Chang v. Wells Fargo Bank, N.A.

Background

On November 9, 2023, the plaintiffs filed a stipulated final judgment. The proposed judgment followed the Court’s order granting final approval of a class-action settlement. Paragraph six contained a permanent injunction involving the “Releasors,” which included class representatives and class members.

The proposed language stated that the Releasors would be permanently barred and enjoined from organizing class members or soliciting their participation in a separate class to pursue any action, including efforts to add class allegations or seek class certification, based on or relating to the released claims against the released parties.

Court’s Concern

The Court was concerned that, read literally, the proposed language could bar class members from organizing a class in “any action,” even when that action did not relate to the released claims. The Court referred to the identical-factual-predicate rule, which limits a settlement release and related injunction to claims based on the same factual predicate as the settled claims.

The Court proposed moving the closing parenthesis so that the phrase “based on or relating to any of the Released Claims against any of the Releasees” would clearly modify the entire restriction. Under the clarified wording, the restriction would apply to actions based on or related to the released claims against the released parties, rather than to every possible action.

Ruling and Required Filing

Judge Haywood S. Gilliam, Jr. did not approve the proposed wording as drafted. The Court directed the plaintiffs, by November 20, 2023, to file either a revised stipulated final judgment reflecting the proposed change to paragraph six or a statement of two pages or less explaining why the existing language did not create a release broader than the one previously approved by the Court. The opinion does not state a final disposition of the stipulated final judgment beyond that directive.