Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements

On December 1, 2003, Federal Rule of Civil Procedure 23 (Rule 23 ¹A version of this article was originally published in the Fall 2010 issue of The Review of Litigation at the University of Texas School of Law.) was amended to require that class action notices in federal court “clearly and concisely state in plain, easily understood language” the information that class members need to make an informed decision. ²Fed. R. Civ. P. 23(c)(2)(B). The Advisory Committee on Civil Rules of the Judicial Conference of the United States asked the Federal Judicial Center (FJC), the research and education agency of the federal judicial system, to draft model notices that would satisfy the plain language requirement. ³More information on the research that was done by the FJC on the model notice project can be found at www.fjc.gov.

Notice expert Dr. Shannon R. Wheatman and legal writing expert Dr. Terri R. LeClercq, who both worked with the FJC to develop the model notices, illustrate the continuing problems with poorly worded and poorly designed notices in this article. ⁴The team working on the model notices included the authors, Todd Hilsee, Tom Willging, and Bob Niemic. Wheatman and LeClercq’s research reports findings from a study of 511 class action notices published after the plain language amendment took effect. The research uncovers many shortcomings and the authors offer advice on improving the design and content of class action notice.

While notice has progressed in the years since the passage of the plain language amendment, it still has a long way to go to realize the Advisory Committee’s goals that “notice be couched in plain, easily understood language” and practitioners “work unremittingly at the difficult task of communicating with class members.” ⁵Fed. R. Civ. P. 23 advisory committee’s note. Unless practitioners are held accountable to the plain language standards, class members cannot benefit from Rule 23.

What Is Plain Language,
and Why Is It Necessary?

Plain language is clear and direct. It relies on principles of clarity, organization, layout, and design. Plain language writers “let their audience concentrate on the message instead of being distracted by complicated language.” ⁶Robert Eagleson, Short Definition of Plain Language, Plain Language, available at
http://www.plainlanguage.gov/whatisPL/definitions/eagleson.cfm (last visited May 14, 2011). Thus, plain language communicates effectively with the general public. This is critical because only 28% of U.S. adults have graduated from college. ⁷Sarah R. Crissey, U.S. Census Bureau, Educational Attainment in the United States: 2007
, 2 (Jan. 2009), available at
http://www.census.gov/prod/2009pubs/p20-560.pdf (last visited May 14, 2011). Even more significant, a 2003 literacy study found that less than 15% of U.S. adults were proficient in “integrating, synthesizing, and analyzing multiple pieces of information located in complex documents.” ⁸Mark Kutner et al., National Center for Educational Statistics, Literacy in Everyday Life: Results from the 2003 National Assessment of Adult Literacy 4, 13 (Apr. 2007), available at
http://www.nces.ed.gov/Pubs2007/2007480.pdf (finding 13% of adults demonstrated ability to perform such skills, last visited May 14, 2011).

Empirical research has shown that redrafting legal documents into plain language increases reader comprehension and is more persuasive. ⁹See Joseph Kimble, Answering the Critics of Plain Language, 5 Scribes J. Legal Writing 51, 62-65, 73 (1996) (listing a number of studies conducted on plain language and concluding that plain language is more persuasive and comprehensible to readers than standard legal writing); s
ee generally Robert Charrow & Veda Charrow, Making Legal Language Understandable: A Psycholinguistic Study of Jury Instructions, 79 Colum. L. Rev. 1306 (1979) (arguing that systematic rewriting of jury instructions can measurably increase reader comprehension); Veda Charrow, Readability vs. Comprehensibility: A Case Study in Improving a Real Document, in Linguistic Complexity and Text Comprehension: Readability Issues Reconsidered 85 (Alice Davison & Georgia M. Green eds., 1988) (rewriting automobile recall letters for readability increases comprehension among study sample); Michael Masson & Mary Ann Waldron, Comprehension of Legal Contracts by Non-experts: Effectiveness of Plain Language Redrafting, 8 App
lied
Cognitive Psychol. 67 (1994) (reporting enhanced comprehension of legal documents after three stages of simplification). On the other hand, failure to write in plain language can have serious consequences because if readers cannot understand the content of a document, they will stop reading. ¹⁰See William H. DuBay, The Principles of Readability 1 (Aug. 25, 2004), available at
http://www.impact-information.com/impactinfo/readability02.pdf (“When texts exceed the reading ability of readers, they usually stop reading,” last visited May 14, 2011). In the class-action notice context, that means due process will be undermined and class members will remain uninformed of important rights that they may be giving up.

