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1.9.2 Client’s Individual Settlement Efforts Do Not Prevent Client’s Later Service As a Class Representative

Class representatives and their attorneys may have attempted to settle their individual claims before bringing an action as a class. There could be several reasons for this—the idea of a class action was only recognized after the settlement attempt, the client wanted to try to settle the dispute before litigation, or state law may require that a demand be made prior to filing a case.

As long as the threat of bringing a class action was not used in an effort to gain “leverage” for an individual settlement that would be disproportionate to the actual value of the plaintiffs’ claims,193 such settlement efforts should not impede the later prosecution of a class claim. In Harper-Wyman Co. v. Connecticut General Life Insurance Co.,194 the court rejected the argument that, because a demand letter seeking settlement was sent before filing the class action, the plaintiff lacked loyalty to the class. The court elaborated:

[T]he court should assess the plaintiff’s motives and ability to represent the class from the perspective of the present. If the representative has no interest antagonistic to the class and is otherwise qualified at the time it moves for class certification, the representative’s earlier attempts at settlement should not foreclose it from acting on behalf of the class.

. . . Any litigant seeking money damages initiates its lawsuit out of self-interest. An attempt to avoid embarking on litigation by tendering a demand letter is also a frequent tactic aimed at avoiding the costs and uncertainties of the lawsuit. In the absence of evidence that the plaintiff’s class claim is frivolous, it would seem unfair to penalize it for being less than altruistic.

Here, [the plaintiff] sought settlement prior to filing its complaint. There is no indication that it has subsequently abdicated its responsibilities by seeking settlement on terms favoring its interest over those of other class members. Nor is there any indication of antagonism going to the subject matter of the litigation, since the ultimate judgment in this case would apparently have a similar impact on all class members. There being no evidence of conflict of interest or conduct inconsistent with the interests of the putative class, this court concludes that [the plaintiff’s] prior settlement attempt should not disqualify it from acting as class representative.195


  • 193 {193} Such conduct is grounds for denial of class certification. Chateau de Ville Prods., Inc. v. Tams-Witmark Music Library, Inc., 586 F.2d 962 (2d Cir. 1978).

  • 194 {194} Harper-Wyman Co. v. Conn. Gen. Life Ins. Co., 1990 U.S. Dist. LEXIS 18762 (N.D. Ill. Sept. 26, 1990) (magistrate judge’s report), 1991 WL 18467 (N.D. Ill. Feb. 8, 1991) (order adopting same).

  • 195 {195} Harper-Wyman Co. v. Conn. Gen. Life Ins. Co., 1990 U.S. Dist. LEXIS 18762, at *20–21 (N.D. Ill. Sept. 26, 1990). Accord Robert Alan Ins. Agency v. Gerard Bank, 107 F.R.D. 271, 274–275 (E.D. Pa. 1985).