Class Actions -- 2002



Devlin v. Scardelletti   (U.S. Supreme Court)

Class action settlement appeals

Resolving a circuit split, the Supreme Court held 6/10/02 that a nonnamed class member who has timely objected to a class settlement at a fairness hearing can bring an appeal without intervening. The Court recognized that only parties to a lawsuit or those that become parties may appeal, but noted that it had never restricted the right to appeal to named parties. The Court reasoned that a nonnamed party’s objections cannot effectively be served by the named class representatives, because once the named representatives reach a settlement over objections of other class members, the interests of the two groups diverge. The fact that nonnamed class members are not considered parties for purposes of the complete diversity requirement of 28 U.S.C. § 1332 is not decisive, as they may be parties for some purposes and not for others. The Court rejected the argument that class members should be required to formally intervene for purposes of appeal, noting that intervention would serve little purpose and that a procedure allowing nonnamed class members to object at the fairness hearing without intervening should also allow them to appeal the district court’s decision to reject their objections. This decision is important to all businesses that are or may become involved in class actions.