What is a class action settlement fairness hearing?

The class action settlement fairness hearing process is the court’s final opportunity to determine whether the proposed settlement is fair, before the distribution of settlement benefits to the class.  

In determining fairness, the courts will consider:

  • A comparison of the strength of the plaintiff’s case against the proposed recovery.
  • Objections from the defense, including the cost and risks of continued litigation.
  • Any evidence of collusion between attorneys that would impact the rights of claimants.
  • Class member comments, objections, or proposed alternatives.
  • The amount of discovery completed.

The court’s role is to protect the interests of the class members, and so the process of compromise will be carefully scrutinized. Though a court may reject the settlement on a variety of grounds, it may not rewrite the terms.

During the hearing, class members may object to the settlement in its entirety or they may be opposed to only portions of it. Serial objectors can cause significant delays. Swift settlement approval is preferred, as it forces objectors to demonstrate the merits of their objections. Counsel will either have to adjust the agreement or let the terms stand.

Common issues raised by objectors:

  • Unjustifiable attorney fees
  • Legal notice plan did not meet estimated reach
  • Lower than expected claimant participation
  • Conflict of interest
  • Settlement fund allocation
  • Cy pres provisions

If the court determines that the proposed settlement is fair, funds will be clear for distribution.

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