Inevitably, there is always at least one late claim form arrival in every class action settlement. This precise issue was highlighted in a recent case in the Northern District of California.
In Curtis-Bauer v. Morgan Stanley & Co., No. 3:06-cv-03903, a class action settlement was reached in a racial discrimination case against financial advisors at Morgan Stanley back in 2008. The Court established a claim deadline of May 20, 2008. One claim form came in postmarked June 16, 2008. The special master in that case determined that the claim form was late and asked the claimant for an explanation. The claimant explained that he put the claim form in his office mail chute on May 20, 2008, and he only later learned that letters were routinely stuck in the chute, which delayed their mailing. The special master rejected this explanation. The claimant then petitioned the court for leave to file his late claim, and the court granted the petition over the opposition of class counsel. After the claimant submitted multiple declarations verifying his prior explanation, the court allowed the late claim form, but ruled that timely claim forms would take priority over the late claim and that the late claim should only be paid after all timely claimants had been paid from the settlement.
This one case example illustrates exactly why the decision to accept, reject, or otherwise handle late claim forms should not be taken lightly. Although all class settlements will require their own unique considerations, the following are just a few of the considerations that should be considered when receiving a late claim:
- How late was the claim?
- Is there any explanation for the late claim?
- What is the amount of the late claim?
- If I accept the late claim, will that acceptance require me to accept any additional late claims?
- What is the economic impact—on both the settlement fund, if any, and the cost to the client—of accepting this and any future late claims?
- Will some additional investigation present a justification for accepting just this one late claim (i.e. circumstances unique to this claimant)?
- If I do not accept the late claim, what is the likelihood of the claimant collaterally attacking the entire class settlement?
- What is the economic impact of both a successful and an unsuccessful collateral attack or other challenge to the settlement?
- Should I attempt to reach an agreement regarding the late claim with plaintiffs’ counsel?
- Should I ask permission from the Court/Special Master to take whichever action is decided upon?
- What kind of notice or explanation should be provided to the late claimant, if any?
- If the deadline is before Final Approval, will my actions hurt my chances at obtaining final approval of the settlement?
Closure and release are still the main goals of most class action settlements. Unfortunately, these goals may still remain uncertain after final approval and even after the claim deadline has passed.