Developing a legally sufficient notice plan is one of the most critical aspects of obtaining final approval of your class action settlement. Central to this effort is the recognition that each class action lawsuit has unique characteristics, which dictate the necessary manner and scope of the outreach effort.
While the 2018 amendment to Rule 23 provided even greater flexibility in crafting a notice plan, Rule 23(c)(2) and (b)(3) still requires the “best notice that is practicable under the circumstances,” including “individual notice to all members who can be identified through reasonable effort.”
As the U.S. Supreme Court in Mullane v. Cent. Hanover Bank & Trust Co. instructed nearly 70 years ago, “[a]n elementary and fundamental requirement of due process … is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”
This is critically important to a class action notice campaign, where unless class members opt-out they are legally bound by their silence. In order for the right to opt-out to be meaningful, class members must be given a reasonable opportunity to do so. The key is devising a notice campaign likely to reach the greatest number of potential class members through actual notice (i.e., individualized), constructive notice (e.g., publication) or a combination of both.
So, how do you strike the right balance between “electronic means, or other appropriate means” in a manner that is not only cost efficient, but will generate enough response from the class to support final settlement approval by the court? How do you ascertain which notice methods are the “best practicable” in your particular case?
To start, if name and address records are reasonably ascertainable, courts almost always still require individual notice. Of course, not all companies have customer records. Large retailers who sell through distribution channels, for example, don’t typically have this information. However, if there is a website that collects email addresses as part of sales transactions or customer service, you should use that data in your notice outreach. The most important thing to understand, and to be able to communicate to the court, is your ability to provide (or not provide) individual direct notice. This is a ripe area for objectors, so the more armed you are with information about the availability of individual contact information, the better.
Here Are Some Trends and Takeaways
Individual notice: Rule 23, as amended, clarifies that individual notice can be effectuated via U.S. mail, email or other electronic means such as computer/mobile apps.
U.S. mail v. email: The cost of mailed notice can be considerable. Postcard notices can be used to keep costs down, but with large class populations even postcard postage can be expensive. It is important to understand that U.S. mail typically has a much better response rate than email. While email is cost efficient, if there is little familiarity with the sender, the response tends to be lower and you may need to supplement this effort with publication notice.
Condition of data is critical to a successful campaign: If you plan to rely in whole or in part on email notice, you need to know how the email data was originally collected. Understanding how it has or has not been previously used, and the frequency with which it has been updated is important. For example, if email addresses were obtained as part of a free “give away,” consumers often give a spam email address or incorrect email address and your data can be sullied. If your email efforts result in a high bounce rate (i.e. emails returned undeliverable), your email efforts may be significantly less than originally estimated to the court, which presents a risk of having your settlement denied because you haven’t provided notice to enough of the class.
Publication notice: If you have limited individual class data or are otherwise unable to provide individual notice, courts commonly accept notice by publication as the best practicable strategy. In these instances, it is important that you work closely with a notice expert to develop a notice program that is most appropriate for the media used by your class.
Courts are increasingly looking to hold settling parties accountable for not only the reach to the class (i.e., did the class have an opportunity to act?), but also for the class response to the class notification (i.e., how many class members claimed the settlement’s benefits). In many cases, courts want to be presented with such information prior to deciding class counsel's fee.
Devising a legally sufficient notice plan is one of the most critical aspects of obtaining final approval of your class action settlement.
Fortunately, the Federal Judicial Center (FJC) and Bolch Judicial Institute, Duke Law School have published historically accepted thresholds for adequate notice. Both guides provide instruction on building effective notice plans. They also address issues concerning the geographic scope of notice efforts, individual vs. published notice, and correctly calculating how many class members were likely reached by these combined efforts.
Consulting with the right notice expert and settlement administrator early in the process may shed light on potential obstacles you might not have considered. Asking the right questions prior to settlement can save you the headaches of wasted time money and effort.