Clas action lawsuits can be very benefial because they allow thousands of claims to be litigated at one time that would otherwise be too impractical to litigate individually. Therefsore, there are several important things that shareholders and consumers should know about class action lawsuits.
The Benefits of a Class Actions
A class action lawsuit allows thousands of claims to be litigated at one time that would otherwise be too impractical to litigate individually. Because a class action allows for the aggregation of many small claims, it lowers the often-high cost of litigation. As a result, class actions can provide restitution to plaintiffs who would otherwise not receive anything because it would not be financially prudent to bring an individual lawsuit. Moreover, class actions make the judicial process much more efficient by reducing the number of suits clogging the courts since one suit is filed instead of many small suits. Finally, class actions are usually brought by attorneys who are particularly trained and experienced in litigating and managing complicated lawsuits. Class actions require much more work than the typical civil lawsuit, and class action attorneys have what it takes to represent the plaintiffs in the class action.
The Number of Class Members Makes a Difference
While there is no set number required for a class action lawsuit to proceed, most cases that are certified have hundreds of plaintiffs or even fewer. Generally, a class with more than forty members will suffice to meet the numerosity requirement. However, having a large number of participants gives the case validity in court. When a small group of people sue a company on behalf of a larger group with similar claims, these cases usually end in settlement instead of going to trial.
How You Get Paid in A Class Action Settlement
All Participating Class Members who submit valid and timely Claim Forms as described in the Notice of Class Action Settlement are entitled to receive settlement payments. If you return the Claim Form, but it is defective, you will be mailed a cure letter by the Claims Administrator within a certain date. The Court will hold a final hearing on a dated provided in the Notice to decide whether to finally approve the settlement. If the Court finally approves the settlement, and there are no objections or appeals, settlement payments will be mailed to all Participating Class Members within a few months. If you stay in the Class, as opposed to opting out, you become a Class Member, and you will automatically release the Defendant from any claims as set forth in the Notice, which includes your right to sue the Defendant for injunctive relief beyond the relief that has been agreed to in the Settlement Agreement, or any form of monetary relief other than personal injury claims, and you will give up your rights to pursue or continue any action against the Defendant based on the Released Claims described in the Notice.
Option to Stay in the Class Action or Opt-Out
The first thing to do if you receive a class action notice is to read the notice very carefully. Notices are sent at various times in a class action lawsuit. The first notice is sent at the time the lawsuit is certified as a class action. In most cases you will be automatically included in the class if you fit within the description of the class and if you do nothing when you receive the notice. You have essentially 3 possible options when you receive a class action notice: (1) Participate as a class member; (2) Not participate in the lawsuit at all (Opt-out); or (3) Participate as a named plaintiff in the lawsuit.
In most instances you will automatically be included as a member in the lawsuit if you fit the description of the class and do nothing when you receive notice of the lawsuit. However, participation in the class action lawsuit in this way will mean that you are giving up any right you might have had to pursue a remedy for your injury in a private lawsuit.
If you do not want to participate in the lawsuit as a member of a class, you will need to opt out of the class. The notice you receive will explain how to do that. There will also be a cut-off date, and you must send your notice to opt out of the class by the date specified or you will be included in the class and lose any rights to file a lawsuit on your own. However, timely opting out means that you can sue the defendant on your own, instead of being part of a class.
You have one other option if you qualify as a class member. You can hire your own attorney and participate in the case as a named party. You might want to do this if your damages are large and you want the advantage of playing a more active role in the lawsuit. If you have a great deal at stake in a class action lawsuit for example, if you have suffered a serious injury from a defective product or have lost a large amount of money because of illegal market manipulation in a securities case you should consult with an experienced class action attorney before you decide whether to participate as a class member, opt out, or participate as named plaintiff.
You Often Give up Your Rights to Sue Individually
In a class action lawsuit, you often give up the right to bring an individual action. As a result, this means that you may have to live with whatever the settlement or verdict of the lawsuit is even if it does not satisfactorily address your situation or damages. Thus, all participants need to consider their individual situation carefully before signing onto a class action lawsuit. In some cases, you may have a better chance at a meaningful recovery if you file a suit on your own or opt-out of the settlement.
Class Action Suits Take Time to Settle
Every class action lawsuit is different; therefore, it is impossible to say how long a class action lawsuit will take. There are very specific steps in the class action process that must be taken, irrespective of the nature of the claims or damages or how large the class. All class action cases must go through each of these steps. Some class actions take nine months to a year; however, most take longer than a year. Some can take two years or even longer, depending on appeals. Factors that play a role in how long a class action lawsuit takes include procedural delays, the court’s docket, and the complexity of the case and number of class members.
Higher Likelihood of Financial Recovery
Lawsuits brought by individuals usually are governed on a first-come, first-served basis. For example, if many individuals sue the defendant at the same concurrently, those who filed earlier claims have more chances to get recovery, if the event the defendant or business goes bankrupt. Onn the other hand, a class-action lawsuit eliminates the ‘’first-come, first-served’’ risks and enables all the injured parties to get recovery at the same time in equal proportions.
How the Recovery Is Divided
Once a class action settles, the parties will ask the Court for final approval of the settlement including approving a plan of distribution to class members. If the Court approves the settlement, the attorneys will be awarded their fees and costs, the Lead Plaintiff(s) will receive an amount partly determined by their participation in the lawsuit, and the rest of the recovery is divided among the class members.
Additional resources provided by the author
Timothy L. Miles has committed his entire career to representing shareholders in complex litigation. Mr. Miles has been recognized for numerous awards for his legal abilities in his struggles to fight for shareholder rights not only among his peers but also those in the judiciary who see firsthand not only his tenacity for protecting shareholder rights, but how he always adheres to the utmost ethical standards when litigating against his adversaries and in a Court of Law. These efforts have resulted in Mr. Miles being recognized not only as an industry leader in his fight for shareholders but also in the ethical manner in which he conducts himself as a lawyer and member of the bar. These recognitions include: The AV® Preeminent™ Rating by Martindale-Hubble®, which is bestowed on fewer than 5 percent of attorneys, in Securities Law, Litigation and Class Actions (2014-2019); The AV® Preeminent™ Attorney – Judicial Edition, the Highest Possible Rating in Both Legal Ability & Ethical Standard Reflecting the confidential opinions on members of the Bar and Judiciary (2017-2010); The Top-Rated Lawyer in Litigation™ for Ethical Standards and Legal Ability by Martindale-Hubble® (Feb. 2015); Superb Rated Attorney, (10.0 out of 10), the Highest Rating Possible by Avvo; Avvo Top Rated Lawyer 2017 & 2018 (Avvo); America’s Most Honored Professionals – Top 1% (2016-2018) (American Registry). Mr. Miles is also a member of Top 100 Civil Plaintiff Trial Lawyers: The National Trial Lawyers Association, which is by invitation only and according to the National Trial Lawyers Association, is “extended to those attorneys who exemplify superior qualifications, trial results, and leadership in their respective state based upon objective and uniformly applied criteria.” The press release by The National Trial Lawyers Association announcing Mr. Miles selection for inclusion into its Top 100 Trial Lawyers stated: “With the selection of Timothy L. Miles by The National Trial Lawyers: Top 100, Miles has shown that he exemplifies superior qualifications, leadership skills, and trial results as a trial lawyer. The selection process for this elite honor is based on a multi-phase process which includes peer nominations combined with third party research.” Mr. Miles focuses his practice on securities fraud class actions, shareholder derivative actions, and corporate mergers and acquisitions class actions.