Development of the Model
Plain Language Notices

The FJC conducted research to determine the best way to write class action notices to allow class members to easily understand all of their rights and options. The model plain language notices (“model notices”) include examples for two settlement classes (a securities settlement and a personal injury/product liability settlement) as well as a model notice for an unrestricted certification involving an employment case on a trial track. To support judges and practitioners in these efforts, the FJC has posted the model notices at www.fjc.gov.

The model notices were not created in a vacuum, but were developed through a thoughtful, multi-stage process that culminated with an empirical study. An empirical study on the FJC’s securities notice proved that the plain language versions of the model notices were exponentially more understandable than the typical legalistic notices that are still common today. ¹¹See Shannon R. Wheatman, The Effects of Plain Language Drafting on Layperson’s Comprehension of Class Action Notices 21, 55 (September 25, 2001) (unpublished Ph.D. dissertation, University of Georgia) (on file with author) (revealing poor overall comprehension of a sample of class action notices by laypersons—between 45% to 65%). This empirical study also found that comprehension for the rewritten securities plain language notice was over 90%. Id. (listing findings that comprehension of plain language notices ranged from 15.99 to 16.17 out of a possible score of 17). The notice project involved real-world testing that included focus groups composed of laypersons of average education. The first author of this report tested securities model notices on shareholders in investment clubs across the country. ¹²Id. at 35 (explaining the FJC securities notices study involved 229 volunteer participants who were members of 27 investment clubs).

Most of the focus group participants displayed only a general knowledge of class action lawsuits ¹³Detailed Discussion of Methodology, Fed. Jud
.
C
enter, available at
http://www.fjc.gov/public/home.nsf/autoframe?openform&url_l=/public/home.nsf/inavgeneral?openpage&url_r=/public/home.nsf/pages/816 (last visited May 14, 2010). and were relatively unfamiliar with class action notices. ¹⁴Id. Participants’ “preconceived notion[s] of a notice [were] almost totally negative; they expected to find wordy legalese that would be difficult or impossible to understand.” ¹⁵Id. Unfortunately, most notices today continue to live down to this expectation. ¹⁶See infra Part IV,B-C.

Where Are We Now?

With the passage of the plain language amendment, the hope was that the world of class action notice would be turned on its head and lawyers would take great strides to ensure that class members could finally understand all of their rights and options. The real question is: how far has class action notice come in the past six years? If you turn the page of many major newspapers and periodicals, you will probably find a typical class action notice—that is, if you can see it. Many notices continue to be written in small, fine print that is difficult to read. ¹⁷See infra Part IV.C. Furthermore, the notices often feature the court’s official-looking case caption, ¹⁸See infra Part IV.C-D. which usually does not provide any incentive for actual class members to read them. ¹⁹See infra Part IV.B. If readers can get past the design features that deter reading, they will likely be met with large blocks of jargon-filled text that is unintelligible to most class members. ²⁰See infra Part IV.G.

Current Study

To determine empirically whether class action notices are complying with the plain language requirement of Rule 23, the authors reviewed 511 class action notices published between 2004 and 2009. ²¹The notices were published in The
Austin American Statesman, Better Homes & Gardens, Cosmopolitan, The Detroit News, Financial Times, Jet, National Geographic, Newsweek, The North Penn Reporter, Oakland Tribune, Parade, People, The Philadelphia Inquirer, Reader’s Digest, Spirit Flight, Sports Illustrated, The Sunday Voice, TV Guide, USA Today, USA Weekend, The Wall Street Journal, and The Wall Street Journal Sunday. The sample included 176 notices filed in state court (representing 42 states) and 335 notices filed in federal court (representing 54 federal district courts). ²²Half of the notices were filed in California (19%), New York (16%), Illinois (8%) and New Jersey (7%). The sample included 477 settlement notices and 34 certification notices. The lawsuits involved a variety of subject matters including antitrust, banking and finance, consumer, employment, environmental, human rights, insurance, pharmaceutical, privacy, securities, and telecommunications.

