Legal Memorandum: Reviewing a circuit court’s discretion to approve or reject a class settlement

Issue: Under Illinois law, when constitutes an abuse of discretion by the circuit court in the approval or rejection of a class settlement?

There exists a strong public policy in favor of settlement and the avoidance of costly and time-consuming litigation. Security Pacific Financial Services v. Jefferson, 259 Ill.App.3d 914, 919 (1994). A circuit court’s approval of the class settlement is reviewed for an abuse of discretion. Steinberg v. System Software Associates, Inc., 306 Ill.App.3d 157, 169 (1999). A reviewing court should not overturn the circuit court’s approval of a class settlement unless, taken as a whole, the settlement appears on its face so unfair as to preclude judicial approval. City of Chicago v. Korshak, 206 Ill.App.3d 968, 972 (1990). The standard used in evaluating a class settlement is whether the settlement was fair, reasonable, and adequate. Steinberg, 306 Ill.App.3d at 169.

The circuit court should consider the following factors when evaluating the fairness of a class settlement: (1) the strength of the case for plaintiffs on the merits, balanced against the money or other relief offered in settlement; (2) the defendant’s ability to pay; (3) the complexity, length, and expense of further litigation; (4) the amount of opposition to the settlement; (5) the presence of collusion in reaching a settlement; (6) the reaction of members of the class to the settlement; (7) the opinion of competent counsel; and (8) the stage of proceedings and the amount of discovery completed. Korshak, 206 Ill.App.3d at 972. Where the procedural factors support approval of a class settlement, there is a presumption that the settlement is fair, reasonable, and adequate. […]