Oft-maligned objectors serve a valuable function in class actions. Rather than trying to rein them in; the Advisory Committee should work on reducing the need for them.
No one likes objectors. Plaintiffs don’t like them because they stand in the way of getting paid. Defendants don’t like them because they add expense and delay to an already expensive and drawn-out process. Most judges don’t like them for the same reasons, going so far as to call them “remoras.”
American judges are accustomed to presiding over adversary proceedings. They expect the clash of the adversaries to generate the information that the judge needs to decide the case. And so when a judge is being urged by both adversaries to approve the class-action settlement that they’ve negotiated, he’s at a disadvantage in evaluating the fairness of the settlement to the class.
Enter the objectors. Members of the class who smell a rat can object to approval of the settlement. If their objections persuade the judge to disapprove it, and as a consequence a settlement more favorable to the class is negotiated and approved, the objectors will receive a cash award that can be substantial[.]”
(Emphasis added, internal citations omitted.)
The Rules Advisory Committee recognizes that regulating objectors can pose a difficult balancing act. From its October 2014 Report:
The 2003 amendments specifically recognized in Rule 23(e)(5), as the courts had previously, that members of the class may object to a proposed settlement. The Supreme Court held in 2002 that objecting class members could appeal the rejection of their objections. At the time the 2003 amendments were developed, there was much discussion of the tension between ensuring that “good” objectors had an adequate opportunity to contest the attractiveness of the settlement and preventing “bad” objectors [from] using the objection process as a way to extract tribute from the settling parties, whose deal might be put on hold for years by objections in the district court, followed by an appeal. In 2003, the rule was amended to direct that objections, once made, could be withdrawn only with the permission of the court. The goal was to prevent hold-up behavior by objectors who would offer to drop their objections for a payment to them. But that approval requirement may not have solved the problem, as it seems not to apply to a settlement reached only after the objector has filed a notice of appeal. The Appellate Rules Committee has received a proposal to build some sort of approval process into appellate practice to deal with this concern, but the logistics of such a response present some difficult questions.
It will be interesting to see what proposal the Committee received. Assuming that it is not simply a codification of the tactic of demanding large appeal bonds when an objector appeals, it could provide an intriguing new way to resolve the tension between “good” and “bad” objectors.
The difficulty is, of course, that from a lawyer’s standpoint, a “bad” objector is one who is opposing your settlement. Ultimately, the presence of professional objectors is more a symptom of a settlement regime with serious flaws than it is one of the flaws themselves. After all, remoras only show up where there is adequate food.
As a result, the best way to prevent costly, time-consuming objections is to encourage better settlements. Reform the otherparts of Rule 23(e), and you can cut down on objections of all types, “good” or “bad.”
This is, by the way, an area in which I recognize that I am speaking against some clients’ short-term interests. Making it more difficult for objectors to do their jobs would make it easier to settle bad cases quickly and inexpensively. But, as both an officer of the court and as someone who tries to keep my clients’ long-term interests in mind [http://www.classactioncountermeasures.com/2010/05/articles/strategy-1/grand-strategy-and-class-actions/], I’d rather see fewer bad cases leading to bad settlements than fewer legitimate objections. That goal is harder to reach, but it makes for a better outcome for my clients, and for absent class members.
[Disclosure: I have on occasion worked pro bono for the Center for Class Action Fairness, a non-profit that objects to problematic class settlements.)