A Reminder That Rule 23 Requires Hearings On All Proposed Class Settlements, Even If There Are No Objectors

• Published date: 24 January 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employment Litigation/ Tribunals, Class Actions
• Law Firm: Lowenstein Sandler
• Author: Mr Joseph A. Fischetti

Certain class action settlements'like employment and consumer settlements'will very often draw objections from absent class members. But other types of settlements with more sophisticated absent class members'like antitrust and securities'will often draw no objections at all.

Without any objectors, and thus no one contesting approval of the settlement, a district judge with busy docket will sometimes choose to dispense with the formality of a fairness hearing on an uncontested motion for settlement approval. While more efficient for the court, this approach is problematic under Rule 23(e)(2), which states that "[i]f the proposal would bind class members, the court may approve it only after a hearing . . . ." This requirement originated in the 2003 amendments to Rule 23. The advisory committee note to that amendment explained that the provision "confirms and mandates the already common practice of holding hearings as a part of the process of approving settlement . . . that would bind members of a class."

To be sure, district courts enjoy "wide latitude" on the scope of a hearing necessary to "reach[] an informed, just and reasoned decision." UAW v. Gen. Motors Corp., 497 F.3d 615, 635 (6th Cir. 2007) (citation omitted). So if the class notice required written objection as a prerequisite to participation at the fairness hearing, and the court receives no written objections, then a fairness hearing could theoretically be a one-minute exercise in taking appearances, acknowledging the lack of objectors, and accepting the motion for approval for consideration on the papers. As empty as such an exercise may be, Rule 23(e)(2) does appear to require it.

For defense attorneys, a judge's sua sponte...