What you need to know before entering the final stages of your class action settlement.
A class action fairness hearing is the court’s final opportunity to determine whether the proposed settlement is fair, reasonable, adequate, and not based on collusion.
Courts use a final fairness hearing to assess the negotiation between parties and determine whether the proposed settlement benefits class members. Settlement approval happens over two-steps, through a preliminary fairness evaluation and a final fairness evaluation.
According to the Shriver Center, the court often uses fundamental factors to determine fairness.
- A comparison of the strength of the plaintiff’s case against the recovery proposed in the settlement.
- The risks of continued litigation.
- The possible presence of collusion between attorneys.
- Class member comments or objections.
- The amount of discovery completed.
The negotiation process is often heavily weighed. The court’s role throughout a class action lawsuit is to protect the interests of class members. In doing so, the process of compromise must be scrutinized. For instance, courts can determine whether benefits or advantages for class members were traded away in favor of a large or quick settlement. While a court may reject a settlement, it can’t rewrite it.
Common Objections to Settlements
A fairness hearing is also a chance for class members to object to portions of the settlement such as attorney fees or claims funds. There are not many requirements for an objection other than class membership.
Notice of a fairness hearing must be given to class members.
- Unjustifiable attorney fees and/or expenses
- Lower than expected claimant participation
- Legal notice plan did not meet estimated reach
- Conflict of interest
- Cy pres provisions
Professional objectors are serial objectors across class action lawsuits. Usually, there are two types, people who object in order to get more money from the settlement, or watchdog groups.
Moving through the settlement approval process swiftly could force objectors to demonstrate the merits of their objection. Sometimes, defense counsel will put the onus on class counsel to work with the objector.
A lesser-used approach to dealing with objectors is in the appeal stage, with a request to require objectors to post an appeal bond (or cost bond). This requires the appellant who wants to delay payment of the settlement to post a surety bond.
Discovery from objectors is limited in scope, and the request needs to detail the need for the information. It also can’t be considered a burdensome request.
Find Your Experts
It’s helpful to align yourself with experts at the beginning. It won’t cost more to bring a claims and notice administrator onto your team prior to preliminary approval. Administrators can assist in creating a settlement plan that satisfies due process and gets preliminary approval, all the way through to settlement distribution. Engaging a claims and notice administrator early can ensure each step in the claims process is tailored to fit your case, maximizing class benefit and minimizing costs. By doing so, your settlement is more likely to pass a fairness hearing.
In addition, engaging practiced class action attorneys can help you navigate the process. Class action law is a complex specialty and learning from experts who have been there can be invaluable.