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September 14, 2017 by Jeremy N. NashDownload PDF


Money In Your Pocket: Shifting The Cost Of Class Notice To DefendantsJeremy N. Nash

In class actions, the usual rule is that the plaintiff must initially bear the cost of sending notice to the class, which can amount to hundreds of thousands of dollars, depending on the size of the class and type of notice program. As the name suggests, there are exceptions to the usual rule and, if you represent plaintiffs in class actions, it pays to know them.

District courts have some discretion in how they allocate notice costs. Many regularly exercise that discretion to shift the entire cost of notice to the defendant where the plaintiff has prevailed on the merits of a class claim prior to class certification.

Procedurally, that usually happens on a motion for summary judgment as to a plaintiff’s individual claims pursuant to Federal Rule of Civil Procedure 56. As I wrote in a previous blog post, Pre-certification Motions for Summary Judgment in Class Action Litigation, a plaintiff in a class action generally has little incentive to seek a favorable ruling on the merits of her individual claims, since it would not be binding on members of the proposed class. The rule against one-way intervention may also bar an early merits motion. Nevertheless, it sometimes happens.

In Macarz v. Transworld Sys., Inc., for example, the plaintiff prevailed on his individual claim that the defendant’s debt collection letter violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. 201 F.R.D. 54 (D. Conn. 2001). Afterwards, the court certified a class of all other Connecticut residents who received a similar debt collection letter and directed the defendant to bear the cost of notice. The court observed that many “courts have held that, where notice is to occur after liability has been determined, the defendant appropriately bears the costs.” Id. (collecting cases).

A District of Arizona court reached a similar result in Six (6) Mexican Workers v. Ariz. Citrus Growers, 641 F. Supp. 259 (D. Ariz. 1986). There, the court ordered the defendants to bear not only the cost of notice, but also the cost of locating plaintiffs based on “defendants’ intentional failure to properly maintain records . . . , the fact that the liability of the defendants will have already been established, and because there may be substantial costs involved in locating class members whose whereabouts are unknown[.]” Id. at 264.

In Catlett v. Missouri Hwy. and Transp. Commn., 589 F. Supp. 949, 950-51 (W.D. Mo. 1984), the class’s sex discrimination claims were tried in separate trials: one for liability, and a later one for damages. After the class prevailed on liability, the court ordered notice to help identify certain absent class members. Id. at 951. Since liability had been established at that point, the court determined it was appropriate for the defendant to bear the cost of notice. Id. (collecting cases).
These and other similar rulings “establish a general principle that ‘interim litigation costs, including class notice costs, may be shifted to defendant after plaintiff’s showing of some success on the merits, whether by preliminary injunction, partial summary judgment, or other procedure.’” Hunt v. Imperial Merch. Servs., Inc., 560 F.3d 1137, 1143 (9th Cir. 2009), cert. denied, 130 S. Ct. 154 (2009).

Given the amount of money that may be at stake, class counsel should be mindful of the above rulings in creating a litigation strategy for every class action. The money you save could be your own.