Opinion ID: 709071
Heading Depth: 2
Heading Rank: 3

Heading: The Order Refusing Park Nicollet's Request To Opt Out.

Text: 36 Park Nicollet also asked the district court to exclude Park Nicollet from the class or, alternatively, to stay the class action litigation. Reflecting due process principles, Fed.R.Civ.P. 23(c)(2) requires that a putative member of a Rule 23(b)(3) class action be given the opportunity to opt out and not be bound by the judgment. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173-76, 94 S.Ct. 2140, 2150-52, 40 L.Ed.2d 732 (1974). 7 Therefore, a district court's class notice must advise each class member that the court will exclude the member from the class if the member so requests by a specified date. Rule 23(c)(2)(A). In this case, the class notice is part of the lengthy settlement approval process, and the district court refused Park Nicollet's request for early opt out. Thus, the unique question presented is whether an unwilling class member's right to arbitrate may be held hostage in this manner to the class action settlement process. 37 We have no quarrel with the usual practice of not allowing class members to opt out until after the formal Rule 23(c)(2) notice to the class. That practice is administratively efficient, and it helps the court ensure that class members make informed decisions whether to opt out. However, the usual practice is not appropriate in this case. Although the court supervising a class action has wide discretion to control a class action, including the opt-out process, that discretion must be exercised consistent with the policies and principles of the FAA when a class member with an immediate right to arbitrate its claim seeks to opt out. 38 In this case, by its March 2, 1995, letter to the district court, Park Nicollet made an unrefuted showing that it (i) was represented by separate counsel; (ii) had a contractual right to arbitrate any claim encompassed by the class action; (iii) had submitted a claim to the NASD along with a declaration under Sec. 12(d)(2) of the NASD Code that it elected not to participate in the class action; and (iv) now elected irrevocably to opt out of the class action. In our view, proper regard for the FAA required that the court promptly take one of three actions: it could stay the class action while Park Nicollet's claim is arbitrated; it could deny the request to opt out (for example, because Park Nicollet's arbitration claim is not arbitrable or its request to opt out was too late); or it could grant the request to opt out, in which case Park Nicollet's motion to stay the class action becomes moot. The district court did not stay the class action, and it is conceded that Park Nicollet is entitled to opt out. In these circumstances, the court abused its discretion in refusing to enter an order excluding Park Nicollet from the class. 39