Lawsuits by students and former students of Charlotte Law School proliferated after the school lost its accreditation from the ABA. Based on an extensive evidentiary showing, the District Court found that the presence of each of the three requirements set forth in Ortiz v. Fibreboard, 527 U.S. 815 (1999) for the establishment of a limited fund settlement under Rule 23(b)(1) were present. The Court of Appeal affirmed.
The Court also rejected the appellant objectors’ argument that they should have been provided with additional settlement-related discovery. “When denying the Barchiesi Objectors’ discovery motion, the district court applied a very stringent standard. The district court first noted that the purpose of settlement-related discovery is to ensure that the district court has sufficient information to enable it to approve the settlement. The district court further noted that settlement-related discovery often delays settlement, introduces uncertainty, and might be undertaken primarily to justify an award of attorneys fees to objector’s counsel, thereby justifying a higher standard. The district court advised that in a limited fund settlement context, these concerns are heightened. The district court then applied the standard … that to obtain settlement-related discovery, a movant is required to demonstrate a colorable claim that the settlement should not be approved and that existing discovery is insufficient or not truly adversarial…. Today, we do not decide whether a more stringent standard must be applied to settlement-related discovery motions. We only decide whether the district court abused its discretion in denying the discovery motion at issue. The basis of the discovery motion pertained to the limited fund. At the fairness hearing, the Court heard argument on the discovery motion and subsequently denied it, finding that the terms of the extent of discovery were negotiated vigorously, that Defendants complied with those terms, and that as a result, extensive document discovery had occurred. These findings were amply supported by the record and were well within the district court’s discretion.”
Herrera v. Charlotte School of Law, No.19-1148, 2020 WL 3118494 (4th Cir. June 11, 2020).