In Ortins v. Lincoln Property Company, the Supreme Judicial Court (SJC) of Massachusetts addressed a post-settlement challenge arising from a class action alleging violations of the Massachusetts security deposit statute and Chapter 93A based on allegedly unlawful apartment application and lock-change fees. Although the plaintiffs had succeeded on liability under Massachusetts General Law Chapter 186, § 15B, the trial court denied summary judgment on the Chapter 93A claims before the parties ultimately reached a class settlement. The SJC’s opinion primarily concerned the administration of class-action settlements and the Massachusetts Interest on Lawyers’ Trust Accounts (IOLTA) Committee’s limited rights concerning residual settlement funds, but the decision contains several points that may be favorable to class action and Chapter 93A defendants.
From a defense perspective, the court strongly reaffirmed the principle that settlement approval and protection of absent class members remain the responsibility of the trial judge as opposed to collateral participants such as the IOLTA Committee. The SJC held that the IOLTA Committee’s standing under Mass. R. Civ. P. 23(e)(3) is narrowly limited to receiving notice and presenting arguments concerning whether it should receive residual settlement funds. The court expressly rejected the committee’s attempt to challenge the settlement’s overall fairness, adequacy, or structure, holding that Rule 23 does not transform the committee into a “surrogate for absent class members.” This aspect of the opinion may be useful to defendants seeking to limit collateral attacks on negotiated settlements by nonparties or advocacy groups attempting to challenge settlement terms after approval.
The decision also provides support for the finality of class settlements and application of harmless-error principles in the settlement context. Although the SJC assumed that the parties violated Rule 23(e)(3) by failing to timely notify the IOLTA Committee before settlement approval, the court affirmed the judgment because the committee could not demonstrate prejudice. The court emphasized that procedural violations do not automatically require vacatur and that the relevant inquiry is whether the error deprived the objector of a meaningful opportunity to present arguments that would likely have altered the outcome. Because the settlement judge had independently scrutinized the settlement, including the treatment of residual funds and the extent of any reversion to defendants, and because the committee later received a full opportunity to be heard before final was judgment entered, the SJC found no prejudice warranting disruption of the settlement.
The opinion is also notable for implicitly approving a claims-made settlement structure that limited the defendants’ actual payout exposure. Although the settlement nominally created a fund of up to $4.16 million, the defendants were initially required to deposit only $800,000. The defendants received approximately $500,000 of that amount back after relatively few class members submitted claims. The SJC acknowledged that in claims-made settlements, “the defendant’s liability is never greater than the precise amount the class claims,” recognizing the legitimacy of settlement structures that cap exposure and permit reversionary interests.
Overall, Ortins provides favorable authority for defendants defending Chapter 93A class actions by reinforcing judicial discretion in settlement approval, limiting the ability of nonparties to challenge settlements, protecting the stability and finality of negotiated class resolutions, and acknowledging the viability of claims-made settlement structures.