The Class Action Fairness Act of 2005 (CAFA) turns 15 years old on Feb. 18, 2020. But while CAFA is well known for expanding federal subject matter jurisdiction for class actions, it also requires defendants who settle any class action in federal court (not just those removed to federal court under CAFA) to provide notice of the settlement to the federal and relevant state governments. (See 28 U.S.C. §1711(2) (defining "class action" to include "any civil action filed in a district court of the United States under rule 23 of the Federal Rules of Civil Procedure or any civil action that is removed to a district court of the United States that was originally filed under a state statute or rule of judicial procedure authorizing an action to be brought by 1 or more representatives as a class action").)

This obligation is easy to overlook, but it should not be forgotten: Failure to provide the required notice can allow class members to "refuse to comply with" and "choose not to be bound by" the parties' agreement. (28 U.S.C. §1715(e).) This article provides a summary of what must be done and some pointers for how to streamline the process.

Who gets notice. CAFA requires defendants to provide notice to the "appropriate federal official" and "appropriate state official." Both terms are defined in the statute, and the definitions should be carefully considered. In most cases, unless the defendant is a financial institution, the appropriate federal official will be the attorney general of the United States. Determining the appropriate state official is more difficult. The "appropriate state official" is defined as the official in the state who has "primary regulatory or supervisory responsibility" or licensing authority over the defendant, if the class action had something to do with that person's regulatory or supervisory role. If there is no such person, the appropriate state official is the state attorney general. Because notice must be provided to the "appropriate state official" of each state in which a settlement class member resides, a defendant could have to perform this analysis as many as 50 times.

What the notice must contain. The statute lists the required contents in detail, and they are set forth in the chart below. Most requirements, such as providing copies of the complaints and notice of scheduled hearings, are straightforward. But some require some real work, particularly with large-scale settlements. For example, defendants must provide the "appropriate state official" of each state with the names of the class members (or at least a reasonable estimate of the number of class members) who reside in that state, and the estimated proportionate share of the claims of those members to the entire settlement. (28 U.S.C. §1715(b)(7).) A defendant will have to perform calculations and create class lists unique to each state, which can be time-consuming and tedious.

Timing: the 10-day and 90-day deadlines. All this must be done (1) within 10 days after the proposed settlement is filed in court (28 U.S.C. §1715(b)), and (2) at least 90 days before final approval is granted (28 U.S.C. §1715(d)).

Typically, a proposed settlement is first filed in court along with the motion for preliminary approval. Given the detailed requirements, a defendant should be sure to have marshaled the data necessary for the CAFA notice before the preliminary approval motion is filed to avoid a rush to meet the 10-day deadline. If it is not possible to meet the 10-day deadline, options exist. Notably, the statute does not require notice within 10 days after the settlement is first filed, but when it is "filed." Therefore, a defendant who does not provide notice within 10 days of the first filing, could re-file the proposed settlement and provide compliant CAFA notice within 10 days of that subsequent filing. Further, a handful of district court cases find that technical non-compliance with CAFA's 10-day notice deadline does not allow class members to exempt themselves from the settlement. (See Adoma v. Univ. of Phx., Inc., 913 F. Supp. 2d 964, 972-73 (E.D. Cal. 2012) (collecting cases; finding that "even if defendants are late in serving notice to state and federal officials, class members may not exempt themselves from a settlement so long as at least 90 days elapse between service of the notice and entry of an order granting final approval of the settlement"); Jakosalem v. Air Serv Corp., No. 13-cv-05944-SI, 2015 U.S. Dist. LEXIS 117235, at *2-3 (N.D. Cal. Sep. 2, 2015) ("Courts have found that CAFA's notice requirements have been substantially complied with when the relevant state and federal officials have had 90 days to review the proposed settlement, even when notice was sent out late").)

The 90-day period is more rigid. The 90 days are intended to provide the state and federal officials time to review the settlement and, if necessary, file objections with the settlement court. (See Adoma, 913 F. Supp. 2d at 973 (describing 90-day period as "the statutory period to file objections with the court").) Courts are far less likely to find the failure to satisfy this requirement a mere technicality. Defendants should ensure that the final approval hearing takes place at least 90 days after CAFA notice is provided.

Administrators. Settlement administrators have become the norm for most class settlements, and many offer to provide CAFA notice as part of administering the settlement. That sometimes presents efficiencies—it usually falls to the administrator to calculate final payments, so it may be also prudent to have the administrator use the same or similar data to prepare CAFA notices. But pitfalls exist here too. Initially, practically speaking, the administrator is not usually appointed until the court grants preliminary approval. Invariably, litigants can expect more than 10 days to elapse between the filing of the motion for preliminary approval (and the settlement), and a decision granting preliminary approval. Thus, unless other arrangements are made, the 10-day deadline will pass before the administrator is officially appointed by the court. Moreover, and more importantly, because the consequences for insufficient notice are significant, counsel should provide careful oversight to the CAFA notice process to ensure that administrators meet the requirements of the statute.

Below is a proposed CAFA checklist a defendant can use to efficiently prepare timely, compliant CAFA notice.

Ryan C. Bykerk is an associate in global law firm Greenberg Traurig's Los Angeles office, and a member of the firm's labor & employment practice. He focuses his practice on helping clients develop strategies that meet their case-specific and larger business objectives, and has broad litigation experience in both federal and state court. Atlanta-based shareholder John R. Richards contributed to this article.