The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
Plaintiffs, disabled former students in the Attica Central School District ("Defendant" or "District"), commenced this action on behalf of themselves and others similarly situated on June 14, 2000, seeking equitable relief, costs, and attorney's fees from Defendant pursuant to the Individuals with Disabilities Education Act, § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, and related New York State education law. Presently before this Court is the parties' Joint Motion for Approval and Entry of Settlement and Dismissal. For the reasons stated below, the parties' motion is granted.
Over objections by Defendant, Plaintiffs' Motion for Class Certification was granted on March 8, 2006. (Docket No. 61.) After several years of extensive discovery, Defendant filed a motion for summary judgment on February 22, 2011. (Docket No. 189.) Plaintiffs then filed a motion for partial summary judgment on February 28, 2011. (Docket No. 194.) This Court denied Defendant's motion in part and granted it in part. (Docket No. 210.)
Specifically, the Court ruled in favor of the District on all of Plaintiffs' 41 claims or "contentions" with the exception of contentions 2, 3, 11, and 27-36, as to which issues of fact remained. (Docket No. 217.)*fn2 Plaintiff's motion was denied. Defendant filed a second motion for summary judgment on February 16, 2012. (Docket No. 221.) That motion is still pending before this Court.
The parties then notified this Court that this case had been settled in principle and that they were preparing the documents necessary to effectuate settlement. (Docket No. 228.) Subsequently, on June 19, 2012, the parties set forth the terms and conditions of their settlement in a Joint Motion for Approval and Entry of Settlement and Dismissal. (Mot. for Settlement, pp.3-4, Docket No. 229-1.) Therein, the parties agree to settle all claims and to dismiss this action with prejudice. (Id. at 3.) Under the settlement no party admits liability, and the parties further agree that the individual rights of parents to pursue individual allegations on behalf of their children will be unaffected. (Id. at 3-4.) Counsel for Plaintiffs shall be paid by Defendant's insurance carrier in the sum of $300,000. (Id. at 4.) The Settlement Agreement represents a final and unappealable resolution. (Id.) In their motion, the parties also request to dispense with the formal requirements of Rule 23(e), including a fairness hearing.
Claims of a certified class may be settled, voluntarily dismissed, or compromised only with a court's approval pursuant to Rule 23 of the Federal Rules of Civil Procedure. The requirements of Rule 23 "exist primarily to discourage individual plaintiffs from using the class action device to secure unjust settlements to the detriment of the interests of the rest of the class." Doe by Doe v. Perales, 782 F. Supp. 201, 206 (W.D.N.Y. 1991). For this reason, settlements pursuant to Rule 23 first "require notice, in a reasonable manner, to all class members who would be bound by the proposal." Fed. R. Civ. P. 23(e)(1). A court will only approve a settlement after holding a fairness hearing and finding that it is "fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). Any class member may appear before the court and voice their objections to the proposal. Fed. R. Civ. P. 23(e)(5).
A proposed settlement's fairness is determined "by examining the negotiating process leading up to the settlement as well as the settlement's substantive terms." D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001). The court must evaluate the negotiating process in light of "the experience of counsel, the vigor with which the case was prosecuted, and the coercion or collusion that may have marred the negotiations themselves." Malchman v. Davis, 706 F.2d 426, 433 (2d Cir. 1983) (citations omitted). As to procedural fairness, "a court reviewing a proposed settlement must pay close attention to the negotiating process, to ensure that the settlement resulted from 'arm's-length negotiations and that plaintiffs' counsel have possessed the experience and ability, and have engaged in the discovery, necessary to effective representation of the class's interests.'" D'Amato, 236 F.3d at 85 (quoting Weinberger v. Kendrick, 698 F.2d 61, 74 (2d Cir.1982)). The substantive fairness of a settlement will be reviewed based on nine factors:
(1) the complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.
City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974), overruled on other grounds by Missouri v. Jenkins, 491 U.S. 274, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989); see also Wal--Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 117 (2d Cir. 2005); Dupler v. Costco Wholesale Corp., 705 F. Supp. 2d 231, 238 (E.D.N.Y. 2010).
Because there is a strong judicial policy in favor of settlements, particularly in class action litigation, there is a presumption of fairness, adequacy, and reasonableness in proposed settlements. See Wal--Mart Stores, 396 F.3d at 116; In re PaineWebber Ltd. P'ships Litig., 147 F.3d 132, 138 (2d Cir. 1998). "The settlement hearing must not be turned into a trial or a rehearsal of the trial." Ebbert v. Nassau, No. CV 05-5445 AKT, 2011 WL 6826121, at *8 (E.D.N.Y. Dec. 22, 2011) (quoting Grinnell, 495 F.2d at 463). Such a procedure "would emasculate the very purpose for which settlements are made." Id. At the same time, a court must avoid "any rubber stamp approval" and instead pursue an independent evaluation. Id.
Despite the general rule, some courts have approved class action settlements without requiring notice and/or a fairness hearing. See Sheinberg v. Fluor Corp., 91 F.R.D. 74, 75 (S.D.N.Y. 1981); Plaskow v. Peabody Int'l Corp., 95 F.R.D. 297, 299 (S.D.N.Y. 1982); Doe, 782 F. Supp. at 207; Green v. Am. Exp. Co., 200 F.R.D. 211, 213 (S.D.N.Y. 2001); Selby v. Principal Mut. Life Ins. Co., No. 98 CIV. 5283(RLC), 2003 WL 22772330, *3-*4 (S.D.N.Y. Nov. 21, 2003); Town of Greece, N.Y. v. Eastman Kodak Co., No. CIV.A.06CV6570L(F), 2007 WL 2126277, *1 (W.D.N.Y. July 24, 2007). Courts granting dismissal without notice or a hearing have taken a "functional approach" to Rule 23. In re Nazi Era Cases Against German Defs. Litig., 198 F.R.D. 429, 441-42 (D.N.J. 2000) (citing Anderberg v. Masonite Corp., 176 F.R.D. 682, 689 (N.D. Ga. 1997)). As explained in In re Nazi Era Cases, "if there is no evidence of any collusion between the named plaintiffs and the defendants in seeking [settlement] and no evidence of any prejudice to absent class members," the requirements of Rule 23 may not be compulsory. 198 F.R.D. at 442 (quoting Anderberg, 176 F.R.D. at 689) (citations omitted). "Rather than insist on a narrow, strict interpretation of Rule 23(e), the more enlightened approach adopted by courts avoids judicial time expenditure and relieves the parties of the expense of notice when it is appropriate." Id. at 441 (quoting H. ...