Volume 36

Fairness and Due Process in Class Settlements: Analyzing Amchem and Stephenson

by Chase W. Gordon

In 1997, the Supreme Court released a landmark decision in aggregate litigation, Amchem Products, Inc. v. Windsor. Amchem clarified that Federal Rule of Civil Procedure 23 applies to settlement classes or classes certified in the courts for the sole purpose of legitimizing a private settlement agreement. In doing so, the Court declared that the terms of a settlement could not modify Rule 23 in certifying a class. However, in 2003, with a chance to solidify the Amchem decision, the Court deadlocked and affirmed Stephenson v. Dow Chemical Co., a Second Circuit decision relying on a private settlement to defeat an earlier certification. A question thus arose about the extent to which courts may permissibly consider the settlement to certify or defeat settlement class actions. After nearly twenty years, the Amchem-Stephenson divide needs a definitive answer.

This Note argues that Stephenson was wrongly decided. The Second Circuit inappropriately reconsidered an earlier class certification by relying on a settlement term to create an issue of adequate representation. Although Stephenson arose in a slightly different procedural context, the Supreme Court’s decision in Amchem nevertheless forecloses any reliance on a settlement term to approve or defeat a certification. While Stephenson has appeal to protect the interests of illinformed class members and claimants with latent injuries, courts are not free to disregard Rule 23’s requirements for certification to import a question of fairness into the analysis. Stephenson’s decision––along with more recent cases employing a similar logic––violate the Rules Enabling Act’s pellucid dictate not to “abridge, enlarge or modify any substantive right.

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