Class Action Notification With Electronic Media: Emerging Legal - - PowerPoint PPT Presentation

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Class Action Notification With Electronic Media: Emerging Legal Issues

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Strategic Use of E-mail, Google, Social Networks and Other E-Media to Communicate with Class Member

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

Today's panel features: Shannon Wheatman, Vice President, Kinsella Media, Washington, D.C. Mark P. Rapazzini, Senior Vice President, Rust Consulting, San Francisco Matt C Bailey Partner Pollard/Bailey Beverly Hills Calif

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

Matt C. Bailey, Partner, Pollard/Bailey, Beverly Hills, Calif. David Jay, Shareholder, Greenberg Traurig, Florham Park, N.J.

Wednesday, September 8, 2010 The conference begins at: The conference begins at: 1 pm Eastern 12 pm Central 11 am Mountain 10 P ifi 10 am Pacific

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Class Action Notification with Electronic Media Electronic Media

Shannon R. Wheatm an, Ph.D.

Choosing Media Choosing Media

• Demographic and media usage analysis

Demographic and media usage analysis

• Media selected by audience coverage and

composition composition

• Measurement tools – what can be

measured and how well?

• Reach and frequency calculation

Reach and frequency calculation

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Internet Advertising Internet Advertising

• Provides immediate connection to case

Provides immediate connection to case website Use if demographics show class members

• Use if demographics show class members

are average to high Internet users

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Search Engine Optimization Search Engine Optimization

• Purchase keywords to guide users to the website

y g

• Ensures website will appear at the top of a search engine

Lawn Mower Settlements Lawn Mower Settlements Proposed settlements of a class action may affect walk-behind and riding lawn mower owners. http://www.LawnMowerClass.com

7

Mobile Media Mobile Media

• 4.6 billion mobile phones globally

4.6 billion mobile phones globally

• 234 million subscribers in U.S.
• 89 million (38%) have used mobile Internet in

the past year

• Forecast: 134 million mobile Internet

users in 2013 users in 2013

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Measuring Mobile Audiences Measuring Mobile Audiences

• Nielsen Mobile and comScore: M Metrics

Nielsen Mobile and comScore: M Metrics

• Behavioral, psychographic, demographic,

product usage information p g

• Increasingly more sophisticated but still

evolving evolving

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Text Messaging Text Messaging

• 90% of U.S. mobile subscribers have the

ability to text message

• Over 168 million people have sent/received a
• Over 168 million people have sent/received a

text message in the past year I th (2008) U S

• In an average month (2008), U.S.

subscribers are texting 75% more than they are making calls are making calls

• Over 1.5 trillion text messages sent in 2009

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Texting Demonstration Texting Demonstration

Text “Lawnmowers” to 41513 for more information information.

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Social Media Social Media

• Driving expanded and customized access to

Driving expanded and customized access to news and information

• Increasing fragmentation of the media market
• Increasing fragmentation of the media market
• Measurement maturity

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Social Media Social Media

• Started with college students
• Started with college students
• 65% of users are 25+ (87 million)
• Up 69% (2009‐2010)

Facebook

• Social network/micro blogging service
• 84% of users are 25+

Twitter Twitter

• Up 45% (2009 – 2010)

Twitter Twitter

• 126 million blogs on the Internet

126 million blogs on the Internet

• Highly targeted to narrow niches
• Uncontrolled content

Blogs Blogs

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Coverage of Social Network Compared to Consumer Print

• Only Facebook has coverage above 10%

Compared to Consumer Print

Only Facebook has coverage above 10%

• People, National Geographic, Better Homes

& Gardens and Parade each reach or & Gardens, and Parade each reach or exceed 10%

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Traditional Media:

“The reports of my death are greatly exaggerated ” The reports of my death are greatly exaggerated.

• Television – 45% of consumer time

5%

• Average adult reads a newspaper 19/month

58% f d l 45 ill d S d

• 58% of adults 45+ still read a Sunday newspaper
• 24-44 age group – biggest declines, 40% still

S read a Sunday newspaper

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Email Notification and Email Notification and Claimant Websites

MARK P. RAPAZZINI, ESQ.

Email Notification

Email notice is increasingly used in conjunction with traditional first-class mail to provide notice to class members in class action litigation. It has the appeal of being a fast and inexpensive way

• f communicating with the class. However, as

with any form of notice email notice to class with any form of notice, email notice to class members is subject to certain limitations.

Challenges Challenges

• Email lacks the type of resources to enable address

updates, as is possible with traditional mail.

• It is common for people to have multiple email

addresses of different types.

• Unwanted email, or spam, filters often prevent

addressees from receiving important class notices.

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Solutions Solutions

In designing an email program for class members, it is important that the substance of the notice not trigger spam filters or blocks.

• Avoid hyperlinks and certain words, such as “millions” or

“ bli ti ” “no obligation.”

• Use a real email domain in the send field.
• Notify large ISPs and IP providers to determine whether

th d b l d “ hit li t” f d the sender can be placed on a “white list” of approved sellers to avoid blockage by the ISP/IP servers.

