Judges have wide discretion in settlement notifications, according to law prof

By Jamie Kelly | Jul 12, 2016

LOS ANGELES – A recent state appellate court decision upholding the notification plan for a 2014 class-action settlement shows that judges have wide discretion when it comes to notifying class members of a settlement agreement, according to a Vanderbilt law professor who studies class-action lawsuits.

A court of appeals ruled last month that publishing the terms of the class-action settlement in the case Choi v. Mario Badescu Skin Care Inc. one time in Parade magazine, which had a circulation of approximately 30 million and was included with more than 600 newspapers nationwide, was legally valid.

There are numerous ways that the court can notify class members about a settlement agreement, according to Brian Fitzpatrick, a law professor at Vanderbilt University’s school of law.

“If the parties are able to get addresses for the class members, then sending everyone a letter to notify them is typically considered the gold standard for notice,” Fitzpatrick told the Northern California Record. “The questions really arise when you don't have the addresses for everyone, and what kind of notice might you do instead of that. Or, questions arise if you do have the addresses, but in light of the expense of sending out letters to everyone, sometimes the parties ask the court to do a different type of notice."

Newspapers are just one of many other means of getting the word out about class-action suits, Fitzpatrick said.

"So the different types of notices that you might have to resort to if you don't have addresses, or you might ask to do because of the expense of first-class mail are things like emails–sometimes you can get the emails of class members–or some kind of advertising," he said. "This is where the question of 'Well, can we put an advertisement in the newspaper, which newspaper, what about magazines, which magazines, what about internet advertising, television advertising,' and oftentimes the parties hire experts in communicating with people to advise them and the court as what alternatives methods should be used to reach a certain percentage of the class population.”

Several class members appealed the settlement, claiming, among other things, that the court should have ordered multiple publications under California law. The appeals court held that the appellant’s reasoning invoked the wrong section of the law, and that courts have wide latitude in deciding what notification is best.

Fitzpatrick said that follows the general principle in class-action settlements.

“The rule is that you have to send the best notice that is practicable under the circumstances,” he said. “So when the circumstances vary, what is practicable varies, as well. Typically, if you have mailing addresses, the courts typically make you send a letter, even if it's expensive. You're not going to have all the mailing addresses, probably. There are going to be class members who have moved, or whose data has been lost, but as many addresses as you have, the courts generally make you send a letter no matter how expensive it is. But there's no minimum threshold that's set in stone about how many class members you have to have addresses for, or if you don't have addresses, or in addition to addresses, how many class members you think you're going to reach through email or advertising.”

It would be impossible to reach every class member, he said, and at some point the courts decide that enough members will be reached.

“Substantially over half seems to satisfy the courts,” he said. “If an expert thinks 70 percent of the class will see the notice, then that tends to satisfy the courts. It's a question of cost versus effectiveness. The courts try to balance those things. That's what the best notice practicable means. It doesn't mean we put an ad in every magazine, just what's reasonable. There's a lot of discretion in the courts.”

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