Courts may also consider the involvement of a mediator or settlement facilitator in determining whether the settlement terms resulted from real arm's-length negotiations rather than solely through direct negotiations by the parties' counsel (where collusion could potentially occur). The Advisory Committee tells courts to consider the nature and amount of discovery conducted to determine whether class counsel had sufficient information as a basis for settlement. Parties must make a robust showing to warrant the court's preliminary settlement approval. Rather, the rule forces the parties to consider the equities early in the litigation and during the settlement negotiation stage to ensure they can justify the proposed class settlement when they present it to the court for preliminary approval. Heightened Judicial Scrutiny and Increased Litigant CostsĪlthough these changes are unlikely to result in outright rejection of many more proposed class settlements than under the former approach, the amended rule's practical effect is that parties cannot gloss over the equities of the settlement's terms until the final approval hearing. Most consequential for parties considering class settlements, the rule contemplates increased judicial involvement in and scrutiny of class settlements, including scrutiny of the manner in which relief is distributed to class members and whether the parties have made sufficient efforts to identify class members. The changes also aim to reduce forum shopping and inconsistency in settlement approvals across jurisdictions, as all federal courts must now consider the same factors in approving class settlements. The amended rule aims at streamlining a court's consideration of settlement proposals, particularly at the preliminary approval phase, unifying the federal courts' approach to approval, and increasing predictability for the parties. The 2018 amendment does not displace any factor but instead focuses the court's analysis on due process and fairness concerns for the unnamed class members. The Advisory Committee acknowledges that courts have established and applied similar factors that reflect these considerations.
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