• Volume alone can trigger blocking; send email in small

batches over a period of time batches over a period of time.

• Include an “opt out” provision to comply with the “CAN-

SPAM” law.

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Metrics Metrics

Hard bounce: an email that is rejected by the addressee’s

• domain. This is common when a person has moved and

no longer has an address issued by an ISP. If the ISP itself no longer exists, this can also trigger a hard bounce bounce. Soft bounce: an email that cannot be delivered, although the server recognizes that an email address exists The the server recognizes that an email address exists. The email account may be full or the recipient may use a POP3 email server and has not downloaded email messages. g Email notification programs can be designed to notify the sender when the email is opened by the addressee. sender when the email is opened by the addressee.

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Website Use for Class Action Website Use for Class Action Notification and Administration

Websites are increasingly being used as components of class action notice programs and settlement administrations. This growth in use is because, under certain circumstances, websites can be more efficient and cost effective than traditional methods of communication with the traditional methods of communication with the

• class. However, websites are not appropriate for

every case.

Certification Notice Programs Certification Notice Programs

• Static website: a website in which documents can be

viewed and downloaded, but there is no other functionality

• Used in conjunction with mailed full notice or postcard

notice – When used in combination with a postcard notice, postage and print savings can offset the fixed setup cost of creating a static website

• Usually does not include telephone support

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Settlement Administration Settlement Administration

• Dynamic website: a website with increased

functionality in which class members can file their claims online – Reduced cost of processing and validating claims – Customized claim form content and functionality – Fixed set-up costs

• “Break-even point”: a point where the

Break-even point : a point where the volume of claims filed have created a sufficient return on investment that the net savings from automated processing is equal to the net cost p g q

• f creating the technological solution

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Settlement Administration (cont ) Settlement Administration (cont.)

• Advantages to online claims filing

– Accuracy – Increased filing rates (when only the completion of a simple online claim form is required) p q ) – Cost savings can be substantial once the “break- even point” has been surpassed

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Website Security Website Security

There are several security features common to online claims filing:

• CAPTCHA: A random series of letters or numbers

that claimants must retype in order to differentiate a human from a computer. This prevents the mass submission of claims by a program or a “bot”.

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Website Security (cont ) Website Security (cont.)

• 8-digit sequence unique to each notice

– Required to access or submit a claim form on the website – Creates a direct link to the class database, which , improves the administrator’s efficiency in processing and validating claims.

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Portals Portals

• Offer a web-based view into the case administration

process

• External users can securely access case data without

installing additional software

• Stakeholders and participants can directly interact

with the data in an active or passive role

• Allow for different views of data to be provided based

p

• n the role of the person viewing the data

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Class Action Notification Using Class Action Notification Using Electronic Media Electronic Media:

The Plaintiff’s Perspective The Plaintiff’s Perspective

Matt C. Bailey, Esq. Matt C. Bailey, Esq.

9 7 0 1 W i l s h i r e B l v d . , 1 0 t h F l o o r | B e v e r l y H i l l s , C A 9 0 2 1 2 9 7 0 1 W i l s h i r e B l v d . , 1 0 t h F l o o r | B e v e r l y H i l l s , C A 9 0 2 1 2

w w w . p o l l a r d b a i l e y . c o m | w w w . b a i l e y d a i l y . c o m w w w . p o l l a r d b a i l e y . c o m | w w w . b a i l e y d a i l y . c o m

Introduction/Overview Introduction/Overview

Why Is E‐Notification An Important Issue?

• Transition to Paperless Economy: Increasingly important as business

changes. g

• Increased Use of Notice: In some cases, notice may occur three times before

the case is resolved:

– Pre‐certification: In jurisdictions like California, plaintiff may obtain the contact information of absent class members, prior to certification, subsequent to notice d i “ ” S i l i (USA) I S i and opportunity to “opt‐out.” See e.g. Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal. 4th 360 (2007). – Certification:

• Rule 23/State Law Class Actions: Subsequent to certification of a class action, notice

and an opportunity to opt‐out is generally required before the Court may act pp y p g y q y substantively on class member claims. Notice is mandatory under FRCP 23(b)(3).

• Collective Actions: Under provisions of the FLSA (29 U.S.C. § 216(b)), a plaintiff may

move the court to provide notice to similarly situated employees so as to allow them to opt‐in to the action.

– Settlement: Before granting final approval of a settlement, notice must be provided to the class to allow them the opportunity to object or to opt‐out.

• Effective/Efficient Representation: the success of a case can turn on

effective use of electronic notice.

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Introduction/Overview Introduction/Overview

What are the Key Issues that Must be Considered With E‐Notification?

• Legal Sufficiency of Notice Program: Does My E‐Notification Plan

Satisfy Due Process? y

• Practical Sufficiency of Notice Program: Does My E‐notification Plan

Address My Objectives And Obligations As Class Counsel?

