Fourteen years ago, Congress enacted legislation intended to protect consumers and investors from settlements in which plaintiffs' attorneys pulled in large fees while their clients (the class members) received little.In one (in)famous case, for example, an unfortunate class member incurred $91.33 in attorneys’ fees to recover $2.19 on the merits.Kamilewicz v. Bank of Boston Corp., 92 F.3d 506 (7th Cir. 1996). The result of Congress' efforts was the Class Action Fairness Act (CAFA), P.L. No. 109-2 (28 U.S.C. §§ 1332(d), 1453, and 1711 – 1715).
One CAFA requirement is that each defendant participating in a proposed settlement must serve notice on the “appropriate state official” of each state in which a class member resides and the appropriate Federal official. 28 U.S.C. § 1715(b). Rather unhelpfully, the CAFA doesn’t say what exactly the appropriate state official is to do with the notice. In 2007, then Commissioner of Corporations Preston DuFauchard issuedRelease 18-Gto provide guidance with respect to notifying the Department of Corporations (now known as the Department of Business Oversight).
The numbers of CAFA notices filed with the DBO spiked in 2013 with 20 notices filed. Last year, only 12 notices were filed, far fewer than the 78 securities class actions reportedly settled nationwide in 2018. Only three notices have been filed so far this year.