Class Settlement: Addressing Reversionary Clauses, Fraud in Administration, Notice, Opt-Outs and Objectors

Judges see certain problems and defects in motions for preliminary approval of class action settlements over and over--most could be corrected without time-consuming redrafts and resubmissions.

In any class action settlement, the fate of unclaimed funds can be pivotal because whether the case involves a common fund or claims-made settlement, some tenders always go unclaimed. Giving those funds back to the defendant creates special problems. While "reverters" may well be justified, counsel often fail to provide mechanisms to adjust for those issues or why such a clause is appropriate in the first place.

Settlement administration is often not adequately understood or explained, such as why a particular administrator was selected and how, which party pays those costs, and disclosing any possible connections between counsel and the administrator. The panel will also discuss fraud in the administration process and proactive steps to eliminate it.

Since due process requires adequate notice, practitioners must explain what notice to absent class members will be provided without reference to conclusory statements that notice is adequate. Without proper notice, any settlement itself will be worthless. Courts are especially interested in protecting the rights of claimants who elect not to participate and objectors. Recently, lone objectors upended two settlements in the Eleventh Circuit over incentive awards and standing long after the deal was made.

Listen as the panel discusses often seen and often easily corrected gaps in the preliminary motion.