Should I Join a Class Action Lawsuit?

New York legal specialists weigh in

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We’ve all received that letter. Out of the blue, a law firm lets us know that a product we bought, or a pharmaceutical we used, or a company we worked for, is being sued as part of a class action lawsuit. Many of us throw the letter away. Should we?
 
And how did they get our name anyway?
 
How they get our names
The lawyer can’t just get names, says Marc J. Bern, a class action attorney with Bern Ripka.
 
“You can’t call up AT&T and say, ‘Who did you defraud? Can you send us a list of those people?’” Bern says. “It’s court-ordered, and then a notice goes out. … It’s not like [the consumer is] being contacted before there’s litigation. Generally the litigation has already commenced, and that’s how the names are given to the plaintiff’s steering committee.”
 
Along with that list of names, and the list of those who have already registered for the class action, a third list of names is gathered via court-ordered advertisements.
 
“The court will say, ‘Submit various publications that you feel will hit the proper demographic,’” says Bern. “Oftentimes Parade magazine is used because it has such a wide and appropriate reach.”
 
Determining who and what actually composes a class can be a complex matter.
 
Generally, a class is an “aggregation of people who are similarly situated under a similar fact pattern,” says Joseph J. Ortego, a partner with Nixon Peabody. “It’s supposed to be a more convenient way to deal with a group of people, a tool by which you can resolve multiple claims with multiple people in one place.”
 
What they’re for
“Class actions, if they have legs, are for economic losses or damages because a product has not met statements about the product or warrantees,” says Sheila Birnbaum, a partner with Quinn Emanuel, who represents defendants.
 
Class actions do have a few drawbacks. The process can be laborious and lengthy while the payoff from settlements can be enormous in sum but small once sliced into individual pieces.
 
But there are financial advantages to remaining in a class rather than pursuing an individual claim. "It could cost millions to do discovery," says Paul Rheingold of Rheingold, Valet, Rheingold, McCartney & Giuffra. "But if you spread it across lawyers, it doesn't cost as much." (Rheingold notes that the cost structure remains the same in a class or mass actionl the difference between the two has to do with organization, control and binding outcomes.)
 
As for tossing that letter aside: Should we do it?
 
“Absoutely not,” Bern says. “Many people get multitudes of these things. You could get up to five to 10 a year. … Whether you get a dollar back, or you get a coupon for something, or you get a new toaster oven instead of the old one, it ultimately will pay off for you.”
 
Not to mention, says Andrei Rado, a partner with Milberg, that class actions can be an effective way to improve an industry’s behavior. “Even if you don’t get a lot of money back,” Rado says, “you can still get a company to stop doing what they were doing.”
 
Some of the biggest class action suits in history
Tobacco Master Settlement Agreement ($206 billion)
  • Attorneys general filed individual suits against the major tobacco companies to recover smoking-related health care costs and reduce exposure to minors
  • Settled 1998
  • Each state receives roughly $3.98 billion a year until 2025

Engle v. Liggett Group Inc. ($144.8 billion, overturned)

  • Stanley and Susan Rosenblatt represented as many as 700,000 Florida smokers seeking damages for tobacco-related diseases from companies they alleged concealed the addictiveness of smoking
  • Judgment 2000, overturned 2003
  • When the ruling was overturned, it left $709.7 million to the original 100,000 plaintiffs, or roughly $7,097 each (instead of $1.4 million each)

Enron ($7.2 billion)

  • Company shareholders and investors filed a $40 billion suit after the stock price fell from $90 a share in 2000 to less than $1 by 2001, arguing fraud and the concealment of information
  • Settled in 2008
  • An estimated 1.5 million people received $4,800 each

New York

“Many people get multitudes of [class action letters]. You could get up to five to 10 a year. … Whether you get a dollar back, or you get a coupon for something, or you get a new toaster oven instead of the old one, it ultimately will pay off for you.”

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