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(Part 1) Legal Sufficiency & Due Process (Part 1) Legal Sufficiency & Due Process:

Applicable Legal Standard: Sufficient notice for due process is NOT necessarily actual notice, but rather, the “best notice that is practicable under the circumstances.” See FRCP, Rule 23(c)(2)(B).

• Standard Is Inherently Fuzzy, Leaving A Lot Of Play For The Defendant And Plaintiff

To Argue For Varying Strengths Of Notice: See e.g. California Rules of Court, Rule 3.766(e) (“In determining the manner of the notice, the court must consider: (1) The interests of the class; (2) The type of relief requested; (3) The stake of the The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.”).

• Core Consideration is Sufficiency of Medium, Relative to Cost / Amount at Stake:

See e.g. California Rules of Court, Rule 3.766(f) (“If personal notification is unreasonably expensive or the stake of individual class members is insubstantial,

• r if it appears that all members of the class cannot be notified personally, the

pp p y, court may order a means of notice reasonably calculated to apprise the class members of the pendency of the action‐for example, publication in a newspaper

• r magazine; broadcasting on television, radio, or the Internet; or posting or

distribution through a trade or professional association, union, or public interest ”) group.”).

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Sufficiency Concerns With E Sufficiency Concerns With E‐Notification Notification:

• Issue #1 – Controllability/Distortion of Notice: As one Court reasoned, “electronic

communication inherently has the potential to be copied and forwarded to other people via the internet with commentary that could distort the notice approved by the Court.” See Reab v. Elec. Arts, Inc., 214 F.R.D. 623, 630‐631 (D. Colo. 2002); Hintergerger v Catholic Health Sys 2009 U S Dist LEXIS 97944 40 42 (WD N Y Oct Hintergerger v. Catholic Health Sys., 2009 U.S. Dist. LEXIS 97944, 40‐42 (W.D.N.Y. Oct. 20, 2009).

• Issue #2 – Apathy/Fraud: Online notice communications may be ignored due to the

sheer volume of information people are subjected to online, or viewed as fraudulent. p p j , See e.g. Karvaly v. eBay, Inc., 245 F.R.D. 71, 91‐92 (E.D.N.Y. 2007) (“[N]otice by electronic mail is particularly inappropriate in this case because, as acknowledged by

• Mr. Rhodes, eBay and PayPal are popular targets of unscrupulous email spoofing

schemes; as such, it is likely that many prospective Eligible Class Members would delete or ignore an electronic communication from PayPal that purports to address a delete or ignore an electronic communication from PayPal that purports to address a class action settlement in which the recipient may be entitled to a monetary award.”).

• Issue #3 – Too Passive in Nature: A notice website is equivalent to a tree falling in the
• woods. See e.g. Larson v. Sprint Nextel Corp., 2009 U.S. Dist. LEXIS 39298, 36 n. 15

( ) (“ h b h l b d d f h (D.N.J. Apr. 29, 2009) (“The website, while important, cannot be considered part of the notice publication plan given that it does not actively place itself in view of class

• members. Rather, class members had to know the website address or be provided the

website link to access it. Because of its static nature, it is not considered a piece of the publication notice campaign.”). p p g )

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Are Due Process Concerns Principled? Are Due Process Concerns Principled?:

• Issue #1 – Controllability/Distortion of Notice Always a Potential Issue: Distortion of

a notice can occur when notice sent via first class mail. See Krzesniak v. Cendant Corp., 2007 U.S. Dist. LEXIS 95145, 6 (N.D. Cal. Dec. 17, 2007) (reasoning that “although the court in Reab noted that messages in electronic format could be easily be forwarded to nonclass members and posted to internet sites [], the same can be said of messages sent by first class mail, which can easily be scanned and posted to websites.”).

• Issue #2 – Apathy/Fraud Always a Potential Issue: class member apathy is a

p y/ y p y phenomenon that may occur with any established mode of communication, even first class mail. See e.g. Larson v. Sprint Nextel Corp., 2009 U.S. Dist. LEXIS 39298, 32‐33 (D.N.J. Apr. 29, 2009) (reasoning that a response rate of .4 percent of current customers “is suggestive evidence that the Bill Insert did not provide ‘notice’ to those 14.8 million customers.”)

• Issue #3 – Passivity Also an Issue with Newspaper Publication: This criticism is not

unique to websites, but may equally be applied to the adequacy of publication through

• newspaper. See e.g. Reg'l Transit Auth. v. Miller, 156 Wn.2d 403, 415 (2006)

(concluding that an “argument that posting on a web site does not necessarily ‘furnish’ notice to anyone is unfounded” because “[j]ust as it is impossible to assure that anyone will look at a particular web site, it is equally impossible to assure that anyone ill h h l d ”) will purchase, much less read, a newspaper.”).

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The Case for E The Case for E‐Notification Being Superior Notification Being Superior:

Argument #1 – Its Cost Effective:

• Email Cheaper than U.S. Mail: Cost of email notice may be as little as $0.02 per

unit, compared to first class mail, which costs approximately $0.28 per unit for postcards, and $0.44 per unit for letter.

