A sign of the times? A New York court approved Class Notice via social media in a lawsuit against Gawker Media LLC. FLSA Overtime Law Blog has the scoop. Gawker is being sued in a class action by current and former interns for allegedly violating the Fair Labor Standards Act (“FLSA”). Since it is a class action, a majority of the interns probably do not know about the case, and the Court wants to inform them of their right to participate.
Interns are usually young. Gawker is a well known blogging website. Ergo, social media is probably an excellent means of getting in touch with these young, tech savvy class members. The Court noted in its Order that “89% of 18—to 29–year–olds use social networking sites.” You can find the Order here.
I applaud the Plaintiffs’ creativity and I will be keeping this Order in my research file for my next class action. Class actions are hard. Max Kennerly’s Litigation and Trial blog (if you’re a litigator add that to your weekly reading list) has an excellent post detailing just how difficult some class cases can be. Even if you “certify” a class action (i.e., get a Judge to agree that your single Plaintiff can represent a larger number of as-yet unnamed similar Plaintiffs) you are still faced with the huge hurdle of actually getting everyone in the class to participate. When class participation becomes a problem depends on whether you have an “opt-in” or an “opt-out” class notice procedure. In California, the default rule is all class cases are “opt-out.” This means you are in the class unless you tell the Court you are not. Class certification in California therefore usually goes like this: (1) the court certifies the class; (2) the lawyers agree on the form of class notice and submit it to the court for approval; (3) class notice goes out to class members; and (4) class members either opt out of the class after receiving the notice, or they do nothing and remain as class members. The Federal rule, by contrast, requires you to opt-in after being notified. This means you are out until you tell the court you are in. Practically speaking, under the Federal rule it is harder to get higher participation in the actual class. If too few people opt-in to the class, then you have no class case, or you have a lower amount of exposure to the Defendants and thus less leverage to settle the case.
I do not know the average opt-in rates for Federal class cases, but in California it is customary to expect as few as 15-25% of the class to actually participate or even claim any settlement once the case is settled. Yes you read that right. Once the case is settled and the class is told “hey, there is a pot of money with your name on it, just tell us you want it” only around 1 out of 4 class members claim the money.
Why? Sometimes a class settlement is so nominal it might not be worth your time. I once got a settlement for about $10 in some consumer case against Dell. I didn’t mail that in, even though it was basically free money. (I should have!) In my experience however I think the biggest culprit is stale class member contact info. I have had low participation even in cases where class members were potentially getting hundreds or thousands of dollars, and it was primarily because we just could not find people. This is often the case in wage and hour class cases against places with a lot of turnover, such as restaurants or other low wage establishments. In these cases sometimes you are trying to find people employed as long as eight to ten years ago, and whose records might not be complete or accurate (or might not even exist at all). Think about it–do you think someone could have found you when you were 27 based on a single snapshot of info garnered from when you were 19? Might be kind of hard. And in some cases if participation is too low, then your class is decertified. That means it is dead, gone, kaput, bye bye.
This is obviously not how anyone wants class cases to go (except defendants). Defendants actually bank on low participation by crafting one-sided class settlements with two pay-out numbers. These are called “reversionary settlements.” They basically work like this: you have one big number that might sell with a court and with an over-eager Plaintiffs’ counsel, but getting that pay out is dependent on some totally unrealistic % of participation. There is a second smaller amount that kicks in if there is not enough participation in the class. Defendants like these deals because they know that so long as the participation number is high enough, they will never have to pay top dollar to settle the case. For this reason devising creative and effective ways to increase class participation in settlements or during the class notice period is always a high priority for Plaintiff’s lawyers who want their clients to get paid.
Enter social media. A brilliant idea and something more courts and more Plaintiffs should suggest for class notice. When you move or change your phone number, odds are you are still keeping your Facebook account or your Twitter profile. Odds are you might even check those more than you check the mail. (How many times did you physically open your mailbox this week? How many times did you open Twitter or Facebook? Exactly.) High participation in class cases is not only good for class members, it is good for the integrity of the system, since class action cases and the lawyers who prosecute them get a bad rap in the media, mostly thanks to a constant dose of reported “coupon” settlements that look like a windfall for lawyers. This perception is not representative of the actual class action landscape and it should change. Class cases are one of the most effective tools in the consumer or the employee’s arsenal for enacting real, positive social change on behalf of a large number of people whose individual claims might not be worth enough to get to a court room. (Or worse, people might not even know it is happening to them.) Class actions are literally the answer to being “nickel and dimed.” They exist for that reason. It’s why big business would love to kill the class action device entirely (and spends billions every year trying to do so). Hopefully the internet and social media will help push the needle in the other direction.