On December 1, 2018, the amendments to the Federal Rule of Civil Procedure 23 took effect. These amendments primarily alter rules governing federal class action notice, settlement, and appeal. The following is an overview of key changes.
The amended Rule 23 clarifies that providing “the best notice that is practicable under the circumstances” to individual class members may include “electronic means, or other appropriate means.” This clarification is consistent with a trend of courts moving to authorize forms of communication other than first-class mail, the traditional method for providing notice. The 2018 Advisory Committee Note cautions that cases may differ in their notice needs.
Settlement Approval Standard
Elaborating on the standards for a court to evaluate whether a proposed class settlement is “fair, reasonable, and adequate,” the amended Rule 23 requires analysis of four factors: (1) the adequacy of representation by class representatives and class counsel; (2) whether settlement negotiations were at arm’s length; (3) the adequacy of relief provided under the settlement; and (4) the equity of treatment of class members relative to one another. In addition, in assessing the adequacy of the proposed relief, the court must balance the proposed relief against the costs, risks, and delay of trial and appeal, as well as consider the effectiveness of the method for distributing relief to the class, the terms of any attorneys’ fees award, and any agreements made in connection with the proposal. These changes codify what many courts already have focused on as core procedural and substantive concerns with proposed class settlements.
The amended Rule 23 also establishes that, when parties seek preliminary approval of a proposed settlement, they must provide the court with sufficient information to decide whether to notify the putative class. Such notice “is justified” if the court “will likely be able to” both approve the proposed settlement and certify the class for purposes of judgment on the proposed settlement.
Settlement Proposal Objections
Under the amended rule 23, an objection to a proposed settlement must indicate to whom it applies (i.e., the objector, a subset of the class, or the entire class), as well as state its grounds “with specificity.”
Furthermore, the rule removes a requirement for an objector to obtain court approval to withdraw an objection. However, court approval is mandated for any payment or “other consideration” in connection with forgoing or withdrawing an objection, or forgoing, dismissing, or withdrawing an appeal from a judgment approving a settlement proposal. The 2018 Advisory Committee Note indicates an intent to curb the use of meritless objections “advanced for improper purposes,” such as “seeking only personal gain.”
The amended Rule 23 clarifies that interlocutory appeal is available only for the actual denial or grant of class certification—not for the preliminary approval of a class or the giving of notice to a class. It also provides additional time (45 days instead of 14 days) to file a petition for review of a class certification order whenever a party is the United States, a U.S. agency, or a U.S. officer or employee sued in connection with duties performed on the United States’ behalf.