On November 1, 2018, the U.S. District Court for the Northern District of California published updated procedural guidance for class action settlements (the “Guidance”). While the court made changes to align its rules with the December 1, 2018 amendments to Federal Rule of Civil Procedure 23, the court also sought to provide better information for parties and courts in negotiating and approving settlements. It became the first federal district court to require parties to class action settlements to publicly disclose a broad range of detailed settlement information. The following is an overview of key changes.
Preliminary Approval
The Guidance details extensive upfront disclosure requirements for parties seeking preliminary approval for a proposed settlement, including, e.g.:
- Settlement fund and allocation plan to class members;
- How the settlement differs from the allegations in the complaint, both in terms of the class definitions and the scope of the released claims as compared to the alleged claims;
- Settlement administrator selection process and administrative costs;
- Class notice and instructions for opt-outs or objections;
- Attorneys’ fees, including lodestar calculation;
- Incentive awards;
- Cy pres recipients and their potential conflicts; and
- Data on at least one of class counsel’s “past comparable class settlements” in terms of similar clients, claims, and/or issues.
Final Approval
The Guidance mandates three key categories of information to be submitted for parties to obtain final approval of a class settlement, including:
- Detailed support for attorneys’ fees—including lodestar information, even when the attorneys’ request is based on a percentage of the settlement fund;
- Class members’ responses—e.g., claims, undeliverable notices, and opt-outs; and
- Justification for incentive awards—g., evidence of awardees’ involvement in the case.
Post-Distribution Accounting
Parties must file a “Post-Distribution Accounting” and post it to a website maintained by the claims administrator or class counsel within 21 days of the distribution of settlement funds and attorneys’ fees. Courts then have the option of holding a hearing to ensure compliance with rules.
Details to be disclosed in an “easy-to-read chart that allows for quick comparisons with other cases” include:
- For monetary relief, data such as total settlement fund, number of notices, claims rate, average, median, largest, and smallest recovery per claimant, amounts distributed to each cy pres recipient, and attorneys’ fees; and
- For non-monetary relief, data such as the number of class members availing themselves of this relief and a discussion of the benefit conferred on the class.