United States District Court, W.D. Arkansas, Texarkana Division
JAMES STUART and CAREDA L. HOOD, individually and on behalf of all others similarly situated PLAINTIFFS
STATE FARM FIRE AND CASUALTY COMPANY DEFENDANT
O. Hickey, Chief United States District Judge.
the Court is Plaintiffs' Opposed Motion for Order
Approving Class Notice Plan and Class Notice. (ECF No. 168).
Defendant has filed a response. (ECF No. 175). Plaintiffs
have filed a reply. (ECF No. 179). The Court finds the matter
ripe for consideration.
assert that Defendant unlawfully depreciated labor in
calculating their payment obligations under the parties'
homeowner's insurance contracts. Plaintiffs allege that
Arkansas law in place at the time prohibited an insurance
company from depreciating the cost of labor. Plaintiffs claim
that, by depreciating this cost in initial “actual cash
value” payments made to insureds, Defendant breached
its contract with Plaintiffs.
August 24, 2016, the Court granted Plaintiffs' motion for
class certification. (ECF No. 142). Defendant subsequently
appealed that ruling pursuant to Federal Rule of Civil
Procedure 23(f). On December 6, 2018, the Eighth Circuit
issued its opinion, affirming the Court's certification
ruling, as modified.
April 1, 2019, Plaintiffs filed the instant motion, asking
the Court to approve its proposed Class Notice Plan (ECF No.
168-1) and require that the parties and proposed third-party
administrator, JND Legal Administration (“JND”),
carry out and comply with the terms of the notice plan.
Plaintiffs' proposed Class Notice Plan provides as
follows. Notice will be given to the class via individually
mailed notices, a website banner notification, a newspaper
publication, and a class-action website. To accomplish this,
within twenty-one days of the Court's approval of the
Class Notice Plan, Defendant will compile in an electronic
format substantively similar to Plaintiffs' Exhibit D
(ECF No. 168-1, p. 15), the following information for all
persons who meet the Class Definition from the period of May
1, 2010, through December 6, 2013: first and last name, last
known mailing address, last known email address, policy and
claim numbers, and date of covered loss. This information
will be transmitted to Plaintiffs' counsel, who will
provide it to the third-party administrator.
third-party administrator will then mail to each class
member's last known address a Postcard Notice, in a form
substantially similar to Plaintiffs' Exhibit A (ECF No.
168-1, p. 6). If any mailing is returned with a forwarding
address, the third-party administrator will mail the Postcard
Notice to that address. The third-party administrator will
also email the contents of the Postcard Notice to any known
email address of a class member whose Postcard Notice mailing
third-party administrator will place a publication notice in
the Arkansas Democrat-Gazette, in a form substantially
similar to Plaintiffs' Exhibit E (ECF No. 168-1, p. 16),
running once a week for four consecutive weeks. The
third-party administrator will also create and maintain a
dedicated case website that will host, inter alia,
the pleadings filed in this case, the Court's class
certification order and the Eighth Circuit's opinion
affirming the same, the individual notice forms discussed
above, and this case's operative Final Scheduling Order.
will also place a banner on its website, in a form
substantially similar to Plaintiffs' Exhibit C (ECF No.
168-1, p. 14). The banner will be located at the top of the
screen after an existing customer logs into the payment
portal and will be accessible both via computer
and on Defendant's mobile app. The banner states that a
class action lawsuit may affect the rights of insureds who
received an actual cash value payment for a covered loss
between May 1, 2010, and December 6, 2013. The banner will
also link to the class website.
members who do not validly and timely opt out of the class
will be bound by the terms of any final judgment entered in
this case. Class members may opt out of the class only by
mailing to the third-party administrator a letter containing
this case's name and case number; the class member's
name, address, telephone number, and signature; and a
sentence expressly stating that the individual wishes to be
excluded from the class. (ECF No. 168-1, p. 4). To be valid
and timely, an opt-out request must be mailed to a specified
address and must be postmarked on or before an exclusion
deadline date. The opt-out period will run for sixty days,
beginning on the date the third-party administrator begins
mailing and publication.
April 15, 2019, Defendant responded to the instant motion.
Defendant makes no objection to most of Plaintiffs'
proposed Class Notice Plan. However, Defendant requests that
the Court reject five aspects of the proposed plan and modify
the plan accordingly before approving the notice plan.
class certified under Federal Rule of Civil Procedure
23(b)(3), courts must direct to class members “the best
notice that is practicable under the circumstances, including
individual notice to all members who can be identified
through reasonable effort.” Fed.R.Civ.P. 23(c)(2)(B).
Because “an action maintained as a class suit under
Rule 23 has res judicata effect on all members of the class,
” constitutional due process requires that the class be
provided the best notice practicable, “reasonably
calculated, under all of the circumstances, to apprise
interested parties of the pendency of the action and afford
them an opportunity to present their objections . . . and . .
