Opinion ID: 796443
Heading Depth: 2
Heading Rank: 4

Heading: Of the Elite Model Management Settlement Allocation Order.

Text: 74 Appellants contend that [t]he [district] court's entry of the Allocation Order [of July 12, 2005] sending the funds received from the Elite Settlement back to the bankruptcy court, without notice to the class or an opportunity to submit claims against those funds, was contrary to the plain language and clear intent of the notice provisions of Fed.R.Civ.P. 23(e). Brief of Plaintiffs-Appellants at 27. But Rule 23(e)(B) provides only that [t]he court must direct notice in a reasonable manner to all class members who would be bound by a proposed settlement. We have interpreted this provision as follows: 75 The standard for the adequacy of a settlement notice in a class action under either the Due Process Clause or the Federal Rules is measured by reasonableness. There are no rigid rules to determine whether a settlement notice to the class satisfies constitutional or Rule 23(e) requirements; the settlement notice must fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with the proceedings. Notice is adequate if it may be understood by the average class member. 76 Wal-Mart Stores, 396 F.3d at 113-14 (internal citations omitted). Moreover, a district court's decision regarding the form and content of notices sent to class members is reviewed only for an abuse of discretion. In re Agent Orange Prod. Liab. Litig. V, 818 F.2d 145, 168 (2d Cir.1987). 77 In this case, the District Court clearly felt that the class would have received adequate notice of the Elite Settlement through the Bankruptcy Court proceedings. During the course of this litigation, defendant Elite filed its petition for bankruptcy, and this filing stayed this class action as to Elite. The Bankruptcy Court ordered that all proofs of claim against Elite, including those of the certified class, be filed by June 7, 2004. Thereafter, Elite sent a notice through the Bankruptcy Court to its would-be creditors, including those of the certified class through the Claims Administrator appointed by the District Court. 78 On April 29, 2004, one of the attorneys representing the plaintiff class informed the District Court of the mailing of the notice and asserted that Elite had violated an Order of the District Court regarding class notices. The District Court responded by letter the same day, informing the attorney that it had consulted with the Bankruptcy Court upon receipt of the letter and that it had been determined that, absent an objection in Bankruptcy Court, lead counsel in the class action would submit a single class-wide proof of claim and would send a second notice to class members, informing them that it would be submitting a joint proof of claim. Counsel for the class, as well as individual models, filed proofs of claim. 79 In February 2005, Elite and the class settled their claims and the Bankruptcy Court permitted one claim for the class. Because the claim payment was included as part of a settlement confirmation order, the Bankruptcy Court approved the settlement pursuant to Fed. R. Bankr.P. 9019. Settlement proceeds were to be held in escrow pending the entry of an allocation order by the District Court. The 9019 order provided that, to the extent the allocation order directed that all or a portion of the Elite settlement was to be distributed to charity or to holders of other claims besides the class in District Court, such amounts instead would be returned to the Elite estate. No objections to, or appeal from, this order were taken. 80 The District Court approved the Elite settlement, like all the other settlements, on May 6, 2005. Not until June 2005, when plaintiffs' attorneys alleged that the class had never received notice of the Elite settlement, was any issue of notice raised. The basis for this argument apparently is that an earlier class notice from the District Court regarding the Settlement Agreement stated (because the action had been stayed as to Elite) that it did not settle claims against Elite. However, it is undisputed that notice was sent through the bankruptcy proceedings, in which class counsel was participating, to all models who had claims against Elite, both as part of the class and as part of a parallel state action. 81 We agree with the apparent understanding of the District Court that the class had received adequate notice of the Elite settlement through the Bankruptcy Court proceedings and find no abuse of discretion in this regard. Moreover, appellants' argument here seems to be less directed at a supposed lack of notice and more at the fact that the District Court returned the remainder of the Elite settlement fund to the Bankruptcy Court after determining that the settlement fund would be adequately funded to pay actual damages even without the remainder of Elite's settlement. This concern is part-and-parcel of appellants' argument that class members should receive treble damages — a topic which we have dealt with earlier. In any event, we find that the measure of reasonableness that we require in cases of this nature has been satisfied and that the notice to the class members with respect to the Elite settlement was in all respects adequate.