Unlike product liability and consumer cases, in most wage and hour class actions, notice is not published in any general circulation medium. Instead, notice of the class action and its settlement is provided by mail to an affected employee's last known address. What happens to the unlucky class member who moved and received no notice of a pending class action settlement? Under many circumstances, that employee has a good argument that he or she is not bound by the settlement.
What is clear is that unnamed class members are not bound by a settlement that does not comply with minimal due process requirements. Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, 811-812. The class member must receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel. The notice must be the best practicable, "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." The notice must describe the action and the plaintiffs' rights in it. Additionally, due process requires, at a minimum, that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an "opt out" or "request for exclusion" form to the court. Finally, the Due Process Clause requires that the named plaintiff at all times adequately represent the interests of the absent class members. Id.
What is unclear is whether the settlement is binding upon those persons who do not get notice, when publication is not made, and individual notices are returned as undeliverable. We believe that under Phillips Petroleum and Hansberry v. Lee (1940) 311 U.S. 32, such notice is not proper as to those persons. The notice "must be the best practicable, 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. If the parties know, because of a returned notice, that the class member did not get adequate notice, then the notice procedure is not calculated, under all the circumstances to give notice to those particular class members.
Under Federal rules, FRCP Rule 23(c)(2) requires "the best notice practicable under the circumstances," and that individual notice need be given only to members of the class "who can be identified through reasonable effort." Sometimes, that means first class mail, not only upon certification of the class, but at each time notice would thereafter be necessary. Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, 811-812, 86 L. Ed. 2d 628, 105 S. Ct. 2965; Eisen v. Carlisle & Jacquelin (1974) 417 U.S. 156, 173-176, 40 L. Ed. 2d 732, 94 S. Ct. 2140 [where names and addresses of 2,250,000 class members were easily ascertainable, individual notice had to be given]. In Cartt v. Superior Court (1975) 50 Cal.App.3d 960, in a consumer case, a California court held that meaningful notice must be given in a form that "should have a reasonable chance of reaching a substantial percentage of the class members." Under Civil Code § 1781(d), notice by publication may be ordered "if personal notification is unreasonably expensive or it appears that all members of the class cannot be notified personally."
Evidence of actual receipt is not required. But, at least in class actions for damages or similar relief, the claims of class members whose notices are returned as undeliverable must be excluded from any judgment in the class action. Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, at 813, 105 S.Ct. at 2975 (28,000 notices mailed, 1,500 returned as undeliverable). This does not, of course, invalidate the entire settlement. "Courts should not be deterred from Rule 23 economies in litigation by exaggerating the presumed requirements of due process, or by the specter of an occasional successful collateral attack on the basis of due-process." Philadelphia Electric Co. v. Anaconda American Brass Co. (E.D.Pa. 1968) 43 F.R.D. 452, 459. If the class member can show that the process was not reasonably calculated, under all the circumstances, to give him or her notice, then he or she would not be bound by the terms of the settlement. Other class members, however, will be.