Pallister v. Blue Cross & Blue Shield of Montana, Inc. , 383 Mont. 404 ( 2016 )

May 24 2016
DA 15-0458
Case Number: DA 15-0458
IN THE SUPREME COURT OF THE STATE OF MONTANA
2016 MT 121In re BLUE CROSS AND BLUE SHIELD OF
MONTANA, INC., n/k/a CARING FOR
MONTANANS, INC., and MONTANA
COMPREHENSIVE HEALTH ASSOCIATION
INSURANCE LITIGATION.
__________________________________
TYSON PALLISTER, KEVIN BUDD,
KENNETH WALSH, MARTIN T. MANGAN,
SHIRLEY MANGAN, RAY LEE,
and LAURA FORTUNE,
Objectors and Appellants,
v.
BLUE CROSS AND BLUE SHIELD OF
MONTANA, INC., n/k/a CARING FOR
MONTANANS, INC., and MONTANA
COMPREHENSIVE HEALTH ASSOCIATION,
Defendants and Appellees.
APPEAL FROM: District Court of the Second Judicial District,
In and For the County of Butte-Silver Bow, Cause No. DV 08-553
Honorable Brad Newman, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
James G. Hunt, Hunt Law Firm, Helena, Montana
Jory C. Ruggiero, Domenic A. Cossi, Western Justices Associates,
Bozeman, Montana
For Appellant Laura Fortune:
Lawrence A. Anderson, Attorney at Law, P.C., Great Falls, Montana
For Appellee Montana Comprehensive Health Association:
Jacqueline T. Lenmark, Keller, Reynolds, Drake, Johnson
& Gillespie, P.C., Helena, Montana
For Appellee Caring for Montanans, Inc.:
Michael F. McMahon, Stefan T. Wall, McMahon, Wall & Hubley, PLLC,
Helena, Montana
For Class Representatives:
Robert G. McCarthy, McCarthy Law, P.C., Butte, Montana
Submitted on Briefs: April 6, 2016
Decided: May 24, 2016
Filed:
__________________________________________
Clerk
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Justice Patricia Cotter delivered the Opinion of the Court.
¶1 This case arises out of claims asserted by multiple persons against Blue Cross and
Blue Shield of Montana, now known as Caring for Montanans, Inc. (CFM) and Montana
Comprehensive Health Association (MCHA) (collectively “Insurers”). The District
Court certified a class of claimants for settlement purposes only. The District Court then
held a fairness hearing on a proposed settlement agreement and approved the settlement.
Several class members objected to the settlement (Objectors) and appealed to this Court,
arguing they should be allowed to conduct further discovery to ascertain the fairness of
the settlement agreement. We agreed with Objectors and remanded the case to the
District Court for further discovery and a second fairness hearing. The District Court
allowed further discovery, held a second fairness hearing, and determined that the same
settlement agreement was fair, reasonable, and adequate. The Objectors again appeal.
We affirm.
ISSUES
¶2 We restate the issues on appeal as follows:
¶3 Has Objector Laura Fortune waived her right on appeal to object to the settlement
agreement?
¶4 Does Objector Kevin Budd have standing to object to the settlement agreement?
¶5 Did the District Court abuse its discretion by certifying this matter as a class
action?
¶6 Did the District Court abuse its discretion by approving the settlement agreement?
¶7 Did the District Court err by allowing individual settlements?
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FACTUAL AND PROCEDURAL BACKGROUND
¶8 This case arises out of claims asserted by multiple persons against CFM and
MCHA. The claimants assert that while they were insured by CFM or MCHA, they
submitted claims that the insurers denied based upon exclusions contained in their health
insurance policies. These exclusions generally provided that the insurer would not pay
for health care costs of the injured insureds if the insureds received, or were entitled to
receive, benefits from any automobile liability policy. These exclusions were
subsequently disapproved by the Montana Commissioner of Insurance, see Blue Cross &
Blue Shield of Mont. v. Mont. State Auditor (State Auditor), 2009 MT 318, 352 Mont.
423, 218 P.3d 475, and the insureds sought the previously-denied benefits. We affirmed
the disapproval on appeal. State Auditor, ¶ 20.
