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Consumer Class Actions: 13.4.1 Overview

The different types of notices have their own specific requirements, but there are general precepts and best practices to consider when drafting any notice to the class. The overarching principle is that, besides complying with specific notice requirements, class counsel should make sure that all notices are easy to understand.91

Consumer Class Actions: 13.5.1 Compiling the Class List

In order to send notice to the class, counsel must first assemble an accurate and complete list of class members. Either the plaintiff’s or defendant’s counsel can assemble the list using the defendant’s records.

Consumer Class Actions: 13.5.2 Updating Class Members’ Addresses

Because class litigation can be lengthy and people frequently move, merely mailing a class settlement notice to class members’ last known addresses may result in a significant number of undeliverable notices. Therefore, it is essential to take all reasonable steps necessary to update class members’ addresses.

Consumer Class Actions: 13.6.1 Overview

In the past, courts often required the use of first-class mail to individual class members for notices sent to Rule 23(b)(3) classes. First class mail may be appropriate for other types of notices as well.117 Notice need not be sent by certified mail.118

Consumer Class Actions: 13.6.2 Mail

Although Rule 23(c)(2)(B) does not require it, the 2018 Advisory Committee Notes recognize that first class mail may still be the preferred primary method of giving notice. Specifically, the Advisory Committee Notes caution that it is important to keep in mind that a significant portion of class members in certain cases may have limited or no access to email or the internet. In such circumstances, it would be appropriate to rely upon first class mail to reach the absent class members.

Consumer Class Actions: 13.6.3 Publication

If class members cannot be identified or located using the defendant’s records or any other source, notice by publication is necessary. Publication may be important as a supplement to other forms of notice. However, merely publishing the notice in printed media provides few practical benefits because class members are unlikely to see the published notice.

Consumer Class Actions: 13.6.4 Web, Email Notice, and Social Media

Prior to the 2018 amendments to Rule 23(c)(2)(B), many courts read the rule as requiring notice by first class mail,127 while others often approved the use of appropriate websites—along with other means of communication—to provide information about the settlement notice.128 Following the 2018 amendments, electronic means are now explicitly included as one of several acceptable methods of providing notice to Rule 23(b)(3) certified classes (as well as any other class certified for the purpose

Consumer Class Actions: 13.7.1 Plaintiff Usually Bears the Initial Cost

If a class action is certified but not yet settled, “the plaintiff must pay for the cost of notice as part of the ordinary burden of financing [their] own suit.”143 “[A] bare allegation of wrongdoing . . . is not a fair reason for requiring a defendant to undertake financial burdens and risks to further a plaintiff’s case.”144 The expense of giving notice includes all costs involved in making the notice effective.145

Consumer Class Actions: 13.7.2 Shifting Costs to the Defendant

Regarding the settlement notice, the general practice is for the settlement agreement to provide that the defendant pay all costs of giving notice. However, if the case is not settled but is certified without settlement, there are still possibilities for shifting the cost of the notice to the defendant.

Consumer Class Actions: 15.1.1 Overview

Federal Rule of Civil Procedure 23(e) provides that class actions may be “settled, voluntarily dismissed, or compromised only with the court’s approval.” Obtaining final approval of a class action settlement is a multi-step process. It can take anywhere from a few months to more than six months to complete, depending on the complexity and size of the case.

Consumer Class Actions: 15.1.2 “Preliminary Approval” of Settlement

Although Rule 23 did not explicitly require preliminary approval of the settlement prior to the 2018 amendments, most experienced class counsel believed strongly that seeking it was wise or necessary or both. Some circuits strongly endorsed preliminary approval prior to notice being given. As amended, Rule 23 effectively codifies this practice, while not denominating it as “preliminary approval,” except in the Advisory Committee Notes.24

Consumer Class Actions: 15.1.3 The Notice

As discussed in depth in Chapter 13, supra, the Rule 23(e) notice given to class members must inform them of the nature of the claims being settled, the release of claims that will be agreed to by class members if they do not opt out, deadlines to opt out or object, the date of the fairness hearing, the provision for attorney fees, how to get more information regarding the settlement (including websites or links

