Objecting to a Class Action Settlement

Depending on who you ask, class actions are either a realistic method for handling numerous (sometimes thousands) of smaller-stakes legal claims, or just another way for attorneys to pad their pockets, while class members are left with little more than a coupon. But beyond criticism or endorsement of the class action system as a whole, individuals who will be affected by a class action settlement (the members of the class who stand to receive some portion of what's agreed upon) have the right to object to it, and to send those objections to the court.

In this article, we'll take a look at the class action settlement process and the steps a class member might be able to take to keep the court from approving the settlement.

The Class Action Settlement Process

Whether a class action lawsuit is filed in federal or state court, the parties to a class action typically consist of the class, through the class representative or "lead plaintiff" and class counsel, and the defendant—usually a company or other organization—represented by its own lawyers.

Note: The procedure for starting a class action lawsuit (by "certifying" the class) and settling these kinds of cases differs slightly among the federal system and the different states. But many state procedural rules for class actions largely mirror what's set out in the federal procedural rules, so we'll discuss class action settlement in the context of the Federal Rules of Civil Procedure (FRCP).

Motion for Preliminary Approval

If the parties reach an agreement on settlement of a federal class action, they typically must file a "motion for preliminary approval" asking the court to sign off on the terms of the settlement. This motion must provide a number of details regarding the case and the agreed-upon settlement, including the likely amount of recovery per class member, and the amount and reasonableness of the administrative costs related to settlement.

Sending Notice of the Proposed Settlement to Class Members

The parties must also mail to each class member a notice of the planned settlement.

Class Members Can Object to the Proposed Settlement

The notice of settlement must also give the class members instructions on how they can object to the settlement. In federal court, class members may only send their objections directly to the court in most instances, and it's not possible to ask the court to change the terms of the proposed settlement (increase the amount, for example); objecting class members can only ask the court to deny the settlement.

To give you an idea of the kind of information and instructions you should receive (via snail mail or email) regarding your right to object to a proposed class action settlement, the U.S. District Court for the Northern District of California has posted this sample language on its website:

You can ask the Court to deny approval by filing an objection. You can't ask the Court to order a larger settlement; the Court can only approve or deny the settlement. If the Court denies approval, no settlement payments will be sent out and the lawsuit will continue. If that is what you want to happen, you must object. You may object to the proposed settlement in writing. You may also appear at the Final Approval Hearing, either in person or through your own attorney. If you appear through your own attorney, you are responsible for paying that attorney. All written objections and supporting papers must (a) clearly identify the case name and number ( _________ v. __________, Case Number __________), (b) be submitted to the Court either by mailing them to the Class Action Clerk, United States District Court for the Northern District of California, [insert appropriate Court location here], or by filing them in person at any location of the United States District Court for the Northern District of California, and (c) be filed or postmarked on or before _________________.

Grounds for Objecting to a Class Action Settlement

Depending on the procedural rules in the jurisdiction, a class member may be able to object to a proposed class action settlement on a number of grounds, from the fairly general to the specific.

For example, a class member's objection might state that, in light of the harm suffered by members of the class and the extent of the defendant's wrongdoing, the proposed settlement is not fair, reasonable, and/or adequate. (Learn more about damages in a civil lawsuit.)

Objections can also be raised based on perceived procedural flaws in the settlement process. For example, a class member may claim that the Notice of Settlement itself is too vague as to the terms of the settlement, and details are not readily available online, so that it's impossible for the class members to understand what they're being asked to agree to.