California Courts Provide Yet More Guidance on Drafting Class Action Settlements -- Munoz v. BCI Coca-Cola Bottling Co.

In my prior post, I noted that the recent decision in Nordstrom Commission Cases by the Fourth Distrct Court of Appeal had given much needed guidance in drafting class action settlement agreements.  Well, there may be a trend afoot because the Second DCA has now weighed in with Munoz v. BCI Coca-Cola Bottling. 

Both cases are pro-settlement.  But while the Nordstrom case is mostly concerned with how the consideration is structured and allocated, Munoz v. Coca-Cola (which was decided the same day) provides more of a road map for the specific facts which the parties need to put in the record as part of the settlement review process.  The highpoints of the decision are:

  • Amount in Controversy.  To approve a settlement the reviewing court must be able to generally understand the "amount that is in controversy and the realistic range of outcomes."  But this does not require an "explicit statement of the maximum amount the plaintiff class could recover if it prevailed on all its claims." 
  • Source of Settlement Data.  It is immaterial whether the data used to determine the general amount in controversy has been obtained through formal discovery,other litigation or informal disclosures by the defendant.
  • Potential Certification Difficulties.  Class members must presumably share enough commonality to warrant the formation of a settlement class.  The court nevertheless cited the potential difficulty in obtaining a contested certification order as a factor favoring the adequacy of an agreed-upon settlement amount.
  • The Unsettled Status of Brinker Supports Settlement.   In a clear allusion to the California Supreme Court's ongoing (and seemingly never ending) review of Brinker v. Superior Court, the court found that "The uncertain state of the law with respect to meal and rest period claims was likewise a substantial concern" which favors settlement approval.
  •  No Opt-Out Form Need Be Provided.  Although potential class members must be informed of their right to opt-out of the settlement the parties are not required to provide a separate opt-out form with the class notice.
  • Incentive Payments for Named Plaintiffs.  "[N]amed plaintiffs are eligible for reasonable incentive payments to compensate them for the expense or risk they have incurred in conferring a benefit on other members of the class."  An additional incentive payment of $5,000 for the named plaintiff is reasonable where the average participating class member received $4,300.  

 As with Nordstrom Commissions Cases, the Munoz decision helps everyone involved by providing some fairly clear rules for approving class settlements.


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