What Is the U.S. Attorney General Doing with Settlement Notices Under the Class Action Fairness Act?

by Scott Nelson

The Class Action Fairness Act (CAFA) requires that whenever a federal class action filed after the Act's effective date is settled, notice of the proposed settlement must be sent to relevant federal officials, which in most cases means the Attorney General of the United States.  But what does the Attorney General do with these notices?  It seems that is a mystery.

The Senate Judiciary Committee's Report on CAFA says that the point of the notice provision is "to ensure that a responsible ... federal official receives information about proposed class action settlements and is in a position to react if the settlement appears unfair to some or all class members or inconsistent with applicable regulatory policies."  Put another way, the provision is aimed at "adding a layer of independent oversight to prohibit inequitable settlements."  At the same time, however, the Senate Report stresses that the law doesn't actually require the Attorney General to do anything: "it should not be construed to impose any obligations, duties or responsibilities on the federal ... officials who receive notice of a class action settlement."  Thus, whether the notice provisions do any good depends entirely on what (if anything) the officials who receive them decide to do with them.

As far as I can tell, there is virtually no publicly available information about what the U.S. Attorney General does with CAFA settlement notices - who, if anyone, reviews them; what, if any, standards are used in reviewing them; and what, if anything, the AG does once it has reviewed them.  That's perhaps not terribly surprising, because the Department of Justice (unlike the FTC) didn't have any program for reviewing class action settlements before CAFA was enacted, and nothing in CAFA obligated DOJ to institute such a program.  But one might hope that the AG at least does something with the notices he receives.

If anyone has any information on this subject, we'd like to hear about it.  Meanwhile, we've submitted this Freedom of Information Act request to the Department of Justice seeking any documents that set forth the AG's policies and procedures for reviewing CAFA settlement notices, as well as documents indicating how many notices the AG has received and what (if any) actions he has taken as a result.  It's been reported that the California AG has received in excess of 40 CAFA settlement notices since the Act went into effect, so Alberto Gonzales has probably received even more, and there has to be some paper trail indicating what he does with them.

Maybe the CAFA settlement notices just go into some black hole at DOJ - which also has been known to happen with FOIA requests like mine.  But I hope that at least someone at DOJ is looking at these things, and that a fairly simple FOIA request may help shed some light on the subject.  We'll see - but I'm not going to hold my breath in the meantime.

Comments

[Dan]

Scott,

Did you hear anything back from Justice re their policies and procedures?

I am just starting a project where I am trying to determine the best procedures for State attorneys generals to use in reviewing CAFA notices. My next step was going to be to contact different State AG offices. Do you know of an easy way to find the FTC's procedures? (I just started this project a few minutes ago).

Thank you for your post.

Best,

Dan

[Scott Nelson]

I'm no better positioned than anyone else to speculate about the motives of the Act's sponsors. In an article published immediately after the Act's passage, however, I noted the irony that the FTC - the one federal agency with a project devoted to scrutinizing the fairness of class action settlements, was not included in the notice provisions. See "A Section-by-Section Analysis of the Class Action Fairness Act of 2005," at 13 (www.citizen.org/documents/TheClass%20ActionFairnessAct.pdf).

My guess is that the backers of the Act weren't thinking too much about who within the federal government would be most interested in scrutinizing class action settlements. With a few exceptions, the settlement provisions are largely window-dressing designed to add a pro-consumer veneer to legislation designed principally to serve the interests of defendants. I suspect that whoever drafted this section thought it sounded impressive to require that notices be sent to the Attorney General of the United States, without regard to what he or she might actually do with them.

[Deepak]

Any insight into why CAFA didn't just require that the notices be sent to the FTC--an agency that actually monitors settlements and files objections? The cynic in me says it's because the lobbyists that wrote CAFA didn't really want robust federal oversight of settlements. But if that's the case, why did it require notification to the federal government at all?