Utilizing California Civil Code Section 1542 Waivers In Class Action Settlement Agreements: Helpful Or Harmful?

A significant concern for any lawyer negotiating the settlement of a class action in California state court is crafting a settlement agreement that the court will ultimately approve. Under California law, a judge must approve of any proposed settlement agreement disposing of a class action.ⁱ A judge will only approve a class action settlement that he/she determines is fair, adequate, and reasonable.ⁱⁱ Courts have broad discretion in evaluating the fairness, adequacy, and reasonableness of class settlement agreements. ⁱⁱⁱ

In deciding whether to approve a proposed class action settlement, judges pay close attention to the extent to which the settlement agreement requires class members to waive other claims they may have against the defendant. Of growing concern to judges is whether the settlement includes a California Civil Code section 1542 waiver.