Seventh Circuit Rejects “Scandalous” Settlement
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The U.S. Court of Appeals for the Seventh Circuit issued a scathing rebuke of class counsel in an opinion reversing the approval of a settlement. Referring to the case as “eight largely wasted years,” to the settlement as “scandalous,” and to the terms as “[selling] out the class,” Judge Posner’s opinion dealt harshly with class counsel. Eubank v. Pella. This opinion is “consistent with a recent trend of courts turning up the heat on class action settlement scrutiny,” explains Jeffrey D. Gardner, Phoenix, AZ, cochair of the ABA Section of Litigation’s Class Actions & Derivative Suits Committee.
The Eubank v. Pella Litigation
In 2006, the plaintiffs filed a class action lawsuit against Pella, a windows manufacturer, claiming that certain of its windows had a design defect that allowed water to enter, causing damage. The court certified two classes: one for customers who had already replaced or repaired their windows, and one for those who had not. The Seventh Circuit affirmed the class certification on a Rule 23(f) interlocutory appeal.
Class counsel negotiated a proposed settlement in the fall of 2011, which the district court approved in 2013. Objectors—four former named plaintiffs whom class counsel had purportedly removed from named plaintiff status when they opposed the settlement—appealed.
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