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July 5, 2018 by Mindee J. ReubenDownload PDF

New Amendments to the Federal Rules of Civil Procedure - Rule 23, Relating to Class ActionsMindee J. Reuben

On April 26, 2018, the Supreme Court of the United States adopted several amendments to the Federal Rules of Civil Procedure (Rules 5, 23, 52 and 65.1) and are pending Congressional review. This post relates to certain aspects of the amendments to Rule 23. In order to view the entire package of materials transmitted to Congress, including redlined versions of the amendments and all related Committee Notes, please click here.

Notice. Rule 23(c)(2)(B) currently requires notice to be given to any class certified under Fed. R. Civ. P. 23(b)(3). The proposed amendment recognizes the propriety of issuing combined notice of any class certified under (b)(3), as well as any settlement class that is preliminarily approved by the court under (e)(3). See April 2018 Committee Note, Subdivision (c).

The proposed amendment to Rule 23(c)(2)(B) also explicitly recognizes that notice may be given by “United States mail, electronic means, or other appropriate means,” i.e., “the best notice that is practicable,” whatever the means. These additions recognize technical changes in methods of communication that have occurred over the years. See April 2018 Committee Note, Subdivision (c).

Approval of Settlement Classes. The proposed amendment to Rule 23(e) makes clear that the procedural requirements of this Rule would apply to settlement classes even where no litigation class has been certified. Moreover, although there is no question that the standards for certification of a settlement class differ from the standards for approval of a litigation class, the amended Rule specifies the core factors a court should use to decide whether approval of a settlement class and the related provision of notice is appropriate:

(A) the class representatives and class counsel have adequately represented the class; (B) the proposal was negotiated at arm’s length; (C) the relief provided for the class is adequate, taking into account: (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; (iii) the terms of any proposed award of attorney’s fees, including timing of payment; and (iv) any agreement required to be identified under Rule 23(e)(3); and (D) the proposal treats class members equitably relative to each other.
Such approval requires both a hearing and a finding that the settlement is fair, reasonable and adequate based on the foregoing factors, as well as whether the class can be certified under Rules 23(a) and (b). Fed. R. Civ. P. 23(e)(2).

The Supreme Court notes that the purpose of this amendment “is not to displace any factor [which may have been generated by courts over the years], but rather to focus the court and the lawyers on the core concerns of procedure and substance that should guide the decision whether to approve the proposal.” However, additional commentary from the Court suggests that it is not necessary to address “every factor on a given circuit’s list in every case,” and—in a somewhat of a mixed message—“therefore directs the parties to present the settlement to the court in terms of a shorter list of core concerns….” See April 2018 Committee Note, Subdivision (e)(2).

Objections. The proposed amendment to Rule 23(e)(5) would no longer require court approval every time an objector withdraws an objection. The amended Rule does, however, require court approval if that withdrawal is coupled with payment or other consideration. Fed. R. Civ. P. 23(e)(5)(B)(i).