The Ninth Circuit recently ruled in favor of President Trump. That was not a typo, and this is not fake news. The ruling was not in favor of Trump in his official capacity, but in his capacity as a class action defendant. And it was in a case where the plaintiffs were on his side, seeking to defend the lower court’s approval of a class action settlement involving Trump University. The key practice pointer from this decision for those who litigate class actions is that if a class is certified before you reach a settlement, you don’t have to give the class members a second chance to opt out when you later reach a settlement. You might want to make it explicit that there will not be a second chance to opt out.

In Low v. Trump Univ., LLC, No. 17-55635,2018 U.S. App. LEXIS 2920 (9th Cir. Feb. 6, 2018), an objector challenged the district court’s approval of a settlement of several class actions involving allegations of false advertising and fraudulent practices by Trump University, which provided real estate investment seminars. The objector argued that she was entitled to a second opportunity to opt out of the class after a settlement was reached.

The Ninth Circuit first held that the notice that was sent to class members when the class was certified and before a settlement was reached did not promise them as second opportunity to opt out. The Ninth Circuit adopted a standard focusing on “what an average class member would have understood the notice to guarantee.” Id. at *19. The objector focused on a statement in the notice that if “the Plaintiffs obtain money or benefits, either as a result of the trial or a settlement, you will be notified about how to obtain a share (or how to ask to be excluded from any settlement).” Id. at *16.  The court concluded that the notice, which was based on a Federal Judicial Center form, when read as a whole, made clear that there was a single deadline to opt out, and the decision had to be made when the first notice was sent. Based on the notice as a whole, a class member being excluded from the settlement could refer to simply declining to submit a claim form in a claims made settlement, and it was unclear at that point what type of settlement might be reached.

The Ninth Circuit then held that due process did not require a second opportunity to opt out, applying binding precedent in Officers for Justice v. Civil Service Commission of San Francisco, 688 F.2d 615 (9th Cir. 1982), which reasoned that class members’ rights were adequately protected by the opportunity to object to the settlement, the district court’s fairness hearing, and the right to appeal from the approval of a settlement. The court found no intervening Supreme Court authority on point. In a footnote, the court suggested that a district court might have the power to withhold approval of a settlement that did not provide a second opportunity to opt out, in an appropriate case.

Although large numbers of opt outs are relatively rare in the context of a class notice, regardless of whether a settlement has been reached, it may be advisable not to offer class members a second chance to opt out. If the parties think ahead about this issue, they can address it explicitly when the first notice is issued to class members.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

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