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http://ssrn.com/abstract=1017266
 
 

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Judicial Review of Class Action Settlements


Jonathan R. Macey


Yale Law School

Geoffrey P. Miller


New York University School of Law

September 2007

NYU Law and Economics Research Paper No. 07-34

Abstract:     
This article proposes a simple approach to judicial review of class action settlements. The key is to recognize that courts should apply different degrees of scrutiny for different issues depending on the respective competence of the court and class counsel. For questions going to the adequacy of the settlement, where no warning signals of fraud, collusion or inadequate bargaining leverage are found, the court should employ lenient scrutiny and approve the settlement if it has a rational basis. An intermediate level of scrutiny should apply to issues implicating the fairness of the settlement, including the allocation of settlement proceeds among subgroups in the class, the presence of coupon-type relief, "shotgun" settlements occurring very early in the litigation, and settlements in overlapping class actions. Here, if the initial inquiry raises concerns, the court should demand a well-reasoned explanation for the choices made. For the issue of attorneys' fees and other questions presenting a direct conflict between the interests of class counsel and those of the class, courts should employ exacting scrutiny and require convincing evidence that the proposal is reasonable.

Number of Pages in PDF File: 54

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Date posted: September 26, 2007  

Suggested Citation

Macey, Jonathan R. and Miller, Geoffrey P., Judicial Review of Class Action Settlements (September 2007). NYU Law and Economics Research Paper No. 07-34. Available at SSRN: http://ssrn.com/abstract=1017266 or http://dx.doi.org/10.2139/ssrn.1017266

Contact Information

Jonathan R. Macey (Contact Author)
Yale Law School ( email )
P.O. Box 208215
New Haven, CT 06520-8215
United States
+203-432-7913 (Phone)
+203-4871 (Fax)
Geoffrey P. Miller
New York University School of Law ( email )
Center for the Study of Central Banks
40 Washington Square South
New York, NY 10012-1099
United States
212-998-6329 (Phone)
212-995-4590 (Fax)
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