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After more than 10 years of consideration, several changes to the federal class action rule went into effect Monday. Among the changes is a provision that gives class action plaintiffs a second chance to opt out of a class settlement after the original opt-out period has passed. Critics argued that a second opt-out opportunity would encourage objections and create uncertainty in settlement negotiations, since defendants would not know how many future claims would be left unresolved. Still, lawyers for both plaintiffs and defendants for the most part agreed that this and the other changes would have a very minor impact on the vast majority of class action cases. “These are not radical changes in the class action rules,” said John Beisner, who chairs the class action practice at O’Melveny & Myers in Washington, D.C. “They are more of a confirmation of best practices that some federal courts have been using for some years.” Herbert Milstein of the Washington, D.C.-based plaintiffs firm Cohen, Milstein, Hausfeld & Toll agreed that the changes would not have a dramatic impact on how class actions are litigated generally, although they could affect particular cases. He said the second opt-out could give more due process to class members in some cases where plaintiffs may not know initially how extensive their injuries are. “It gives them a second bite at the apple,” Milstein said. On Sept. 24, the 27 judges of the U.S. Judicial Conference unanimously approved the changes to Rule 23 of the Federal Rules of Civil Procedure, which were drafted by the conference’s civil rules advisory committee. The changes are published on the federal judiciary’s Web site at http://www.uscourts.gov/rules/newrules6.html. The committee had been studying Rule 23 since 1991. As modest as they are, the revisions represent the most significant amendments to the class action rule since it was rewritten in 1966. The changes received voluminous testimony and written comments when they were under proposal. The second opt-out provision, which generated the most controversy when it was under consideration, gives judges the discretion to reject a proposed settlement unless it affords class members a second chance to ask to be excluded from the class after the settlement terms are known. Despite critics’ contention that the provision could create uncertainty in settlement, Beisner and Milstein pointed out that most cases are settled even before the first opportunity to opt out has taken place. “The reality is parties generally agree to certify the class at the same time they agree to settle,” said Beisner, whose firm submitted comments supporting the changes. But he said the second opt-out option could be an important safeguard in certain instances. “There could be some cases on the fringes where a settlement is reached three years into the case and a lot of facts may have changed as a result,” he said. OTHER REVISIONS Other revisions include the elimination of a mandatory notice requirement in some cases, which is designed to permit class actions to go forward where the notice obligation would be prohibitively expensive. The revised rule also requires that parties inform the judge of any side agreements made when proposing a settlement. Under another change, notice of a class certification must now include certain details, such as the nature of the action and the definition of the class. Two new sections, Rule 23(g) and Rule 23(h), have been added. The first, subtitled “Class Counsel,” sets out in detail the four factors that judges must consider when appointing class counsel: the work done in identifying and investigating claims, experience in handling class actions, knowledge of the law, and the resources that will be committed in representing the class. The other, subtitled “Attorney’s Fees,” gives judges a framework for approving the final fee award and for supervising the work of the class counsel during the course of the class action. Beisner said that early on, some of the proposed changes were much more significant than what was finally approved. “They were trying to change what a class action looks like,” he said. “That’s not what we are seeing here.”

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