• Dedicated Websites Cheaper than Newspaper Publication: Use of dedicated

website is recognized as cost effective as a standalone notice device [Stoffels v. SBC Communs Inc 254 F R D 294 299 (W D Tex 2008) (citing Manual for SBC Communs., Inc., 254 F.R.D. 294, 299 (W.D. Tex. 2008) (citing Manual for Complex Litigation § 21.311)], which in most cases is cheaper than publication by newspaper.

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The Case for E The Case for E‐Notification Being Superior Notification Being Superior:

Argument #2 – Superior Control/Accountability:

• Ability to Track Actual Notice : Technology provides Court a means to evaluate “actual”

notice in real time:

– Email: SEC v. Global Online Direct, Inc., 2007 U.S. Dist. LEXIS 88819, 4‐5 (N.D. Ga. Nov. 29, 2007) (“The Receiver estimates over 93% of its first email notices to investors were delivered. Over 51 %

• f these emails have been verified as opened, and the Receiver estimates that the actual number of

investors who opened the email is significantly higher.”); Fulford v. Logitech, Inc., 2010 U.S. Dist. LEXIS 29042, 3‐4 (N.D. Cal. Mar. 5, 2010) (“The Court‐approved Notice was emailed directly to LEXIS 29042, 3 4 (N.D. Cal. Mar. 5, 2010) ( The Court approved Notice was emailed directly to approximately 96,403 Class members whose email addresses were available through Logitech's product registration information, and 81,422 (84.5%) of these emails were delivered successfully.”) – Website: In re Lupron(R) Mktg. & Sales Practices Litig., 228 F.R.D. 75, 85 (D. Mass. 2005) (noting that “as of April 15, 2005, 187 ‘hits’ had been recorded at the [settlement] website.”); Dewey v. Volkswagen of Am., 2010 U.S. Dist. LEXIS 79304 (D.N.J. July 30, 2010) (“The settlement administrator, Rust Consulting, established the court‐ordered website which, as of July 22, 2010, had 19,891 unique visitors.”)

• Transform Publication Notice Into An “Active” Notice: Unlike a newspaper, traffic flow may

b di t d t d di t d b it i t t d b d ti t d b i t i be directed to a dedicated website using targeted banner advertisements and by registering “keyword” search terms with established search engines, such as Google and Yahoo! See e.g. Fresco v. Auto Data Direct, Inc., 2007 U.S. Dist. LEXIS 37863 (S.D. Fla. May 11, 2007) (dedicated website approved as the primary component in a “publication only” notice plan h b d ti t d k d h t h d) where banner advertisements and keyword search terms were purchased). www.pollardbailey.com www.pollardbailey.com

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The Case for E The Case for E‐Notification Being Superior Notification Being Superior:

Argument #3 – Ability to Cure Defects Through Targeted Follow‐up Notice:

• The ability to track actual notification using e‐notification methods allows for

targeted, follow‐up notices to be sent to class members at very little cost. See e.g. SEC v. Global Online Direct, Inc., 2007 U.S. Dist. LEXIS 88819, at 5‐6 (“The Receiver anticipates sending prompting follow‐up emails to investors who fail to open a

• notice. The follow‐up emails will be designed similarly to the initial notice

emails ”)

• emails. ).

[This is an important feature for plaintiff counsel to consider when claims rates are important to settlement approval]. www.pollardbailey.com www.pollardbailey.com

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The Case for E The Case for E‐Notification Being Superior Notification Being Superior:

Argument #4 – Perfection is Not the Standard for Due Process:

• Deleted Emails Does Not Invalidate Notice Program: “The Court acknowledges evidence indicating

that some number of class members may have deleted the email notice out of concern that it was an identity theft scam However no objector has presented evidence of how widespread this an identity theft scam. However, no objector has presented evidence of how widespread this concern was throughout the class. There are tradeoffs involved in any form of notice, especially with a settlement class of this size. For approval, the notice need not have been perfect. Rather, it needed to be the ‘best notice practicable under the circumstances’ and directed ‘in a reasonable manner to all members who would be bound.’ Fed. R. Civ. P. 23(c)(2)(B); Fed. R. Civ. P. 23(e)(1)(B). a e to a e be s

• u d be bou d.
• ed. . C . . 3(c)( )( ); ed. . C . . 3(e)( )( ).

The email notice program adopted in this case met these requirements.” See Browning v. Yahoo! Inc., 2007 U.S. Dist. LEXIS 86266, 21‐22 (N.D. Cal. Nov. 16, 2007)

• Emails Lost In Spam Does Not Invalidate Notice Program: “One individual objector submitted an

Emails Lost In Spam Does Not Invalidate Notice Program: One individual objector submitted an

• bjection complaining that the email notice he was given was intercepted by his email program's

‘spam filter.’ The objector asserted that this occurred despite the fact that he has received other email from Facebook that was not filtered. Although it is not entirely clear how or why this may have occurred, the Court is satisfied that the possibility that some Class members have activated settings on their email accounts that might filter the email notices does not undermine the overall adequacy of the notice given. Indeed, even the objector appears to have received actual notice via email, albeit only because he checked the contents of his spam filter, which not all Class members may have done.” See Lane v. Facebook, Inc., 2010 U.S. Dist. LEXIS 24762, 7‐9 (N.D. Cal. Mar. 17, ) 2010)

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Text Messaging Text Messaging – The Future Of Electronic Notice? The Future Of Electronic Notice?

