Settlement valid despite untimely notice to IOLTA committee

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A settlement agreement should be upheld even though the Massachusetts IOLTA Committee was not provided with notice and an opportunity to be heard prior to the settlement’s approval, the Supreme Judicial Court has ruled.

The committee, which was not a party to the underlying litigation, received notice of the class action settlement for the first time more than two years after the settlement’s final approval in Superior Court.

After receiving notice, the committee opposed the parties’ joint motion for an order approving the final distribution of unclaimed settlement funds. The motion judge allowed the parties’ joint motion and entered a final judgment of dismissal in accordance with the settlement.

“We conclude that the committee has standing to appeal from the alleged denial of the procedural entitlement conferred on the committee by rule 23(e)(3): namely, timely notice and an opportunity to be heard on whether it should receive residual funds. The committee lacks standing, however, to contest the settlement’s over-all fairness, reasonableness, or adequacy, or otherwise attack the validity of its terms. Assuming, without deciding, the approval of the settlement violated rule 23(e)(3), we conclude that the committee suffered no prejudice. The committee ultimately received the process that rule 23(e)(3) guarantees — an opportunity to be heard as a potential recipient of any residual funds — and the record provides no basis to conclude that earlier notice would have altered the outcome. The violation therefore does not warrant vacating the judgment or the settlement approval. We affirm,” Justice Serge Georges Jr. wrote for the SJC.

The 19-page decision is Ortins, et al. v. Lincoln Property Company, et al., Lawyers Weekly No. 10-038-26.

Click here to read the full text of the opinion.