The dispute arose from a class action lawsuit filed by former tenants Matthew Ortins and Olivia Savarino against Lincoln Property Company and others over allegedly unlawful rental application fees and excessive apartment lock-changing fees at a Salem residential complex. The case resulted in a $4.16 million settlement fund, though only about 220 class members submitted claims totaling approximately $51,000.
Writing for a unanimous seven-judge panel, Justice Gabrielle R. Georges held that while the IOLTA Committee has standing to challenge procedural violations under Mass. R. Civ. P. 23(e)(3), it cannot attack the overall fairness or adequacy of class settlements. "Rule 23 (e) (3) confers a limited participatory right -- notice and an opportunity to be heard -- rather than a substantive entitlement to receive residual funds or to litigate, for example, settlement adequacy," Georges wrote.
The procedural violation occurred after a Superior Court judge approved the settlement in July 2021, with approximately $500,000 designated to revert to defendants and approximately $124,500 proposed to go to each of two affordable housing charities. The IOLTA Committee only learned of the settlement in December 2023 when the parties sought final distribution approval from Judge Janice W. Howe, who concluded there was a rule violation but declined to "unwind" the extensively supervised settlement.
The court emphasized the mandatory nature of notice requirements, stating that "compliance with rule 23 (e) (3) is mandatory" and that "rules of procedure are not just guidelines." Georges warned that "trial courts must ensure that the committee receives timely notice whenever residual funds may remain" and should "address rule 23 (e) (3) expressly at the settlement-approval stage."
The Supreme Judicial Court noted the settlement judge's independent scrutiny of unclaimed fund provisions, including requiring revisions to cap defendant reversions at $500,000. "That inquiry -- including the settlement judge's misgivings about whether a proposed cy pres recipient bore a sufficient relationship to the claims at issue -- served the institutional purpose underlying rule 23 (e): ensuring that the disposition of potential residual funds is considered explicitly," Georges wrote.
The decision clarifies the IOLTA Committee's limited role in class action settlements while reinforcing mandatory notice requirements. The court emphasized its ruling "should not be read to suggest that delayed notice to the committee is never prejudicial, particularly where the absence of timely participation prevents the court from addressing the treatment of potential residual funds at the settlement-approval stage."