I’ve been busy this week with a number of things, but a few of them, including the upcoming amendments to Rule 23 and prepping for a Strafford webinar on Thursday, have me thinking about the proper role of objectors again.
I think I’ve mentioned before that a number of class action lawyers (especially on plaintiffs’ side) really don’t like those who come in and try to improve settlements. Some of this is simple financial self-interest: barring a quick-pay provision, class counsel doesn’t get paid until the settlement is finalized. But some of this is also actual distaste. In fact, plaintiffs’ lawyers speak of settlement objectors in the same terms in-house counsel use to describe those same plaintiffs’ lawyers.
These days, of course, lawyers are far more civil in describing objectors. The rise of public-interest groups like the Competitive Enterprise Institute’s Center for Class Action Fairness or the National Consumer Law Center have lawyers straining to distinguish between the “good objectors” who want to improve class action settlements and the “professional objectors” who just want to make a quick buck.
I’d like to offer a heretical opinion. From the perspective of someone who defends class actions, it doesn’t much matter whether an objector is a “good” public-interest objector or a “bad” professional objector. And that’s because, from the defense perspective, the objectors do the same thing: they come into a settlement where there is a distinct gap between the relief for the class and the fees for the plaintiffs’ attorneys, and they point out the various ways in which the settlement enable such a gap to exist.
I’m in no way pretending this is not aggravating. If you have just spent two weeks in mediation, a harried, cost-conscious client behind you and putative class counsel two rooms over, eating the same stale pastries, insisting a large enough settlement to justify their fees, then yes, the sudden appearance of an objector with their hand extended too is not what you want to see, even if class counsel has to shoulder the task of dealing with them.
But savvy defendants can make this situation work for them by anticipating it. The simple truth is that objectors are most likely to show up where there is a problem with the settlement, one that stems from the difference between the defendant’s estimation of the case’s merit and class counsel’s need for fees. Public interest objectors won’t attack decent settlements, and professional objectors won’t see much margin in doing so.
And if you know where, when, and why an objector will show up, you can take steps to avoid the problems that will attract them. Moreover, you can use the possibility of objections as a way of (1) field-testing the value of the case with your client; and (2) bringing class counsel around to your way of thinking. If the only way to accomplish a settlement is by engaging in illusory injunctive relief, cy pres distributions, or coupons, then the case probably doesn’t have that much merit to begin with.