¶9 Following our ruling in State Auditor, the Second Judicial District Court certified
a class of claimants for settlement purposes only and appointed class counsel. A
settlement was negotiated, which the District Court approved after conducting a
settlement fairness hearing. Several members of the class objected to the settlement and
appealed to this Court, claiming the District Court erred in denying their motion to
conduct discovery into the fairness of the settlement. We held in Pallister v. Blue Cross
& Blue Shield of Mont., Inc. (Pallister I), 2012 MT 198, 366 Mont. 175, 285 P.3d 562that the District Court should have allowed the Objectors to conduct discovery into how
the class members were identified and how the class counsel’s fee was negotiated. We
concluded that this information was necessary for the District Court to evaluate whether
the proposed settlement agreement was “fair, reasonable and adequate.” Pallister I, ¶ 34.
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We therefore vacated the District Court’s approval of the settlement agreement, and
reversed and remanded for discovery, a second fairness hearing, and an evaluation of the
totality of the evidence to determine if the proposed settlement agreement was fair,
reasonable and adequate. Pallister I, ¶ 36. We instructed the District Court to evaluate
the fairness of the proposed settlement by analyzing the factors identified in Jones v. GN
Netcom, Inc. (In re Bluetooth Headset Prods. Liab. Litig.), 654 F.3d 935, 946 (9th Cir.
2011) as well as any other factors the District Court deemed critical to the case. Pallister
I, ¶¶ 38-39.
¶10 After allowing for further discovery, the District Court held a second fairness
hearing on March 3, 2015, during which the parties presented arguments and submitted
additional documents. On July 7, 2015, the District Court issued Findings of Fact,
Conclusions of Law, and a Final Order and Judgment. The District Court analyzed the
same proposed settlement agreement according to the Jones factors, found the agreement
to be fair, reasonable, and adequate, and approved the settlement. The Objectors appeal
from that order, and again are challenging the settlement agreement, as well as the
certification of the class and the allowance of individual settlements.
STANDARD OF REVIEW
¶11 A district court “is in the best position to consider the most fair and efficient
procedure for conducting any given litigation,” so we review for abuse of discretion a
district court’s decision whether to certify a class. Sieglock v. Burlington Northern &
Santa Fe Ry. Co., 2003 MT 355, ¶ 8, 319 Mont. 8, 81 P.3d 495 (citing McDonald v.
Washington, 261 Mont. 392, 399, 862 P.2d 1150, 1154 (1993)). “However, [t]o the
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extent that the ruling on a Rule 23 requirement is supported by a finding of fact, that
finding, like any other finding of fact, is reviewed under the clearly erroneous standard.
And to the extent that the ruling involves an issue of law, review is de novo.” Jacobsen
v. Allstate Ins. Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452 (citing Mattson v.
Mont. Power Co., 2012 MT 318, ¶ 17, 368 Mont. 1, 291 P.3d 1209) (internal quotations
omitted).
¶12 Rule 23 of the Montana Rules of Civil Procedure is identical to the federal Rule
23, so “federal authority is instructive.” Jacobsen, ¶ 28. We review for abuse of
discretion a district court’s decision to approve a class action settlement. Dunleavy v.
Nadler (In re Mego Fin. Corp. Sec. Litig.), 213 F.3d 454, 458 (9th Cir. 2000). We will
affirm if the district court “applies the proper legal standard and [its] findings of fact are
not clearly erroneous.” Dunleavy, 213 F.3d at 458.
DISCUSSION
¶13 Has Objector Laura Fortune waived her right on appeal to object to the settlement
agreement?
¶14 Objectors Tyson Pallister, Kevin Budd, Kenneth Walsh, Martin Mangan, Shirley
Mangan, and Ray Lee filed a joint brief on appeal, and Objector Laura Fortune (Fortune)
filed her own brief. In their response briefs, the Insurers responded to the issues raised by
all the Objectors and separately raised the issue of Fortune’s standing to object to the
settlement agreement.
¶15 The issue of Fortune’s standing as a putative class member to object to the
settlement agreement was raised in Pallister I. We said then that
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The District Court determined that she lacked standing to object to the
fairness of the Settlement Agreement because her excluded claims had been
paid in full by BCBSMT. Fortune disputes this assertion. Because we are
remanding for further discovery, Fortune shall be given the opportunity to
present evidence to the District Court that will establish whether or not she
has been paid for her excluded claims and whether she therefore has
standing.
Pallister I, ¶ 42. The Insurers now argue that Fortune does not have standing to
challenge the settlement agreement because she did not participate in the second fairness
hearing and she did not avail herself of the opportunity provided by this Court to present
to the District Court on remand evidence to establish her standing. Although the
Insurers’ argument is couched as a standing argument, it is in effect a waiver argument
and we will address it as such.
