The Supreme Court ruled that the standard for certifying "settlement only" classes is no lower -- and may even be higher -- than for certifying classes for trial. Several lower courts had held that settlement obviates or reduces the need to measure a proposed class against the Rule 23 requirements, but the Supreme Court made it clear that, while settlement is relevant to the certification issue, Rule 23's requirements are not reduced in the settlement context.For example, the Court held that, since a settlement-only case would never be tried, a district court need not inquire whether the case, if tried, would present intractable management problems. But other Rule 23 requirements -- such as those designed to block unwarranted or overbroad class definitions -- "demand undiluted, even heightened, attention in the settlement context." In most class-action cases, courts can adjust the class as litigation unfolds, but in settlement cases, courts lack that option, making it even more important to scrutinize proposed classes for overbreadth.
In the case at hand, the Court held that the sprawling class of all persons who had been exposed to asbestos but had not previously sued an asbestos manufacturer did not meet Rule 23's requirements for certification. Since the class included those who had already developed asbestos-related diseases as well as those who had not, common issues did not predominate over individual issues. Moreover, the named representatives did not adequately represent the class, given that the settlement was geared more toward compensating currently-injured class members than assuring future compensation for the others.
Finally, the Court questioned whether adequate notice could ever be given to such a class, particularly since many class members might not even know of their exposure to asbestos. Given its disposition on the other issues, however, the Court declined to rule on the notice issue.
The NAM urged the Supreme Court to take this case, to provide manufacturers with a clear rule regarding acceptable procedures to resolve class action claims.