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February 29, 2016 Articles

Class Notice Version 2.0: Revising Rule 23 for the Internet Age

Today, the rule's provisions look like relics in obvious need of an upgrade.

By Martin Woodward

Over the past couple of decades, tens of millions of Americans have become used to using new technology for routine communication and business transactions. But the class notice requirements of Rule 23 have not kept pace with these real-world conditions. Today, the rule’s class notice provisions look like relics of the pre-Internet world, in obvious need of an upgrade.

In its draft proposals, the Rule 23 Subcommittee of the Advisory Committee on Civil Rules presents a timely but incomplete solution to the problem created by the antiquated class notice provisions. If adopted, they would explicitly allow notice of class certification to class members by electronic or other means. This is a laudable and necessary proposal, but a revision that would also include such language in the rule’s provisions governing settlement notice, fee notice, and discretionary notice would make the change comprehensive and, therefore, more effective.

The Current Rule and the Proposed Change
Rule 23(c)(2)(B) is the provision requiring notice of class certification to members of (b)(3) classes. As currently worded, it says that “the court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” The Rule 23 Subcommittee recognized that since the Supreme Court’s interpretation of this requirement in Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974), many courts have construed the language to require certification notice by first-class mail in every case, effectively making first-class mail the “gold standard” for notice.

The Rule 23 Subcommittee proposes revising the rule by adding, after “individual notice” and before “to all members,” the following verbiage: “by the most appropriate means, including first class mail, electronic, or other means.” (An alternatively worded but very similar subcommittee suggestion uses the words “by first class mail, electronic mail, or other appropriate means.”)

This proposal is simple and impactful: It enshrines both “electronic” and “other” means as acceptable methods of certification notice within the language of Rule 23—on equal footing with “first class mail.” As the Rule 23 Subcommittee noted, no particular method is preferred.

Thus, if the subcommittee’s proposal is adopted, a court should not hesitate to find—in the appropriate circumstances—that the best individual notice practicable under the circumstances can and should be sent via email, social media accounts, or text or instant messaging (or a combination of some or all of these methods). Think about the cost of sending an email compared with the cost of mailing a letter, multiplied by the thousands (or millions): For a class of any significant size, the cost savings to the litigants will be substantial. Also, perhaps counterintuitively, the likelihood of class members actually reading and reacting to the notice may be higher if it is sent by one or more electronic methods rather than by “snail mail”—for better or worse, many of us now prioritize messages we get in a virtual inbox or on our phones over those waiting for us in our mailboxes at home.

Building the Bridge Farther
The current version of Rule 23 and the subcommittee’s proposed revision both prescribe a particular method only for the mandatory notice of class certification required by Rule 23(c)(2)(B). That leaves the question of the appropriate method for sending the other three types of class notice recognized by Rule 23: settlement notice, fee notice, and discretionary notice.

Here is the status quo: For settlement notices under Rule 23(e)(1), the only explicit requirement is to notify class members “in a reasonable manner” that a case has been settled. Likewise, a fee notice under Rule 23(h)(1) also requires notification “in a reasonable manner” that class counsel have petitioned the court for attorney fees. For the discretionary notice that a court might direct to class members for any other reason, Rule 23(d)(1)(B) commands only that it be “appropriate.”

While the Rule 23 Subcommittee does not propose any changes to the class notice wording in these three subsections of Rule 23, each of these subsections should also be amended to state explicitly that electronic and other methods of notice are permissible for settlement, fee, and discretionary notices respectively. If the Rule 23 Subcommittee’s proposed change to subsection 23(c)(2)(B) is adopted while the other class notice subsections are left alone, we are left with an ambiguity that could lead to unintended consequences. For example, the rule could be read to allow for notice by electronic means for class certification but not for settlement.

Instead, all four subsections Rule 23 that address notice to class members should be amended to explicitly allow such notice to be directed to them “by the most appropriate means, including first class mail, electronic, or other means.” The advisory committee notes should also state that, in appropriate circumstances, a short-form notice transmitted by electronic means can refer recipients to a longer form of the same notice containing more information: a text (or instant message or tweet) containing a hyperlink that leads to a website hosting multiple filings in the case, for example.

Whenever a court looks to Rule 23 for guidance on directing the appropriate method of notice to class members, it should have no doubt that it may choose from the full menu of options supported by today’s technology, regardless of whether it is considering notice of class certification, settlement, an attorney fee application, or any type of discretionary notice. To achieve this goal, all four subsections of Rule 23 that refer to class notice should explicitly refer to electronic technology in describing the method of class notice.

Keywords: litigation, class actions, class certification notice, settlement notice, attorney fee application, discretionary notice

Martin Woodward – February 29, 2016