¶16 The Insurers urge this Court not to consider Fortune’s objections to the settlement
agreement because Fortune “did not participate in the district court proceedings after
remand.” The Insurers maintain that although Fortune joined the Objectors’ combined
brief filed prior to the second fairness hearing, the fact that Fortune and her attorneys did
not appear at or object during the fairness hearing means she has now waived her right to
object to the settlement agreement. Federal courts that have addressed similar situations
have reached different conclusions regarding an unnamed non-intervening class
member’s right to object to a settlement agreement. The Tenth Circuit held that a class
member who filed written objections to a settlement agreement was not entitled to appeal
approval of the settlement because he did not object during the fairness hearing, which
was a requirement imposed by the district court in the notice to class members of the
proposed settlement. Weinman v. Fid. Capital Appreciation Fund (In re Integra Realty
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Res., Inc.), 354 F.3d 1246, 1257-58 (10th Cir. 2004). The Sixth Circuit came to the
opposite conclusion and held that a class member who filed written objections to a
settlement but did not appear at the fairness hearing was nonetheless entitled to appeal the
district court’s approval of the settlement. Fidel v. Farley, 534 F.3d 508, 511-13 (6th Cir.
2008). The Insurers urge us to adopt the reasoning of the Tenth Circuit; Fortune urges us
to adopt the reasoning of the Sixth Circuit. However, we need not decide this issue now
because the Insurers’ other waiver argument is dispositive.
¶17 The Insurers secondarily argue that Fortune cannot object to the settlement
agreement now because the question of her standing to do so was previously raised and
decided, she was given an opportunity to supplement the record and seek a different
ruling from the District Court, and she declined to do so. The Insurers are correct. The
District Court already determined that Fortune lacked standing to object to the settlement
agreement. Pallister I, ¶ 42. This Court then gave Fortune the opportunity to conduct
further discovery and present additional evidence to establish her standing. Pallister I,
¶ 42. On remand, Fortune failed to conduct further discovery and she presented no new
evidence of standing to the District Court. In her reply brief on appeal, Fortune points to
evidence of excluded claims sufficient to confer standing that was in the record when this
Court decided Pallister I. That evidence was in the record before the District Court, and
the District Court found it insufficient. Since Fortune did not avail herself of the
opportunity to supplement that evidence, the District Court’s ruling regarding her
standing remains uncontested. As a result, Fortune has waived her right on appeal to
reassert her objections to the settlement agreement. Siebken v. Voderberg, 2015 MT 296,
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¶ 19, 381 Mont. 256, 359 P.3d 1073 (“We will not reverse a district court when it was not
given an opportunity to correct the error alleged.”). We therefore decline to address
arguments raised only in her brief.
¶18 Does Objector Kevin Budd have standing to object to the settlement agreement?
¶19 The Insurers argue on appeal that Objector Budd does not have standing to object
to the settlement agreement because he is not a class member and is not eligible to
recover under the settlement agreement. Objectors do not respond to this argument. The
District Court already determined that Budd has no standing to object to the settlement
agreement because he is not a class member. We did not overrule that finding on
remand, Pallister I, ¶ 82 (Morris, J., dissenting), and we will not disturb that finding now.
¶20 Did the District Court abuse its discretion by certifying this matter as a class
action?
¶21 The four prerequisites to a class action are numerosity, commonality, typicality,
and adequacy of representation. M. R. Civ. P. 23(a). Objectors contend that the District
Court certified the class in violation of two of the requirements of Rule 23(a), typicality
and adequacy of representation. We address these two requirements in turn.
¶22 We have explained before that
To satisfy the typicality element, a plaintiff must demonstrate that
the claims or defenses of the representative parties are typical of the claims
or defenses of the class. The typicality requirement is designed to ensure
that the interests of the named plaintiffs align with the interests of the class
members, the rationale being that a named plaintiff who vigorously pursues
his or her own interests will necessarily advance the interests of the class. A
named plaintiff’s claim is typical if it stems from the same event, practice,
or course of conduct that forms the basis of the class claims and is based
upon the same legal or remedial theory.
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Chipman v. Northwest Healthcare Corp., 2012 MT 242, ¶ 53, 366 Mont. 450, 288 P.3d
193 (internal quotations and citations omitted). Objectors allege that typicality is not
satisfied in this case because the class representatives have non-ERISA claims that have
different legal and remedial bases than the ERISA claims held by most class members.