Both authors evaluated the content of each notice. ²³The percentage of agreement between the two authors was high at 92%. The average score was used when there was disagreement. They evaluated the notices on design attributes, content, and overall readability. The layout or design of a notice includes the headline, font size, ad size, and the techniques used to highlight important information. The content of the notice includes information about the lawsuit, the class definition, settlement details, attorneys’ fees, how to file a claim, how to be excluded, how to object, deadlines, hearing date, and the binding effect of any settlement or judgment. Readability was based on whether the notice was concise, avoided legalese, and was written in plain language.

The authors found significant differences in securities and non-securities notices and therefore present the overall findings for each group separately in the sections that follow.

Overall Findings

While the differences in securities and non-securities notices will be detailed below, the authors also found shared challenges with the structure, content, and language of notices that undermined their effectiveness. These common issues led the authors to conclude that lessons drawn from the examples outlined below can be applied more broadly across all types of cases—at both the state and federal levels.

Key Findings

•  Most notices did not include an eye-catching and informative headline to capture the attention of potential class members.

•  Over 90% of securities notices used an uninformative case caption in the header of the notice.

•  Over 60% of notices were written in less than an 8-point font.

•  The majority of notices failed to clearly inform class members of the binding effect of the settlement.

•  Over two-thirds of the notices with an opt-out right did not inform the class member that they could opt out of the litigation or settlement.

•  Over 75% of the notices did not tell class members they had the right to appear through an attorney.

•  Over two-thirds of the notices failed to satisfy the concise, plain language requirement of Rule 23.

Notice Design

There is more to a notice than just words on a page. The design or layout of a notice influences readability. The FJC study found that comprehension of class action notices could be significantly improved through deliberate changes in “language, organizational structure, formatting, and presentation of the notice.” ²⁴Detailed Discussion of Methodology, supra note 15.

The design of a notice will determine whether anyone will even attempt to read it. The notice must be designed using a reader-friendly format that will entice class members to want to take time to review it. A well-designed notice will incorporate readable fonts, a noticeable and informative headline, section headings, adequate white space, and proper highlighting techniques such as using bold headlines and avoiding all capital letters (CAPs).

Figure 1 reveals that a clear majority of class action notices in the study did not heed the advice of The Manual for Co
mplex Litigation, which recommends that an author take steps to capture the attention of class members: “Published notice should be designed to catch the attention of the class members to whom it applies. … Headlines and formatting should draw the reader’s attention to key features of the notice.” ²⁵Federal Judicial Center, Manual For Complex Litigation (Fourth) §21.31 (2004), available at http://public.resource.org/scribd/8763868.pdf (last visited May 14, 2011).

Headline

Advertising research has found that the eyes and consciousness of most readers never make it past the headline. ²⁶See Kenneth Roman & Jane Maas, How to Advertise, 110 (1st ed. 1976) (explaining “most readers never reach the text or body copy”). A court’s formal case caption (inappropriately used in 38% of non-securities and 91% of securities notices) will never provide an adequate headline for a class action notice because it does not alert the reader to the subject matter. The case caption is meaningless to any class member who is not a named party.

The size of the headline is also important. It is doubtful that attorneys would find it effective to use a tiny font size to advertise their law firm. However, the majority of notices in the study (61% of non-securities and 74% of securities notices) had a headline or heading a few point sizes smaller than the text in this article. Fifty-nine percent of notices used the same size font for the headline and the body of the notice. The headline needs to stand out from the body of the text and should be in a much larger font in order to catch the attention of potential class members. Moreover, a recent study found that an easy-to-read font is more likely to get people to act because it is more appealing, easier to handle, and more efficient. ²⁷See Hyunjin Song & Norbert Schwarz, If it’s Easy to Read, It’s Easy to Do, Pretty, Good, and True, 23 The Psychol
ogist, 108, 108 (2010) (suggesting that font type leads readers to predict ease or difficulty of reading, informing their decision to act).

A carefully crafted headline should quickly persuade readers that they have a stake in the class action and that they will be able to understand it. Here is an example of an attention-getting headline from the securities model notice (the actual sized notice appears below):

The large, noticeable font will capture the attention of potential class members, and the benefit focus of the headline will motivate them to read the notice.

