In class action settlements, both defense and plaintiff attorneys try to anticipate any circumstances that could jeopardize final approval, especially after lengthy litigation and protracted negotiations. The effectiveness of class action notice programs is becoming a focus of many courts as well as objectors. In particular, recent court rulings are questioning the adequacy of notice programs as well as the size of attorneys’ fees in comparison to the amount being distributed to class members.
v.
American Express Travel Related Services Co.,
Over the past decade, the number of class action administrators has proliferated with many holding themselves out as “notice” experts without the requisite qualifications or experience to ensure that due process standards are met.
Here are some of the common notice pitfalls that class action attorneys should avoid if they want to benefit from the age-old lesson of “buyer beware.”
Pitfall 1
Relying on Administrator Rather Than Expert
To Prove Program Adequate, Satisfies Rule 23
A notice expert provides testimony regarding the adequacy of notice programs, which is subject to the holdings of the U.S. Supreme Court’s decisions in Daubert v. Merrell Dow Pharmaceuticals and Kumho Tire Co. v. Carmichael.
In assessing an expert’s reliability, a court must determine whether the testifying expert “employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.”
The role of claims administrators in testifying by affidavit or in court is to demonstrate that they have executed settlement-required responsibilities with respect to mailed notice and claims processing.
But describing the factual elements of a notice program is different from providing an opinion regarding the adequacy of notice and its compliance with Rule 23 or analogous state statutes. In designing notice programs or providing an opinion as to the “best notice practicable under the circumstances,” notice experts must fulfill the statutory requirements for notice at the federal and state levels, and have a sound understanding of applicable case law.
Buyer beware—claims administration and notice program design are entirely different functions and require different training, credentials, expertise and experience.
At a minimum, a notice expert should possess all of the following traits:
- Recognition by courts of expert status through court testimony.
- Training and/or in-depth experience in media planning and paid media measurement.
- Thorough knowledge of Rule 23 and particularly of 23(c)(2)(B) requirements for notice.
- Ability to translate complicated legal issues into accurate plain language that facilitates class member understanding of the litigation and their legal rights.
- Creation of effective print, Internet, radio, and TV notices consistent with best advertising practices.
- Understanding of direct notice deliverability issues that affect notice sufficiency, whether email, postcards, or other mailed notice formats.
- Ability to combine direct notice reach, when known, with media reach to ascertain overall unduplicated reach of class members.
Pitfall 2
Inflating Reach Estimates by Not Applying, Misusing Methods to Calculate Media Reach
As Daubert and Kumho make clear, the reliability of a notice expert’s testimony should be tested against the standards developed within the media industry for determining whether and to what degree a target audience has been reached and how often. Accurate measurement of media penetration must be estimated using industry-vetted software and accredited data sources.
Reach
Kinsella Media’s review of many recent notice programs reveal significant deviations from industry-standard methodology as well as other problems. The following examples should be warning signs that a notice program does not meet due process or “best notice practicable” standards:
• Calculating reach by adding together the reach of individual notice elements without accounting for duplication. Most notice plans utilize multiple media forms to provide notice. Since many people watch TV, read magazines, newspapers, and/or use the Internet, they may have an opportunity to see a notice more than once. So every “pair of eyeballs” in an estimate of a particular media’s reach is not necessarily a unique exposure. Adding together the individual reaches achieved by each form of media in a notice program is incorrect and can greatly overstate the program’s reach.
For example, a class member might receive a notice in the mail and also have an opportunity to see the published notice in People magazine. Because reach is an estimate of the number of “different people” given an opportunity to see a message, the duplication needs to be factored out to get to the “net” reach. Some inexperienced notice providers inaccurately calculate reach as cumulative as demonstrated below:
Buyer beware—an “expert” affidavit in an antitrust notice program was withdrawn and re-submitted, avoiding a threatened objection, when counsel realized that the reach was additive and not calculated according to industry standards and was therefore considerably overinflated:
• Achieving a “high” reach at a low cost. This is a red flag that the reach may not have been calculated properly. High-reaching national notice plans (over 90 percent reach) will typically cost $3 million or more. If your notice provider purports to reach 90+ percent of class members for $1 million through media alone, buyer beware. Your reach is inflated. Even a national 80 percent media-based notice plan will cost between $700,000 and $1 million or more depending on the target audience.
Kinsella Media recently analyzed a media program purporting to reach more than 95 percent of a target audience. In fact, the program actually delivered less than a 30 percent reach. One of the miscalculations vastly overstated the reported reach of class members by attributing a cable network’s entire weekly audience to every notice spot that aired.
Pitfall 3
Including News Releases, Keyword Search Ads
In Determining Projected Program Reach
Certain program elements can expand distribution of key information and increase class member exposure to a message but their contributions cannot be factored into reach projections. Buyer beware—for example:
• Press Releases: Factoring the reach of a press release into a program before it has been issued is guesswork. There is no way to know in advance which media outlet will use a press release to create a print, broadcast, or online story. In some situations, it is possible to measure the reach contributed by earned media, but this requires a detailed analysis after the notice program has been implemented.
• Keyword Search Ads: Keyword ads on search engines are common and valuable components of class notice programs. These text ads appear as sponsored results when class members search for certain information either about a case or about the product or service at issue in a case. However, a notice provider cannot calculate the reach of keyword ads, either before or after implementing a notice program because there is no comparable measurement of exposure. For example, there is no measurement of duplication. More importantly, keyword searches are not providing notice in the same way that other paid media is, because in almost all circumstances, a class member must know what they are searching for in order to undertake a search.