¶23 The District Court reviewed the requirements for typicality and the facts in this
case and determined that typicality was satisfied. We agree. In Montana, “the typicality
requirement is not demanding.” Diaz v. Blue Cross & Blue Shield, 2011 MT 322, ¶ 35,
363 Mont. 151, 267 P.3d 756. The requirement serves to “prevent[] plaintiffs from
bringing a class action against defendants with whom they have not had any dealings.”
Diaz, ¶ 35. In a settlement class, typicality “requires proof that the interests of the class
representative and the class are commonly held for purposes of receiving similar or
overlapping benefits from a settlement.” 2 Newberg & Conte, Newberg on Class Actions
§ 11.28, 11-58 (3d ed. 1992). “This is a much simpler proposition than showing
typicality in an ongoing litigation context, wherein all elements of liability and damages
must be analyzed to determine common questions affecting both the class representative
and the class.” Newberg & Conte, § 11.28, at 11-58.
¶24 In this case, the class members (including the class representatives and Objectors)
alleged that the Insurers applied an unlawful policy exclusion to their medical bill claims
when other liability coverage was available to pay those claims, and that benefits would
have been paid to the class members but for the application of the exclusion. All class
members, including the class representatives, clearly have had dealings with the
defendants, Diaz, ¶ 35, and the class representatives’ claims “stem[] from the same event,
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practice, or course of conduct that forms the basis of the class claims,” Chipman, ¶ 53.
Although some class members were part of a plan governed by ERISA and some class
members were not, the remedy for the ERISA plan members is the same as the remedy
for non-ERISA plan members: recovery of the benefit denied. This remedy is in fact the
relief offered to all class members by the settlement agreement, so the class
representatives and the class members have common interests for purposes of receiving
similar benefits from a settlement. Newberg & Conte, § 11.28, at 11-58. The class
members have satisfied the typicality requirement by establishing that the claims of the
class representatives are typical of the claims of the class as a whole, and the interests of
the class representatives and the non-named class members are sufficiently aligned.
Chipman, ¶ 53. The District Court did not err in concluding that this requirement of Rule
23(a) was satisfied.
¶25 The fourth requirement of Rule 23(a), adequacy of representation, “allows
certification only where the representative parties will fairly and adequately protect the
interests of the class. This element requires that the named representative’s attorney be
qualified and competent and able to conduct the litigation and that the named
representative’s interests not be antagonistic to the interests of the class.” Diaz, ¶ 38
(citing M. R. Civ. P. 23(a)(4)) (internal quotations omitted). No party has challenged the
qualifications, competency, or abilities of the class representatives’ attorney, so the
requirement is satisfied if the class representatives’ interests are not antagonistic to the
interests of the rest of the class.
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¶26 Objectors contend the adequacy of representation requirement is not met because
the denied benefits to which the class representatives claim entitlement may be subsumed
by the deductibles, co-pays, and co-insurance specified in their particular plans.
According to Objectors, “[p]ayment of funds to claimants like the class representatives
reduces class funds available to claimants who have legitimate damages far in excess of
their deductibles,” which “puts the interests of the class representatives at odds with other
class members.”1 But offsets due to deductibles, co-pays, or co-insurance are litigation
defenses, which the Insurers waived in settlement, so in light of the settlement agreement,
the District Court and this Court need not determine how these defenses would have fared
with respect to the class representatives in litigation. Rather, we concern ourselves with
whether the interests of the class representatives with regard to the settlement agreement
are “antagonistic to the interests of the class.” Diaz, ¶ 38 (internal quotations omitted).
We are satisfied they are not.
¶27 All class members, including the class representatives, have claims for wrongful
denial of benefits, and all class members are entitled under the settlement agreement to a
predetermined percentage of those benefits as a remedy. The percentages range from
1
Objectors purport to challenge the standing of the class representatives to be involved in
the litigation, based upon the same allegations that the deductible, co-pay, and co-insurance
applicable under their policies subsume the denied benefits to which they claim entitlement. In
other words, the Insurers’ waiver of these defenses conferred standing on the class
representatives. The class representatives dispute this allegation and point to evidence in the
record that establishes that the value of their denied benefits exceeds the setoffs. The District
Court made no findings on this subject because the issue was not squarely presented to it.
Regardless, this is not truly a standing dispute because Objectors raise the point as another
challenge to the “adequacy of representation” requirement. As a result, we address the argument
about deductibles, co-pays, and co-insurance in the context of the Rule 23(a) requirements, and
not as a separate standing argument.
