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Pettway v. American Cast Iron Pipe Co.

United States Court of Appeals for the Eleventh Circuit · Civil Procedure

Civil ProcedureClass action settlementclass actionsettlement approvalfairness hearingfair and reasonableabuse of discretionobjectors

Facts

The litigation had previously established racial discrimination in the defendant's employment and promotion practices, and the case had been repeatedly remanded over back-pay and settlement issues. A prior proposed settlement had been rejected, but later settlement efforts succeeded, and more than 95 percent of the class members, along with the concurrence of the Equal Employment Opportunity Commission, approved the new settlement. The current appellants argued that they received less than comparable class members because amounts they had received and cashed in 1975 were counted as part of their final awards. At the fairness hearing, there was evidence concerning the current value of those 1975 payments.

Issue

Whether the trial court abused its discretion in approving the class settlement as fair and reasonable despite objections that some class members did not receive distributions equal to comparable members because their earlier 1975 payments were included in their final awards.

Rule

A trial court's approval of a class settlement will be upheld when the court has more than sufficient evidence from the fairness hearing to conclude that the settlement is fair and reasonable; that determination will not be disturbed absent an abuse of discretion.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A wage-and-hour class action in Atlanta ends in a proposed settlement. At the fairness hearing, the district judge hears testimony about how prior interim payments made to some class members compare in present value to the credits applied in the final distribution, addresses the objectors' concerns on the record, and approves the settlement as fair and reasonable.

If several objectors appeal, arguing only that the judge should have rejected the settlement because their final shares were reduced by the earlier payments, how should the appellate court most likely rule?

Explanation. The governing rule is that approval of a class settlement will be upheld when the trial court had more than sufficient evidence from the fairness hearing to conclude the settlement was fair and reasonable, and the decision is reviewed for abuse of discretion. Here, the judge had evidence about the present value of prior payments and addressed the objections on the record, so affirmance is most likely. (Derived from Pettway v. American Cast Iron Pipe Co. (n.d.).)