Legally Informed: Class-Action Lawsuits and Settlements

If you receive a letter or email inviting you to join a class-action lawsuit to receive a settlement, you may have questions and wonder what to do next. This blog answers some common questions about class-action lawsuits and settlements.

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Legal terminology can be complicated and confusing unless you are a party in the justice system yourself. Ohio Legal Help seeks to make the justice system more accessible so that people feel empowered to resolve their legal problems. Our blog series, Legally Informed, will help you understand important things to know regarding legal issues.

What are class-action lawsuits and settlements? 

A lawsuit happens when one party (the plaintiff) claims they were harmed by another party (the defendant). Lawsuits can be resolved in two ways:

  1. Litigation. Litigation is the process and the steps to resolve a legal dispute in court. These steps may include collecting evidence and preparing witnesses for a hearing. Ligation may happen in small claims court or other civil court.
  2. Settlement. A settlement is an agreement that two parties make to resolve their legal case. If parties need help in resolving a case, they can work through a mediator. 

Some lawsuits have just one plaintiff, like if you sue your landlord to get your security deposit back. Other lawsuits have multiple plaintiffs, like when multiple consumers are harmed by a company’s product, marketing or security breach. 

A class-action lawsuit is a legal case where multiple plaintiffs join together to sue the same defendant for the same harm. The “class” is the group of all people similarly affected by the harm. A class-action settlement is the agreement that the class accepts to resolve the problem. If you join a class-action settlement, you can receive part of the settlement money without going to court.

Receiving a class-action lawsuit notice 

If you are part of a lawsuit’s class of affected people, you may receive a letter or email. 

First, read the entire notice carefully

Second, determine if the notice is legitimate. Scammers may send fake notices to steal your information or money. To avoid being a scam victim, research the class-action lawsuit. To research the lawsuit, you may look up the lawsuit on the Attorney General Office’s website. Also, you may be able to find more information about the lawsuit in a trustworthy news source, like a reputable newspaper’s website. Check that the details in your notice match the details from the Attorney General’s Office or another trusted source. If you think the notice is a scam, report it to the Federal Trade Commission and the Attorney General’s Office.

Third, decide if you want to join the settlement and take action. The notice explains your options for joining. Each case has different options and rules, so read your notice carefully. Your options may include:

  • Join the settlement (opt in). If you want to join the settlement, you may need to take action (like registering on a website or mailing a form) or you may be included automatically.
  • Leave the settlement (opt out). If you do not want to participate in the class-action settlement, you should opt out. To opt out, you may need to take action (like mailing a form) or you may be excluded automatically if you ignore the notice.

No matter what you decide, keep the notice for your records.

Deciding to join a settlement 

There are pros and cons to joining a settlement. The best decision depends on your settlement details and how much harm you have from the company.

If you opt in, you:

  • Avoid risks. You do not have to pay legal fees or spend time in court.
  • Must wait. A class-action settlement can take many years. You cannot control the timeline.
  • Limit your possible compensation and give up rights to sue alone. The amount of money paid to each individual in the class is usually small, because the settlement is divided between many people. The amount may be just a few dollars or up to a few thousand. If you join and others opt out, you may get more money than initially expected, or the company may keep the extra money or give it to charity. Depending on your case, if you join the class-action settlement, you may give up the right to sue the company on your own, so the settlement is the only compensation you receive.

If you opt out, you:

  • Are no longer eligible to receive money. After you opt out, you are ineligible to receive settlement money. You are not required to take further action related to the case. 
  • May sue the company on your own. If you have proof of significant harm (like injury from a product or financial loss from a data breach), you may be able to receive more money if you sue the company on your own instead of joining the class-action settlement. However, suing a company on your own may be expensive and difficult. You may have to gather evidence, share personal details in court, and pay a lot of money to a lawyer upfront. If you lose the case, you may lose your money. If you think you may have a larger claim, find a lawyer and discuss your options before you decide to opt in or out. 

In conclusion, if you get a legitimate class action notice in your mail, always keep it for your records even if you decide not to pursue it. There are pros and cons to each option you decide to take, but you can always consult a lawyer if you have questions about it.

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