Legal Disclaimer: This article provides general information for educational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change frequently. For advice specific to your situation, consult a licensed attorney in your area.
Class action lawsuits allow many people with similar claims to sue together. If you've received a class action notice, understanding your options helps you make the best decision for your situation. The U.S. Courts provides information about federal court procedures, and Federal Rule of Civil Procedure 23 governs class action requirements.
Those Notices Aren't Spam: Class action notices may look like junk mail, but they can represent real money. Read them carefully to understand your options.
What Is a Class Action?
A class action is a lawsuit where:
- One or more people sue on behalf of many
- All class members have similar claims
- Too many people to sue individually
- Common questions of law or fact
- Named plaintiffs represent the class
Common Class Action Types
Consumer Protection
- Defective products
- False advertising
- Privacy violations
- Billing overcharges
Securities
- Stock fraud
- Misleading statements to investors
- Insider trading
Employment
- Wage and hour violations
- Discrimination
- Benefits disputes
Data Breaches
- Identity theft exposure
- Credit monitoring costs
- Privacy violations
How Class Actions Work
Filing and Certification
- Named plaintiff files lawsuit
- Seeks class certification from court
- Court decides if class meets requirements
- If certified, notice sent to class members
Certification Requirements
- Numerosity: Too many to join individually
- Commonality: Common questions of law/fact
- Typicality: Representatives' claims typical of class
- Adequacy: Representatives will protect class interests
Class Action Waivers: Many contracts include class action waivers requiring arbitration. Check your agreements - you may have waived class action rights.
Your Options as a Class Member
Do Nothing (Usually Remain In)
- Automatically included in most class actions
- Bound by outcome
- Share in any recovery
- Give up right to sue individually
Submit a Claim
- Complete claim form by deadline
- Provide required documentation
- Necessary to receive payment in many cases
- Follow instructions exactly
Opt Out
- Exclude yourself from class
- Preserve right to sue individually
- Strict deadline to opt out
- Must follow opt-out procedures exactly
Object
- Oppose the settlement
- Remain in class but voice disagreement
- Court considers objections
- Can appear at fairness hearing
Opt Out vs. Object: Opting out removes you from the class (you can sue separately). Objecting means you stay in but argue the settlement should be different.
When to Opt Out
Consider Opting Out If
- Your damages are much larger than typical
- You have a strong individual case
- Settlement amount is very low
- You want to pursue your own lawsuit
- You have significant, provable losses
Usually Stay In If
- Your individual damages are small
- Too costly to sue individually
- Settlement is fair
- Getting something is better than nothing
- You don't want the hassle of a lawsuit
Class Action Settlements
Settlement Process
- Parties negotiate settlement
- Court preliminarily approves
- Notice sent to class
- Fairness hearing held
- Court gives final approval
- Claims processed and paid
Types of Compensation
- Cash payments: Direct money
- Vouchers/credits: Future purchases
- Product replacement: New product
- Services: Credit monitoring, etc.
- Cy pres: Donation to charity if unclaimed
Attorney Fees in Class Actions
How Lawyers Get Paid
- Percentage of recovery (25-33% typical)
- Paid from settlement fund
- Subject to court approval
- Class members don't pay directly
Lawyer-Heavy Settlements: Critics note class action lawyers sometimes receive millions while class members get small amounts. Review settlement terms carefully.
Filing a Class Action Claim
How to File
- Read notice carefully
- Complete claim form accurately
- Provide documentation if required
- Meet the deadline
- Keep copies of everything
Common Claim Form Requirements
- Proof of purchase
- Account numbers
- Dates of transactions
- Description of harm
- Signature under penalty of perjury
Finding Class Actions
How to Learn About Them
- Notice by mail or email
- News reports
- Class action settlement websites
- Consumer protection organizations
- Check if products/services you use have settlements
If You're Not Part of an Existing Class
Individual Options
- File your own lawsuit
- Send demand letter
- Complain to regulators
- Contact attorney about starting class action
Handle Your Own Dispute
For individual claims, a demand letter can get results without waiting for class action.
Create Your Letter