Organization, Internal Cues, and White Space

Information is well organized if it is easy for readers to navigate. Writers can accomplish this by using appropriate headings and sub-headings. The notice should tell the story of the litigation. Unnecessarily long sentences and lengthy paragraphs in many of the sample notices became even more cumbersome because they also failed to incorporate section headings (41% of non-securities and 88% of securities notices). Section headings serve as guideposts to the information in each section and improve readability by breaking up large blocks of text. ²⁸JoAnn Syverson & Holly Littlefield, Informative Headings Improve Readability, U. Minn. C
enter
for Writing (Apr. 11, 2003), available at
http://www.writing.umn.edu/tww/disciplines/business/resources/BA3033headings.html (last visited May 14, 2011).

In addition, a large majority of sample notices (84% of non-securities and 97% of securities notices) included wall-to-wall words with little to no white space around the paragraphs and headings. Focus groups in the FJC study found that level of text density off-putting. ²⁹See Detailed Discussion of Methodology, supra note 15 (“Even small changes in format and presentation … appeared to increase a reader’s motivation to read and understand the notice.”). One notice in the study was the size of four first-class postage stamps when published. There is absolutely no way something that small can attract the attention of potential class members, let alone provide the information required by Rule 23.

Appropriate Highlighting Techniques

Furthermore, the model notices show that appropriate highlighting of key information (e.g., bolding important deadlines) also breaks up the text and lets readers know what is important. Appropriate highlighting of important information appeared in only one out of 10 securities notices and about one-third of non-securities notices. Another common design flaw is the use of all capital letters in long strings of text. Some writers may mistakenly believe this is a good way to provide a class definition or to give warnings. However, PEOPLE RECOGNIZE WORDS BASED ON THEIR SHAPE, NOT THE ACTUAL LETTERS IN THE WORDS. ³⁰Kevin Larson, The Science of Word Recognition
: or how I Learned to Stop Worrying and Love the Bauma, Microsoft Corp. (July 2004), available at
http://www.microsoft.com/typography/ctfonts/wordrecognition.aspx. ALL CAPS ARE HARD TO READ, CAUSING THE READER TO STRUGGLE TO MAKE OUT THE WORDS. Many of the notices in the study used too many CAPs (the average number of words in CAPs was 28 in non-securities and 41 in securities notices). One notice had 391 words in CAPs, which made a very short notice quite difficult to read. Writers should stay away from all CAPs and instead use bold, italics, or both to make important information stand out. However, in order not to overwhelm readers, writers should use this highlighting in moderation and consider incorporating bulleting or numbered elements to further break up blocks of text to help readers digest information more easily.

Content of the Notice

Rule 23 requires that specific content be written in plain language. ³¹See Fed. R. Civ. P. 23(c)(2)(B) (
“The notice must clearly and concisely state in plain, easily understood language … .”). The notice must clearly describe: (1) the nature of the case, claims, issues or defenses, (2) the class definition, (3) certain rights and options available to class members (such as appearing in court, objecting to the settlement, or opting out of the class), and (4) the binding nature of any judgment on anyone who remains in the class. ³² Id.
;
In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088, 1104–05 (5th Cir. 1977) (“Surely ‘the best notice practicable under the circumstances cannot stop with … generalities. It must also contain an adequate description of the proceedings written in objective, neutral terms, that … may be understood by the average absentee class member.” (quoting Robinson v. Union Carbide Corp., 544 F.2d 1258, 1263–65 (5th Cir. 1977))). Rule 23 also advises that class members should be notified of an attorney fee motion by class counsel, and provided an opportunity to object to it. ³³Fed. R. Civ. P. 23(h)(1)–(2). The Advisory Committee notes to the 2003 amendments state that “it would be important to require the filing of at least the initial motion in time for inclusion of information about the motion in the notice to the class about the proposed settlement that is required by Rule 23(e).” Fed. R. Civ. P. 23 advisory committee’s notes.

The Manual for Complex Litigation also recommends that the notice should: include deadlines for taking action, describe essential terms of the settlement (including information that will allow class members to calculate their benefit), indicate the time and place of the fairness hearing, and prominently display how to get more information. ³⁴Federal Judicial Center, Manual for Complex Litigation (Fourth), §21.312 (2004), available at http://public.resource.org/scribd/8763868.pdf.

