Earlier this year, the SJC approved several amendments to the Massachusetts Rules of Civil Procedure, which are to take effect on September 1, 2023. One such amendment applies to Mass. R. Civ. P. 23, and specifically to the section concerning notice to the Massachusetts IOLTA Committee prior to the disposition of residual or "cy pres" funds. That section, 23(e)(3), currently provides: "Where residual funds may remain, no judgment may enter or compromise be approved unless the plaintiff has given notice to the Massachusetts IOLTA Committee for the limited purpose of allowing the committee to be heard on whether it ought to be a recipient of any or all residual funds."
That section, 23(e)(3), has been amended to include the following two sentences:
The plaintiff shall provide such notice no later than 30 days prior to the entry of judgment or any hearing approving any compromise that creates residual funds. If no later than 10 days prior to the entry of judgment or such hearing, the court does not receive a certification by the plaintiff that the required notice has been provided to the Massachusetts IOLTA Committee, no judgment shall enter and any such hearing shall be continued to a date at least 30 days after the required notice has been provided and certification of such is submitted to the court.
The amendment in essence requires that, prior to the entry of judgment or any hearing approving a compromise that creates residual funds, the Plaintiff is required to provide notice to the Massachusetts IOLTA Committee. The Massachusetts IOLTA Committee provides funding for civil legal services for those who cannot afford a lawyer and projects that improve the administration of justice in the Commonwealth; residual funds are a critical source of IOLTA funding.
The requirement that notice be given to the IOLTA Committee at least 30 days before such a hearing is intended to include any preliminary hearing approving a compromise that creates residual funds. The certification procedure serves to provide the Massachusetts IOLTA Committee with sufficient notice so that it has an opportunity to be heard on the issue of disposition of residual funds. For more information on the Massachusetts IOLTA Committee and residual funds, you can consult the Committee's Cy Pres Fact Sheet.
Navigating the class action settlement approval process requires close attention to applicable rules and practices to ensure as efficient a resolution as possible for your client, consistent with compromises secured by the parties in their agreement. Class action practitioners seeking approval for class action settlements in Massachusetts state court should be mindful of this change to Rule 23(e)(3) and the new deadline that it creates for providing notice of any residual fund distributions to the Massachusetts IOLTA Committee.
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