Northern District Holds That Failing to Receive Opt-Out Notice Insufficient to Support Excusable Neglect Finding to Allow Late Class Member Opt-Out

by charlesjung

SAN FRANCISCO - MARCH 25:  Boxes of mail waits...
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The Northern District of California denied a motion by a member of a federal securities class action to opt out after the deadline.  In re Charles Schwab Corporation Securities Litigation, No. C 08-01510 WHA, 2010 WL 4509718 (N.D. Cal. Nov. 1, 2010) (slip op.).   The standard for determining whether a class member should be allowed to opt out of a class action after the applicable exclusion deadline has passed is whether the class member’s failure to meet the deadline is the result of “excusable neglect.”  Id. *1 (citing Silber v. Mabon, 18 F.3d 1449, 1455 (9th Cir. 1994)).

The court found that the excuse provided by the class member—not receiving the opt-out notice—was insufficient to support a finding of excusable neglect:

Having considered the factors set forth above, this order finds that the facts and circumstances underlying the request of Gary Benson do not support a finding of excusable neglect under Ninth Circuit law. The only excuse provided by Mr. Benson is that he did not receive the opt-out notice sent to federal securities class members on October 12, 2009. While it may be true that he did not learn of his involvement in the instant case until recently, the class action notice was properly sent via first-class mail to the address associated with his Schwab account(s) and was not returned to the claims administrator as “undeliverable” (see Dkt. No. 751-1, listing all class members for whom notices were returned “undeliverable” and where new addresses could not be found). In other words, the notice provided to Mr. Benson was reasonably calculated to give him actual notice of this class action and was constitutionally sufficient. This weighs against a finding of excusable neglect.


The court noted that “if such excuses were deemed sufficient to warrant exclusion at this time, defendants would be prejudiced, given their commitment to a settlement amount that was negotiated with a stable class membership in mind.” Id.

Judge and Attorneys

District Judge William Alsup.

Peter E. Borkon Reed R. Kathrein, Hagens Berman Sobol Shapiro LLP, Berkeley, CA, Lisa Hasselman, Robert F. Lopez, Lisa Hasselman, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Sean R. Matt, Hagens Berman LLP, Seattle, WA, for Mike Labins on Behalf of Himself and All Others Similarly Situated, James Coffin, David Mikelonis, John A. Hill, Robert Dickson, Kevin O’Donnell, Yieldplus Investor Group.

Samuel Benton Edwards, Shepherd Smith Edwards & Kantas LLP, Houston, TX, for Thomas T. Chowattukunnel, Lisa Fox-McManus, Gary Holmes, Shiela F. Silver, Martin J. Beckmann, Mark Connolly, Steven Rees, Ray Chezik, Lisa Schaefer, Rodney E. Thompson, Suzanna Thompson, Arthur Froot, Roger Fross, Arthur Whiteway, Paul Willey, Diane Willey, Richard Jones, Zhihua Sui.

Long Pound & Komer PA, Santa Fe, NM, for Timothy L. Garcia.

Nancy R. Long, Santa Fe, NM, pro se.

Alan Charles Friedberg, Pendleton Friedberg Wilson & Hennessey, P.C., Denver, CO, for Aspen Grove Townhome Association.

Darryl Paul Rains, Morrison & Foerster LLP, Palo Alto, CA, Craig David Martin, Dana Anthony Rodriguez, Dorothy L. Fernandez, Stuart Christopher Plunkett, Morrison & Foerster LLP, Karin A. Kramer, Patrick C. Doolittle, Quinn Emanuel Urquhart and Sullivan LLP, Kimberly Linnell Taylor, Taylor & Company Law Offices, LLP, San Francisco, CA, Faith Elizabeth Gay, Quinn Emanuel Urquhart and Sullivan LLP, Robert Craig Juman, Quinn Emanuel Urquhart et al LLP, New York, NY, Richard A. Schirtzer, Quinn Emanuel Urquhart and Sullivan LLP, Los Angeles, CA, for Charles Schwab Corporation Securities Litigation.