An arbitration clause or class-action waiver can block a settlement class from reaching court at all, but only if the defendant raises it before acting inconsistently with that right — and neither device touches a separate fight over attorney fees once a class is already certified. Objections to fee requests and threshold arbitration disputes are legally distinct battles that happen to surface in the same case.
A settlement class is a group of people a court certifies to resolve a dispute collectively, usually through a negotiated deal that still needs judicial approval. Fee objections target what class counsel asks to keep from that settlement; arbitration clauses and class waivers target whether the case belongs in court in the first place. Which one controls depends entirely on timing and who already acted.
Official resources:
- Read the original report from Jacksonlewis — Use this primary source to review the complete report.
- Read the original report from Gibsondunn — Use this primary source to review the complete report.
Table of Contents
- Can a Defendant Raise Arbitration After Litigating the Case?
- Do Class-Action Waivers Work the Same Way?
- What Rules Actually Govern Objections to Attorney Fees?
- Can an Objector's Own Lawyer Get Paid for Winning?
- Can a Court Step In to Protect the Settlement From an Arbitration Clause?
- Frequently Asked Questions
Can a Defendant Raise Arbitration After Litigating the Case?
A defendant that litigates first and demands arbitration later can lose that right entirely, regardless of whether the delay actually hurt the other side. The Supreme Court settled this in *Morgan v. Sundance, Inc.*, a unanimous May 2022 ruling holding that a party can waive arbitration without any showing of prejudice to its opponent, rejecting the "prejudice" test most federal circuits had required for decades — Sundance had litigated for roughly eight months, including a motion to dismiss, before trying to compel arbitration, according to Jackson Lewis's summary of the decision. That rule matters directly for settlement classes.
The Ninth Circuit applied it in February 2023 against Xerox, finding the company had waived arbitration against absent class members because it litigated against the named plaintiff before invoking arbitration against the broader putative class, as reported in Shook, Hardy & Bacon's class action newsletter. The lesson for a class member watching a settlement unfold: if the company answered the complaint, moved to dismiss, or exchanged discovery before ever mentioning arbitration, that conduct can forfeit the defense for the whole class, not just the named plaintiff. This is why arbitration clauses rarely surface as a late surprise in a settlement that's already reached the fairness-hearing stage. By the time a judge is considering final approval, the defendant has almost always either compelled arbitration early (removing arbitrable claims from the case before a class was ever certified) or lost the right to raise it. A class member reviewing a settlement notice who sees no mention of arbitration can generally assume the defense was resolved, or waived, long before fee objections became relevant.
Do Class-Action Waivers Work the Same Way?
A class waiver is a contract clause requiring disputes to be brought individually, not as a class or collective action. It operates differently from an arbitration clause, and the two often appear together but raise separate legal questions. The clearest example is *Viking River Cruises, Inc. v. Moriana*, decided by the Supreme Court in June 2022.
The Court held that the Federal Arbitration Act preempts California's *Iskanian* rule, meaning an employer can compel arbitration of an employee's individual claim under California's Private Attorneys General Act even where the agreement also waived class and representative claims — and once that individual claim is compelled to arbitration, the employee's remaining non-individual claims must be dismissed from court for lack of standing, according to Gibson Dunn's analysis of the ruling. In practice, a valid class waiver can strip out the representative piece of a case entirely, leaving only an individual arbitration — which means there may be no settlement class left to object to. For a reader evaluating a pending settlement, the practical question is whether the underlying claims were ever subject to an enforceable waiver and, if so, whether the defendant invoked it before the class was certified. If a class was certified and a settlement reached, that usually means any waiver was found unenforceable, was waived through litigation conduct, or never covered the claims at issue. A class waiver discovered after certification faces the same forfeiture risk described above.
What Rules Actually Govern Objections to Attorney Fees?
Fee objections are governed by a different body of law entirely: Federal Rule of Civil Procedure 23, the rule that governs class actions in federal court, not arbitration doctrine. Rule 23(e)(5), amended in 2018, requires anyone objecting to a settlement — including an objection aimed specifically at the requested attorney fees — to "state with specificity the grounds for the objection," and it bars an objector from withdrawing that objection or an appeal in exchange for a payment unless a court approves the exchange, as explained in materials cited by the National Association of Legal Fee Analysis. That court-approval requirement has teeth. In *In re Foreign Exchange Benchmark Rates Antitrust Litigation*, a federal court in the Southern District of New York refused to approve a side arrangement in which class counsel would have paid an objector's attorney $300,000 to drop an appeal, holding that Rule 23(e)(5)(B) squarely covered the deal and required judicial sign-off before it could proceed, according to Mintz's summary of the October 2019 opinion.
The rule exists because objectors have sometimes used an appeal as leverage to extract a private payout rather than to actually improve the settlement for the class. Fee objections can also succeed after a settlement is approved. A 2023 Federal Circuit decision vacated an attorney fee award of roughly $185 million in part because the trial court had failed to perform the lodestar cross-check — a secondary math check comparing the fee to hours worked and rates charged — that it had promised class members in the settlement notice, according to a case summary of the ruling. That shows fee awards remain reversible even after a judge signs off, if the court skipped a step it told the class it would take.
Can an Objector's Own Lawyer Get Paid for Winning?
Even a successful fee objection doesn't guarantee the objector's attorney gets paid. New York's Appellate Division has held that CPLR 909, the state statute governing fee awards in class actions, authorizes payment only to class counsel — the lawyers representing the certified class — not to an objector's separate attorney, even when that attorney's objection improves the outcome for the class, according to a ruling discussed by the Center for Class Action Fairness. That limits the financial incentive for an attorney to file a fee objection in states with similarly narrow statutes, since a win on the merits of the objection doesn't automatically translate into a fee award for the objector's own counsel.
This matters for a class member deciding whether to object or to support someone else's objection to the fee request. An objection can still succeed in reducing the overall fee award — and increasing what's left for the class — even if the objector's lawyer isn't separately compensated for the work. The incentive structure and the merits of the objection are two different questions.
Can a Court Step In to Protect the Settlement From an Arbitration Clause?
Courts overseeing a certified class case have broader supervisory authority than a simple up-or-down ruling on whether arbitration applies. In *Nugussie v.
HMS Host North America*, decided in the Western District of Washington in 2017, plaintiffs asked the court to use its Rule 23 supervisory power to nullify an arbitration clause the defendant had attached to individual settlement offers sent directly to class members, arguing the clause threatened the fairness of the pending class proceeding, according to court filings in the Shearman arbitration database. That case illustrates a distinct risk: a defendant reaching around class counsel to offer individual deals with arbitration or waiver terms attached, aimed at putative class members directly rather than at the certified class as a whole. A class member who receives a separate settlement offer — one that didn't come through the court-approved notice process and that includes new arbitration or waiver language — should treat that as a signal to ask questions before signing anything, since it may be an attempt to extract individual releases outside the supervised settlement.
Frequently Asked Questions
If a company has an arbitration clause in its contracts, can it still end up in a certified settlement class?
Yes — if it litigated the case before asserting arbitration, courts can find it waived that right, as happened to Xerox in a 2023 Ninth Circuit ruling.
Does objecting to attorney fees in a settlement require a lawyer?
No, but Rule 23(e)(5) requires the objection to state its grounds with specificity, and any payment to drop the objection needs court approval.
Can an arbitration clause be challenged after a class is already certified?
It's unusual, but *Nugussie v. HMS Host* shows plaintiffs can ask the court to use its supervisory authority over the class to nullify a clause introduced later.