The US Supreme Court recently denied certiorari of a New Jersey trial court’s order, which directed a class action defendant to pay the entire cost of class notice based on the relative wealth of the parties. In DTD Enterprises, Inc. v. Wells, a dating-referral service, DTD, sued one of its customers in New Jersey state court for failure to make payments due under their contract. The customer answered with a class action against DTD. The trial court certified the class and ordered DTD to bear the class notification costs apparently on the sole ground that it could afford to pay while the plaintiff could not. DTD petitioned the Supreme Court for a writ of certiorari raising due process claims.
Although the Supreme Court ultimately denied DTD’s petition, Justice Kennedy issued a rare explanatory statement, joined by Chief Justice Roberts and Justice Sotomayor, that “[t]o the extent that New Jersey law allows a trial court to impose the onerous costs of class notification on a defendant simply because of the relative wealth of the defendant and without any consideration of the underlying merits of the suit, a serious due process question is raised.” Justice Kennedy noted that, under the circumstances, a defendant would have little hope of recovering its expenditures if the suit later proved meritless, and, thus would be deprived of a property interest protected by the Due Process Clause. He added that “there is considerable force to the argument that a hearing in which the trial court does not consider the underlying merits of the class-action suit is not consistent with due process because it is not sufficient, or appropriate, to protect the property interest at stake.” The three justices nonetheless agreed with the Court’s denial of certiorari because the appeal was interlocutory, and the action was automatically stayed when DTD filed for bankruptcy.