Judicial Review of Class Action Settlements

40 Pages Posted: 26 Feb 2009  

Jonathan R. Macey

Yale Law School

Geoffrey P. Miller

New York University School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: January 21, 2009

Abstract

This article proposes a simple and coherent approach to judicial review of class action settlements. Specifically, we propose that for questions going to the adequacy of a settlement, where no warning signals of fraud or collusion are found, the court should act relatively deferentially by employing a lenient standard of scrutiny and approving a settlement if it has a rational basis. An intermediate level of scrutiny should apply when the settlement presents facial issues that implicate the fairness of the settlement. Such facial issues include the allocation of settlement proceeds among subgroups in a class, the presence of coupon-type relief, "shotgun" settlements occurring very early in the litigation, and settlements in overlapping class actions. In settlements with one or more of these characteristics, if the initial inquiry raises concerns, the court should demand a well-reasoned explanation for the choices made. Finally, where the components of a settlement present a direct conflict between the interests of class counsel and those of the class issues, such as issues related to attorneys' fees, courts should employ exacting scrutiny and require convincing evidence that the proposal is reasonable.

Keywords: judicial review, class action settlements

JEL Classification: K10, K40

Suggested Citation

Macey, Jonathan R. and Miller, Geoffrey P., Judicial Review of Class Action Settlements (January 21, 2009). The Journal of Legal Analysis, Vol. 1, No. 1, p. 167-205, 2009. Available at SSRN: https://ssrn.com/abstract=1349463

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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