Is It Lawful?: the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227).

• The TCPA Requires Prior Express Consent: The statute makes it unlawful for any person or entity to “make any call (other

than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to … a cellular telephone device ” (47 U S C § 227(b)(1)(A)(iii) ) telephone device. (47 U.S.C. § 227(b)(1)(A)(iii).)

• The TCPA Applies to Text Messaging: The term call under the TCPA has been interpreted to include text messages

(Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009)).

• What’s the Big Deal?: Unless the sending entity has “prior express consent” from intended text‐message recipients, it risks

statutory fines of $500 per violation, as well as treble damages.

Is there a Way Around it?

• Analogy to FCC Declaratory Ruling: A January 4, 2008, FCC declaratory ruling concluded that prior express consent existed

for debt‐collection purposes “if (1) the wireless number was provided by the consumer to the creditor, and (2) that such number was provided during the transaction that resulted in the debt owed.” (See 2008 F.C.C. LEXIS 56, at **16–17.)

• Only Defendant and Privities Covered by Exemption: While the FCC has concluded that “[c]alls placed by a third party

Only Defendant and Privities Covered by Exemption: While the FCC has concluded that [c]alls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call” [2008 F.C.C. LEXIS 56 at 17], it is clear the exemption will not apply unless third party has some form of privity with the entity that secured prior express consent. See Satterfield, 569 F.3d at 955. Thus, Defendant or its privity would have to affect text notice.

• Ongoing Text Communication With Current Customers: While uncertainty of prior express consent may lead some

defendants to oppose text notification, if Defendant currently sends text messages to existing customer base, then they pp , y g g , y cannot complain about being ordered to provide text notice (unless the class issue itself involves a TCPA claim.

Has it Ever Been Done? Only one opinion found, but TCPA was not considered:

• In re AT&T Mobility Wireless Data Servs. Sales Litig., 2010 U.S. Dist. LEXIS 81527, 50‐51 (N.D. Ill. Aug. 11, 2010) (“The notice

plan provides that all class members who are current AT&T customers will receive a notice through (1) a message sent with h hl bill d ( ) di i h f h i f i ”) the monthly bill and (2) a text message directing them to further information.”).

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(Part 2) (Part 2) Practical Sufficiency of Notice Program

Practical Sufficiency of Notice Program:

Cost vs. Penetration: Plaintiff has inherent interests, which vary depending

• n the stage of the litigation, that will generally motivate the strength of a

notice program advocated:

• Precertification (Cost, Not Penetration ): Plaintiff may be required to bear cost of
• notice. However, enhanced notice plan is not in plaintiff’s interest, as it can only

maximize opt‐out’s and minimize plaintiff’s access to class pre‐certification.

• Certification:

– Rule 23/State Law Class Actions (Cost, Not Penetration): Cost of notice generally born by plaintiff at this stage. However, enhanced notice plan can only maximize opt‐out’s, reducing size of class. Collective Actions (Penetration Not Cost): As individuals do not become part of the – Collective Actions (Penetration, Not Cost): As individuals do not become part of the action unless and until they receive notice and affirmatively opt‐in, Plaintiff’s interest is to have strongest notice plan possible.

• Settlement: Strength of notice plan depends of type of settlement:

– Claims‐Made / Common fund w/ reversion (Penetration, Not Cost): Plaintiff has a strong interest in robust notice plan to (1) maximize settlement participation (i.e. fiduciary duty to class), and (2) justify attorneys fee award. – Common Fund (Balanced Cost & Penetration): Strength of notice plan to be balanced with cost where notice costs are to come out of class fund Notice plan should not with cost where notice costs are to come out of class fund. Notice plan should not exceed point of diminishing returns. www.pollardbailey.com www.pollardbailey.com

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

General Rule – First Class Mail Still the Gold Standard:

“Here, the best practicable notice is first class mail. The Court sees no reason why such notice is inadequate, and as such, the Court will not require Defendants to provide ti i il d bli ti i D f d t ' l l tt notice via email and publication in Defendants' employee newsletter, as was requested.” See Stickle v. SCI Western Mkt. Support Ctr., L.P., 2009 U.S. Dist. LEXIS 97735, 23 (D. Ariz. Sept. 30, 2009).

Points to Consider: First class mail will generally be viewed as the best notice practicable when:

– Value of individual claims are significant; and/or – Defendant has access to class member contact information.

