Undoing Class Action Judgments – An Example of Deficient Notice to the Class

What should a federal district judge do when when only about 1 percent ($41,510 out of $4 million) was claimed from a class action settlement fund? In Kaufman v. American Express Travel Related Services, Inc. 283 F.R.D. 404 (N.D.Ill. 2012), those results caused Judge Gottschall to hold the class notice inadequate, and ordered new notice regarding the settlement arising from gift cards. She also sought to apply advice from an expert on notice.

Why does this decision matter beyond the parties to the case? Because decisions like this are part of a growing body of law that ultimately will be used to undo class action and bankruptcy court judgments that purport to bind many businesses and people. Set out below are key portions of Judge Gotschall’s ruling – hat tip to Jay Judge for flagging the decision in his Federal Courts column in the Chicago Daily Law Bulletin.

"Where notice to a class has been inadequate, it may be appropriate to reject the settlement in its entirety. Girsh v. Jepson. 521 F.2d 153, 158 (3d Cir. 1975). Instead, the court will appoint an expert in class notification, as advised by the Federal Judicial Center’s Class Action Checklist 2010. Federal Judicial Center, Judges Class Action Notice and Claims Process Checklist & Plain Language Guide, 1-2 (2010) (‘In order to find the ‘best practicable’ notice as Rule 23 requires, your own expert report may be advisable. This is especially true in the diminished adversarial posture in which settlement places the parties.’)

"After receiving the expert’s report, the court will then order the settling parties to undertake a second round of notice, the form and content of which will be determined by the expert’s recommendations. The court proposes the appointment of Shannon R. Wheatman, the expert approved by the court in Loef, if she is available. The parties are invited to respond to this suggestion or to propose an alternate expert with similar qualifications."

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About Kirk

Since becoming a lawyer in 1983, Kirk’s over 30 years of practice have focused on advising a wide range of corporations, associations, and individuals (as both plaintiffs and defendants) on both tort and commercial law issues centered around “mass torts.”

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