What is a Legal Notice of Class Action Settlement?

All potential class members are entitled to notice of any proposed class action settlement agreement. Here's what the notification should cover, and your options once you receive this legal notice.

You’ve recently received (via the U.S. mail, email, or both) an envelope or a message containing something called a Legal Notice of Settlement of Class Action. What is the nature of this notice, and what do you need to do now? In this article, we’ll answer these questions and more.

How Class Actions Work

First, some background: When the same conduct by the same business or organization affects a large number of people in the same way—and when certain procedural requirements are met—the affected people who have suffered damages (sometimes hundreds or even thousands of them) can form a "class" of plaintiffs in one lawsuit (as opposed to filing hundreds or thousands of individual cases). This kind of lawsuit is called a “class action.”

Learn more about how class actions work.

In most situations, anyone receiving a Legal Notice of Settlement of Class Action should have already received (usually several months or even a few years earlier) a different mailed (or emailed) document called a Notice of Class Action Lawsuit. This earlier document is meant to notify the recipient of his or her inclusion in the class, detail the nature of the allegations against the defendant, and also to provide instructions on how to “opt out” of the class and preserve the right to file a lawsuit separate from the class action.

Settlement of a Class Action and Notice Requirements

Any member who does not “opt out” of the class will be subject to any resolution of the class action, including any settlement that’s agreed upon between the class representatives (sometimes called the lead plaintiffs) and the defendant. And in most jurisdictions, the court must approve any proposed class action settlement before it’s made final and binding.

Note: Procedural rules for class action lawsuits and settlements differ slightly among the federal system and the different states, but since many state procedural rules for class actions largely mirror what's set out in the federal procedural rules, we’ll discuss class action settlement in the context of the Federal Rules of Civil Procedure (FRCP).

Any time there is a proposed settlement in a class action case, the federal civil procedure rules (specifically, FRCP 23) require the court to direct notice “in a reasonable manner” to every member of the class who would be bound by the proposed settlement. The court can only approve a proposed binding settlement if, after a hearing, the court determines that the proposed agreement is “fair, reasonable, and adequate.”

FRCP 23 also says that any class member may object to the proposed settlement. More on this later.

To give you an idea of the kind of notice you should receive (via snail mail or email) related to a class action settlement in federal court, where the terms of a class action settlement are almost always accessible online, the U.S. District Court for the Northern District of California has posted this sample language on its website:

This notice summarizes the proposed settlement. For the precise terms and conditions of the settlement, please see the settlement agreement available at www.____________.com, by contacting class counsel at _______________, by accessing the Court docket in this case through the Court’s Public Access to Court Electronic Records (PACER) system at https://ecf.cand.uscourts.gov, or by visiting the office of the Clerk of the Court for the United States District Court for the Northern District of California, [insert appropriate Court location here], between 9:00 a.m. and 4:00 p.m., Monday through Friday, excluding Court holidays.

PLEASE DO NOT TELEPHONE THE COURT OR THE COURT CLERK’S OFFICE TO INQUIRE ABOUT THIS SETTLEMENT OR THE CLAIM PROCESS.

Objecting to the Proposed Class Action Settlement

As mentioned above, one function of the Legal Notice of Settlement of Class Action (at least in federal court) is to let class members know of their right to file an objection to the proposed agreement, and to provide details on how to do so. Learn more about the proceure for objecting to a class action settlement.

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