USA – NEW YORK Law and Practice Contributed by: Sam Lieberman, Claiborne Hane and Ben Hutman, Sadis & Goldberg LLP
WL 10353228, at *1 (S.D.N.Y. Feb. 22, 2016) (“[C]ourts are extremely reluctant to permit discovery of absent
it is “fair, reasonable, and adequate” in light of the litigation risks, the relief offered and class member reaction. Rule 23 (e)(2). A mediator’s involvement in reaching the settlement may support a court’s finding that the settlement was the result of an arm’s length negotiation, though it does not by itself relieve courts of their independent duty to assess the fairness and adequacy of a proposed settlement. New York law is similar because, under Article 9, “[a] class action shall not be dismissed, discontinued, or compromised without the approval of the court” (CPLR 908). Therefore, New York state court judges also oversee and must approve any settlements or dismissals of class actions that would be binding on absent class members. As for alternative dispute resolution (ADR) mecha- nisms, both federal and state courts increasingly employ mediation or neutral evaluation in class cas- es. In federal courts, courts often propose or order mediation at one or more stages (for example, post- discovery or after summary judgment motions) to help the parties determine whether they can reach a negotiated resolution. Participation is typically confi- dential, and settlements achieved with a mediator’s assistance tend to have additional persuasive weight in judicial review. 3.13 Judgments and Enforcement of Judgments In federal class actions in New York, final judgments, whether following trial, summary judgment or settle- ment approval under Rule 23 (e), are appealable as of right to the US Court of Appeals for the Second Circuit (28 U.S.C. Section 1291). Interlocutory appeals (ie, intermediate appeals before a final judgment) are more limited, but Rule 23 (f) allows a party to seek discretionary appellate review of an order granting or denying class certification. The appellate court has “unfettered discretion” to accept or deny such peti- tions (Rule 23 (f) advisory committee’s note to 1998 amendment). Beyond the Court of Appeals for the Second Circuit, further review by the Supreme Court is entirely discretionary via a petition for certiorari under 28 U.S.C. Section 1254; no class action litigant has an appeal as of right to the Supreme Court.
class members”). 3.11 Remedies
Federal class action plaintiffs may seek different cat- egories of relief depending on the type of class action certified under Rule 23 (b). Under Rule 23 (b)(1), which applies where individual litigation would risk inconsist- ent adjudications or impair the rights of absent par- ties, the remedy is typically unitary or indivisible, such as declaratory or structural relief that binds the entire class. Because the rights at issue are collective and not readily severable, monetary damages are not the primary focus; rather, the remedy is uniform resolution of a shared legal interest. Rule 23 (b)(2) class actions are designed for injunc- tive or declaratory relief, where “the party opposing the class has acted or refused to act on grounds that apply generally to the class” (Rule 23 (b)(2)). These actions seek forward-looking remedies, such as orders compelling policy changes, halting discrimina- tory practices or clarifying legal rights. Monetary relief may be incidental but cannot predominate. By contrast, Rule 23 (b)(3) actions, commonly used in consumer, antitrust and securities cases, are express- ly tailored for legal claims seeking monetary damages. Plaintiffs may seek compensatory, statutory or puni- tive damages, as well as restitution or disgorgement. Unlike Rule 23 (b)(1) and (b)(2) class actions, Rule 23 (b)(3) classes require notice and an opportunity to opt out, recognising that individual class members have a substantial personal stake in the monetary remedies at issue. 3.12 Settlement and ADR Mechanisms In class actions in federal court, any settlement (or dismissal) that would bind class members requires court approval under Rule 23 (e). For settlements, courts typically engage in a two-step process: first granting preliminary approval of the proposed set- tlement and notice plan, then conducting a fairness hearing after class members receive notice and have an opportunity to object or opt out of the class. The court’s scrutiny focuses on whether the settlement is the product of “arm’s length” negotiation, and whether
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