In the July 17, 2025 edition of The Legal Intelligencer, Edward Kang writes, “Justice at Scale: Class Action Settlements Must Deliver.”
In June 2024, U.S. District Judge Margo Brodie in the Eastern District of New York denied preliminary approval of a proposed $30 billion swipe-fee settlement between merchants and credit card giants Visa and Mastercard. At the last moment, despite nearly two decades of litigation and what appeared to be a monumental compromise, the deal fell through. The court criticized the sufficiency of relief compared to trial-level damages and noted that the proposed settlement inequitably benefited smaller merchants at the expense of larger ones. The court’s decision exemplifies heightened judicial scrutiny over class action settlements in recent years. It underscores the central tension in such cases: while such settlements can deliver mass redress, they must offer the class real, equitable benefits, not just symbolic fixes or compensation for counsel.
In re Payment Card Interchange Fee is not the only such cautionary tale. In 2022, a court rejected a proposed settlement in Powers v. Filters Fast, a data-breach class action. The defendant’s proposed settlement resulted in a claims rate of only one percent, while plaintiffs counsel sought nearly triple the value of the actual cash claims submitted. The court demanded a more robust notice system and meaningful opt-in rates, emphasizing that the notice requirements must be functional, because if class members did not engage with the settlement, the deal would fail in its purpose. The court also criticized the fee request and questioned whether legal fees it saw as excessive should be distributed to the class members. In February 2025, a court rejected a $27.5 million class settlement in Snow v. Align Technology, in which Invisalign maker Align was accused of conspiring to drive up a rival’s prices. The court concluded that the coupon-based relief proposed in the settlement, which included offering the estimated 1.4 million class member $300 toward Align’s product, effectively reinforced the defendant’s monopolistic position while doing little to address the antitrust injury. In May 2025, a court rejected a proposed $40 million class settlement in In re Vanguard Chester Funds Litigation, noting that the settlement would leave class members worse off than an existing remediation agreement between Vanguard and the SEC that guaranteed class members the exact benefits provided by the proposed settlement, without deducting attorney fees of over $13 million or requiring claims to be extinguished.
Central to all these decisions is judicial scrutiny over class settlements, an essential check that helps preserve the integrity of the class action mechanism. The power of the class action lies in its ability to provide redress to individuals who would otherwise lack access to justice. When these mechanisms function properly, they provide significant aggregated relief, deter unlawful behavior, and encourage corporate accountability. However, they must provide tangible benefits to the actual members of the class, not just to plaintiffs counsel or external beneficiaries.
The Strength of Class Actions and Emerging AI Tools
Well-structured class actions continue to offer vital consumer protections. Class actions aggregate claims that would individually be too small into litigation that can effectively capture the defendant’s total ill‑gotten gain. One of the goals of the class action mechanism is to create deterrents for bad behaviors. Without aggregation, rational consumers would rarely sue, allowing unlawful practices to persist unchecked. Aggregation allows plaintiffs to match the scale of modern corporate misconduct. Class actions also improve access to justice. By working on contingency or under fee‑shifting statutes, plaintiffs counsel can represent entire classes without individual out‑of‑pocket costs to class members. This arrangement spreads the cost of litigation rather than deterring claims up front.
Importantly, class actions serve not only to provide recompense for past damages but to shape the future. The threat of collective liability creates incentives for transparency, quality control, and compliance, benefiting consumers well beyond the immediate class. For companies weighing the cost of reform against the risk of litigation, class actions can be the decisive variable.
New machine learning approaches are reshaping how potential class claims are identified. Sophisticated data mining allows law firms to identify patterns of harm, such as erroneous charges, defective products, and discriminatory outcomes, before the traditional complaint pipeline even begins. These technologies can scan purchase histories, helpdesk complaints, and user forums for recurring problems, enabling earlier intervention and more precisely targeted litigation.
But with that power comes heightened responsibility. AI can surface signals, but only attorneys can verify whether the underlying practices are unlawful, whether relief is warranted, and whether the litigation serves justice or opportunism. Courts have made clear that counsel cannot simply ride the wave of mass claims; they must build the evidentiary scaffolding to support them. The success of class actions depends on the ethical and strategic choices of plaintiffs counsel. Effective class action practice requires transparency, fair value distribution, responsive notice practices, and adherence to the procedural protections in Rule 23.
Counsel’s Role in Effective Settlements
The success of a class action settlement depends in large part on the integrity and diligence of counsel. In an era of heightened judicial scrutiny, rote settlements will not suffice. Counsel must ensure that every aspect of the settlement, from notice to claims administration to fee allocation, centers the interests of the class.
Cash remains the most persuasive form of relief. Vouchers or in-kind benefits may be acceptable, but only if counsel can demonstrate they offer meaningful value and are likely to be used. Courts will closely examine redemption rates, claims processes, and any restrictions that reduce utility.
Transparency is key. Judges expect clear disclosures about how the settlement was negotiated and how attorney fees were calculated. Fee requests must be anchored in actual results achieved for the class, not just the size of the fund or hours billed.
Class releases must also be appropriately tailored. Courts increasingly reject global waivers, especially those covering unknown claims, when the offered relief is thin. If class members are giving up broad rights, they must receive commensurate compensation.
Preparation should begin early. Counsel should document the fairness of negotiations, engage experts to assess damages, and build a record showing how the proposed settlement meaningfully serves the class. Clarity in notice, simplicity in claims administration, and fairness in allocation are now essential elements, not afterthoughts.
Conclusion
Ultimately, the recent wave of rejected class settlements signals a recalibration of judicial expectations. Courts are no longer content with the appearance of resolution—they demand substance. Settlements must be structured to deliver real value to class members, not just procedural closure or windfalls for counsel. The message is clear: class actions must serve the people they purport to represent. When they do, they remain one of the most powerful tools in our legal system for addressing systemic harm and holding powerful entities accountable.
As artificial intelligence and data analytics reshape how class claims are identified and litigated, the ethical obligations of counsel grow even more critical. Technology may enhance efficiency, but it cannot replace judgment, diligence, or fairness. The future of class actions will depend not only on innovation but on integrity—on lawyers who are willing to do the hard work of building credible cases, negotiating equitable settlements, and ensuring that justice is not just pursued, but achieved.
Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.
Reprinted with permission from the July 17, 2025 edition of “The Legal Intelligencer” © 2025 ALM Global, LLC. All rights reserved. Further duplication without permission is prohibited. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.