A consumer guide to class-action lawsuits

Most consumers at one time or another have opened their mail to learn they are a member of a class-action lawsuit. Oftentimes the packets are bulky with several pages of legal language outlining the case and their rights. Intimidated by all the paper, many people simply throw the packets away. However by doing so, they may be discarding the opportunity for both justice and compensation.

Understanding how class-action lawsuits work can make the process less intimidating and the case for participating in them more powerful.

A class action is a lawsuit in which one or more plaintiffs pursue claims on behalf of a much larger group against one or more defendants for some type of common injury or offense. Many that make headlines are consumer cases, but they can also involve anti-trust claims, securities, fraud, employment discrimination or environmental claims.

Class-action lawsuits serve justice in two primary ways. First, they allow ordinary citizens to pursue small claims they otherwise might not be able to afford against very large and wealthy organizations. Second, they provide a system for punishing wrongdoers, thereby deterring that harmful conduct by both the defendant and others in the future.

Your first step when you receive notice that you may be a member of a class-action, is to determine whether you’ve been properly identified as being part of the class. For example, if you receive a notice involving Verizon and you have never used Verizon, it’s a mistake.

Second, check to see what your obligations are to continue as a member of the class. Your notice will indicate whether it’s an opt-out or opt-in situation; most will be opt-out. Generally, you should opt out only if you have a large individual claim that you believe would be beneficial to pursue on your own. For example, if you suffered major, permanent injuries from using Vioxx, the value of your claim may far exceed what you would be entitled to as a member of a class. On the other hand, if you have a $200 claim against Microsoft in an antitrust lawsuit, it makes more sense to remain part of the class because your legal costs to pursue action on your own would exceed $200. Moreover, you would still have the burden of proving the company is guilty of antitrust activity.

Third, satisfy any required “proof obligations” described in the notice. This is often the point where class members abandon the process, but it is a necessary step to assure fairness both to the defendant and to all the plaintiffs.

Finally, return the proof of claim to the address indicated before the deadline specified in the notice.

If you participate in a class-action lawsuit, you do not need to hire your own attorney. Attorneys who represent the lead plaintiffs have an obligation to each and every member of the class. These attorneys typically are paid out of the damages recovered in the case, with fee awards subject to court review and approval.

It’s important to note that if you do remain a member of the class, you are bound by the settlement or judgment in the action. This means that if the “class” agrees to settle for a certain amount of money, or a judge awards a certain amount of money, you have no right to appeal it in court. You must accept what has been accepted on your behalf by the class.

When determining whether to participate in a class-action lawsuit, it helps to consider public along with personal interest. You may find that participating results personally in only a few dollars for you, but when you consider that you may be helping society and the public by participating in a legal process that rights wrongs, the overall benefits can be much greater.


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