Although Matsushita II can be read in a way that might lead to some difficulties, Professor Morrison insists that its result is plainly correct and its basic message—that federal courts should look with considerable skepticism on state court class action settlements that release federal claims which state courts are forbidden to adjudicate—is a sound one, properly applied to the facts of that case. Matsushita II is a narrow case that would not and should not, lead to the broad-scale collateral attack predicted by Professors Kahan and Silberman. Given the practicalities of litigation (including the statute of limitations for securities cases and the substantial risks of sideline sitting), the opportunities for collateral attack are quite limited and the possibility of abuses very small. At the same time, Kahan and Silberman undervalue adequacy of representation, which is an essential element of due process that must exist to bind persons not parties to a lawsuit. Their proposed solution would prevent meaningful federal review and create practical problems without effectively addressing the problems of forum shopping and plaintiff shopping. The holding of Matsushita II, in contrast would encourage settlement of such actions in a single proceeding in a federal court that finally resolves the dispute.
Alan B. Morrison
Class actions are important and useful both to deter wrongful conduct and to provide compensation for injured plaintiffs. In complex cases, however, the existing class action structure falters. In this Article, Messrs. Wolfman and Morrison argue that in “settlement class actions” the current class action rules do not adequately protect class members whose interests do not coincide with those of the class representatives and the class attorneys. Through a survey of recent, prominent settlement class actions, the authors show that the current system does not fairly treat subgroups in a class with respect to matters as diverse as future injury, fee distribution, applicable law, and timing of payments. In response to these problems and others, Messrs. Wolfman and Morrison ultimately urge the adoption of amendments to the class action rules to handle settlement class actions. The effect of these amendments would be twofold: first, to ensure that “unrepresented” class members would be represented by counsel who would have adequate opportunity to champion their interests; and second, to allow a judge handling a settlement class action to evaluate the substantive provisions of a proposed settlement, and to impose or reject certain terms in order to assure fairness within the class, as well as between the class and defendants.