Tech Tools Are Increasingly Used to Disseminate NoticeFebruary 17, 2015 | | |
Federal Rule of Civil Procedure 23 requires two forms of class notice. Rule 23(c)(2) requires notice to a potential class member that a class has been certified and substance of the class claims. Rule 23(e) requires notice that a settlement has been negotiated, which will require court approval, and the steps that each potential class member needs to take to object to the settlement, “opt-in,” “opt-out,” or otherwise be bound by it.
Because class actions may affect the rights of absent class members, federal notice provisions are intended to require that notice is sent in a manner that is substantially likely to reach the highest numbers of absent class members. Rule 23(c)(2) requires the court to direct the “best notice that is practicable under the circumstances.” Notice must be written in “plain, easily understood language” and be clear and “concise.” Notice also must explain the nature of the action; the definition of the class certified; the class claims, issues, or defenses; that a class member may enter an appearance through an attorney if so desired; that the court will exclude from the class any member who requests exclusion; the time and manner for requesting exclusion; and the binding effect of a class judgment on class members.
Rule 23(e), which is designed to summarize the litigation and the settlement and to apprise class members of the right and opportunity to inspect the complete settlement documents, papers, and pleadings filed in the litigation, provides a second set of requirements. Under Rule 23(e), prior to approving a settlement, the court must direct notice in a reasonable manner to all class members who would be bound by the proposal.
What that “reasonable manner” may be, however, has changed with the times and the evolving nature of class actions themselves. The pervasive use of Internet-enabled technology throughout American society has resulted in substantial reliance on websites, email, and even social media communications as an adjunct to, or in some cases as a replacement for, traditional notice by the U.S. Postal Service to the last known address of absent potential class members with publication in local and national newspapers or other print publications.
Two New York federal cases are indicative of the trend in recent years and illustrate how Internet-enabled technology and social media may play a role in Rule 23 depending on the individual notice required in each case
Not Approved for Notice
The first such case1 concerned a consumer class action brought on behalf of New York state consumers alleging that Best Buy was not honoring its guarantee to match prices. The court granted class certification and thereafter considered the “best method practicable under the circumstances” to provide notice in light of the fact that the Rule 23(b)(3) class action that was certified would bind all members unless they expressly opted out of the class.
Judge Colleen McMahon noted the general proposition that Rule 23 requires that those class members who can be identified by reasonable efforts should receive individual notice. However, individual notice was impossible in that case because there was no way that either the plaintiff or the defendant could identify New York Best Buy customers who unsuccessfully sought to avail themselves of the price match guarantee. Accordingly, notice by publication was required.
The plaintiff proposed a variety of traditional and Internet-enabled methods to provide notice to the potential class members. The court noted that due process was satisfied even if some individuals did not receive actual notice, so long as the method of notice was reasonable under the circumstances. Accordingly, each of the plaintiff’s proposals was analyzed with the guidance provided by the Manual for Complex Litigation that the court “should strike an appropriate balance between protecting class members and making Rule 23 workable.”2
The court first approved publication of notice on a website created for that purpose as well as publication in New York newspapers. The court thereafter analyzed four Internet-enabled methods proposed by the plaintiff.
First, the court considered and rejected the plaintiff’s proposal to require the defendant to post multiple notices through “tweets” on its Twitter-enabled technology help desk program, called “Twelpforce.” Best Buy argued that tweets on Twelpforce would constitute individual notice to a set of customers that may or may not be class members and that such overly broad notice was not required by Rule 23. The court agreed and concluded that, in this case, notice by Twitter suffered from two flaws. First, although the class was limited to New York state residents, notice by Twitter would be disseminated to anyone who read Twelpforce regardless of his or her location. Second, the court concluded that there was no way to demonstrate that “notice via Twitter will result in notice to even a single class member, let alone a substantial number of class members” as there was no connection between the technology advice that was tweeted at Twelpforce and the price guarantee that was the subject of the claim.
For similar reasons of over-inclusivity and under-inclusivity, the court rejected the plaintiff’s request that Best Buy send notice via SMS text message to mobile phones of all New York customers or by email to those New York customers for whom it had email addresses. The court noted that, although a text message or email could be limited to New York residents, it nevertheless would be sent indiscriminately to all individuals, including those who had no claims regarding the price match guarantee or who were excluded due to their relationship with Best Buy. Moreover, because Best Buy had mobile phone numbers and email addresses for only certain categories of individuals, it was likely that substantial numbers of class members would not receive either texts or emails regarding the class, the court determined.
