A number of changes to Fed. R. Civ. P. 23 took effect on December 1, 2018. They’ve been in the works for some time, so no surprises, but now is a good time to summarize them. The changes deal primarily with class settlements and objections:
Rule 23(c)(2)(B), which deals with class notice, has been expanded to encompass proposed settlement classes. Giving notice of proposed settlement classes is now discretionary under Rule 23(e) as discussed below.
Rule 23(c)(2)(B) also added a sentence specifying that the class notice may be made by U.S. Mail, electronic means, or other appropriate means. This is a clarification, but it confirms what has already been the reality–that courts and parties have great flexibility in how to serve the “best notice that is practicable.”
Rule 23(e) has been substantially amended.
First, notice to class members of a proposed settlement class is now discretionary, instead of mandatory. The court is only required to give such notice if it finds that it is likely to approve the proposal under Rule 23(e)(2) and to certify the settlement class for purposes of judgment.
Second, Rule 23(e)(2), which addresses the court’s approval of a proposed settlement class, codifies existing variable practice by the courts and requires the court consider a host of factors before approving a class settlement. The mandated factors are:
(A) the class representatives and class counsel have adequately represented the class;
(B) the proposal was negotiated at arm’s length;
(C) the relief provided for the class is adequate, taking into account:
(i) the costs, risks, and delay of trial and appeal;
(ii) the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims;
(iii) the terms of any proposed award of attorney’s fees, including timing of payment; and
(iv) any agreement required to be identified under Rule 23(e)(3); and
(D) the proposal treats class members equitably relative to each other.
Third, Rule 23(e)(5), which deals with objections by class members to a proposed class settlement, requires that an objection “must state whether it applies only to the objector, to a specific subset of the class, or to the entire class, and also state with specificity the grounds for the objection.” The degree of specificity remains to be seen, but the rules committee has suggested that courts not unduly burden objecting class members, especially those who are pro se. The Rule also requires court approval of any payment made to a class member in exchange for withdrawing/dismissing/abandoning an objection or appeal in an effort to discourage serial professional objectors who previously have sought to hold up settlements on appeal absent receipt of a personal payout.
Finally, Rule 23(f), which addresses interlocutory appeals of class certification decisions, has been amended to provide that there is no appeal of a trial court decision under 23(e)(1) on whether or not to give notice of a proposed class settlement. In addition, the Rule extends the 14-day deadline to file the petition for appeal to 45 days, but unfortunately only for the United States government.
Overall, the changes to Rule 23 that are now in effect are technical in nature and rather modest in scope. Practitioners should take note, but the revisions are overwhelmingly only relevant when it is time to seek court approval of a class settlement.