Judging Aggregate Settlement
62 Pages Posted: 12 Jan 2017 Last revised: 16 Jul 2017
Date Written: January 10, 2017
While courts historically have taken a hands-off approach to settlement, judges across the legal spectrum have begun to intervene actively in “aggregate settlements” — repeated settlements between the same parties or institutions that resolve large groups of claims in a lockstep manner. In large-scale litigation, for example, courts have invented, without express authority, new “quasi-class action” doctrines to review the adequacy of massive settlements brokered by similar groups of attorneys. In recent and prominent agency settlements, including ones involving the SEC and EPA, courts have scrutinized the underlying merits to ensure settlements adequately reflect the interests of victims and the public at large. Even in criminal law, which has lagged behind other legal systems in acknowledging the primacy of negotiated outcomes, judges have taken additional steps to review iterant settlement decisions routinely made by criminal defense attorneys and prosecutors.
Increasingly, courts intervene in settlements out of a fear commonly associated with class action negotiations — that the “aggregate” nature of the settlement process undermines the courts’ ability to promote legitimacy, loyalty, accuracy and the development of substantive law. Unfortunately, when courts step in to review the substance of settlements on their own, they may frustrate the parties’ interests, upset the separation of powers, or stretch the limits of their ability. The phenomenon of aggregate settlement thus challenges the judiciary’s duty to preserve the integrity of the civil, administrative, and criminal justice systems.
This Article maps the new and critical role that courts must play in policing aggregate settlements. We argue that judicial review should exist to alert and press other institutions — private associations of attorneys, government lawyers, and the coordinate branches of government — to reform bureaucratic approaches to settling cases. Such review would not mean interfering with the final outcome of any given settlement. Rather, judicial review would instead mean demanding more information about the parties’ competing interests in settlement, more participation by outside stakeholders, and more reasoned explanations for the trade-offs made by counsel on behalf of similarly situated parties. In so doing, courts can provide an important failsafe that helps protect the procedural, substantive, and rule-of-law values threatened by aggregate settlements.
Keywords: multi-district litigation, class actions, administrative law, criminal law, deferred prosecution, consent decree
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