In contrast, the court approved placement of a hyperlink to the class action website on Best Buy’s website in three locations—Best Buy’s homepage, the page that specifically addressed the best price guarantee, and by a “thread” on Best Buy’s online discussion forum. In requiring Best Buy to post the links on its own website, the court rejected Best Buy’s argument that, like the other notice methods, the website notice was over-inclusive as it could not limit website access to New York residents. Instead, the court concluded that over-inclusivity was not an issue because, unlike Twitter, SMS text messages, or email, notice via Best Buy’s website was a form of publication and not individual notice.
Approved for Notice
Under different circumstances, this past November, U.S. District Judge Alison J. Nathan of the Southern District of New York approved dissemination of notice via social media in a case alleging that Gawker Media had violated the federal Fair Labor Standards Act (FLSA) in connection with former Gawker interns.3
In the case, the court previously had granted conditional certification and authorized notice under §216(b) of the FLSA. It ordered the parties to meet and confer about the content and dissemination of the proposed notice. The parties agreed that notice could be disseminated by U.S. mail, email, and two standalone websites that would give potential plaintiffs the ability to download and submit a consent form electronically. In its November decision, the court resolved what the parties could not, including a dispute over notice via Gawker’s website and social media.
First, the court rejected the plaintiff’s proposal that Gawker be required to post notice of the action on Gawker’s websites and blogs. The court distinguished between the situation in Jermyn, where the posting was necessary to address the risk that potential, unknown class members would not receive notice, and the FLSA claim at issue in its case, which involved a known class of potential plaintiffs who were likely to be identified and reached by other methods and who, under the FLSA, would not be bound by a judgment in the action if they did not receive notice. As such, posting on the website and blogs would be overbroad and “not likely to materially improve” the chance of notice, the court found.
Importantly the court also considered the coercive impact the proposed website and blog posting could have. “Posting a link on their website extracts a cost from Defendants, and has the potential to appear punitive, while the incremental chance that potential plaintiffs who do not otherwise receive notice would see it and become aware of their rights is small,” the court found.
The plaintiffs also sought to use social media to target potential plaintiffs—former Gawker interns. They proposed use of dedicated social media pages entitled “Gawker Intern Lawsuit” or “Gawker Class Action”—names that matched the URLs of the websites that the parties agreed would be used to provide notice—on sites such as Facebook, LinkedIn, and Twitter.
The defendants objected, first arguing (as had Best Buy earlier) that there was “no evidence” that any former Gawker intern used Twitter or reasonably could be expected to receive notice in that way. The defendants also objected on the ground that creating social media pages would deprive the court of control over the message delivered to potential collective members.
As to the first objection, the court found that it was “unrealistic” that Gawker’s former interns did not maintain social media accounts, declaring that “the vast majority likely have at least one such account, if not more.” The court noted the Pew Research study that found that, as of January 2014, 89 percent of 18- to 29-year-olds used social networking sites. As such, the court approved use of social media, including Twitter, based on the statistical assumption that the former interns would have social media accounts.
The court also rejected the second objection, explaining that it would exercise control only over the materials prepared and sent by the parties, not over the discussion that would take place by and among potential class members after notice had been sent. The court said that the inability to control “discussion of the lawsuit” on social media sites was “no different” from the court’s inability to control two potential plaintiffs’ discussions of the lawsuit in person, by telephone, or even on a social media page that could be created by a person without the parties’ intervention.
The court then granted the plaintiffs’ request to use social media to provide potential plaintiffs with notice that mirrored the notice otherwise approved by the court. It did require, however, that the parties confer regarding the content of the social media postings and return to the court should they be unable to agree.
The reasonableness of the method used to give notice of a class action is, by its very nature, sui generis. Nevertheless, in the four years between Jermyn and Mark, the use of social media has become ubiquitous in society. Indeed, given the impact that “new media” has had on traditional media, it is ever more likely that an individual will read an Internet article, tweet, or Facebook posting to learn about the day’s events rather than read a newspaper or watch a television news show. As such, we may not be far off from the day where it will be assumed that the “best notice that is practicable under the circumstances” will be achieved through social media and websites and not by print publication or dropping a letter in the mail. It is hoped that the courts will, nevertheless, continue to balance the need to provide reasonable notice to absent class members with the interest of class action defendants to avoid the punitive aspects of such postings on their websites and social media resources.
1. Jermyn v. Best Buy Stores, 2010 U.S. Dist. Lexis 130682 (S.D.N.Y. Dec. 6, 2010).
2. Manual for Complex Litigation §30.211, at 223.
3. Mark v. Gawker Media, 2014 U.S. Dist. Lexis 155424 (S.D.N.Y. Nov. 3, 2014).
Read more: New York Law Journal
Reprinted with permission from the February 17, 2014 issue of the New York Law Journal. All rights reserved.