Metropolitan News-Enterprise


Wednesday, June 6, 2018


Page 1


Ninth Circuit:

Actual Notice to Class Member of Settlement Inessential

Opinion Declares That Existence of Program Reasonably Calculated to Advise of Proposed Accord Is What Is Needed; Sending Letter to Wrong Address of Active Litigant Is Excusable


By a MetNews Staff Writer


A woman whose attorney did not receive a mailed notice of a proposed class settlement because it was sent to the wrong address was properly denied an opportunity to opt out of the class after the deadline to do so had passed, the Ninth U.S. Circuit Court of Appeals has held in a case with facts variously described by a judge at oral argument as “weird,” “peculiar” and “interesting.”

A three-judge panel on Monday affirmed the decision by District Court Judge James V. Selna of the Central District of California denying a motion by Cassandra McNair-Stepney, pursuant to Federal Rule of Civil Procedure 60(b), for relief from a judgment that was based on a settlement with Toyota Motor Corp. in a class action.

That particular settlement was one in a series of agreements stemming from an unintended-acceleration defect in some Toyota vehicles, this one reached in 2013. Moneys in a $1.1 billion fund were distributed among owners or former owners of the Toyota “lemons” under circumstances that did not involve injuries or deaths.

From that fund, $250 million was set aside for those persons whose vehicles would not be getting a brake override retrofit. That included McNair-Stepney; her Toyota was in a junkyard.

Payments to those in McNair-Stepney’s subclass ranged from $37.50 to $125.

McNair-Stepney was in litigation with Toyota for five years in Illinois state court and purportedly did not learn of the settlement in the consolidated action in federal court in Los Angeles until 2014, doing so in connection with a summary judgment motion.

Not a Requirement

The Ninth Circuit’s memorandum opinion says:

“McNair-Stepney contends that both her right to due process and Federal Rule of Civil Procedure 23 were violated because neither she nor her attorney received actual notice of the class action settlement, thereby depriving her of an opportunity to opt out. But neither due process nor Rule 23 require that each individual class member receive actual notice.”

The panel quoted the U.S. Supreme Court’s 1950 opinion in Mullane v. Central Hanover Bank & Trust Co. in saying that what due process demands is notice “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”

Monday’s opinion declares:

“Here, that standard was met.”

Typographical Error

The opinion goes on to say:

“The claims administrator mailed individual notices to more than 22 million class members. The notice sent to McNair-Stepney’s attorney contained a typographical error in the address, but the notice was not returned as undeliverable, so there was no reason for the claims administrator to take additional steps to ensure that the notice was actually delivered. The claims administrator did take additional steps to send notice to the roughly one million class members whose notices were returned as undeliverable. But with a class of more than 22 million members, it would simply not have been feasible for the claims administrator to independently verify that every one of the individual notices had in fact reached its intended recipient.

“The notice program approved by the district court provided adequate protection against the isolated failure of an individual notice to reach its intended recipient, due to mistake or otherwise. In addition to mailing notices, Toyota planned and executed a comprehensive notice-by-publication campaign, which included settlement advertisements in 1,300 newspapers, at least ten national consumer magazines, and internet banners on popular and highly trafficked websites. As the district court noted, given the widespread publicity surrounding the class action litigation and the publication notice actually provided, ‘it is difficult to believe that an attorney involved in this massive litigation would not have learned of the proposed settlement and opportunity to opt-out, even if notice was not sent to his postal address.’ ”

Oral Argument

The opinion does not deal with a point discussed at oral argument in Pasadena on Nov. 9 of last year that Toyota had actual knowledge of the address of McNair-Stepney’s lawyer because it was involved in active litigation with her, so it wasn’t a matter of incorrect information being supplied to it.

When Circuit Judge Marsha Berzon observed that “this is just a weird case because the mail” sent to the wrong address “wasn’t returned,” New York class-action attorney Brian L. Bromberg responded:

“This is a weird case, your honor, I would agree.”

He continued:

“No case is quite like this. This is something out of a civil procedure class in high school.

“You had a case sitting there for five years that everyone had been actively litigating. They had actual knowledge of the correct address, and they got it wrong. They blew it.”

Judge Watford Comments

In questioning Toyota’s counsel, Raymond A. Cardozo of Reed Smith, Judge Paul J. Watford remarked:

“I haven’t found any case like this one where you all actually had the correct address but you guys screwed up and mailed it to the wrong address.”

He added:

“It seems to me that the party that’s at fault might be a relevant consideration in the due process analysis.”

He went on to say:

“The only address you had in the database, to begin with, was the correct one and for whatever reason, that got screwed up. All of the fault is really with your client.”

Watford posed the hypothetical of all notices being sent out with the wrong address. He queried whether, if “it turns out that half of these damn people never found out about this,” he “would say, ‘Oh, sorry, typos occur.’ ”

Cardozo responded that such a notification effort would not suffice because the due-process inquiry relates to the effectiveness of “the program as a whole.”

Knowledge of Settlement

Berzon expressed skepticism that McNair-Stepney did not actually know of the 2013 settlement, announcing what while she did not have any connection with the case, she knew about it from news reports.

“It is a peculiar situation,” she said, telling Bromberg, during his rebuttal, that it was not “terribly credible” that his client’s lawyers were oblivious to the 2013 accord.

Watford interjected:

“That is one way of looking at it. I guess the other way would be that it is entirely credible because, I think, under the settlement agreement your client was going to get like $100—and you had this litigation for five years.”

He opined that there was “no way, if you had known about the settlement,” that McNair-Stepney would not have opted out.

At the conclusion of argument, Berzon, who presided, said:

“Interesting argument. Interesting case.”

That case is McNair-Stepney v. Toyota Motor Corp., No. 16-55327.


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