When parties to a class action notify the District Court that they have reached a settlement, the court is required to review and approve or disapprove the settlement under Rule 23(e)(2)'s preliminary approval process, even if the court has taken dispositive motions under submission, and even if the court has already drafted an order or memorandum of decision. In re: Syncor Erisa Litigation, Pilkington v. Cardinal Health, Inc. (9th Cir. 2008) __ F.3d __ (February 19, 2008). Thus, Judge R. Gary Klausner abused his discretion by granting the defendant's pending summary judgment motion rather than permitting the parties to file a motion for preliminary approval of the settlement.
the requirement that the district court approve a class action settlement does not affect the binding nature of the parties’ agreement. See Collins v. Thompson, 679 F.2d 168, 172 (9th Cir. 1982) (“Judicial approval of a [class action settlement] is clearly a condition subsequent, and should not affect the legality of the formation of the proposed [settlement] as between the negotiating parties.”) At the time of the settlement, Defendants knew they had dispositive motions pending and chose the certainty of settlement rather than the gamble of a ruling on their motions. Thus, Defendants chose to forego the chance that the district court would grant summary judgment in their favor. Because the parties bound themselves to a settlement agreement subject only to court approval (which they had agreed to seek) and gave the required notice of the agreement, the district court should not have (1) filed its order granting the motions for summary judgment and (2) entered final judgments against the Class.
That the district court had already drafted a summary judgment order is not justification for refusing to approve an otherwise enforceable settlement agreement between the parties.
In a second holding of less interest to wage and hour lawyers and litigants, the Ninth Circuit added that there were triable issues of material fact and the court should not have granted the summary judgment motion anyhow.