Your Options When You Receive a Settlement Notice

If it’s early enough, you can accept, opt out or object to the terms

If you live in California, you have probably received a class action notice in the mail at some point. A class action is a special type of lawsuit where one or more individuals sue a defendant on behalf of a larger group of similarly situated individuals. For example, let's say a company manufactures a product that contains a critical safety defect. A person injured by that product may subsequently file a class action on behalf of everyone who purchased the same item.

“Most class actions are brought because the damages suffered by any one individual is relatively small and would not justify them suing individually,” says Behram V. Parekh, a class action attorney at Kirtland & Packard in Redondo Beach, California. “But, when the damages are collected together, they become big enough to justify a lawsuit.”

In a typical California class action, the lead plaintiff and their attorneys will negotiate a monetary settlement on behalf of the class. The court will then require the parties to send a formal notice to all individual members of the class. This is the notice you may have seen in your mailbox. In some cases, the notice may also be sent via email or even social media.

Responding to the Class Action Notice

The class action notice outlines the original plaintiff's claims against the defendant and the terms of the proposed settlement. California's federal courts have suggested language that attorneys should use when sending out these notices. It is important to understand that the notice will not contain the full text of the settlement agreement. You do, however, have the right to see the full agreement if you wish.

The notice will explain your three options for how to respond. The first option is to simply accept the proposed agreement. This is the simplest option, as you do not actually have to do anything. By not responding to the notice at all, the parties and the court overseeing the class action will assume you wish to participate in the settlement. Once the settlement is approved, you will receive any compensation outlined in the agreement. But do note that, by accepting a class action settlement in this manner, you may waive any right to file your own lawsuit involving the same issue in the future.

“The primary disadvantage of joining a class action is that, once you do, you give up the right to sue the defendant independently,” says Parekh. “You are bound by whatever the result of the class action is. That is why most class actions are brought over a relatively small amount of damage done to a large number of people. If the damage to any one person is large, they are much more likely to want to file their own case with their own lawyers.”

Your second option would be to opt out of the class action. This means that you do not wish to participate in the settlement, while reserving your right to file your own lawsuit in the future. Typically, California courts require you to send a letter opting out of a class action to a settlement administrator appointed by the court.

“It is relatively rare for people to opt out of a class,” adds Parekh. “In general, large numbers of opt-outs only happen when the dollar value of individual cases is large, and some class members believe that they can get a better result by suing independently. The rest of the time, the few people who opt out are generally people who, philosophically, do not believe in the class action process and choose to express their view by opting out.”

Finally, you can choose to participate in the class action while objecting to the terms of the proposed settlement. Any objections must be filed in writing with the court. By objecting, you are asking the judge not to approve the settlement as proposed. You cannot ask the judge to modify the settlement or require the parties to make a different agreement. Should the court decline to approve the settlement, the class action lawsuit will simply continue.

Should You Speak with an Attorney First?

Responding to a class action notice can significantly impact your legal rights. Many people ignore a notice without taking the time to understand this. But if you have questions or concerns, it is best to speak with a qualified California class action attorney.

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