Consumer Class Actions: 15.2.1 Overview

A proposed class action settlement arrived at by counsel experienced in the type of litigation involved, following arm’s length negotiations, based on sufficient information concerning the claims at issue, and with few objectors, generally has been viewed as being entitled to a presumption of fairness.49 The 2018 amendment to Rule 23(e)(2),50 however, sets forth more specific guidelines for a finding that a settlement is “fair, reasonable, and adequate.” The amended rule provides that, after

Consumer Class Actions: 15.2.2 First Circuit

The First Circuit has held that, although the case law offers “laundry lists of factors” regarding reasonableness, “the ultimate decision by the judge involves balancing the advantages and disadvantages of the proposed settlement as against the consequences of going to trial or other possible but perhaps unattainable variations on the proffered settlement.”59 Furthermore, it has held that, if the parties negotiated at arm’s length and sufficient discovery was conducted, the district court must presume the settlement is reasonable.

Consumer Class Actions: 15.2.3 Second Circuit

In the Second Circuit, approval is appropriate when the settlement “is the result of serious, informed, and non-collusive negotiations, where there are no grounds to doubt its fairness and no other obvious deficiencies . .

Consumer Class Actions: 15.2.4 Third Circuit

The Third Circuit applies “an initial presumption of fairness in reviewing a class settlement when: ‘(1) the negotiations occurred at arms length; (2) there was sufficient discovery; (3) the proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of the class objected.’”64 Apart from such an initial presumption, the court has considered nine factors: (1) the complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the state of the proceedings a

Consumer Class Actions: 15.2.5 Fourth Circuit

The Fourth Circuit has identified four factors that must be evaluated to determine if a settlement is fair: “(1) the posture of the case at the time settlement was proposed; (2) the extent of discovery that had been conducted; (3) the circumstances surrounding the negotiations; and (4) the experience of counsel in the area of [the] class action litigation.”79 In addition, five factors must be assessed to determine a settlement’s adequacy: (1) the relative strength of the plaintiffs’ case on the merits; (2) the existence of any difficulties

Consumer Class Actions: 15.2.6 Fifth Circuit

Six factors have guided the Fifth Circuit’s review of a decision to approve a class action settlement: (1) evidence that the settlement was obtained by fraud or collusion; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the litigation and available discovery; (4) the probability of plaintiffs prevailing on the merits; (5) the range of possible recovery and certainty of damages; and (6) the opinions of class counsel, class representatives, and absent class members.82

Consumer Class Actions: 15.2.7 Sixth Circuit

The relevant factors for evaluating whether a class settlement is fair, adequate, and reasonable include: “(1) the risk of fraud or collusion; (2) the complexity, expense and likely duration of the litigation; (3) the amount of discovery engaged in by the parties; (4) the likelihood of success on the merits; (5) the opinions of class counsel and class representatives; (6) the reaction of absent class members; and (7) the public interest.”83

Consumer Class Actions: 15.2.8 Seventh Circuit

The Seventh Circuit has considered six factors, the most important of which is the strength of the plaintiff’s claims balanced by the benefit from the settlement.84 But it has also held that it is “generally for the parties to decide how much litigation risk they wish to take, and courts should be hesitant to second-guess them.”85

Consumer Class Actions: 15.2.9 Eighth Circuit

The Eighth Circuit has identified four factors that must be evaluated in determining whether a settlement is fair, reasonable, and adequate: (1) the merits of the case; (2) the defendant’s financial condition; (3) the complexity and expense of further litigation; and (4) the amount of opposition to the settlement.86

Consumer Class Actions: 15.2.10 Ninth Circuit

In the Ninth Circuit, the “factors in a court’s fairness assessment will naturally vary from case to case, but courts generally must weigh: (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members of the proposed settlemen

Consumer Class Actions: 15.2.11 Tenth Circuit

The Tenth Circuit has used four factors to determine if the fair, reasonable and adequate standard is met: “(1) whether the proposed settlement was fairly and honestly negotiated; (2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt; (3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and (4) the judgment of the parties that the settlement is fair and reasonable.”91