A ruling by New York’s highest court that notice of settlements must be sent to possible class members even if the class has not yet been certified could lead to more litigation and higher settlement costs for businesses, says an expert.

Tuesday’s ruling by the New York Court of Appeals involved two cases that had been settled before the class was certified: Geoffrey Desrosiers v. Perry Ellis Menswear L.L.C., in which an unpaid intern had sued the New York-based fashion house; and Christopher Vasquez v. National Securities Corp., in which a salesperson charged the Seattle-based financial services firm had paid him less than minimum wage.

In both cases, New York’s appellate division held that notice of the settlement could be sent to putative class members. The Court of Appeals agreed in its 4-3 ruling.

New York’s law is ambiguous on this issue, said the majority opinion. It notes that as of 2003, under Federal Rules of Civil Procedure, notice of settlement is required only for certified classes in federal courts.

However, it states, a 1982 ruling by New York’s appellate division in Avena V. Ford Motor Co. that held notices should be sent to putative class members in state court litigation has never been overruled.

The New York Legislature has never acted on this issue, said the ruling. “Any practical difficulties and policy concerns that may arise from Avena’s interpretation” of state law “are best addressed by the legislature,” said the ruling, in affirming the lower court rulings.

The minority opinion said “there is no basis under the statutory scheme to mandate … notice to putative members of an undefined class that an individual claim — of which they had received no prior notice and in which they had taken no part — is being settled, but the settlement is not binding on them.”

Robert S. Whitman, a partner with Seyfarth Shaw L.L.P. in New York, said despite the Avena ruling, in practice settlement notices have only been sent out after a class has been certified.

He said one of defendants’ motivators to settle before a class has been certified is there is a smaller population than the entire proposed class.

As a result of this ruling, if notice now must go out to everyone, there is a “strong possibility that those additional people will now try to either participate in the settlement in some way or might be motivated to bring their own claims, knowing that there is money out there to be had,” said Mr. Whitman.

“It could drive up the cost of settlements and therefore make settlements even more expensive, or less likely, or both,” he said.