Class Actions • Opt-out Procedure • Excusable Neglect

In re Imprelis Herbicide Mktg., PICS Case No. 14-0141 (E.D. Pa. Jan. 30, 2014) Pratter, J. (11 pages)

Plaintiff did not show excusable neglect for filing opt-out form after deadline passed; plaintiff had ample notice of the settlement’s term and of the procedures required for opting out, and defendant would be prejudice by permitting opt-out at later date. Motion denied.

Pilgrim Village was one of 29 plaintiffs who filed an individual complaint charging defendant with a variety of products liability claims. A few months later, class plaintiffs filed for preliminary approval of a settlement. Shortly afterwards, counsel for Pilgrim Village instructed plaintiff to fill out and sign an opt-out form. Before settlement was preliminarily approved, a notice of intention to opt out listed Pilgrim Village among those plaintiffs who intended to opt out of the settlement.

The court preliminarily approved the settlement, and set an opt-out deadline of June 28, 2013. More than three months later, Pilgrim Village submitted a signed opt-out form, and moved to extend the deadline to opt out of the class action settlement. It claimed that its failure to file an opt-out form by the specified deadline was the result of excusable neglect. Defendant argued that its ability to terminate the agreement based on an unsatisfactory number of opt-outs was an essential term of its agreement, and that opening the door to plaintiff would deprive defendant of a key contractual right. The U.S. District Court for the Eastern District of Pennsylvania denied plaintiff’s motion.

Under Fed.R.Civ.P. 6(b), the court may extend a specified time for taking action if the party failed to act because of excusable neglect. Four factors are relevant in assessing the issue of excusable neglect: (1) the danger of prejudice to the nonmovant; (2) the length of delay and its potential effect on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant; and (4) whether movant acted in good faith.

Determining ahead of time whether the settlement would resolve most of the potential claims was an important part of defendant’s bargain in accepting the settlement and this bargained-for benefit would be upset by later allowing late opt-outs. Plaintiff argued that defendant knew of its intent to opt out all along (plaintiff filed a lawsuit independent of the pending class action and joined in a notice of intention to opt out prior to the court’s preliminary approval of the settlement) and treated it as if it had opted out (defendant failed to schedule a site inspection after telling counsel that site visits would not be scheduled for plaintiffs who had opted out). Defendant countered that it was not put on notice.

At most, defendant had notice that plaintiff was likely to opt out. Nothing presented by plaintiff shows an actual acknowledgment by defendant that plaintiff opted out. In balancing the impact of one class member’s request for relaxing a deadline against defendant’s bargained-for certainty, the potential for future requests from similarly situated class members, and the cost to defendant of continued litigation against an additional party, the danger of prejudice weighs in favor of defendant.

The third factor, the reason for delay, weighed heavily against plaintiff. The evidence did not show an understanding on defendant’s part that plaintiff had opted out. Nevertheless, it still took more than three additional months and a direct inquiry from the court to spur plaintiff to send in a signed opt-out form.