Settlement

Earlier this month, the Ninth Circuit held in Sweet v. Cardona that although a third-party intervenor who wishes to object to a class settlement may have Article III standing based on an alleged reputational harm from the settlement, the intervenor nonetheless lacks standing to challenge a district court’s final approval…

Continue Reading Ninth Circuit Holds That Third-Party Intervenors Do Not Have Standing to Challenge Class Action Settlements

Earlier this summer we reported that federal courts of appeals are more closely scrutinizing class action settlements that award class counsel outsized sums not reflecting counsels’ time spent on the litigation.  Last week, the Eighth Circuit joined the trend by reversing an attorneys’ fee award of almost $80 million in a “megafund” case that “had barely gotten off the ground before it settled.”  In re T-Mobile Customer Data Sec. Breach Litig., — F.4th —, 2024 WL 3561874, at *1 (8th Cir. July 29, 2024).Continue Reading Eighth Circuit Reverses “Windfall” Fee Award to Class Counsel

In two recent decisions, federal courts of appeals confirmed they are prepared to give close scrutiny to a class settlement that offers a hefty payday to plaintiffs’ counsel with very little genuine benefit to any class.Continue Reading A Closer Look:  Appellate Courts Closely Scrutinize Settlements

This blog has covered recent decisions from the Eleventh Circuit that have taken a hard look at class action settlements.  For example, we previously discussed the Eleventh Circuit’s per se prohibition on the inclusion of incentive awards for class action representatives in class action settlements.  See Johnson v. NPAS Sols., LLC, 975 F.3d 1244 (11th Cir. 2020) (vacating settlement in part because it included incentive awards).  Just recently, the Eleventh Circuit vacated the approval of another class action settlement because it “included relief that [the district court] had no jurisdiction to award.”  Smith v. Miorelli, 93 F.4th 1206, 1209 (11th Cir. 2024).Continue Reading Eleventh Circuit Vacates Settlement Approval Because Plaintiffs Lacked Standing to Seek Injunctive Relief

The Fourth Circuit recently reinstated a wrongful death suit against a defendant, holding that the release in a settlement of consumer class actions against the defendant did not preclude plaintiff’s personal injury suit against that same defendant.  See In re Lumber Liquidators Chinese-Manufactured Flooring Prod. Mktg., Sales Pracs. & Prod. Liab. Litig., — F. 4th —, 2024 WL 174363 (4th Cir. Jan. 17, 2024).  The Fourth Circuit’s decision is notable given that class members—including plaintiff—explicitly agreed to release all personal injury claims against the defendant, yet the Fourth Circuit held that the plain language of the release was limited by the “identical factual predicate” doctrine and allowed the class member to raise this challenge in a subsequent lawsuit.Continue Reading Fourth Circuit Holds That Consumer Class Action Release Does Not Necessarily Release Personal Injury Claims

Cy pres (or “next best”) provisions are a relatively common provision of class action settlements.  The cy pres doctrine permits funds from a cash settlement in a class action to be sent to a third party, usually a charitable organization with a mission related to the claims in the lawsuit, rather than to class members.  Cy pres provisions are typically used for residual funds in a settlement pool or, less commonly, when class members are hard to identify.  But cy pres provisions have come under increasing scrutiny, as evidenced by an Ohio federal court’s recent rejection of a class action settlement based solely on its cy pres provision.  Hawes v. Macy’s Inc., No. 1:17-CV-754, 2023 WL 8811499 (S.D. Ohio Dec. 20, 2023). Continue Reading Federal Court Rejects Class Action Settlement Over Cy Pres Provision

On October 25, 2023, the Eleventh Circuit overruled several objections to a $2.67 billion antitrust class action settlement agreement that was the product of years of negotiations between Blue Cross and classes of its past and present health plan subscribers.  Two objections, raised by Home Depot, focused on (i) the settlement’s release of antitrust claims arising from Blue Cross’s conduct, and, relatedly, (ii) the adequacy of representation for an injunctive class of plaintiffs who might have future claims based on that conduct.Continue Reading Eleventh Circuit Upholds Blue Cross Blue Shield Subscriber Settlement Over Antitrust and Public Policy Objections

Courts and litigants continue to grapple with the new frontier of artificial intelligence (“AI”).  One recent case in California demonstrates a new wrinkle in this evolving landscape—the use of AI to aggregate class claims.

Because class settlements bind absent class members who do not object or opt out, Rule 23 requires courts to carefully review and approve them as “fair, reasonable, and adequate.”  An important part of this inquiry is making sure class members are given adequate notice of the terms of the proposed settlement and their rights.  When class members are required to submit claims to access settlement benefits, parties often turn to professional claims administration companies to assist in providing notice and facilitating the claims process.  Under Rule 23, courts closely monitor the information that flows from class counsel and claims administrators to putative class members to make sure it complies with due process.Continue Reading California Federal Court Clamps Down on ‘En Masse’ Class Claims Identified by AI

In Moses v. New York Times Co., 2023 WL 5281138 (2d Cir. Aug. 17, 2023), the Second Circuit vacated and remanded the approval of a class action settlement because the district court applied the wrong legal standard in determining that the settlement was fair.  But in doing so, the court reiterated that incentive awards for class action representatives are permissible in the Second Circuit.Continue Reading Second Circuit Holds that Rule 23(e) Prohibits Presumption of Fairness of Arm’s-Length Negotiated Class Settlements

We previously covered the Eleventh Circuit’s decision in Johnson v. NPAS Solutions, LLC, 975 F.3d 1244 (11th Cir. 2020), in which the Eleventh Circuit relied on two Supreme Court decisions from the 1880s to prohibit courts from awarding incentive or service awards to class representatives in class settlements.  Id. at 1255 (citing Trustees v. Greenough, 105 U.S. 527 (1881), and Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885).  Although the Eleventh Circuit was the first federal appellate court to bar these awards in all circumstances, a recent Second Circuit decision agreed that these awards are “likely impermissible” under Supreme Court precedent, while observing that it would take the entire Second Circuit to overturn prior precedent upholding incentive awards.  See Fikes Wholesale, Inc. v. HSBC Bank USA, N.A., 62 F.4th 704, 721 (2nd Cir. 2023).  The Department of Justice has likewise implied that it agrees with the Eleventh Circuit’s position, relying on the Johnson decision in an effort to block incentive awards from a class settlement in a District of Columbia court.  Continue Reading Supreme Court Denies Cert on Incentive Awards