Your Options When You Receive a Class Action Settlement Notice

You may have received a class action notice in the mail at some point. A class action is a special type of lawsuit where a smaller number of representatives sue a defendant on behalf of a larger group of people with similar claims.

Most class action claims settle with a settlement amount divided among all class members. In the end, you may only get a small payment. You can also exclude yourself from the class if you want to file your own individual claim against the defendant.

To understand your legal options after getting a class action notice claim form, talk to a class action lawyer for legal advice.

What Is a Class Action Lawsuit?

“Most class actions are brought because the damages suffered by any one person is relatively small and would not justify them suing individually,” says Behram V. Parekh, a California class action attorney at Dalimonte Rueb Stoller in Los Angeles. “But, when the damages are collected together, they become big enough to justify a lawsuit.”

In a typical class action, the lead plaintiff and their attorneys will negotiate the terms of the settlement payment 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 come via email or even social media.

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Your Options for Responding to a Class Action Notice

The class action notice outlines the original plaintiff’s claims against the defendant and the terms of the proposed settlement. 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, including:

1. Accept the settlement
2. Opt-out
3. Challenge the settlement terms

Option 1: Accept the Proposed Class Action Settlement

The first option is to simply accept the proposed agreement and remain in the class. This is the simplest option, as you don’t 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 part of the settlement.

Once the court approves the settlement, you will get a settlement check or other 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.”

Option 2: Opt Out of the Class Action

Your second option would be to opt out of the class action. This means that you do not wish to participate in the settlement negotiations while reserving your right to file your own lawsuit in the future. Typically, 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.”

Option 3: Object to the Terms of the Settlement

Finally, you can choose to participate in the class action while objecting to the terms of the proposed settlement offer. You must file, in writing, any objections to the fairness of the settlement with the court.

In filing a written objection, you are asking the judge not to give final approval to 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 a Class Actio 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, contact a law firm and seek legal advice from an experienced attorney who handles class action cases.

Many attorneys provide free consultations at which you can ask questions about your legal claims as well as attorney’s fees and other practical aspects of a class action.