Class Action Experts Weigh In on Rule 23 Changes, Western Alliance Report

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The 2018 amendments to Federal Rule of Civil Procedure 23 altered nearly every part of the class action settlement process, from preliminary approval to class notifications. A recent research report by Western Alliance Bank’s Settlement Services Group shows attorneys, claims administrators, and judges positively view the changes.

Those findings were the subject of a webinar earlier this month, “Rule 23 Amendments: How They Are Reshaping Class Action Settlements & What Attorneys Need to Know.”

The webinar, which featured a panel of prominent legal industry authorities, focused on the report’s findings and provided further analysis of the Rule 23 amendments, which were the first such changes in 15 years. The engaging discussion was moderated by Francesca Castagnola, Senior Managing Director of Western Alliance Bank’s Settlement Services national specialty banking group.

Here are the webinar’s key takeaways:

Improved uniformity in the settlement process: That’s what the Rule 23 changes did, according to 74 percent of the report’s survey respondents. “The amendments required the court to have a more formalized, consistent process in holding a hearing and approving a settlement, and required the parties to provide the court with sufficient information,” said Darren Cottriel, partner at JonesDay. “This helps to ensure that the settlement is fair, adequate and reasonable.”

Judges like settlement process front-loading, other changes: Judges and attorneys supported the amendment’s new preliminary approval process. They also were provided with four factors to consider when evaluating settlement agreements: 1) Adequacy of representation by class representatives and class counsel; 2) Whether settlement negotiations were done fairly 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.

“The first two factors are logistical — geared toward the question of ‘are you engaged in the process you should be engaged in,’” said Tom Loeser, partner at Hagens Berman Sobol Shapiro LLP. “The other two factors are more about whether or not the court feels the result is fair and equitable for everyone.”

Support for electronic notice changes: Eighty percent of respondents said notice by electronic means positively affected the settlement process — easily the highest among the five rule changes. This finding shows that aspects of class action procedure hadn’t caught up to modern communications before the 2018 amendments.

“When advertising class action settlements in today’s ecosystem — the digital media world — we can test ads, monitor them and adjust them in real-time, which is a huge breakthrough,” said Steven Weisbrot, partner and chief innovation officer at Angeion Group.

Problems remain with professional objectors: The report found that bad faith objectors remain a problem, particularly “professional objectors” who file frivolous objections to extract payouts. “It is incumbent upon us [attorneys], when we appear before a judge, to act in good faith and carry out our responsibilities as officers of the court,” said Ariana J. Tadler, founder and managing partner at Tadler Law LLP. 

To download the Rule 23 Report and learn more about the findings, please click here.