The study revealed that some notices provide so few details that it is unlikely class members would recognize that they might benefit from reading them (Figure 2); it is also unlikely that those class members would learn enough from the information to decide what to do. Most securities notices failed to provide class members with details about the lawsuit, the terms of the settlement, or how much attorneys stand to make from the settlement. Non-securities notices were better on most counts, but the number of notices that did not clearly tell class members what they needed to know was still high. The most astounding finding was that 10% of non-securities notices and 20% of securities notices did not provide a definition of the class.

Figure 3 provides even more troubling findings. The basic rights afforded class members under Rule 23 are often omitted from publication notices. The most common omission was notice of the right to appear, which was absent in 77% of non-securities notices and 90% of securities notices. Many notices did not inform class members that they had the right to object to a settlement (33% of non-securities and 40% of securities notices) or that they could opt out of the litigation or settlement (25% of non-securities and 31% of securities notices). Most problematic was that 40% of non-securities notices and 10% of securities notices did not even tell class members the all-important fact that they would be bound by any court order if they remained in the class. In addition, the term “bound” is foreign to most class members. Of those notices that informed class members they would be bound by the court’s decisions, only a handful (31% of non-securities and 14% of securities notices) of properly educated class members, in easily understood language, as to what “bound” really meant. The FJC model notices explain what this means to the class member in practical terms: “If you don’t want to be legally bound by the settlement, you must exclude yourself by Month 00, 0000, or you won’t be able to sue, or continue to sue, XYZ about the legal claims in this case.” ³⁵See infra App. A.

Readability

“The purpose of [readability] is to close the gap between the reading level of the [notice] and the reading ability of [class members].” ³⁶Impact Information, Using Readability Formulas, available at www.impact-information.com/Resources/plainlanguage.ppt (last visited May 14, 2010). Figures 4 and 5 show that many notices—at both the state and the federal levels—in the study failed to close that gap. Overall, only 14% of notices filed in federal court were concise and written in plain language. In contrast, although only four of the 50 states require plain language in their class actions statutes, ³⁷See generally American Bar Association, Survey of State Class Action Law 2009 (Dennis K. Egan et al. eds., 2009), available at http://www.americanbar.org/tools/digitalassetabstract.SIGNIN.html/content/dam/aba/publishing/litigation_news/state_survey_2009.pdf (subscription required) (examining each state class action rule and finding only Arkansas, Minnesota, New Jersey, and Texas have adopted Rule 23’s requirement for plain language). the state court class action notices in the study were easier to understand than the federal class action notices, with a slightly more robust 28% of them satisfying the concise, plain language requirement.

Further analysis revealed that the securities cases in the study contributed directly to the disparity between federal and state court notices. Specifically, in non-securities cases, 27% of federal class action notices and 31% of state class action notices were clear and concise. In contrast, a meager 2% of the 170 notices filed in federal securities cases provided class members with a clear, concise recitation of their rights. These findings, albeit not very surprising, seem to provide one explanation of why billions of dollars are left unclaimed in securities cases. ³⁸Adam Savett, A Billion Here, A Billion There: Solving the Historical Data Problem and Recouping More in Securities Litigation, RiskMetrics Group, 2, available at
http://www.riskmetrics.com/system/files/private/SCAS_billion-here-billion-there.pdf (last visited May 14, 2010) (“[A]ccording to a series of academic studies conducted over the last decade, as well as anecdotal evidence from market participants, anywhere from 30%–70% of investors that are eligible to participate in a given settlement fail to file a claim form … .”).

Plain language is attainable by reducing or eliminating writing that frustrates even the most motivated readers: legal jargon, unfamiliar or abstract words, negatively modified sentences, words with double meanings, verbs as nouns, misplaced phrases, and prepositional phrases. ³⁹Kinsella Media LLC & Rust Consulting
Inc., Plain Language Primer for Class Action Notice 1, 11–12, available at
http://www.kinsellamedia.com/portals/1/media/pdf/PlainLanguagePrimer.pdf (last visited May 14, 2010). The active voice and personal pronouns aid comprehension. ⁴⁰Id. at 11. Eliminating extraneous information and keeping sentences and paragraphs short helps notices fulfill the concision requirement and increases comprehension in the process. ⁴¹Id. at 9.

