Judicial Responses to Class Action Settlements That Provide No Benefits to Some Class Members

Class proceedings may be instituted in only two Australian Courts, the Federal Court of Australia and the Supreme Court of Victoria. The settlement of class proceedings raises unique and challenging issues given that the outcome of such proceedings binds not only the formal parties - the class representatives and the defendants - but also the claimants represented by the class representatives, the class members. This is one of the reasons why a class proceeding may not be settled without the approval of the Court. The aim of this article is to explore the approach of these two Courts when confronted with settlements that provide no benefits to some categories of class members. Federal Courts in the United States have been required to approve class action settlements since 1938. This has resulted in an extensive, and extremely useful, body of case law and legal literature on class action settlements. Consequently, the US jurisprudence on class action settlements is also considered in some detail. Class actions differ from ordinary lawsuits in that the lawyers for the class, rather than the clients, have all the initiative and are close to being the real parties in interest. This fundamental departure from the traditional pattern in Anglo-American litigation generates a host of problems.' Class actions accomplish many salutary goals; at the same time, they can cause great mischief. In both instances, the legal profession, judges and lawyers alike, are responsible for the result.