Not So Fast: Settling Class Actions in Washington Pre-Certification
Before 2003, Rule 23 of the Federal Rules of Civil Procedure provided that “[a] class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.” This ambiguous language created a circuit split regarding whether court approval was required for settlement and dismissal of a putative class action prior to class certification.
In 2003, the Rule 23 was amended to clarify that court approval is not required before a class has been certified. The rule now provides that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed. R. Civ. P. 23(e) (emphasis added).
In Washington, however, Civil Rule 23 remains identical to the pre-2003 federal counterpart. As a result, unlike in federal court, pre-certification approval is still likely required in class actions filed in Washington state courts. Jones v. Home Care of Washington, Inc., appears to be the only Washington case addressing this issue. In Jones, two plaintiffs filed a putative class action seeking unpaid wages and overtime from their employer. Prior to class certification, the plaintiffs fired their counsel and settled their claims. The defendant employer filed a stipulation of dismissal without providing notice to class counsel. The court entered the dismissal and class counsel then filed a motion to vacate, and sought to intervene on behalf of the class.
The Washington Court of Appeals found that the putative class was entitled to notice that the class representatives were seeking to dismiss their claims. In reaching this conclusion, the court relied on a Ninth Circuit case, Diaz v. Trust Territory of Pac. Islands, interpreting the pre-2003 version of the federal rule. In Diaz, the Ninth Circuit noted that, although notice is not required in all cases, “very few cases involving a voluntary pre-certification dismissal have actually held notice not required.” Examples of cases where notice was not required included situations where there was no possibility of prejudice to the absent class members because suit had been filed in another district.
Parties seeking to settle a Washington class action before class certification should consider a more robust stipulated motion to dismiss than might otherwise be used, setting forth clear reasons why prejudice will not result.