Federal Authorities Continue To Monitor Proposed Class Action Settlements

Officials at the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) continue to scrutinize class settlements to ensure that neither defendants nor class action counsel are improperly benefiting at the expense of class members. As discussed below, at minimum, parties to class actions in federal court can expect federal authorities to increasingly monitor and review class actions and file amicus briefs or statements of interest in appropriate cases.

By way of introduction, a provision of the Class Action Fairness Act (CAFA) requires that proposed class action settlements be served on the Attorney General of the United States at least 90 days prior to being entered by a court. This allows the DOJ to file a statement of interest with the court if it identifies fairness concerns. The government has rarely exercised the prerogative to file such statements, but that may change soon based on recent activity at the DOJ.