The 5th Circuit today
issued an opinion basically tossing out the settlement agreement agreed to by
the Plaintiffs and the Defendants and approved by District Judge Barbier. The
2-1 decision was written by Judge Clement.
The Ruling had three major
instructions:
1. Requesting the Claims Administrator to
confirm to the District Court that he is not ignoring the “accrual-basis”
accounting method for companies using such method;
2. Remand to the District Court to develop
a more complete factual record to determine whether the settlement agreement
intended to require a claimant to convert from a “cash-basis” accounting method
to an “accrual-basis” accounting method; and
3. Stay all payments to claimants until
the District Court Judge can clarify these two issues.
Once Judge Barbier in the District
Court takes up these issues on remand, we will have a better understanding of
the type of claims that will be approved and administered.
Although I have not had a chance
to digest the entire opinion, one citation in particular stuck out to me:
“It makes
no difference that a defendant may bargain for global peace by agreeing to
allow claimants with no colorable legal claim to recover from the settlement fund. A class settlement is not a private agreement between the parties. It
is a creature of Rule 23, which authorizes its use to resolve the legal claims of a
class “only with the court’s approval.”
