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Class Action Settlements Under AssaultSteven J. Greenfogel

Ever since the Supreme Court decided Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997), the use of the class action vehicle to settle litigation has become more and more problematic. There, the Court found that, even in a settlement context, a district court had to consider all of the Rule 23 (a) and (b)(3) factors (other than management issues at trial) in determining whether class certification of a settlement agreement is appropriate.

Most recently, on January 23, 2018, in In re Hyundai and Kia Fuel Economy Litigation, the Ninth Circuit went even further. That court ruled, by a 2-1 vote, that the plaintiffs there, who had reached a nationwide class settlement, had to show that various state laws are sufficiently similar to the law of the state where the action is pending and that the use of that state’s law would not impinge on the interests of other states in applying their own laws.

In Hyundai, the settlement utilized California consumer protection statutes as the settlement vehicle for the multistate consumer fraud case that had been brought. The Ninth Circuit undid the settlement and found that plaintiffs had to show that other state laws were similar to the law of California before a nationwide settlement class could be certified.

This type of impediment to settlement class certification flies in the face of much Supreme Court jurisprudence, which indicates that settlement of litigation is to be encouraged. In fact, between the negativity of appellate courts and the proliferation of professional objectors (some motivated by ideological hostility to anyone who is opposed to corporate malfeasance, and others motivated by sheer greed), the class action vehicle is under assault as never before.

Where all of this will ultimately lead is open to anyone’s guess. Quite often the law of unintended consequences can have insidious effects. When there is a case involving common questions of law and fact that both sides to the lawsuit wish to resolve on a classwide basis and which a judge finds to be a fair and reasonable way to resolve the dispute, shouldn’t that decision be given great deference? Doing so delivers settlement benefits to the thousands in the class immediately. Otherwise, we may see more of these complex cases put before a jury (despite the parties’ preference to resolve them by settlement), taking up far more of the judiciary’s time and putting litigants on both sides of the issue at a far greater risk of an adverse verdict. As litigants have discovered far too often to their dismay, trusting their case to the tender mercies of a jury can lead to disastrous results.

Therefore, rather than throwing up roadblocks to settlements, courts should be doing whatever they can to assist litigants in implementing settlements, while at the same time ensuring that those settlements have been reached without any collusion between the parties. Similarly, unless objections are so fundamental to the rights of a proposed class, appellate courts should look at them with a jaundiced eye. That is the exact opposite of what is happening in the judicial system as we know it today.