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

Exception – Internet Related Claims:

• Electronic Means Used to Communicate with Class: “[E]‐mailed individual

notices were the best notice practicable under the circumstances, which included the fact that eWork Markets, Inc. communicated with the Class primarily through e‐mail.” See Ramirez v. eWork, Inc., 2008 U.S. Dist. LEXIS 69700, 5 (D. Colo. Sept. 15, 2008)

• Claims Derived By Way Of Internet/Email Communications: “Email notice was

particularly suitable in this case, where settlement class members' claims arise from their visits to Defendants' Internet websites.” See Browning v. Yahoo! Inc 2007 U S Dist LEXIS 86266 (N D Cal Nov 16 2007) Yahoo! Inc., 2007 U.S. Dist. LEXIS 86266 (N.D. Cal. Nov. 16, 2007)

• Tech Savvy Class: See e.g. Lewis v. Wells Fargo & Co., 669 F. Supp. 2d 1124,

1128‐1129 (N.D. Cal. 2009) (“The potential class members, technical support workers are likely to be particularly comfortable communicating by email and workers, are likely to be particularly comfortable communicating by email and thus this form of communication is just as, if not more, likely to effectuate notice than first class mail.”)

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

Hybrid Application – Using Dedicated Website To Reduce the Cost of Direct Mailing: Courts have approved use of a dedicated website to permit the use

• f a “summary” post‐card notice to cut down on mailing and paper costs.

– Chavez v. Netflix, Inc., 162 Cal. App. 4th 43, 58 (2008) (“Using a summary notice that directed the class member wanting more information to a Web site containing a more detailed notice, and provided hyperlinks to that Web site, was a perfectly acceptable manner of giving notice in this case.”). g g ) – Cellphone Termination Fee Cases, 186 Cal. App. 4th 1380, 1392 (2010) (“We agree with the observation in Chavez that ‘[u]sing the capability of the Internet in [this] fashion was a sensible and efficient way of providing notice, especially compared to the alternative [objector] apparently preferred—mailing out a lengthy legalistic document alternative [objector] apparently preferred mailing out a lengthy legalistic document that few class members would have been able to plow through.’”). www.pollardbailey.com www.pollardbailey.com

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

Hybrid Application – Using Dedicated Website To Deliver Large Amounts of Information: Dedicated Website enhances due process being met in any case, especially cases where adequate notice involves large amounts of information:

– Milliron v. T‐Mobile USA, Inc., 2009 U.S. Dist. LEXIS 101201, 12 n.3 (D.N.J. Sept. 10, 2009) (“Objector Daniel Phee argues that the Notice was inadequate because it failed to include the Plan of Allocation [] This Court disagrees As the Plan of Allocation was to include the Plan of Allocation. [] This Court disagrees. As … the Plan of Allocation was referenced in the Settlement Agreement and made easily accessible to anyone interested in viewing it on the Settlement Website.”). – In re M3 Power Razor Sys. Mktg. & Sales Practice Litig., 2010 U.S. Dist. LEXIS 79626, 57‐ 58 (D Mass Aug 6 2010) (“I do impose one additional requirement upon the 58 (D. Mass. Aug. 6, 2010) (“I do impose one additional requirement upon the Representative Plaintiffs as they proceed with the notice of the class action. In the notice to class members on the website created for this proposed settlement, the ‘Joint Submission by the Proponents of the Proposed Settlement Comparing the Relevant Laws of Applicable Jurisdiction for Settlement Class Certification’ must be posted Laws of Applicable Jurisdiction for Settlement Class Certification must be posted together with a copy of this Memorandum and Order alerting class members to the issues presented by the varying state law causes of action and remedies available to the class members. In this way, class members who may wish to learn more about those alternatives and consider their implications will have a foundation for doing so ”) alternatives and consider their implications will have a foundation for doing so. ). www.pollardbailey.com www.pollardbailey.com

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

Hybrid Application – Fill in Gaps of Primary Notice Method:

– Email Used When Residential Address List Incomplete: See e.g. Create‐A‐Card,

• Inc. v. INTUIT, Inc., 2009 U.S. Dist. LEXIS 93989, 5‐6 (N.D. Cal. Sept. 22, 2009)

(“Court‐approved notice was mailed directly to more than 40,000 potential Class members whose addresses were available through Intuit's records. The notice was also emailed to more than 30,000 potential Class members whose email addresses were known ”) email addresses were known. ) – First Class Mail Used When Email Address List Incomplete: See e.g. Fulford v. Logitech, Inc., 2010 U.S. Dist. LEXIS 29042, 3‐4 (N.D. Cal. Mar. 5, 2010) (“The Notice was also direct mailed to 340 Class members whose email addresses were unknown or out of date. Thus, a total of approximately 82,091 (85%) Class members were notified of the proposed Settlement by email or mail.”)

www.pollardbailey.com www.pollardbailey.com

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When Do I Advocate E When Do I Advocate E‐Notification? Notification?