. must afford a reasonable time for those interested to make
their appearance.” Grunin v. Int'l House of
Pancakes, 513 F.2d 114, 120 (8th Cir. 1975). To that
end, the class notice must “clearly and concisely state
in plain, easily understood language” the following:
(1) the nature of the action; (2) the definition of the class
certified; (3) the class claims; (4) that a class member may
enter an appearance through an attorney if so desired; (5)
that the court will exclude from the class those members who
request exclusion; (6) the time and manner for requesting
exclusion; and (7) the binding effect of a class judgment on
members. Fed.R.Civ.P. 23(c)(2)(B)(i)-(vii). Providing class
notice is not an exact science, however, and the specific
mechanics of the notice process “are left to the
discretion of the court[, ] subject only to the broad
‘reasonableness' standards imposed by due
process.” Grunin, 513 F.2d at 121.
objects to portions of Plaintiffs' proposed Class Notice
Plan. Specifically, Defendant takes issue with the following
five aspects of the proposed plan: (1) the placement of a
banner on Defendant's website; (2) that class members may
only opt out of the class via letter; (3) the length of the
opt-out period; (4) the requirement that Defendant must
compile the class members' information, including each
policy number, in a digital spreadsheet format resembling
Plaintiffs' Exhibit D; and (5) that the proposed Class
Notice Plan does not address who bears the cost of the notice
process. The Court will discuss each challenged
item in turn.
major fighting point of Plaintiffs' proposed Class Notice
Plan is the requirement that Defendant place a banner on its
website, located at the top of the screen after an existing
customer logs into the payment portal, which will be
accessible both via computer and on Defendant's mobile
app. The website banner would state that a class action
lawsuit may affect the rights of State Farm insureds who
received an actual cash value payment for a covered loss to a
dwelling or structure in Arkansas between May 1, 2010, and
December 6, 2013. The banner would also link to the class
website maintained by the third-party administrator.
objects on several grounds, arguing that the website banner:
(1) is unnecessary because individual notice may be
accomplished for most, if not all class members; (2) is
unfairly prejudicial and could have significant negative
effects on Defendant's business; (3) would be seen by an
overly inclusive group of customers and could confuse
Defendant's nationwide customer base; and (4) is
inconsistent with notice plans this Court has approved in
prior labor depreciation class action cases.
argue that the website banner is not unnecessary because it
would serve as a supplemental form of notice. Plaintiffs also
argue that Defendant has provided no evidence that a website
banner would negatively impact Defendant's business and
that Defendant has already generated ample media coverage and
publicity of this case by appealing the Court's class
certification order. Plaintiffs argue further that Defendant
has provided no evidence that a website banner would confuse
people as to whether or not they are class members.
Plaintiffs concede that this Court has not utilized a website
banner in previous labor depreciation class action notice
plans, but also note that Plaintiffs' counsel recently
utilized website banners in two unopposed class notice plans
approved in unrelated class actions in the United States
District Court for the Eastern District of Texas. Plaintiffs
also argue that notice by electronic means is specifically
contemplated by Rule 23 and that courts in other
jurisdictions have found the Internet to be a particularly
effective means of providing notice. Thus, Plaintiffs
analogize their proposed website banner to newspaper
publication and conclude that the Court should approve its
use as a supplemental form of notice to ensure that as many
class members receive notice as possible.
notice is required for all members who can be identified
through reasonable effort. Fed.R.Civ.P. 23(c)(2)(B);
Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176
(1974). However, publication notice is often used as a
supplement to individualized notice. See William B.
Rubenstein, 3 Newberg on Class Actions § 8:29
(5th ed. 2018). Although publication notice has traditionally
been accomplished through newspaper ads, the Internet is
increasingly becoming an acceptable avenue for accomplishing
publication notice. Id. at § 8:30. Publication
notice via the Internet is “a useful supplement to
individual notice, might be provided at a relatively low
cost, and will become increasingly useful as the percentage
of the population that regularly relies on the Internet for
information increases.” Stoffels ex rel. SBC Tel.
Concession Plan v. SBC Commc'ns, Inc., 254 F.R.D.
294, 299 (W.D. Tex. 2008) (citing David F. Herr, Manual
for Complex Litigation § 21.311 (4th ed.)).
“Accordingly, many courts include the Internet as a
component of class certification and class . . . notice
courts within the Eighth Circuit have approved the use of
targeted banner ads on high-traffic, third-party websites in
nationwide class action cases. See, e.g.,
Swinton v. SquareTrade, Inc., No.
418-cv-00144SMRSBJ, 2019 WL 617791, at *4 (S.D. Iowa Feb. 14,
2019) (authorizing banner ads on the Google Display Network
and Facebook); Klug v. Watts Regulator Co., No.
815-cv-00061JFBTDT, 2016 WL 7156480, at *3 (D. Neb. Dec. 7,
2016) (authorizing banner ads on the Conversant Ad Network,
Yahoo Ad Network, and Facebook); In re Zurn Pex Plumbing
Prod. Liab. Litig., No. 08-MDL-1958 ADM/AJB, 2013 WL
716088, at *8 (D. Minn. Feb. 27, 2013) (authorizing banner
ads on major online networks such as AOL, Facebook, and 24/7
Real Media). However, it seems to be unsettled in this
circuit whether a class notice plan can call for a website
banner to be placed on the defendant's own ...