(dissenting):
I respectfully dissent.
The question before us is whether a defendant can go outside of the judicial structure to settle in effect with an entire class and thereby bar, as a matter of law, what appears to be a meritorious claim of plaintiffs’ attorneys for fees. Because I believe that such action may constitute a bad faith evasion of Rule 23(e) of the Federal Rules of Civil Procedure that would justify an award of attorney’s fees against defendants, I write separately in dissent.
It is important to appreciate the full flavor of what happened here, assuming that plaintiffs’ allegations are true, as we must in deciding the issue before us. In November 1984, plaintiffs were holders of Series C and Preferred stock in Continental Group, Inc., which was publicly owned, before that company was merged into a subsidiary of defendant Kiewit-Murdock Investment Corporation (KMI), a privately owned company. Under the merger, KMI paid cash for Continental Series A, Series B and Common stock, but holders of Series C and Preferred stock received only stock certificates in the new entity formed as a result of the merger. Plaintiffs brought suit, alleging that defendants engaged in unlawful manipulation in violation of federal securities laws and that defendants breached a fiduciary duty owed to plaintiffs, by leaving them, after the merger, with “speculative low grade, highly leveraged securities” rather than cash. In October 1985, KMI announced a tender offer for all outstanding shares of Preferred and Series C stock. That tender offer prompted plaintiffs’ counsel to move to dismiss the lawsuit as moot, claiming that the tender offer satisfied the objective of the lawsuit. Thus, the putative class of Series C and Preferred shareholders, who had béen shareholders in a publicly owned corporation, found themselves in November 1984 locked into an unattractive position in a new private entity, although all the other stockholders were bought out in cash. One year later, however, defendants saw to it that the stock owned by the unfortunate members of the putative class was also “cashed out.” This immense change in the position of plaintiffs’ class was brought about by the efforts of plaintiffs and their attorneys.
We must therefore decide whether defendants, having corrected under pressure an injustice to the putative class, are immune as a matter of law from a claim by plaintiffs for attorney’s fees. The district court denied plaintiffs’ claim for attorney’s fees holding, among other things, that “Rule 23 does not appear to apply in situations such as the present where, prior to the certification of a class, a defendant takes some action which has the effect of mooting the claims of potential class members.” The majority agrees that defendants cannot be held liable to plaintiffs for any fee. I respectfully disagree.
When a defendant makes an offer that moots an action after a class complaint is filed, but before a class is certified, plaintiffs’ attorneys should be entitled to fees if the district court decides that (1) it would have certified the class, (2) the complaint could have withstood a motion to dismiss and (3) the lawsuit was the proximate cause of any benefit the class received. Kahan v. Rosenstiel, 424 F.2d 161, 167-68 (3d Cir.), cert. denied, 398 U.S. 950, 90 S.Ct. 1870, 26 L.Ed.2d 290 (1970). Cf. Koppel v. Wien, 743 F.2d 129, 135 (2d Cir.1984) (“Where ... plaintiffs’ lawsuit is mooted by defendants’ corrective action, the burden properly shifts to defendants to establish the absence of a causal connection in order to defeat a claim for legal fees.”) (citations omitted). Plaintiffs’ attorneys would then most likely be entitled to fees from a “common fund” consisting of mo*217nies from defendant’s offer. Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). When, however, a defendant bypasses the court and no such fund can be created, neither precedent nor policy reasons justify denying fees to plaintiffs’ attorneys as a matter of law. Rather, such action violates Rule 23(e) and fees should be available, if warranted, directly from the defendant.
The force of persuasive reasoning as precedent supports this approach. Judge Arlin Adams’ opinion in Kahan v. Rosen-stiel is right on point. As in this case, defendants in Kahan made a public offer to potential class members, before a class was certified, without seeking court supervision or approval of the offer. 424 F.2d at 165. The Third Circuit found that defendants’ action could be considered a “bad faith” attempt to evade the requirements of Rule 23(e) that could support an award of attorney’s fees against defendants. Id. at 165, 174. The Kahan court wrote,
If a court ultimately decides that a plaintiff created substantial benefit for others, it could find it inequitable to deprive plaintiff of counsel fees, merely because defendants prevented the physical creation of [a] fund by flagrantly ignoring Rule 23.
Id. at 168 (footnote omitted).
Moreover, the basis of this ruling — that the spirit and policies behind Rule 23 may apply in the pre-certification stage of a class suit — is not at all unusual. See, e.g., Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982) (Friendly, J.), cert. denied, 464 U.S. 818, 104 S.Ct. 77, 78 L.Ed.2d 89 (1983); Plummer v. Chemical Bank, 668 F.2d 654, 657-58 (2d Cir.1982); Simer v. Rios, 661 F.2d 655, 664-66 (7th Cir.1981), cert. denied, 456 U.S. 917, 102 S.Ct. 1773, 72 L.Ed.2d 177 (1982); In re Beef Industry Antitrust Litigation, 607 F.2d 167 (5th Cir.1979) (Widsom, J.), cert. denied, 452 U.S. 905, 101 S.Ct. 3029, 69 L.Ed.2d 405 (1981); Shelton v. Pargo, Inc., 582 F.2d 1298 (4th Cir.1978); 7B C. Wright A. Miller & M. Kane, Federal Practice and Procedure § 1797, pp. 346-50 (2d ed. 1986) (“courts generally have agreed that actions filed as class suits are within the scope of Rule 23(e) even though they have not been formally certified at the time settlement is reached”); 3B J. Moore, Moore’s Federal Practice 1123.80[2], p. 509 & n. 11 (2d ed. 1985); Comment, The Applicability of Rule 23(e) to Precertification Proceedings: The Functional Approach Applied, 25 VilLL. Rev. 487 (1979-80).
