Reforming Federal Rule of Civil Procedure 23, the rule that covers class action lawsuits, is a fraught enterprise. So much so that past efforts by the Advisory Committee on Civil Rules to substantially reform Rule 23 have been met with such controversy that more recently, the Advisory Committee has elected to pursue more modest reforms. The Committee’s most recent Rule 23 rulemaking efforts, which went into effect in 2018, have maintained this modest focus by focusing on procedural aspects of class actions like notice requirements and the criteria judges use to approve of proposed settlements. In addressing settlement approval in its rulemaking, the Advisory Committee hoped to unify the practice of different circuits, which had all developed their own sets of factors for judges to use in evaluating whether a proposed class settlement was fair, reasonable, and adequate. The new criteria, now codified in Rule 23(e)(2), have been widely understood as introducing modest changes and have even been argued by some to have done nothing more than codify existing circuit practice. And yet, in the few years since the amendment’s adoption, two circuits—the Ninth and the Fourth—have sharply diverged in their interpretation of what the new Rule 23(e)(2) requires, calling into question whether the changes are so self-evidently modest and dashing the goal of unifying circuit practice.

This Note provides an account of the rulemaking process that attempts to explain this reemerging circuit divergence by situating the amended Rule 23(e)(2) settlement criteria within broader historical debates about the proper goals of class actions. Two competing visions of class actions—one a regulatory conception of class actions as a powerful corporate deterrence mechanism, the other a compensatory conception of class actions as merely a joinder rule—have divided thinking on the modern Rule 23 nearly from its inception and have affected every attempt at its reform. I argue that the approach to rulemaking taken by the Advisory Committee, which prioritized process values like consensus-building over other goals, was unlikely to lead to effective rulemaking given the contentious history of class actions. Indeed, the final amendment text and accompanying Committee Note substantially incorporate the ambiguities, subtleties, and conflicting values that reflect the work of consensus and compromise between very different visions of the role of class actions, making the interpretive split between the Fourth and Ninth Circuit understandable and even foreseeable. Finally, I conclude by arguing that the Ninth Circuit has taken the better approach to Rule 23(e)(2). Despite the modest ambitions of the amendment, the amended criteria do more than merely codify existing practice. Instead, they quietly embrace the compensatory view in the class action debates, with potentially far-reaching consequences for the regulatory power of small-value consumer class actions.