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45%–75% of the benefits denied, depending upon the insurer, the date of the claim, and
whether the claim was submitted or unsubmitted. In addition to the remedy to which all
class members are entitled, the class representatives will each receive a relatively small
fee ($2,500) for their service as representatives. This small additional fee does not cause
the interests of the class representatives and the non-named class members to diverge
because it is a set fee that does not reduce the non-named class members’ potential
recovery. Furthermore, contrary to Objectors’ assertions, this is not a limited fund class
settlement, so recovery by a class representative does not reduce the amount of settlement
funds available to other class members. Rather, any benefits the class representatives
were able to negotiate in the settlement agreement apply to all class members equally, so
by pursuing their own interests, the class representatives simultaneously pursued the
interests of the other class members. The class members have satisfied the adequacy of
representation requirement by establishing that the class representatives will “fairly and
adequately protect the interests of the class.” M. R. Civ. P. 23(a)(4); Diaz, ¶ 38. The
District Court did not err in concluding that this requirement of Rule 23(a) was satisfied.
Because both typicality and adequacy of representation are present in this class, the
District Court did not abuse its discretion in certifying the class for settlement purposes.
¶28 Did the District Court abuse its discretion by approving the settlement agreement?
¶29 Objectors contend the District Court’s approval of the settlement agreement was
an abuse of discretion for three reasons. First, Objectors contend the District Court
approved the settlement without sufficient information to determine the fairness of the
settlement. Second, they object to CFM’s method of identifying class members. Third,
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they allege collusion between the Insurers and class counsel, resulting in an unfair
settlement for the Objectors. We address each objection in turn.
¶30 When we remanded this case to the District Court, we instructed the District Court
to allow Objectors to conduct discovery into the fairness of the settlement agreement.
Pallister I, ¶ 43. We also instructed the District Court to evaluate the fairness of the
proposed settlement by analyzing the factors identified in Jones. Pallister I, ¶¶ 38-39.
The District Court did so, and found the settlement agreement to be fair, reasonable, and
adequate. Objectors now contend that class counsel did not conduct sufficient discovery
between the time of the remand in Pallister I and the time of the second fairness hearing.
But it was the Objectors and their counsel and not the class members and class counsel
who sought the right to conduct further discovery. Nothing in Pallister I indicated that
the District Court should require class counsel to conduct further discovery sufficient to
satisfy the Objectors.
¶31 In fact, this Court was very clear about what discovery the District Court should
allow before reconsidering the fairness of the settlement agreement:
On remand, the court shall allow the [O]bjectors the opportunity to
conduct limited discovery. They should be allowed to explore how the
class was chosen, how the medical coding was conducted, and how and
why the particular compromises of claims were determined. They should
also be allowed to explore how the Settlement Agreement and class
counsel’s fee were negotiated, and any other area of inquiry the [O]bjectors
and the court conclude is relevant. The District Court may set parameters
on how and under what time frame this will be accomplished. Upon
completion of this discovery and assuming the negotiation of the same or a
different settlement, the District Court shall then conduct another fairness
hearing and make a determination of whether the proposed settlement is
“fair, reasonable and adequate.”
14
Pallister I, ¶ 36. We said that in a settlement only class action, there needs to be
“sufficient information provided to the class representatives, any objectors, and the
district court to enable the parties and the court to reach a well-informed decision of
whether the proposed settlement is fair, adequate and reasonable.” Pallister I, ¶ 35. The
District Court found the information provided by all the parties was sufficient to make
that fairness determination. We see no reason to disturb that finding, especially when the
Objectors did not discover the information they sought leave to discover but rather
complain that class counsel did not discover it for them.
¶32 The Objectors are also dissatisfied with the way in which the class was defined by
CFM. CFM maintains that the best way to identify class members is to search for three
codes used in two of its databases to indicate the application of a disapproved exclusion.
