The U.S. Congress enacted the Class Action Fairness Act (CAFA) to protect consumers and to prevent potential attorney’s fee abuses. CAFA, as defined in 28 U.S.C. § 1711 – 1715, imposes an obligation on all class action defendants to serve notices of proposed class action settlements to “appropriate federal officials” in the states in which class members reside as well as to other state regulators and federal agencies.
Good command of CAFA lowers class action litigation costs and prevents delays in the final administration of a class action settlement.
The Basic CAFA Notice
There is a basic form of notice commonly used by attorneys and class action settlement administrators. Its components are:
- That parties have negotiated and agreed to a settlement in a pending class action lawsuit;
- A settlement hearing will be held no sooner than 90 days after the CAFA notice is issued;
- Parties will prepare and serve supplemental CAFA notices if warranted; and
- Designate those who will bear the costs associated with providing CAFA notices.
Parties have 10 days from the date of the preliminary approval of a proposed settlement to issue CAFA notices. If the notices are not sent to the appropriate parties within this period, class members may opt-out of any proposed settlements. It is therefore critical that notice is issued to every state and federal official who has an interest in the underlying class action litigation.
Recipients of CAFA Notices
CAFA notice is served to all attorney generals in the states with residents who are engaged in the lawsuit as well as to other state regulators who may have an interest in the substance of the class action litigation. Those officials are charged with reviewing proposed class action settlements to verify the fairness of terms to their constituent class members and conditions of the proposed settlement.
Inadequate or incomplete notices can delay or preclude the entry of a final settlement order. To facilitate a complete review of a proposed settlement by the recipients of the CAFA notices, at a minimum the notices must include:
- Copies of the class action complaint, all exhibits, and other relevant pleadings
- The proposed class action settlement agreement
- Details concerning the class members
- Proposed agreements between plaintiffs’ counsel and the defendants
- Any opinions regarding the fairness of the settlement.
Advance Planning for CAFA Notices
The CAFA's 10-day deadline for providing required notice imposes significant administrative burden on those charged with meeting it. To ease that burden, class action defendants should begin to prepare those notices well before a settlement agreement is proposed or submitted for preliminary approval.
Cover Your CAFA Bases
For more than 50 years, Kroll Class Actions has blazed the trail in the area of class action administration and has seen the impact of CAFA firsthand. We know how to remain compliant with the law’s effort to prevent class action abuse and ensure that all parties receive the notice to which they are entitled. Contact us for more information.