Hybrid Application – Provide Notice to Where Class Members Are Differently Situated:

The proposed notices satisfy Rule 23's requirements. First, the methods for delivering the notices are sufficient. [] The notice plan provides that all class members who are current AT&T customers will receive a notice through (1) a message sent with the monthly bill and (2) a text message directing them to further information. [] The notice plan also provides that all class members who are former customers will receive notice via a message sent to the email address that the customers had provided to AT&T or — if a customer did not provide an email address or her email address is no longer valid — via United States Mail. (Id.) Finally, AT&T has agreed to publish a notice two times in the USA Today newspaper. (Id.) See In re AT&T Mobility Wireless Data Servs. Sales Litig., 2010 U.S. Dist. LEXIS 81527, 50‐51 (N.D. Ill. Aug. 11, 2010) www.pollardbailey.com www.pollardbailey.com

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ALBANY AMSTERDAM ATLANTA BOCA RATON BOSTON CHICAGO

Don’t Forget the Notice

Managing Notice Costs In Class Action Suits

DALLAS DELAWARE DENVER FORT LAUDERDALE HOUSTON

Managing Notice Costs In Class Action Suits

September 8, 2010

LAS VEGAS LOS ANGELES MIAMI NEW JERSEY

GREENBERG TRAURIG, LLP

NEW YORK ORANGE COUNTY ORLANDO PHILADELPHIA

Presentation by: David Jay jayd@gtlaw.com

PHOENIX SILICON VALLEY TALLAHASSEE TAMPA TOKYO

Materials by: David Jay and Jason H. Kislin kislinj@gtlaw.com

TYSONS CORNER WASHINGTON, D.C. WEST PALM BEACH ZURICH

Notice Requirements of the Federal Rules

Greenberg Traurig

• Fed. R. Civ. P. 23(c)(2)A - Applies to actions certified under

23(b)(1) or (b)(2) primaril inj ncti e relief classes

q

23(b)(1) or (b)(2); primarily injunctive relief classes. – Court may “direct appropriate notice to the class.” y pp p – Does not necessarily require direct notice to all class members – Court has broader discretion in determining “appropriate notice”

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Notice Requirements of the Federal Rules cont…

Greenberg Traurig

q

• Fed. R. Civ. P. 23(c)(2)(b) - Applies to actions certified under

(23)(b)(3); primarily monetary damage classes.

– Requires court to “direct to the class members the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Specific direct notice requirement; courts have less discretion in – Specific direct notice requirement; courts have less discretion in determining “best notice practicable under the circumstances” – Seven things that must be included in the notice:

N t f th ti

• Nature of the action
• Definition of the class
• Claims, issues and defenses
• The right of class members to appear through an attorney
• The right of class members to appear through an attorney
• The right to be excluded upon request
• The time and manner to request exclusion
• The binding effect of a class judgment on class members

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g j g

Notice Requirements of the Federal Rules cont

Greenberg Traurig

Notice Requirements of the Federal Rules cont…

• Fed. R. Civ. P. 23(e)(1) - Applies to certification of

settlement classes settlement classes – Requires court to direct “notice in a reasonable manner to all class members who would be bound by the proposal” – Must be read together with notice requirements in Rule 23(c)(2)(A) or (B)

• See Grunewald v. Kasperbauer, 235 F.R.D. 599, 609 (E.D. Pa.

2006); In re Prudential Ins. Co. American Sales Practice Lit., 148 F. 3d 283, 327-38 (3d. Cir. 1998); Wright v. Linkus Enterprises Inc 259 F R D 468 474-75 (E D Cal 2009) Enterprises, Inc., 259 F.R.D. 468, 474 75 (E.D. Cal. 2009)

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Eisen and Direct Notice

Greenberg Traurig

• Eisen v. Carlisle and Jacquelin, 417 U.S. 156 (1974)

– Seminal case regarding notice to a class certified under Seminal case regarding notice to a class certified under 23(b)(3) – Interpreted 23(c)(2)(B) and constitutional due process to i i di id l di t il ti f h l b require individual direct mail notice for each class member “whose names and addresses may be ascertained through reasonable effort.” – Held “individual notice…is not a discretionary consideration to be waived in a particular case.” E t bli h d Fi t Cl M il ti f f di t – Established First Class Mail as presumptive form of direct notice

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Greenberg Traurig

Ei d Di t N ti

• Eisen and notice to a Settlement Class

Eisen and Direct Notice cont..

– Molski v. Gleich, 318 F. 3d 937 (9th Cir. 2003) - reversed an

• rder granting approval of a class settlement where settlement

class members could be identified through a reasonable search g but notice was only provided through publication. – Parker v. Time Warner Entertainment Co. L.P., 239 F.R.D. 318, 334 (S.D.N.Y. 2007) (certified class action settlement not ( ) ( complying with 23(b)(3) notice requirements cannot have a res judicata affect on subsequent damages claims) – Johnson v. General Motors Corp., 598 F.2d 432 (5th Cir.1979) p , ( ) (same)

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Eisen Meets the 21st Century