Pitfall 4
Relying on Inadequate Program Solely Because Court Approved Similar Program in Past
Many cases continue to use a single USA Today publication as the sole form of national notice in cases where there is limited or no direct notice. Many practitioners feel safe using this type of notice program because courts have approved it in the past. However, buyer beware, USA Today does not reach many people. Even in its heyday, 10 years ago, USA Today reached well below 3 percent of adults 18 and older and today it only reaches 1.3 percent of adults.
Because a court has approved a media-based notice program as meeting due process standards does not necessarily mean that it does, especially when there has been no factual data-based analysis of reach provided.
Some judges, however, are scrutinizing notice programs and, as illustrated below, understand the limitations of a national newspaper that has very little national reach.
Hecht v. United Collection Bureau: With a settlement class of approximately two million, one insertion in USA Today was the entirety of the notice efforts in this case. Plaintiff sued in a separate case, claiming notice was constitutionally inadequate and therefore she was not bound by the release in the class action. The Second Circuit found the class notice deficient, stating:
It is difficult to imagine a manner of providing notice more akin to the `mere gesture’ deprecated in Mullane … or less `reasonably calculated … to apprise interested parties of the pendency of the action’ … than the [original class] notice.
Kaufman v. American Express Travel Related Services, Inc.: The notice program included direct notice to 1.2 million, although the class consisted of individuals who purchased or received 70 million gift cards. In addition to the limited direct notice, there was one insertion in USA Today. The court found the overall notice program inadequate. But instead of rejecting the settlement, the court ordered the appointment of a notice expert to design a new plan at additional expense:
As the guardian of the due process rights of the class members, the court must push the parties to do better… . The abundance of cases requiring or approving more extensive notice plans than called for here, even in cases with lower financial stakes or smaller Settlement Classes than in this case, reflects this compromise, and exemplifies the type of effort the court expects of the Settling Parties… . The courts should not permit “better than nothing” to become the new benchmark.
Pitfall 5
Trying to Reach Large National
Class Through Internet Only
Increasingly, attorneys ask for Internet notice programs assuming Internet is the least expensive media option, and that class members, regardless of demographics, must be online and reachable entirely through this medium. However, certain demographic groups can be non-users or infrequent users of the Internet.
With at least 600 million Internet sites,
Pitfall 6
Believing Non-paid Social Media
Can Substitute for Paid Media
With the buzz around the growth of Facebook and other social media activities, it is natural to consider whether non-advertising efforts on social networks offer an opportunity for class action notification. There are applications for social networks in some cases, but not as replacements for a measurable paid media program. It is important to understand that social media content is user-created, and exposure to the content only results when the publisher is followed or the content is shared. To publicize a class action, text and video news releases can be distributed to appropriate news and social sites including Twitter and relevant blogs and social media influencers.
Buyer beware, these tactics have the same shortcomings as other earned media. There is no way to know in advance which media and how many outlets will pick up the story, how many followers will find it, or how many times it will be shared. There is also the risk that misinformation will be conveyed.
In addition, there is no standardization of measurement. While there are tools available to monitor and measure social behavior, there is no one set of data or agreed upon model to quantify results.
It is possible to buy ads on social media websites that can be counted towards the reach of a notice program. This should only be used if the site’s visitors are compatible with the class demographics and the cost is appropriate relative to other media options and goals.
Pitfall 7
Assuming 100 Percent Deliverability of Class Member Lists Regardless of Age, Source
Any reach from direct notice, whether or not calculated with media notice, requires some discount for undelivered mail. When lists contain old postal addresses, a simple address correction will improve deliverability. The age of the list and whether or not addressees are for current or former class members are critical considerations.
Unfortunately, with email lists, there are no well-established, comprehensive correcting mechanisms, and postal addresses are sometimes unknown. Email lists that have current addresses of customers will deliver at a higher rate than lists of former customers.
In calculating reach of email notice, a deliverability discount based on the expert’s experience with similar lists should be factored into the analysis of overall reach. If your notice provider is treating all email lists the same, buyer beware.
Pitfall 8
Using Federal Judicial Center Checklist to Justify Low Reach for Cases With High Money Damages
The FJC Judges’ Class Action Notice and Claims Process Checklist and Plain Language Guide
A high percentage (e.g., between 70–95 percent) can often reasonably be reached by a notice campaign.
This range is based on a study of published opinions in 30 cases that include direct mail and paid media notice programs. Although the range is presented as 70 percent to 95 percent, the average reach of cases in this study is actually 85 percent. In fact, 83 percent of the cases have a reach of 80 percent or more. Unfortunately, the Checklist does not include this information or distinguish between types of notice programs and the appropriate reach level based on the seriousness of case issues or damages.
What is “reasonable” notice in cases that involve cy pres relief, nominal damages, or injunctive relief is not the same as what is “reasonable” in cases that provide significant money damages to class members.
Hundreds of class actions in federal and state court consistently demonstrate that class action notice programs addressing money damages reach 80 percent or more of target audiences.
Increasingly, attorneys request notice programs that reach 70 percent for money damages cases because they believe the FJC Checklist sanctions this level. But buyer beware—the overwhelming jurisprudence suggests that money damages cases merit a higher level of reach than what appears to be the FJC’s lowest standard.
Conclusion
While not an exhaustive list, the pitfalls discussed in this article are ones seen most often in both small and large class actions. Making sure that a notice program is grounded in the vetted procedures and methodologies employed by notice experts helps attorneys avoid judicial scrutiny and overcome objector challenges.
Learn more about Bloomberg Law or Log In to keep reading:
Learn About Bloomberg Law
AI-powered legal analytics, workflow tools and premium legal & business news.
Already a subscriber?
Log in to keep reading or access research tools.