New York high court rules on notification of class settlements

By Dee Thompson | Dec 28, 2017

NEW YORK (Legal Newsline) – The New York Court of Appeals has affirmed that even if class actions are settled before the class is certified, potential class members must be sent notices of the settlement.

NEW YORK (Legal Newsline) – The New York Court of Appeals has affirmed that even if class actions are settled before the class is certified, potential class members must be sent notices of the settlement.

Two cases prompted this finding, which defined a previously ambiguous New York law regarding notice to potential class members of the original claim being settled.

Geoffrey Desrosiers v. Perry Ellis Menswear LLC stated that in 2012 when Geoffrey Desrosiers was employed as an unpaid intern for Perry Ellis Menswear LLC, he should have been paid. Desrosiers filed a class action in February 2015 seeking wages on behalf of himself and others seeking payment, arguing they were improperly classified as interns. 

Perry Ellis settled Desrosiers’ case in March 2015 and moved to dismiss the complaint in May 2015. The time for Desrosiers to move for class certification had by then expired. 

As explained in the Dec. 12 opinion, “Desrosiers did not oppose dismissal of the complaint, but he filed a cross motion seeking leave to provide notice of the proposed dismissal to putative class members pursuant to CPLR 908. Perry Ellis opposed the cross motion, arguing that notice to putative class members was inappropriate because Desrosiers had not moved for class certification within the required time.”

In the case of Christopher Vasquez v. National Securities Corp., Vasquez, who had been a salesperson in 2007 and 2008, claimed that the financial services firm had paid him less than minimum wage. His lawsuit “sought wage and overtime compensation for himself and similarly-situated individuals,” according to the court’s opinion. 

Vasquez accepted a settlement in March 2015, but moved to provide notice of the proposed dismissal to putative class members.

According to the Court of Appeals' opinion, on an appeal in the Desrosiers case, “The [appeals] court concluded that CPLR 908 ‘is not rendered inoperable simply because the time for the individual plaintiff to move for class certification has expired,’ and that notice to putative class members is ‘particularly important under the present circumstances, where the limitations period could run on the putative class members' cases following discontinuance of the individual plaintiff's action.’”

In the Vasquez case, the defendant’s motion to dismiss the case was granted, but the court ruled notice must still be sent to potential class members.

“In each case, the Appellate Division granted the defendant leave to appeal to this court, certifying the question whether its order was properly made. We now affirm in both cases,” the Court of Appeals noted in its decision. 

The court noted that decisions concerning CPLR 908 “are best addressed by the legislature ..., especially considering that there are also policy reasons in favor of applying CPLR 908 in the pre-certification context, such as ensuring that the settlement between the named plaintiff and the defendant is free from collusion and that absent putative class members will not be prejudiced.”

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