Recently, in the Matter of Navistar MaxxForce Engines Mktg., Sales Practices, & Prod. Liab. Litig. (“Navistar”), the Seventh Circuit Court of Appeals was asked to adopt the “reasonable indication” approach, which would allow class members to opt out of a class based on any reasonable indication of their desire to exclude themselves. Finding the application of such an approach to be impractical, the court refused to adopt it.
Navistar involved the settlement of a class action in which class members accused Navistar of selling trucks with defective engines. Prior to approving the settlement, the district court required that all class members be notified via first-class mail, and outlined a detailed opt-out procedure should any class member wish to litigate independently. Two class members, identified as “Drasc,” who had already filed a separate lawsuit against Navistar in Ohio state court, failed to follow these opt out procedures. Once the settlement was approved, Navistar claimed the separate Ohio state lawsuit was now barred. Drasc disagreed, arguing their efforts to continue litigating in state court should be deemed a “reasonable indication” of their desire to opt out of the class settlement.
In its analysis, the Seventh Circuit identified several reasons why implementing the “reasonable indication” standard would be untenable. For example, without a clear bright-line approach, class members may try to have it both ways—i.e., litigate on their own, and if they lose, attempt to argue they are entitled to the class settlement. In addition, the lack of a clear and mechanical rule would make class actions nearly impossible to administer, and instead, may require the district court to analyze whether the “reasonable indication” standard was met for hundreds, if not thousands, of class members.
Despite rejecting its application in this case, where opt-out instructions were provided by the district court in “excruciating detail,” the Seventh Circuit did acknowledge, however, that a district court may use the “reasonable indication” standard if the court has not issued either opt-out instructions, or if the instructions lack specificity.
This is a good reminder that class action litigators should ensure that clear, specific, and detailed opt-out procedures are provided to class members. For Courts following Navistar, including those in the Seventh Circuit, this will foreclose lawsuits brought by class members who fail to follow those opt-out procedures.