Among Others, District Judge Has To Approve Payment Or Consideration To Objectors Or Their Counsel For Withdrawing Objections Or Abandoning Appeals.
Effective December 1, 2018, Federal Rules of Civil Procedure, rule 23 was amended in several respects to clarify notice requirements relating to class action settlements, bulk up “preliminary approval” standards with added clarity, amplify on “final approval” procedures, and iterate there are no appeals from preliminary approval orders.
As it related to our blog, there were some amendments to rule 23(e)(5) relating to objectors in class action cases, inspired by concerns that some objectors (mainly professional objectors) try to “hold up” settlement distributions to the class in order to obtain payoffs to themselves and/or their counsel. To address these concerns, subdivision (e)(5) was amended to provide that any agreement where payment or consideration to an objector is involved (including payment to an attorney) such that an objection is withdrawn or an appeal is abandoned, the district judge must approve such an agreement even if the settlement occurred after an appeal was taken. In the latter situation, the district court must give an “indicative ruling” under F. R. Civ. P. 62.1. Some commentators along the way have suggested that objectors should be required to post an undertaking on appeal, but this reform was not adopted—even though district judges have ordered it in unusual circumstances.
If you want to know more about these amendments, John M. Barkett of Shook, Hardy & Bacon L.L.P. of Miami, Florida has written a good article entitled “The 2018 Amendments to the Federal Class Action Rule,” which easily can be found for reading on the Internet.
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