What Is Class Action Settlement Administration?

Class Action Settlement Administration is the neutral process of handling the claims in a settlement agreement. In all settlement cases, there is compensation available to the class members because a settlement has been reached. Compensation types vary from case to case but typically include monetary compensation or a gift card. A class action settlement administrator like Simpluris is a court-appointed, neutral third-party who uses two specific documents, preliminary approval and settlement agreement, to execute the terms and conditions of the settlement. Simpluris provides industry-leading comprehensive administrative services from start to finish.

Since the court ultimately decides on class action administrators, judges want to see a viable plan that maximizes the number of class action members as this is of the highest concern. These notice issues are determinant when courts choose experienced and reliable settlement administrators like Simpluris because the court has the responsibility to ensure as many class-action members as possible receive notice and have an opportunity to opt-out. Attorneys must feel their settlement administrator is a 'notice expert.' Why? Because ‘ascertainability’. Federal Rules of Civil Procedure (FRCP) 23’s requirement that class members can be identified and found, is probably the most important role of a neutral class action administrator. If only a small percentage of class members are aware of the litigation, a judge can reject a class certification motion or a final settlement motion. To avoid these pitfalls, a well-crafted notice plan must be submitted to the court for approval. Contacting a comprehensive and well-versed settlement administrator, who is familiar and successful with this process, like Simpluris early in the litigation process maximizes class benefit and minimizes cost. 

The first stage of a settlement case is preliminary approval by the court. This occurs when a judge grants preliminary approval of a proposed settlement with his/her signature and timestamp, creating a timeline for the settlement administrator. At Simpluris, this all-encompassing, streamlined, effective, and technologically-advanced process of settlement administration is covered in its four administration areas: 1) notifying class members, 2) call center, 3) response processing, and 4) settlement fund distribution.

After a case is granted preliminary approval, the settlement administrator begins the notice to the class members. This includes sending out the notice and response form to the class members at the address provided by the Defendant. The notice informs class members of the proposed settlement, what their legal rights are, and instructions on how to exercise their legal rights. The notices will also include the applicable response forms and associated deadlines to submit the response forms.

The world of communication is continually shifting primarily due to the rapid evolution of technology. In place of newspapers, people are tweeting, web surfing, social networking, blogging, etc. Simpluris shines in its technological savvy and will use innovative ways to reach your class members, using a cost-effective and high response program. Often the address provided by the Defendant may be incorrect because the class member has moved. Prior to sending out notice packets, Simpluris ensures that each document in the envelope has been meticulously vetted, prepared, and thoroughly complied. Additionally, its mail house is internal and complies with USPS standards, including mail rates. To ensure it reaches the maximum class members, Simpluis may complete a National Change of Address (NCOA) which locates a better address for individuals or perform a skip trace, where the class member’s social security number is used to locate a current address. When mail is returned undeliverable to Simpluris, we have long instituted automated and rapid processes using reliable sources from the U.S. Postal Service, U.S. Census Bureau, and other private nationally recognized credit sources. Our goal is to identify and designate newer or confirmed addresses that may exist for that class member. This very detailed and highly specialized process of mailing and address configuration is yet another value-added-offering of Simpluris, and a part of our ongoing devotion to complete and holistic accuracy.  

Once class members receive the notice packet, they will call the settlement administrator with questions regarding the case and return their response forms for processing. Simpluris houses its own call center and answers all class members' questions with premium customer service and complete neutrality. It is the go-between for class members and attorneys. Common questions include case allegations in which the class members want to know what the case is about, class member criteria, in which class members want to know why they received the notice packet, and what their options are to respond to the case. In settlement cases, class members' options will vary. Typically, options include to submit a claim and receive compensation, opt-out and not receive compensation or object to any of the terms of the settlement. Individuals that do not receive notice packets may hear about the case and call Simpluris to inquire about becoming a class member. Call center must ask the individual a series of questions to determine if based on the information provided they may qualify for the case. These individuals are then submitted to a case manager as a Potential Class Member (PCM) and the records of the Defendant are reviewed to determine if they should or should not be included in the case. In addition to answering calls in response to the notice packets, the call center will receive calls from class members relating to correspondence they may have received from the response processing department. Once a case has received final approval and disbursed, the call center will receive calls related to class member checks and tax forms. 

Simpluris has its own response processing department, which handles all responses that come in from class members after they have received their notice packet. Each response is carefully entered into an application, compiled, and reported back to counsel. Incomplete responses, those that need corrections, or disputes are given personal attention with case management to efficiently resolve.  

Once the response deadline has passed, the case will go to final approval. At final approval, the court takes a much closer look and issues a definitive decision as to whether the proposed settlement is fair, reasonable, and adequate. The judge will sign the final approval order, making the settlement final and effective. Simpluris will then establish a Qualified Settlement Fund (QSF) to manage the distribution of settlement funds. Settlement funds are allocated on a case by case basis. The total amount the Defendant is required to pay is referred to as the Gross Settlement Amount (GSA). There are several costs, fees, and fines associated with a class action that must be paid from the settlement fund. There are Attorney fees and costs, Lead Plaintiff Enhancements, Administration costs and fines or penalties. The amount that is left over after these deductions are allocated to the class members and is referred to as the Net Settlement Amount (NSA).

Simpluris will thereafter begin distributing funds to the eligible class members. Disbursements are commonly a one-time payment, but in some cases, there can be multiple disbursements. A class member’s individual allocation of the net settlement funds is also determined on a case by case basis. In any case, Simpluris accurately calculates a class member’s settlement award, reports taxes, provides tax documentation to class members, and does all the necessary reporting to the Internal Revenue Service (IRS). Settlement checks are void after a certain number of days. The timeframe is case-specific, but typically 90 days. Upon expiration of the check cashing timeframe, Simpluris completes the distribution of residual funds and closes the QSF.