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Fung v. Florida Joint Underwriters Association3/12/2003
The plaintiff in a class action appeals a final judgment approving a class action settlement because the judgment modifies one of the settlement terms. We conclude that the point is well taken and remand for further proceedings.
I.
Plaintiff-appellant Kimberly Fung filed a Personal Injury Protection ("PIP") class action lawsuit against defendant-appellee Florida Automobile Joint Underwriters Association ("FAJUA"). She alleged that certain PIP claims had wrongly been denied or reduced, and that certain required interest had not been paid.
The parties negotiated a settlement agreement for the class. Under the settlement, additional payments are to be made by FAJUA to class members. The details are not material here.
The parties also reached an agreement that FAJUA would pay an attorney's fee of $200,000 to class counsel. The trial court's treatment of the attorney's fee provision is the matter at issue here.
The trial court found that the financial terms of the settlement were fair to the class. The court had a question, however, about whether the $200,000 attorney's fee may be excessive.
The court entered a final judgment which approves the entire settlement as relates to payments to the class members. However, the final judgment made a referral to a special master for a determination whether the $200,000 fee amount was reasonable. The final judgment reserved jurisdiction to set an attorney's fee amount for class counsel at a later time.
The plaintiff has appealed, arguing that it was impermissible for the trial court to proceed as it did.
II.
Certainly the trial court is allowed to conduct whatever investigation it feels appropriate before approving a class action settlement. Where, as here, the court had a concern that the attorney's fee might be excessive, the court had the latitude to conduct whatever proceedings it felt appropriate, or refer the matter (as it did) for a recommendation by a special master.
However, the circumstances of this case are that the parties had a fully negotiated settlement agreement which included the financial benefits to be paid to the class, plus a fixed fee of $200,000 for class counsel. Where that is the situation, the court may accept or reject the settlement as a whole, but the court is not allowed to rewrite the agreement.
Writing about the federal class action rule, the United States Supreme Court has said:
Rule 23(e) wisely requires court approval of the terms of any settlement of a class action, but the power to approve or reject a settlement negotiated by the parties before trial does not authorize the court to require the parties to accept a settlement to which they have not agreed. Although changed circumstances may justify a court-ordered modification of a consent decree over the objections of a party after the decree has been entered and the District Court might have advised petitioners and respondents that it would not approve their proposal unless one or more if its provisions was deleted or modified, Rule 23(e) does not give the court the power, in advance of trial, to modify a proposed consent decree and order its acceptance over either party's objection. The options available to the District Court were essentially the same as those available to respondents: it could have accepted the proposed settlement; it could have rejected the proposal and postponed the trial to see if a different settlement could be achieved; or it could have decided to try the case. The District Court could not enforce the settlement on the merits and award attorney's fees any more than it could, in a situation in which the att
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