Second Circuit Addresses Adequacy of Notice of Settlement Under Rule 23(e)

Per Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423 (2nd Cir. Jan. 04, 2007):

Appellants contend that “[t]he [district] court's entry of the Allocation Order [of July 12, 2005] sending the funds received from the Elite Settlement back to the bankruptcy court, without notice to the class or an opportunity to submit claims against those funds, was contrary to the plain language and clear intent of the notice provisions of Fed.R.Civ.P. 23(e).” Brief of Plaintiffs-Appellants at 27. But Rule 23(e)(B) provides only that “[t]he court must direct notice in a reasonable manner to all class members who would be bound by a proposed settlement.” We have interpreted this provision as follows:

The standard for the adequacy of a settlement notice in a class action under either the Due Process Clause or the Federal Rules is measured by reasonableness. There are no rigid rules to determine whether a settlement notice to the class satisfies constitutional or Rule 23(e) requirements; the settlement notice must “fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with the proceedings.” Notice is “adequate if it may be understood by the average class member.”

Wal-Mart Stores, 396 F.3d at 113-14 (internal citations omitted). Moreover, a district court's decision regarding the form and content of notices sent to class members is reviewed only for an abuse of discretion. In re Agent Orange Prod. Liab. Litig. V, 818 F.2d 145, 168 (2d Cir.1987).

In this case, the District Court clearly felt that the class would have received adequate notice of the Elite Settlement through the Bankruptcy Court proceedings . . . .

We agree with the apparent understanding of the District Court that the class had received adequate notice of the Elite settlement through the Bankruptcy Court proceedings and find no abuse of discretion in this regard.