Kullar v. Foot Locker Retail, Inc

In Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, the court pointed out that "neither Dunk ... nor any other case suggests that the court may determine the adequacy of a class action settlement without independently satisfying itself that the consideration being received for the release of the class members' claims is reasonable in light of the strengths and weaknesses of the claims and the risks of the particular litigation." (Kullar, supra, 168 Cal.App.4th at p. 129.) Kullar continues: "The court undoubtedly should give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm's-length transaction entered without self-dealing or other potential misconduct. While an agreement reached under these circumstances presumably will be fair to all concerned, particularly when few of the affected class members express objections, in the final analysis it is the court that bears the responsibility to ensure that the recovery represents a reasonable compromise, given the magnitude and apparent merit of the claims being released, discounted by the risks and expenses of attempting to establish and collect on those claims by pursuing the litigation. 'The court has a fiduciary responsibility as guardians of the rights of the absentee class members when deciding whether to approve a settlement agreement.'" (Kullar, supra, 168 Cal.App.4th at p. 129.) Kullar further explains that, while there is usually an initial presumption of fairness when a proposed class action settlement was negotiated at arm's length by counsel for the class, " 'to protect the interests of absent class members, the court must independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished.'" (Kullar, supra, 168 Cal.App.4th at p. 130.) To make that determination, " 'the factual record before the ... court must be sufficiently developed,' " and the initial presumption to which Dunk refers " 'must then withstand the test of the plaintiffs' likelihood of success.' " (Kullar, at p. 130.) Again, " ' "The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement." ' " (Ibid.) In Kullar, because the trial court was not presented with data permitting it to review class counsel's evaluation of the sufficiency of the settlement, the order approving the settlement was vacated. (Kullar, supra, 168 Cal.App.4th at p. 131.)