Class action practitioners and scholars are well aware that before a federal court may approve a class action settlement, the judge must assess the settlement’s fairness, adequacy, and reasonableness under various Rule 23(e) requirements. The Advisory Committee on Civil Rules has paid heightened attention to settlement approval, amending Rule 23(e) in 2003 and 2018. State class action procedures contain similar rules relating to judicial scrutiny of state class settlements.
Although the judicial role in overseeing class action settlements is well known, the role of governmental entities under the Class Action Fairness Act of 2005 (CAFA) in assessing class settlements has been somewhat overlooked in class action scholarship. This is not surprising; since CAFA federalized class action procedure, academic discussions of CAFA’s intricacies has receded. Michael Solimine and Hailey Martin’s recent article in the Journal of Legislation reminds us that CAFA intended to provide governmental entities with an additional role in assessing class action settlements, including rights to comment and object. Their article assesses the effect of CAFA’s provision for governmental oversight of class settlements.
CAFA’s notice requirements recognize the role for the federal government and state attorneys general in assessing settlements. When settling parties submit a proposed agreement to federal court for a fairness hearing, they must notify the United States attorney general and relevant state AGs. The notice must include documents such as the complaint, settlement agreement, and hearing schedules. The court cannot approve the settlement for 90 days to allow these officials to respond, comment, or object. Legislative committee hearings on CAFA indicated that the notice’s primary purpose was “to safeguard plaintiff class members’ rights,” and to enable state AGs to “voice concern if they believe that the class action settlement is not in the best interests of its citizens.” Failure to apply with the CAFA notice requirement renders a settlement void.
Solimine and Martin assess the effect of CAFA’s notice provision on class action settlements. At the federal level, DOJ’s consumer protection office monitors notices and responds when necessary, although it has played a negligible role in assessing or objecting to proposed settlements. DOJ has no standardized system for receiving and tracking CAFA notice and experienced long delays in processing the notices internally. And it rarely objects to proposed settlements, despite receiving hundreds of CAFA notices annually; it responded to notices only six times in the first sixteen years since CAFA’s passage in 2005. Complicating the federal landscape, there is widespread non-compliance with the CAFA notice provision, with many lawyers confessing unawareness of the requirement. Anecdotal evidence suggests that parties involved in securities class litigation simply believe CAFA’s notice requirement does not apply to their litigation.
The article identifies instances in which AGs from Arizona, Connecticut, Florida, and the District of Columbia, either singularly or in concert with other state AGs, have offered objections to contested settlements. But the authors acknowledge that while anecdotes are important, no systematic literature documents state AG responses.
Solimine and Martin seek to fill this informational gap with a detailed empirical case study of the Ohio AG’s office handling CAFA notices from 2007 to 2024. It documents a detailed system for receiving, reviewing, and responding to CAFA notices. Upon a receipt, a paralegal distributes the notice to a relevant section and designated official for review. Staff focus on assessing the complaint’s alleged harm, potential effects on Ohio consumers, class member notification, release language, injunctive and monetary relief, cy pres terms, and attorney fees. When staff concerns arise, the AG may decide to engage with other state AGs, engage in discussions with plaintiff and defense counsel, or file an amicus brief detailing their objections.
The Ohio AG’s office maintains a database that includes a “robust summary” of each case from the period, including the nature of the litigation, date of notification, parties’ representation, number of Ohio class members, final hearing date, and pertinent notes. Solimine and Martin argue that Ohio’s system reflects a greater awareness of, an more centralized response to, CAFA and CAFA notices among state AGs than in the DOJ.
They conclude that federal and state involvement with class settlements post-CAFA is sparse. Moreover, they show that many courts are uncertain what deference or weight to give to government responses and objections. Solimine and Martin argue that courts should give heightened deference to governmental objections, considered in conjunction with the court’s evaluation of the Rule 23(e) factors. On the other hand, they argue courts should not read the lack of government response or objection as indicating approval of the settlement or as a reason not to approve it.
