Updated: May 16
Here's a helpful post by my former colleague, Melanie Conroy of Pierce Atwood, describing a recent District of Maine decision approving a settlement in a wage and hour class action. The court had asked the parties to brief the effect of a December 2022 decision by the First Circuit in analyzing the fairness, reasonableness, and adequacy of the proposed settlement. That decision had reversed a district court's approval of a common fund class action settlement in a Telephone Consumer Protection Act case because no subclasses were established to avoid conflicts of interest among members of the single settlement class.
The conflicts arose, the First Circuit had concluded, because different class members possessed different claims under the statute, each with its own elements of proof and subject to different defenses. Because of those differences, the court held that the settling parties had failed to demonstrate that it would be fair, reasonable, and adequate to distribute the common fund evenly among all class members, as the settlement proposed. In the District of Maine case, in contrast, the court found that the "proposed settlement does not suffer from any of [the] fatal flaws" present in the First Circuit case, and that "the Settlement fairly apportions payment equitably among the Class Members."
You can read more about the First Circuit decision, which also addresses a circuit split over the availability of incentive payments for settling class representatives, in my earlier post on this website.
As these decisions make clear, how settling parties structure a class action settlement can determine whether a court will approve it. A mediator familiar with such decisions and with the dynamics of Rule 23's settlement approval process can help guide parties to a successful outcome.