Class Representatives Do Not Hold Veto Power Over Class Settlement

In In re FedEx Ground Package Sys., Inc. Employment Practices Litig., No. 3:05-CV-595 RLM, 2017 WL 632119 (N.D. Ind. Feb. 14, 2017), only one of a total of seven class representatives signed off on accepting a proposed class settlement with the defendant, FedEx. Further, the class representative who assented to the proposed class settlement later withdrew his signature once he realized that the other six representatives objected to the proposed settlement.

In reviewing the seven class representatives’ ensuing challenge to their counsel’s attempt to seek approval of the settlement, the Northern District of Indiana recognized that it had a “‘continuing duty’ to undertake a stringent examination of the adequacy of representation by the name class representatives and their counsel at all stages of the litigation.” Id. at *2. However, it continued by explaining that “class representatives don’t have to agree to a settlement for it to be fair and binding on the class…. The assent of class representatives is not essential to the settlement, as long as the Rule 23 requirements are met.” Id. (original brackets omitted).

In other words, a “class representative cannot alone veto a settlement.” Id. While the objecting class representatives raised some “red flags” regarding the negotiations that led to the proposed class settlement, none of them, per the district court, rose to the level of indicating actual “self-dealing.” Such a showing of “self-dealing” or “collusion” between class counsel and the settling defendant was required for the objecting class representatives to seek and obtain discovery regarding the conduct of the settlement negotiations: “[T]o get discovery, the class representatives must first ‘lay a foundation by adducing from other sources evidence indicating that the settlement may be collusive.’” Id.

The district court held that the class representatives failed to satisfy that threshold requirement and, for that reason, held that the settlement was valid and denied the representatives’ motion to compel discovery to challenge the settlement. Under Rule 23(e)(2), the court concluded that the settlement was “fair, reasonable, and adequate.”

In re FedEx Ground Package Sys., Inc. Employment Practices Litig., No. 3:05-CV-595 RLM, 2017 WL 632119 (N.D. Ind. Feb. 14, 2017).