Consumer Law

Sixth Circuit: Class Members Have Right to Appeal Approval of a Class Settlement in Rule 23(b)(3) Opt-Out Cases

By Brian Wolfman

by Brian Wolfman

Check out Fidel v. Farley, No. 06-5550 (July 18, 2008), a brand-spanking-new decision from the Sixth Circuit. Farley holds that class member-objectors to an opt-out class action settlement have the right to appeal a district court's approval of the settlement without having intervened in the case. Here's some background:

Settling parties in class actions love to concoct ways to prevent objectors from overturning their settlements. In the bad old days, one of their favorite techniques was to stop objectors from appealing a district court's approval of a settlement by claiming that the objectors needed to intervene before they had "standing" to appeal. A bunch of courts of appeals accepted that argument, but the Supreme Court squarely rejected it in Devlin v. Scardelletti, 536 U.S. 1 (2002). Or so many of us thought. Devlin was a non-opt-out class action, and so, after Devlin, settling parties began arguing that the Supreme Court's ruling did not apply to Rule 23(b)(3) opt-out cases -- that is, to the great majority of class actions! There wasn't a hint in Devlin that was what the Court had in mind, so I figured there was no way that argument was going anywhere. Not quite. Shortly after Devlin, the Arkansas Supreme Court bought the argument in a case under Arkansas Rule 23 (which is based on the federal rule), and the Eighth Circuit claimed in dicta that the argument had "considerable merit." In 2004, however, the Ninth Circuit had the good sense to hold that Devlin applies to opt-out cases, see Churchill Village, L.L.C. v. General
Electric, 361 F.3d 566, 572 (9th Cir. 2004), and now the Sixth Circuit has too.

In case you care, the Arkansas Supreme Court and Eighth Circuit decisions annoyed me. So, I published an article that I'd love someone to read explaining that it is downright nutty to limit Devlin to non-opt-out cases.

Full post as published by CL&P Blog on July 21, 2008 (boomark / email).