Class Actions--The Party's Over: Do Spurned Class Action Objectors Have Appellate Rights to Further Protest?

Abstract

This article previews the issues and arguments in Devlin v. Scardelletti, an appeal before the Supreme Court in its 2001-02 Term. In Devlin, the Supreme Court will resolve a very important question relating to the ability of disappointed objectors to pursue appellate challenges to class action settlements. Many federal circuit courts, including the Fourth Circuit from which Mr. Devlin appeals, restrict appellate rights only to those objectors whom the district court previously granted intervention in the underlying class action. The Court’s decision should serve to clarify an area of class action practice beset with conflicting, unclear decisions. More importantly, the Court’s resolution of principles relating objectors’ appellate rights will have significant impact on the role of objectors in class action settlements.

The primary issue on appeal is whether a class member whom the district court denied intervention in class proceedings, and enjoined from collaterally challenging the class settlement, has standing to appeal the district court’s approval of a class settlement?The Devlin appeal to the United States Supreme Court embodies a reprise – although more directly – of a troubling question relating to the ability of objectors to appeal from a district court’s approval of a class action settlement over the objections of unnamed class members.

During the 1998-99 Term, the Supreme Court was presented with this issue obliquely, in California Public Employees Retirement v. Felzen. The Court’s consideration of the problem of appellate rights of class action objectors is likely to center on four core concerns. The first problem relates to whether spurned objectors – who are denied both intervention as well as the merits of their grievances – have standing to appeal. The second problem relates to whether district courts must first grant intervention to objectors, in order for unsuccessful objectors to be able to pursue an appeal. This inquiry centers on whether unnamed class members who are denied intervention are nonetheless parties for the purpose of appeal. The third locus of concern centers on whether there is a new sort of 'timeliness' requirement for intervention requiring formal intervention long before the class settlement, in order subsequently to lodge an appeal. And the fourth area of concern centers on whether there are policy considerations favoring or disfavoring objector appeals.

The Devlin appeal is almost a replay of the Supreme Court’s consideration of the Felzen case four Terms ago, only on a broader canvass. Thus, the same significance attaches to Devlin, only more so. In the broadest policy sense, the Court will have to determine how seriously it takes the role of objectors in keeping everyone honest in negotiating and approving class action settlements. The Supreme Court, in Amchem Products Co. v. Windsor, indicated that federal district courts must provide heightened attention to class certification requirements in reviewing proposed class-action settlements.

In so doing, the Court tacitly recognized the important role of objectors in presenting an adversarial view of proposed settlements. Similar to the Felzen appeal, the Devlin case is significant because the Court will how to determine whether any further participation by objectors will be cabined by requiring technical intervention in the lawsuit in order to pursue an appeal, and whether the Court is going to impose some kind of 'timeliness' requirement for objectors to do so.