Hunton Employment & Labor Perspectives

The U.S. District Court for the Northern District of California is a popular venue for class action lawsuits.  As of November 1, 2018, it is also the first to require parties settling such lawsuits to make broad public disclosures regarding the settlements.

Under new procedural guidance set forth by the court, parties submitting class action settlements for preliminary and final approval in the Northern District of California must disclose, among other details, the total settlement fund, claims rates, objections, recovery per claimant, attorneys’ fees, and injunctive relief within 21 days after the settlement funds and attorneys’ fees are distributed.  The same information must be posted to a claims settlement website maintained by the claims administrator or class counsel.

This “Post-Distribution Accounting” requirement is intended to provide increased transparency in the class action arena and to allow settling parties -- and courts -- to have an improved measuring stick for negotiating and approving settlements.

Under the new rules, courts in the Northern District of California are allowed to hold a hearing after the parties submit their Post-Distribution Accounting to ensure compliance with the rules.  In addition, the courts will require class counsel to provide information on at least one of their past settlements, if any, involving the same clients, claims, or issues.  Specifically, class counsel “should provide,” among other information, the total settlement fund, the total number of class members, the total number of class members to whom notice was sent, the method(s) of notice, the number and percentage of claim forms submitted, the average recovery per class member or claimant, the amounts distributed to each cy pres recipient, the administrative costs, and the attorneys’ fees and costs.

Where class members are entitled to non-monetary relief, such as discount coupons, debit cards, or similar instruments, counsel must provide the number of class members availing themselves of such relief and the aggregate value redeemed by the class members.  Where injunctive or other non-monetary relief has been obtained, class counsel is directed to “discuss the benefit conferred on the class” in its filing.

Other provisions align court rules with changes to Federal Rule of Civil Procedure 23 that are set to go into effect in December, which were the subject of a previous post last July.  Those changes include, among others, new criteria that courts must consider in determining whether a settlement proposal is “fair, reasonable, and adequate” under Rule 23(e)(2) and using email notice as an alternative to regular mail.