Morris Manning & Martin, LLP

Posner's "What-Not-To-Do-List" When Settling Consumer Class Actions

08.01.2014

In a scathing opinion authored by Judge Posner, the Seventh Circuit recently overturned an approval of a consumer class action settlement because it “flunked the ‘fairness’ standard by the one-sidedness of its terms and its fatal conflict of interest.”  The Seventh Circuit’s opinion is a useful roadmap of what not to do when settling a consumer class action in federal court. In particular, litigants should (1) thoroughly screen for conflicts of interest when selecting class counsel and named plaintiffs; (2) ensure that attorneys’ fees to class counsel are not disproportionately high; (3) avoid using complex and/or confusing claim forms; and (4) pay attention to subclasses when drafting class settlement agreements.

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