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New Guidelines Move to Make Class Action Settlement Results Transparent

The Northern District of California United States District Court recently released updated guidelines for class action settlements. These updates, effective immediately, outline new expectations of settlement administrators and class counsel, define appropriate cy pres awardees, make settlement results public information, and provide guidance to notice language. Failure to follow these guidelines could result in unnecessarily delayed or denied approval. 

California’s Northern District is home to many class action suits, and class action procedural guidance commonly begins with guidelines from this Court. The Northern District is the first Court in the country to require this level of transparency.  

Post-Distribution Accounting

Perhaps the most significant change in the guidance is a request to make settlement statistics publicly available on the settlement website within 21 days after funds and fees are distributed. This includes total claim rates, recovery per claimant, attorney’s fees, and injunctive relief.  

Within 21 days after the distribution of the settlement funds and payment of attorneys’ fees, the parties should file a Post-Distribution Accounting, which provides the following information: 

  • The total settlement fund, the total number of class members, the total number of class members to whom notice was sent and not returned as undeliverable, the number and percentage of claim forms submitted, the number and percentage of opt-outs, the number and percentage of objections, the average and median recovery per claimant, the largest and smallest amounts paid to class members, the method(s) of notice and the method(s) of payment to class members, the number and value of checks not cashed, the amounts distributed to each cy pres recipient, the administrative costs, the attorneys’ fees and costs, the attorneys’ fees in terms of percentage of the settlement fund, and the multiplier, if any. 
  • In addition to the above information, where class members are entitled to non-monetary relief, such as discount coupons, debit cards, or similar instruments, the number of class members availing themselves of such relief and the aggregate value redeemed by the class members and/or by any assignees or transferees of the class members’ interests. Where injunctive and/or other non-monetary relief has been obtained, discuss the benefit conferred on the class.” 

Identifying a Settlement Administrator 

In addition to identifying a proposed settlement administrator and their costs during preliminary approval, counsel is required to add the following information: 

  • An accounting of the settlement administration RFP process 
  • Identify how many settlement administrators submitted proposals 
  • Identify what methods of notice and claims payment were proposed 
  • Lead counsel’s history of engagements with the settlement administrator over the last two years. 

Information on Similar Past Settlements from Lead Counsel 

The Court requires disclosure from lead counsel about their past comparable class settlements, including settlements involving the same or similar clients, claims, or issues. 

Alignment with Amendments to Federal Rule 23 

The guidelines contain language designed to match upcoming Rule 23 amendments which go into effect December 1, 2018. The Court makes specific recommendations that class counsel consider notice to class members through social media and other digital sources, hiring of a notice or marketing specialists, and using third-party data sources. 

In addition, the guidelines include new language listing U.S. mail, email, and social media as all appropriate methods to achieve the best notice that is practicable under the circumstances. Rule 23 amendments, which go into effect in December, place electronic means of notice on the same level as first-class mail. 

Cy Pres Awardees 

The Courts added a step to cy pres preliminary approval that requires counsel to not only identify the cy pres awardee, but to also identify any relationship the parties or counsel may have with the proposed recipient. 

If you have questions about the new Northern District guidelines and how they pertain to your class action settlement, our experts can help. Contact Heffler today for a free consultation. 

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Lori Castaneda
Lori Castaneda, who has more than 20 years of experience in the legal industry, serves as Principal of Heffler Claims Group (Heffler). As a highly-skilled strategist with a consultative approach to client service delivery, Ms. Castaneda has been involved in the successful administration of hundreds of high-profile class action settlements


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