Blackmailer Beware: Seventh Circuit Disgorges Class Objectors' Inequitable Settlement Proceeds

The Seventh Circuit held last Thursday that individuals who object to a class action settlement voluntarily assume a limited fiduciary duty to other class members, which they can breach by settling their classwide objections for personal profit. The decision in Frank v. Target Corp., No. 19-3095, 2020 WL 4519053 (7th Cir. Aug. 6, 2020), seeks to put an end to what the court called "objector blackmail." All attorneys should take heed of this decision when considering how to resolve objections to class action settlements.   

The named plaintiffs filed their lawsuit in 2011, accusing several defendants of making false claims regarding dietary supplements. The parties reached an initial classwide settlement in 2013, to which one of the class members, Theodore Frank, objected. Frank eventually prevailed on his objection in an earlier appeal to the Seventh Circuit. Pearson v. NBTY, Inc., 772 F.3d 778, 787 (7th Cir. 2014). On remand, the named parties reworked