Greenberg Traurig

y

• Direct notice still required but Courts are considering

alternatives to first-class mail alternatives to first class mail

• Primary alternative is e-mail
• E-mail generally approved as part of a more

g y pp p comprehensive notice plan also including direct mail

• See 1 McLaughlin on Class Actions § 5:78 at n. 9 (6th

Ed ) (citing 10 cases from 2001 through 2005 Ed.) (citing 10 cases from 2001 through 2005 approving internet or e-mail notice as part of more comprehensive notice plan)

• Encouraging signs from Federal Courts regarding

approval of e-mail notice

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E-mail Notice Approved

Greenberg Traurig

pp

• Browning v. Yahoo! Inc., 2006 WL 3826714 (N.D. Cal. Dec. 27, 2006)

– Approved e-mail notice as initial form of direct notice for those class members for whom defendant had e-mail address – Required direct mail notice where defendant had no e-mail address or where e-mail notice was returned as undeliverable – Court noted that the case was particularly suited for e-mail notification because Yahoo! users were “familiar and comfortable with e mail and the because, Yahoo! users were familiar and comfortable with e-mail and the Internet.”

• In re Sony SXRD Rear Projection Television Class Action Litigation,

2008 WL 1956267 (S.D. N.Y., May 1, 2008) (same)

• Todd v. Retail Concepts, Inc., 2008 WL 3981593 (M.D. Tenn. Aug. 22,

2008)

– Approved e-mail notice to class members for whom defendant had an e-mail dd l di t ti address as only direct notice – No analysis on notice plan, but Court noted that a change in relevant law during the pendency of the action would likely leave plaintiffs without claims but for the defendant’s willingness to comply with the settlement agreement.

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E-mail Notice Questioned but not Foreclosed

Greenberg Traurig

• Karvaly v. Ebay, Inc., 245 F.R.D. 71 (E.D. N.Y. 2007)

– Commented on dearth of case law – Noted flaws in e-mail notice: possibility of class members simply p y p y deleting e-mails; or spam filters rejecting e-mails because of the common practice of e-mail spoofing – Directed parties to reformulate notice plan, suggesting that e-mail might be effective if it required affirmative step to acknowledge i t d i f l fi t l il ti receipt and waive formal, first-class mail notice

• Larson v. Sprint Nextel Corp., 2009 WL 1228443 (D.N.J. April 30,

2009)

– Upheld objection to notice plan that failed to provide individual notice p j p p to readily identifiable class members – Invited parties to explore alternative means of contacting individual class members, including e-mail or text-messaging:

• “This case presents the interplay between a large class, stringent

p p y g g individual notice requirements, and different forms of available technology.”

• The parties “are free to devise a notice plan that meets Rule 23(c)(2)

standards while at the same time utilizing the cost and efficiency savings that come from features such as electronic mail or text messaging.”

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that come from features such as electronic mail or text messaging.

Avoiding Potentially Costly Notice

Greenberg Traurig

g y y

• Structure a settlement to include primarily injunctive relief and

seek certification under Rule 23(b)(1) or (b)(2)

• Consider state courts where lack of stringent constitutional

due process requirements may make notice less onerous

– New Jersey R. 4:32-2(b)(2); “the court shall direct to the members of the class y ( )( ) the best notice practicable under the circumstances, consistent with the due process of law.” –

• Pa. R. Civ. P. 1712; “[i]n determining the type and content of notice to be used

and the members to be notified the court shall consider the extent and nature of and the members to be notified, the court shall consider the extent and nature of the class, the relief requested, the cost of notifying the members and the possible prejudice to be suffered by members of the class or by other parties if notice is not received.” N Y k’ CPLR 908 i i “ bl i i h h – New York’s CPLR 908; requiring “reasonable notice…in such manner as the court directs” and allowing court to consider costs involved, resources of the parties and likelihood that class members would seek to be excluded from class when determining appropriate notice.

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Developing an Effective Notice Plan

Greenberg Traurig

p g

• Plan Ahead: Study the available options, inquire about pricing in

advance of settlement discussions, and understand the defendant company’s capabilities and options. Planning ahead allows you to direct the negotiation and avoid surprises regarding costs after-the-fact. g p g g

• Raise Notice Early: Parties may show more flexibility with respect to

notice terms before all other aspects of the settlement are resolved.

• Acknowledge Common Ground: Plaintiffs and defendants have a

g common goal: structure a notice program that effectively gets word out to the class and therefore passes muster with the court; and keep notice costs in check, leaving more funds available for the class settlement.

• E-mail!!!: E-mail is coming of age in the courts. Most people are tied to

E mail!!!: E mail is coming of age in the courts. Most people are tied to their email even more so than their mailboxes. E-mail is a fraction of the cost of first-class mail, particularly if the defendant can send the communications itself.

• Be creative: Consider a wide variety of options First-class mail and
• Be creative: Consider a wide variety of options. First-class mail and

publication are always good, but e-mail, website postings, dedicated websites, Internet banners, store signs, and bulk or post-card mailings may suffice. Consider trade publications that effectively reach your putative class. Also consider incorporating notice into ordinary course

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g y mailings, such as monthly bills or advertisements.