The Equity in Class Actions Act of 2005 (CAFA) requires any defendant involved to notify the “competent federal official” and “competent state official” in each state where a class member resides within 10 days of filing a settlement proposal in federal court that exceeds a disputed amount of $5 million. CAFA then gives government officials ninety days to review the settlement before final court approval. While a class notice is not always required, parties must assume that they must notify class members who are absent from the proposed settlement. Once the tribunal has granted provisional approval of the settlement, Rule 23 requires the tribunal to address the notice “in an appropriate manner” to any class member who would be bound by the proposed settlement. The parties must coordinate with the Claims Administrator to ensure that appropriate notice is distributed to absent class members and to monitor absent class members who choose not to settle. Parties should seek final approval of the class action lawsuit from the court and request a final approval hearing after cafa`s ninety-day notice period expires. The court must determine whether the settlement is “fair, reasonable and reasonable” for the class action plaintiffs. In doing so, the tribunal shall take into account all objections raised by the absent members of the group. If the court determines that the settlement is fair, reasonable and appropriate, it should grant final approval of the settlement. Once the parties have negotiated a settlement to resolve the claims for the class, they seek preliminary court approval.

Parties must demonstrate during the preliminary approval process (1) that the proposed settlement is likely to receive final approval and (2) that the court is likely to certify the group for the purpose of evaluating the proposed settlement. For the purposes of interim approval, the court will consider whether: The parties should also determine for the court the proposed allocation of settlement funds, the settlement administrator, the methods of notification to absent class action claimants, and the content of the notice. In the absence of a class action, plaintiffs generally have the option to opt out and/or appeal the proposed class action. Conciliatory defendants should consider including an “on-the-spot provision” in the settlement agreement, which would allow the defendants to terminate the settlement agreement if a number of absent class members choose not to enter into the settlement. The class action notice should also give plaintiffs absent from the class action a period of time to file objections with the court before the final settlement approval hearing. The parties should file a response to the objections before the oral proceedings. The parties should carefully consider any other settlement requirements relating to the claims they resolve. For example, the Private Securities Litigation Reform Act of 1995 requires parties who settle class actions under the Securities Exchange Act to ensure that the final order of approval “contains specific findings regarding the compliance of each party and the lawyer representing a party with each requirement of Rule 11(b) of the Federal Rules of Civil Procedure with respect to any complaint. reactive pleading or unfavourable request. A class action affects not only the interests of the above-mentioned parties negotiating the settlement, but also the interests of a much larger number of absent class members.

To protect the interests of absent class action claimants, Rule 23(e) of the Federal Rules of Civil Procedure (FRCP) requires courts to approve class actions before they become final to ensure that the settlements are “fair, reasonable and appropriate.” (Although class action settlements differ slightly between federal and state courts, many state procedural rules mirror those set out in Rule 23.) It is therefore important that these parties take appropriate steps to ensure that the court approves class actions. D. Scott Carlton is Of Counsel at Paul Hastings in Los Angeles, California. Copyright © 2019, American Bar Association. All rights reserved. This information or portions thereof may not be copied, distributed, downloaded, or stored in any electronic database or retrieval system in any form or by any means without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or guidelines of the American Bar Association, the Section of Litigation, this committee, or the author`s employer. .