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Class Action 101

Class Action 101

What is a consumer class action, and how may it affect my rights?

  • A consumer class action is a lawsuit in which one or more individuals, often called the “named plaintiffs,” sue on behalf of themselves and others who are “similarly situated.” For example, if a purchaser of certain product sues the manufacturer, alleging that the product is deceptively labeled, s/he may also seek to represent other purchasers of the same product.
  • Consumer class actions exist because litigation is expensive, and without the ability to group claims together, consumers might not be able to hold manufacturers responsible for bad actions.
  • A case is not officially a class action until a court certifies the class and declares that the named plaintiffs may represent the absent class members.
  • The court’s certification order also defines the class, i.e., decides on who is included and excluded. An example of a class definition could be “All persons who purchased the product in California from January 1, 2014 through the date of this order.”
  • Consumer class actions generally seek two forms of relief: (1) money damages, such as the purchase price consumers paid for a product, and (2) injunctive relief compelling the defendant to undertake some particular changes, such as re-labeling products or advertising differently. A single class action may seek either or both forms of relief.
  • Some class actions proceed to trial, wherein the court or a jury will decide whether the class is entitled to relief. Some class actions settle after certification but before trial. Once a class is certified, the court must approve any settlement and also must approve the plaintiffs’ and defendant’s plans for notifying absent class members about the settlement.
  • In certain cases where only injunctive relief (without money damages) is sought, the relief is considered “indivisible” (common to all class members), and absent class members do not have a right to “opt out” (remove themselves from the settlement). For example, if the court approves a settlement requiring a defendant to change the way it labels and markets a product, but not to pay money damages, class members may not have the right to opt out, even if they didn’t participate in settlement negotiations.
  • In other cases when a court approves a class action settlement, including when the settlement requires the defendant to pay money to all class members, the absent class members must be notified of the settlement and given the opportunity to opt out or to object to the settlement. The chart below summarizes the choices to which you may be entitled if you receive notice of a settlement (or pending trial) by named plaintiffs representing you as a class member. The notice that you receive should direct you to the proper place for exercising these choices, such as how to apply to receive settlement funds, or how to submit your name to an opt-out list.

 

Your Legal Rights and Choices
Do Nothing By doing nothing, you keep the possibility of getting money or benefits that may come from a trial or a settlement. On the other hand, you will give up your right to sue the defendant separately about the same legal claims in the lawsuit. You will not give up the right to sue the defendant for other claims. For example, if you remain part of a lawsuit alleging that a defendant fooled consumers by mislabeling a product, you probably would not surrender your right to sue the defendant if the same product caused you bodily harm.
Opt Out of the Settlement If you “opt out” of the class, i.e., ask to exclude yourself from any trial or settlement, then you will not be able to share in any money or benefits that are awarded to class members. You will retain your right to sue the defendant separately about the same legal claims in the lawsuit, if you choose to do so.
Object to the Settlement If you believe the settlement is unfair or unconscionable, you may object and ask the court not to allow the settlement to proceed. Objecting may require appearing before the court or speaking by telephone during a court proceeding. You may attempt to object on your own, or you may hire an attorney to assist with your objection.

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