People of Weloy ex rel Pong v MV CEC Ace [2007] FMSC 70; 15 FSM Intrm 443 (Yap. 2007) (27 December 2007)

FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 2006-3004

THE PEOPLE OF THE MUNICIPALITY OF WELOY, YAP
STATE,
by and through CHIEF JOHN PONG, CHIEF
ZACHARY GAMOW, and CHIEF JOSEPH LUSON,
Plaintiffs,

vs.

THE M/V CEC ACE,
its engines, masts, bowsprit, boats, anchors, chains, cable, tackle, rigging, apparel, furniture and all other necessaries thereunto appertaining;
In Rem Defendant,

K-S DIFKO,
ACE SONDERLANDSGAD,
CAPTAIN DURSUN ALI ALEMDARROGLU,
MARIANA EXPRESS LINES,
CLIPPER DENMARK,
and MOLIVA SHIPPING INC.,
In Personam Defendants.
_____________________________________________________

ORDER FOR FURTHER PROCEEDINGS

Dennis K. Yamase
Associate Justice

Decided: December 27, 2007

APPEARANCES:

For the Plaintiffs: Daniel J. Berman, Esq.
Berman O'Connor & Mann
111 Chalan Santo Papa, Suite 503
Hagatna, Guam 96910

For the Defendants: David Ledger, Esq. (pro hac vice)
Carlsmith Ball LLP
134 West Soledad Avenue, Suite 401
P.O. Box BF
Hagatna, Guam 96932-5027

* * * *

HEADNOTES

Civil Procedure  Class Actions; Settlement

Rule 23(e) requires that a class action cannot be settled without the court's approval, and that notice of the proposed settlement must be given to all class members in such manner as the court directs. Rule 23(e)'s provisions are mandatory and serve to invalidate a settlement judgment when absent class members were not notified of the pending approval of the settlement. People of Weloy ex rel. Pong v. M/V CEC Ace, [2007] FMSC 70; 15 FSM Intrm. 443, 445 (Yap 2007).

Civil Procedure  Class Actions; Constitutional Law  Due Process  Notice and Hearing

Since a suit maintained as a class action under Rule 23 has res judicata effect on all class members, due process requires that notice of a proposed settlement be given to the class. People of Weloy ex rel. Pong v. M/V CEC Ace, [2007] FMSC 70; 15 FSM Intrm. 443, 445 (Yap 2007).

Civil Procedure  Class Actions; Settlement

A notice must state the terms of the proposed settlement and the options open to the class members. The notice on its face must be scrupulously neutral and emphasize that the court is expressing no opinion on the merits of the case or the amount of the settlement. The notice may consist of a very general description of the proposed settlement, including a summary of the monetary or other benefits that the class would receive and an estimation of attorneys' fees and other expenses. People of Weloy ex rel. Pong v. M/V CEC Ace, [2007] FMSC 70; 15 FSM Intrm. 443, 445 (Yap 2007).

Civil Procedure  Class Actions

Unless a method can be identified that is more reasonably calculated under the circumstances to apprise the interested parties of the class action's pendency and settlement and to afford them an opportunity to present their objections or to opt out, notice will be by publication. People of Weloy ex rel. Pong v. M/V CEC Ace, [2007] FMSC 70; 15 FSM Intrm. 443, 445 (Yap 2007).

* * * *

COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

On November 14, 2007, the plaintiffs filed their Motion to Vacate Schedule for Motions and Trial; Notice of Settlement; Request for Date for Fairness Hearing or Waiver of Same. The plaintiffs give notice to the court that the parties have agreed to settle this case for $15,000 and ask that the court vacate the schedule it earlier set. The plaintiffs further ask that the court waive the fairness hearing and related publication of notice to the class because of the small amount involved or that the court set a convenient date for the fairness hearing on Yap. The motion states that opposing counsel agrees with the motion.

Now therefore it is hereby ordered that the schedule set in this matter is vacated. The court further presumes that the settlement renders the defendants' pending partial summary judgment motion moot.

Rule 23(e) requires that a class action cannot be settled "without the approval of the court," and that notice of the proposed settlement must "be given to all members of the class in such manner as the court directs." The provisions of Rule 23(e) are mandatory and serve to invalidate a settlement judgment when absent class members were not notified of the pending approval of the settlement. See Sagers v. Yellow Freight Sys., Inc., 68 F.R.D. 686, 689 (N.D. Ga. 1975) (relying on identical U.S. Rule 23(e)). Since a suit maintained as a class action under Rule 23 has res judicata effect on all class members, due process requires that notice of the proposed settlement be given to the class. Grunin v. International House of Pancakes, [1975] USCA8 138; 513 F.2d 114, 120 (8th Cir. 1975).

The plaintiffs shall therefore prepare a notice to the class members in English and Yapese, approved as to form by the defendants, stating the terms of the proposed settlement and the options open to the class members. "[T]he notice on its face must be 'scrupulously neutral' and emphasize that the court is expressing no opinion on the merits of the case or the amount of the settlement." Id. at 122. "[T]he notice may consist of a very general description of the proposed settlement, including a summary of the monetary or other benefits that the class would receive and an estimation of attorneys' fees and other expenses." Id.

Unless the parties can identify a method more reasonably calculated under the circumstances to apprise the interested parties of the class action's pendency and settlement and to afford them an opportunity to present their objections or to opt out, id. at 120, notice shall be by publication. This publication must include at a minimum, but not be limited to, notice by frequent, periodic announcements on radio station V6AI over a period of two weeks, publication in at least two issues of the Yap Networker (YNN), the posting of copies in the village meeting place in each and every village in Weloy municipality, and the posting of copies in all public places in Yap, such as the courthouse, the post office, and the library, and other places where public notices may be posted. People of Weloy ex rel. Pong v. M/V CEC Ace, [2007] FMSC 28; 15 FSM Intrm. 151, 161 (Yap 2007). The notice shall give class members at least sixty days (60) days from the date of first publication for class members either to object or to opt out.

The court will schedule a fairness hearing at such later time as may be convenient to the parties and the court.

* * * *