Cohen

Opinion by Chief Judge WALLACE; Dissent by Judge KOZINSKI.

Cohen brought a class action against the Resolution Trust Corporation (RTC), in its capacity as conservator of Imperial Savings Association (Imperial), for bonus compensation allegedly owed to himself and similarly situated Imperial employees pursuant to a corporate bonus plan. Summary judgment was entered by the district court in favor of Cohen, and the RTC filed a timely appeal to this court. During the pendency of the appeal, the parties reached a settlement. The settlement was subsequently approved by the district court over the objections of two of the class members, Manisealco and Lea. Manisealco and Lea now appeal from the district court’s order approving the class settlement. We have jurisdiction pursuant to 28 U.S.C. § 1291 . We affirm,

I

If the class plaintiffs had been entirely successful on appeal, they would have been entitled to a Receiver’s Certificate in the amount of $864,000. The RTC would eventually pay the members of the class out of the liquidated assets of Imperial on a pro rata basis with other Imperial creditors. Thus, had the class plaintiffs not settled, the amount of any recovery would be…

dissenting:

At the heart of this case is a difficult but important question: May the district court approve a settlement that treats some class members worse than others for reasons entirely extraneous to the case being settled? The majority recognizes that Lea and Manis-ealco “are treated differently and less favorably than other members of the class in that their money will be held in an interest bearing escrow account pending resolution of the Alshuler case.” Majority op. at 729. It nevertheless approves the settlement because RTC had good reason to treat them differently. But, good though it be, RTC’s reason has nothing to do with this case; the allegations in Alshuler, even if proved true, make Lea and Manisealco no less entitled to an equal share of this settlement. Penalizing them here because of what they are alleged to have done elsewhere is no more appropriate than reducing their share for bad manners, poor personal hygiene or any other extraneous factor.

It’s perfectly fine to treat class members different from each other because of factors intrinsic to the case being settled. Class members may, for instance, be awarded differing amounts depending upon the strength of…