The Rule 23 Subcommittee of the federal Judicial Conference Advisory Committee on Civil Rules recently issued a report with proposed amendments to Rule 23. These are at an early stage and far from final recommendations. Here are some brief descriptions of them and some thoughts:

  • Settlement approval criteria: The proposal is to insert into the rule a series of specific findings that a court would be required to make in approving a settlement. Most federal circuits have adopted a similar set of factors to consider, and the proposal seems unlikely to result in a major change.
  • Settlement class certification: The proposed amendment would state explicitly that a court can certify a class for settlement purposes where the predominance requirement might not be satisfied at trial. From a defense perspective, this could be a helpful clarification.
  • Cy pres relief in settlements: The proposed amendment would require individual distributions to settlement class members where that is economically viable, and allow cy pres relief only where individual distributions are not viable. The cy pres recipient’s interests would be required to reasonably approximate the class members’ interests. This seems generally consistent with the recent trend of federal appellate authority in this area.
  • Objectors: The proposed amendment would require disclosure of any agreement made in connection with the withdrawal of an objection to a proposed settlement, and might require court approval (there are two alternative proposals). Another proposal would explicitly require objections to proposed settlements to comply with Rule 11, and provide for sanctions if the objections are insubstantial or not reasonably advanced for the purpose of rejecting or improving the settlement. These seem to be targeted to making it more difficult for “professional” objectors, who object for the purpose of trying to obtain settlement money.
  • Tenders of Relief / Rule 68 Offers: One proposal would not allow a putative class action to be terminated by a tender of relief to the named plaintiff, unless class certification has been denied, and it would allow an appeal to be taken. Another proposal would make Rule 68 inapplicable in class actions. Another proposal would re-institute a requirement for approval of pre-certification settlements with named plaintiffs. These proposals could be problematic for defendants – there needs to be an efficient way to resolve weak putative class actions prior to certification.
  • Issues classes: The proposal would have the rule state that predominance is not a requirement for certification of an “issues class” to resolve particular issues on a classwide basis under Rule 23(c)(4), and amend Rule 23(f) to give a court of appeals discretion to hear an interlocutory appeal from a decision certifying a class on a particular issue. This proposal would be most harmful to defendants, where in many circuits the question of whether an “issues class” has to satisfy the predominance requirement has not yet been resolved, and there is substantial authority favorable to defendants’ position.
  • Class notice: The proposal would explicitly allow electronic notice, which many courts are currently allowing, at least in part. Electronic notice, where feasible, obviously provides substantial cost savings.