Home › Case briefs › Civil Procedure

Staton v. Boeing Co.

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

Civil ProcedureClass ActionsSettlement ApprovalAttorney's FeesRule 23Rule 23(a)Rule 23(e)settlement class

Facts

African-American Boeing employees brought a class action alleging company-wide race discrimination in promotion, compensation, career development, and hostile work environment. The proposed consent decree provided monetary relief, broad releases, largely consultative injunctive relief, and a negotiated attorney-fee award fixed as part of the settlement. The district court approved the settlement after objectors argued that the class was uncertifiable and that the settlement was unfair, especially because fees were negotiated as part of the deal and because 237 individually identified recipients received on average far more than unnamed class members. The record did not sufficiently justify either the fee structure or the large differential in damages, and at least one payment appeared to go to a non-class member.

Issue

Did the district court abuse its discretion by certifying the settlement class under Rule 23(a) and by approving the consent decree under Rule 23(e)? More specifically, could the parties include in the settlement a negotiated attorney-fee amount measured as a percentage of a putative common fund, including estimated injunctive-relief value, and was the disparate damages distribution adequately justified?

Rule

A district court reviewing a pre-certification class settlement must give undiluted, heightened attention to both Rule 23 certification requirements and Rule 23(e) fairness. In a class action, parties may not include in a settlement agreement an attorney-fee amount measured as a percentage of an actual or putative common fund; to obtain common-fund fees, class counsel ordinarily must petition the court separately after settlement. Parties also may not include an estimated value of injunctive relief in an actual or putative common fund for purposes of determining attorney's fees, except in the rare case where the benefit can be accurately valued and traced to beneficiaries. Settlement approval is improper where the record does not adequately justify substantial disparities in distributions among class members or payments to nonmembers.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

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

A proposed nationwide settlement in a disability discrimination class action is reached in Denver before the district court has certified any class. The judge states that because settlement is favored, she will give "substantial deference" to counsel's agreement and review the proposal with the same level of scrutiny she would use after a litigated certification order.

Which is the strongest objection under the governing rule?

Explanation. Pre-certification settlements require especially careful review. The majority held that when parties settle before certification, the court must give undiluted, heightened attention to class certification requirements and also carefully assess whether the settlement is fundamentally fair, adequate, and reasonable under Rule 23(e). Deference to counsel or a mere preference for settlement is insufficient. (Derived from Staton v. Boeing Co. (n.d.).)