The majority relies heavily on Judge Friendly’s opinion in Weight Watchers of Philadelphia v. Weight Watchers International, 455 F.2d 770 (2d Cir.1972), which preceded by a decade his opinion in Wein-berger v. Kendrick, 698 F.2d 61. Weight Watchers does not preclude the approach I propose. That case, which was decided on a motion to dismiss the appeal, held nonap-pealable an order allowing defendant to conduct settlement discussions with members of a putative class; it did not deal with the issue of attorney’s fees at all. The majority places undue reliance on dictum in that opinion, which suggests that Rule 23 does not prevent negotiations between defendants and individual members of a potential class. 455 F.2d at 773. Judge Friendly acknowledged, however, that a settlement with individual class members, who may compromise their individual claims and possibly dilute the class, differs from an offer to the class as a whole, which could moot the entire action. Id. at 773, 775.
Unlike the defendants in Weight Watchers, defendants in this case did not attempt to negotiate with individual potential class members. Instead, through the public tender offer defendants extended an offer to the entire putative class — an offer that effectively settled the case by mooting the entire action.1 This is precisely the activity *218that Rule 23(e) was designed to control through judicial review and supervision. By circumventing that review and supervision, defendants violated Rule 23.
The district judge improperly relied on Weight Watchers to support her finding that Rule 23 cannot apply to defendants’ settlement offer to plaintiffs’ class. That case simply does not apply here. Indeed, when faced with this issue, this court has indicated that Rule 23(e) may be applied to dismissals or settlements agreed to before class certification. See Weinberger v. Kendrick, 698 F.2d at 73; Plummer v. Chemical Bank, 668 F.2d at 658. See also Robinson v. First National City Bank, 482 F.Supp. 92, 100 (S.D.N.Y.1979); Jaen v. New York Telephone Co., 81 F.R.D. 696 (S.D.N.Y.1979). As stated by then district judge Walter R. Mansfield in Gaddis v. Wyman, 304 F.Supp. 713 (S.D.N.Y.1969):
Defendants are not aided in their argument by the fact that a court has never determined that a class in fact exists, for ‘during the interim between filing and [a determination concerning class certification, the lawsuit] must be assumed to be a class action for purposes of dismissal or compromise under 23(e) unless and until a contrary determination is made____’
Id. at 715, quoting Philadelphia Electric Co. v. Anaconda American Brass Co., 42 F.R.D. 324, 326 (E.D.Pa.1967) (citations omitted). Rule 23 does not apply only after a class has been certified. The Rule may also be relevant earlier if the court determines that the lawsuit would have been an appropriate class action.
The majority’s approach is also inconsistent with sound policy concerns. It conflicts with the important role of “private attorney general” played by attorneys for plaintiffs in class suits that was recognized by the Supreme Court in Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 338, 100 S.Ct. 1166, 1173, 63 L.Ed.2d 427 (1980). In contrast, permitting defendants to in effect settle an entire class suit and deprive plaintiffs’ attorneys of fees as a matter of law will almost certainly deter attorneys from bringing class action lawsuits. Certainly, frivolous class suits should be discouraged but, as defendants' actions make clear, this class suit was not frivolous.
Finally, I do not believe that requiring defendants to subject these public offers to judicial supervision will discourage curative action or quick settlements. In deciding whether plaintiffs’ attorneys are entitled to fees the court can take into account how much, or how little, plaintiffs had to do in obtaining the settlement. Obviously, the sooner a defendant acts to satisfy plaintiffs’ demands by paying the money offered into court, the lower the fees.
The outcome of this case depends on an analysis of policy views concerning class actions. In my view, the majority has followed the wrong policy. I would remand the case to the district court to allow it to consider whether it would have certified the class, whether the complaint would have withstood a motion to dismiss before defendants mooted the case, and whether the lawsuit was the proximate cause of any benefit to the class. If the answer to these questions is affirmative, I would expect the district court, in the exercise of its discretion, to award a reasonable fee under all the circumstances to be paid by defendants.
. I disagree with the majority’s suggestion that defendants' tender offer was not a settlement offer simply because it was directed at a group of stockholders less broad than the plaintiffs’ proposed class and for an amount less than plaintiffs demanded in their amended complaint. Except for minor variations due to stock transactions between the time of the merger and the tender offer, defendants’ tender offer for all of the outstanding shares of Preferred and Series C stock encompassed the class of persons plaintiffs sought to represent. More*218over, it does not matter that defendants offered less than plaintiffs sought in their lawsuit because a settlement price is almost always somewhat less than the amount originally demanded. I also disagree with the majority’s suggestion that the tender offer could not be a settlement unless plaintiffs were required to sign releases. Under a realistic view of the terms and timing of defendants’ transaction, defendants’ public tender offer was clearly a settlement offer directed at the plaintiff class.