Most professional objectors are fee-seekers (or, as one court called them, "remoras"). But not all; some, like the Public Citizen Litigation Group and the Center for Class Action Fairness, are non-profits that seek to keep class settlements for the benefit of class members instead of class counsel.
What we found was that all the lawyers in every case, as well as virtually every district court judge, were very unhappy to see us and not at all pleased with the substance of our objections. To say that we were considered the proverbial skunk at the garden party would be about as politely as it could be put, even though the Rules clearly gave class members the right to appear and object.
In a recent article in the George Washington Law Review, he explains–from a nonprofit objector’s point of view–the effect of the "little changes" in the ALI Principles of Aggregated Litigation. Among them:
- Shifting focus from the predominant relief to the kind of relief in approving settlements. This gets to a problem that has been hotly discussed lately: can a court certify a class seeking monetary relief under Rule 23(b)(2)? The ALI prescribes looking at the kind of relief (money, injunction) rather than which relief "predominates." It seems primarily concerned with allowing class members to opt out when money is at stake; an option available under Rule 23(b)(3) but not Rule 23(b)(2).
- Requiring courts to look for structural conflicts in the class. As Morrison summarizes: "The ALI now more broadly forbids the certification of a class when there are structural conflicts that may result in one group of claimants being short-changed to the benefit of another, and it included a special provision dealing with the problem of future claims."
- Blessing the lodestar cross-check. In other words, the ALI has approved courts calculating what counsel’s hourly fees would have looked like, and using that figure as a benchmark for determining whether the contingency fee is outsized.
- Making the results of the claims procedure public. Doing so keeps objectors informed, and may provide incentives to keep attorneys fees in line with actual relief to the class.
So what can defense lawyers learn from Morrison’s review of the ALI? Be transparent in the settlement process. It’s a simple–though hardly an easy–lesson. The temptation for most defense lawyers is to make a strong showing of serving the client’s interest by selling class counsel on a settlement with large fees, quick-pay or clear sailing provisions, and relief that appears valuable but doesn’t cost much. But if the settlement appears to be the result of collusion, then it will invite objections, or rejection by the court. As I’ve pointed out before, settling on the cheap can often prove extremely expensive. The ALI’s Principles of Aggregate Litigation only reinforce that lesson.