court will generally reverse the final approval of a settlement only for abuse of discretion.275 The court may, however, reverse and remand if the district court has not provided a “reasoned response” to objections—along with findings of fact and conclusions of law supporting its response—so that the appellate court may properly judge its exercise of its discretion.276 Although it is a limited review, it is not pro forma.

Consumer Class Actions: 15.7 Appeals by Third-Party Non-Objectors

Appeals are sometimes filed by third parties who have not objected to the settlement or the award of attorney fees. For example, an entity whose claim against the settlement fund has been denied on the ground that they are not a member of the settlement class has been found to have standing to appeal the district court’s denial of its motion to direct the settlement administrator to approve its claim.285 Indeed, in Rothstein v.