It is important for practitioners to keep in mind that a notice needs only to meet the content requirements of Rule 23; it is not necessary to include every detail from the class action complaint or settlement agreement. Two legal commentators understood this concept quite well when they remarked that “[m]uch of what lawyers write … including many class action notices, is incomprehensible to average citizens. The lawyerly concern for completeness and accuracy may conflict with the objective of intelligibility.” ⁴²Arthur R. Miller & David Crump, Jurisdiction and Choice of Law in Multistate Class Actions After Phillips Petroleum Co. v. Shutts, 96 Yale L.J. 1, 22 (1986).

Many practitioners may believe that it is not necessary to meet the requirements of Rule 23 in a publication notice because that information can be found in a more detailed notice. The authors disagree, but nonetheless reviewed 50 long form notices (16 securities, 34 non-securities) that were filed in 2008 and 2009. These long form notices suffered from the same defects as the publication notices. Many lacked a readable headline, few clearly informed class members about their rights, and most would be unintelligible to the average layperson. The majority of long form notices were as poorly written as the publication notices—only 18% satisfied the concise, plain language requirement (26% of non-securities notices and none of the securities notices).

A few findings from the FJC study are important to note here. Some securities practitioners mistakenly believe that a simple notice is not necessary for an educated class. The study on the FJC’s securities notices found that even shareholders were less likely to understand a legalistic class action notice than a plain language notice. ⁴³See Wheatman, supra note 13, at 55 (reporting higher overall comprehension for a plain language notice versus a legalistic notice). To read a dense, legalistic notice, an individual must not only be educated, but also must possess the time and motivation required to wade through a sea of legal jargon. The FJC study found that even the most educated and intelligent reader will pass over a notice in small print and stop reading when he or she encounters unfamiliar legalese. ⁴⁴See i
d. at 44 (finding that only 2% of shareholder participants would read a legalistic notice carefully whereas 57% reported they would carefully read a plain language notice).

Keeping It Readable

Documents with legal content should not be burdensome reading to their intended audience. Writers should assume that class action notices will be read by a variety of consumers who shop, buy, work, and live their lives without needing to know court names and case numbers. When writers choose their words, they need to focus on common equivalents of legal jargon. Most readers will stop reading “a claim for declaratory relief” before they learn that “relief” was indeed their goal. If a legal or technical term is necessary, it needs to be defined: “exclusion means … .”

Plain language is more than merely simple words; embedded in the term is sentence length, subject/verb order, unambiguous modifiers, and even the active voice. Rule 23 is not asking authors to talk down to the reader, but it does insist that the notice be stated in “plain, easily understood language.” ⁴⁵Fed. R. Civ. P. 23(c)(2)(B). If sentences average more than 15 words, the legal content may confuse some intended readers. If interrupting clauses separate verbs from their subjects, the lack of unity and clarity may mislead readers. If a sentence is a mish-mash of floating modifiers that do not logically fit next to their antecedents, most readers will be perplexed, particularly when the legal content is already unfamiliar. The passive voice is also a problem: “The service contract has been claimed to be unlawful … class members will be bound by the determination …” Who is claiming? Who is binding them? No one can unravel and reconstruct those vague sentences comfortably. Readers who are uncomfortable stop reading, and the purpose of providing notice has been frustrated. Without plain language, the notice is moot. Courts should not approve notices that fail to meet Rule 23’s plain language requirement.

A notice needs to be clear and succinct, so an average reader can go through it once and understand its general message. Few readers will take the time to re-read a legal notice that appears inside their newspaper or magazine. Potential class members should be caught up by the headline and mention of the product and then able to grasp the point of the notice at first glance. If not, writers of the notice have disregarded the purpose of the notice—to inform class members about the rights and options they have in the case.

Conclusion

No one can affect class action notice as effectively as the judges who prove or reject them. Judges must be the standard-bearers and stringently enforce Rule 23’s requirements. Attorneys and judges can use the FJC model notices as templates or outlines, which demonstrate that it is possible to get all of the necessary information into a noticeable, succinct, plain language format. Satisfying Rule 23 protects the interests of the class and strengthens the class action device, in addition to better serving the principle of due process. With the active participation of judges and practitioners, and widespread use of the FJC models and the attached checklist (see Table A, above), the task of effectively communicating with class members can be made easier.