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What is a Class Action Settlement?
A class action settlement is reached when both parties in a class action lawsuit have decided that they no longer want to continue litigating the allegations in the class action lawsuit and want to settle the lawsuit, typically with a monetary benefit to the Class.
It’s important to note that a class action settlement is not an admission of guilt on the part of the defendant. In most cases, the company facing the class action lawsuit would rather settle the class action lawsuit than go through the expense and uncertainty of going to trial.
Some companies will spend months or years fighting a class action lawsuit and won’t settle the case until the Class is officially certified by the judge overseeing the class action lawsuit. Other companies will settle immediately if they wish to avoid the negative press that could come with fighting a class action lawsuit or for a variety of other reasons.
Once both the defendant and the plaintiffs tell the court that they agree to the terms of the class action settlement, the judge will typically grant Preliminary Approval to the deal. Once Preliminary Approval is granted, the Settlement Administrator will start notifying Class Members, set up a website for Class Members to follow the settlement, and Class Members can start filing claims, if necessary.
The class action settlement does not become effective—and awards will not be distributed to valid claimants—until the judge grants Final Approval to the deal. Final Approval is only granted if the judge determines that the settlement terms are fair and once all objections (if any are filed) are resolved.
Who’s Eligible
The two parties and the judge overseeing the case will agree to a clear Class definition, which will determine who is qualified to benefit from the class action settlement.
This will typically state the specific product or service at issue; the dates the product/service was purchased; the state(s) where the product/service was purchased, and any other relevant details. If you meet the criteria defined by the court, you can file a claim to receive a payout from the class action settlement.
Potential Award
Awards from class action settlements vary widely.
For example, Class Members who were part of the Red Bull Energy Drink Class Action Settlement received $10 cash or up to $15 in free Red Bull products. By comparison, the Automotive Dealer Parts Class Action Settlement resulted in a payout of at least $350 for Class Members.
Class Members who were affected by a recent robocall settlement could collect up to $2,500. In some cases, there is no monetary award, but a substantial benefit to Class Members.
For example, Class Members who were part of the Subaru Oil Burning Class Action Settlement could receive an extended warranty, in addition to any costs related to the alleged issue. Sometimes the award is what is called Injunctive Relief.
This is typically a promise by the defendant to no longer engage in the practice at issue. For example, if a company faced a lawsuit over labeling a product as “all natural” when the product contained artificial ingredients, the company will promise to remove “all natural” from its labels. It is not uncommon for monetary relief to be combined with Injunctive Relief.
Filing a Claim & Proof of Purchase
Typically, Class Members will be required to file a claim with the Settlement Administrator if they hope to benefit from the class action settlement. In some cases, Class Members will be required to provide proof of purchase in order to benefit or at least to receive the maximum benefit available.
In some cases, the claim will only require Class Members to provide their information along with an affidavit or signature under penalty of perjury that they purchased the product at issue.
That was the case for those who purchased Good Karma Flax Milk. In some cases, it is not necessary to file a claim at all. This might be the case if the company already has all the needed customer information. This is typically the case if the defendant is a mortgage lender, auto maker or other company where relevant customer information is collected and saved by the defendant.
Important Deadlines
There are several important deadlines to pay attention to when participating in a class action settlement:
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- Claim Form Deadline: This is the last day in which a claim can be filed online or postmarked if sending via regular U.S. mail.
- Exclusion or “Opt Out” Deadline: This is the last day in which a Class Member may exclude him or herself from a class action settlement. This may be necessary if a Class Member doesn’t agree to the terms of the settlement. If you choose to exclude yourself, you will not be bound by the terms of the settlement agreement, which means you will not receive benefits from the class action settlement but will retain your right to sue the defendant(s) in your own individual lawsuit.
- Objection Deadline: If a Class Member wants to participate in a class action settlement, but they take issue with the terms or they think the payout should be different, he or she may choose to file an objection.
- Final Approval Hearing: This is when the judge will hear arguments about whether or not the settlement should be approved.
Legal Representation/Settlement Administrator
Every class action settlement is assigned both an attorney or several attorneys to represent the Class as well as a Settlement Administrator to oversee the claim filing process and payouts to Class Members.
If you have questions about a settlement or you aren’t sure if you qualify to file a claim, it is best to start by contacting the Settlement Administrator.To see if you qualify to benefit from a class action settlement, check out our Open Settlements page today!
Related FAQ Articles:
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