Objectors contend that allowing CFM to self-report in this way creates a conflict of
interest that is “obvious,” and that CFM’s explanation of why this is the best method for
identifying class members is a “smoke and mirrors explanation.” Objectors also point out
that many other searches of CFM’s adjuster notes and claims correspondence are possible
but were not performed. However, Objectors have offered no evidence that CFM’s
method is not the best method for identifying class members, nor have they argued or
proven that a different search would identify class members not identified by CFM’s
searches. The District Court found the database searches to be adequate, especially
considering that the settlement agreement allows both known and unknown class
members to submit claims. Since the Objectors imply wrongdoing and ill intent on the
part of CFM and class counsel but offer no supporting evidence or superior alternatives,
15
we hold that the District Court did not abuse its discretion in finding the CFM method of
searching for class members to be adequate. See, e.g., In re Marriage of Tummarello,
2012 MT 18, ¶ 38, 363 Mont. 387, 270 P.3d 28 (“The court did not abuse its discretion in
declining to award Phil a deduction for which he provided no evidence.); State v. Dunfee,
2005 MT 147, ¶¶ 17-18, 327 Mont. 335, 114 P.3d 217 (“Other than his speculation,
Dunfee has presented no evidence that the juror held any ill will toward him. Under
these circumstances, the District Court did not abuse its discretion when it denied
Dunfee’s motion for a new trial on the ground of juror misconduct.”).
¶33 Finally, the Objectors contend that CFM and class counsel abandoned the
adversarial process and colluded in reaching a settlement agreement that benefits class
counsel at the expense of the class members and Objectors. The settlement agreement
provides that class counsel will receive a flat fee of $600,000 for submitted claims and a
30% contingency fee on unsubmitted claims. Objectors point to the flat fee on
submitted claims as evidence of collusion because that fee structure does not incentivize
class counsel to maximize recovery for the class. Objectors also contend that class
counsel is incentivized “to put more class members into the ‘unsubmitted’ group of
claims where class members receive less money and [class counsel] receives more.”
Objectors again provide speculation but no evidence to support their accusations.
¶34 The District Court evaluated the allegation of collusion under the factors
articulated in Jones and concluded “there is no evidence to show that class counsel and
the [I]nsurers’ counsel colluded in reaching the Settlement Agreement.” The District
Court noted that it “takes seriously the allegations leveled by Objectors that the
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Settlement Agreement was the product of collusion,” but “Objectors ask the Court to
rely on supposition” and “[t]he Court instead looks at a record that strongly supports the
fairness of the voluntary resolution reached by the Parties.” We agree. Objectors have
offered no evidence of collusion between counsel for the Insurers and class counsel, and
the flat fee for submitted claims and the contingency fee for unsubmitted claims are not
objectively disproportionate or indicative of an improper motive. The District Court did
not abuse its discretion in finding the settlement agreement was not the product of
collusion.
¶35 As noted in ¶ 29, Objectors allege the District Court abused its discretion in
approving the settlement agreement in three particulars, all of which we addressed above.
Notably, Objectors do not contend that the District Court wrongly limited their ability to
conduct discovery or wrongly refused to consider their tendered evidence. It can thus be
presumed that the Objectors were given the opportunity to undertake the discovery that
we determined they should be allowed to conduct, Pallister I, ¶ 36, which was the sole
justification for our remand in Pallister I. Absent any new or additional evidence
adduced by Objectors to support their position, there is simply no basis upon which to
disturb the District Court’s re-approval of the settlement agreement.
¶36 Did the District Court err by allowing individual settlements?
¶37 The District Court granted class members leave to settle their claims against CFM
individually, according to the terms of the settlement agreement. Following the order
allowing individual settlements, 745 individual claims were settled as of July 6, 2015.
Objectors argue that the allowance of individual settlements constitutes a circumvention
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of this Court’s remand in Pallister I—which was designed to elicit more information with
which to determine the fairness of the settlement agreement—and is contrary to the
policy underlying Rule 23. We agree with the District Court that Rule 23(e) has no
bearing on individual settlements.
¶38 By its own terms, Rule 23(e) applies only to settlement of class claims: “[t]he
claims, issues, or defenses of a certified class may be settled . . . with the court’s
approval.” In contrast, Rule 23(e) “does not bar non-approved settlements with
individual members which have no effect upon the rights of others. . . . [I]t is only the
settlement of the class action itself without court approval that [Rule] 23(e) prohibits.”
Weight Watchers of Philadelphia, Inc. v. Weight Watchers International, Inc., 455 F.2d
770, 773, 775 (2d Cir. 1972). Thus, the District Court did not err in allowing individual
settlements.
CONCLUSION
¶39 For the foregoing reasons, we affirm the District Court’s November 26, 2014
Order permitting individual settlements and the District Court’s July 7, 2015 Findings of
Fact, Conclusions of Law, and Final Order and Judgment.
/S/ PATRICIA COTTER
We Concur:
/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ JIM RICE
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