5 Things to Watch as a Class Action Attorney

Class action litigation continues to evolve as parties navigate new challenges, including larger class sizes, more complex claims, and new rules and guidance from courts around the country. 

Here are the top five things for class action attorneys to watch right now:

1. Class arbitration must be specifically authorized

In its April 2019 decision in Lamps Plus, Inc., et al. v. Frank Varela, a  divided U.S. Supreme Court ruled that agreements must explicitly authorize arbitration by a class as a prerequisite to class-wide arbitration. If an agreement does not authorize class arbitration, claims can only proceed on an individual basis. Class action attorneys with pending cases that involve arbitration clauses might face new challenges to class certification as a result of this decision. Attorneys also need to pay close attention to arbitration clause language in contracts that are at the foundation of new class action filings.

2. The Northern District of California’s Procedural Guidance imposes new obligations

The United States District Court for the Northern District of California recently added to its comprehensive set of guidelines for class action settlements. Some significant aspects of those requirements include:

• Lead counsel must provide details such as claims rates of past comparable class settlements, anticipated recovery for class members under the settlement, whether there is a reversion of funds to the defendant and why it is appropriate, and prior involvement with the same or similar clients to the court in Motion for Preliminary Approval;
• Expanded information disclosures regarding the proposed settlement administrator, the reasonableness of their fees, and counsel’s methodology for selecting said administrator;
• A dedicated settlement website with information for class members and court documents should be used;
• New timeline of 35 days from filing the motion for attorney fees and costs to deadline for opt-outs and objections;
• New notice media guidelines including mail, email, and social media. Updated guidelines align with the overall notice obligations imposed by amendments to FRCP Rule 23 in December 2018;
• Post-settlement distribution accounting and reporting requirements that must be filed within 21 after distribution of funds and payment of attorney’s fees and posted on the settlement website;
• Greater oversight of proposed cy pres awards and awardees.

3. The California Consumer Privacy Act provides a foundation for new class action cases

The new California Consumer Privacy Act gives consumers the right to tell businesses not to sell or share their personal information. It also gives consumers more control over the information that businesses collect about them and holds businesses accountable for protecting that information. Businesses and consumer rights advocates are following developments under this Act to determine its impact on the class action landscape. Class action attorneys are already following the growing demand for regulatory oversight of online companies that collect and profit from user data. The new California Act may provide a catalyst for further regulation and an opening for new class action filings.

4. Increased judicial scrutiny surrounding Cy Pres distributions

Class action attorneys apply the cy pres doctrine to distribute unclaimed class action settlement funds to charities and institutions with purposes that coincide with the interests of the class. In several recent cases, courts questioned class action settlements where the goals of the cy pres recipient did not fully align with the class interests. The Northern District of California’s new guideline is a specific extension of this trend, and states class action must provide more thorough justifications for cy pres distribution recipients.

5. Digital notice is more widely accepted

The December 2018 amendments to Rule 23 of the U.S. Code of Civil Procedure place digital notice, including email, on par with physical notice sent via U.S. mail if the parameters of the case call for it as best practicable. Given this amendment and the Northern District of California’s expanded notice requirements, class action settlement administration websites are becoming a mandatory feature of all well-crafted class action settlements. Class counsel can improve the effectiveness and efficiency of settlement proposals by bringing administration into the settlement plan prior to drafting the settlement agreement to create a digital plan that satisfies due process.

Please contact us for more information about the new trends in class action settlement administration and how our services can improve the reach and efficiency of the class settlement process.