Class Action Settlements Need Finality, AIA Urges High Court

December 23, 2002

The American Insurance Association (AIA) today urged the U.S. Supreme Court to overturn a lower court ruling that would allow settlements of class action lawsuits to be challenged even after appeals courts upheld the settlements.

“A class action settlement has to reach finality in order for legitimate claims to be paid,” said Lynda Mounts, AIA senior counsel.

“Defendants and insurers will have very little incentive to settle class action lawsuits and avoid expensive trials if a settlement is never truly final.”

The AIA’s brief comes in Dow Chemical Company, et al. v. Stephenson, an Agent Orange case which is on appeal from the 2nd U.S. Circuit Court of Appeals. The appellate court ruled that some members of the class could challenge the settlement of that case even after details of the settlement were approved by a U.S. District Court and affirmed on all appeals.

Specifically, the appeals court allowed certain members of the class to challenge the settlement’s binding effect on them even though the settlement had received final approval more than 10 years earlier. The two members of the class who brought the challenge claimed that they had discovered injuries years after the final settlement and, on that basis, alleged that they were not properly represented in the settlement.

“If this final settlement can nonetheless be re-opened on (an argument) such as that brought by respondents, class action settlements could hardly be called settlements at all,” AIA argues in its brief.

AIA’s brief supports Dow Chemical and Monsanto, the two main defendants appealing the 2nd Circuit ruling. The U.S. Supreme Court accepted the case in November but has yet to set a date for oral arguments.

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