Motion for Final Approval of Class Action Settlement in New York

Background

New York has a well-established public policy favoring compromises of litigation, especially class litigation. (Hallock v. State of N.Y. (1984) 64 N.Y.2d 224, 230.)

Judicial approval is required for any dismissal, discontinuance, or compromise of claims brought on a class basis. (Civ. Prac. Law & Rules, § 908; Fiala v. Met Life Ins. Co. (2010) 899 N.Y.S.2d 531, 537.)

The Court’s Decision

Section 908 of Civil Practice Law and Rules does not set forth specific criteria for evaluating proposed class action settlements. (Civ. Prac. Law & Rules, § 908.) New York courts regularly refer to the federal standards when determining whether to approve a class action settlement. (Fiala v. Met Life Ins. Co. (2010) 899 N.Y.S.2d 531, 537.) Accordingly, the courts examine "the fairness of the [s]ettlement, its adequacy, its reasonableness and the best interests of the class members." (Id.; Rosenfeld v. Bear Stearns & Co. (1997) 237 A.D.2d 199.)

The relevant factors for a court’s review when determining whether a settlement is fair, reasonable, and adequate include "the likelihood of success, the extent of support from the parties, the judgment of counsel, the presence of bargaining in good faith, and the nature of the issues of law and fact." (In re Colt Indus. Shareholder Litig. (1990) 155 A.D.2d 154, 160.)

A court should also "balanc[e] the value of [a proposed] [s]ettlement against the present value of the anticipated recovery following a trial on the merits, discounted for the inherent risks of litigation." (Klein v. Robert's Am. Gourmet Foods, Inc. (2006) 28 A.D.3d 63, 73.)

"The determination whether a settlement is reasonable does not involve the use of a mathematical equation yielding a particularized sum. Instead, there is a range of reasonableness with regard to a settlement – a range which recognizes the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in taking any litigation to completion." (Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 [W.D.N.Y. 2005].) New York courts grant significant weight to the judgment of experienced counsel in determining the fairness of a class action settlement. (In re Colt Indus., 553 N.Y.S.2d at 141; Fiala, 899 N.Y.S.2d at 538.)

Under New York law, support for a proposed settlement from the opposing parties and class members demonstrates its fairness and reasonableness. (Hibbs v. Marvel Enters., 797 N.Y.S.2d 463, 464 [N.Y. App. Div. 1st Dep’t 2005]; Fiala v. Metro. Life Ins. Co., 899 N.Y.S.2d 531, 539 [N.Y. Sup. Ct. 2010].) A class settlement’s fairness, adequacy, and reasonableness are presumed when "a class settlement is reached in arm’s-length negotiations between experienced, capable counsel after meaningful discovery." (Fiala, 899 N.Y.S.2d at 538; Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 [2d Cir. 2005].)