What Happens If You Lose a Class Action Lawsuit? 

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When a person receives notice that they are going to be included as part of a class action, it is important they understand the potential rewards and consequences of being involved in a class action versus opting out.

Essentially, class action litigation is filed by a small number of plaintiffs on behalf of a group of people, alleging they were all harmed similarly by some action by the defendant.

Class actions are commonly filed against major companies—the average individual plaintiff may not have had the money to pursue litigation against a large corporation alone, but would be able to in the relative safety of a class action with the backing of an entire class of people. This means that litigation can be filed collectively for what would be relatively small individual claims. Indeed, these lawsuits can include hundreds or even thousands of Class Members at a time.

Common class action lawsuits are filed over issues like defective products, labor laws, deceptive products, neglectful care, and other issues that generally apply to many different consumers in similar ways.

For the most part, class action lawsuits typically end in settlement agreements between the lead plaintiffs and the defendants. If a class action ends in a settlement, the settlement award is divided and distributed among Class Members. However, if a settlement is not reached, the case will then go to trial. Of course, as with any trial, there is some level of risk that the court will side with the defendant rather than with the plaintiffs.

What Does It Mean to Lose a Class Action Lawsuit?

Losing a class action lawsuit that has proceeded to trial will have consequences for each Class Member who participated. Obviously, if the lawsuit is lost, Class Members will not receive compensation for the damages they experienced that led them to pursue litigation in the first place.

An individual Class Member has very little or even no control over how the case goes. Whether or not a Class Member will lose a class action lawsuit will not be up to them—the lead plaintiffs are the ones who will decide if they will accept a settlement offer, testify in court, and offer evidence.

Individual Class Members are also not in control of which attorneys will be hired to represent the entirety of the Class in court. Sometimes, a case might be lost because of poor decisions on the part of attorneys or lead plaintiffs, and even though the hundreds or thousands of individual class members did nothing wrong, they still lose the case.

Some of this risk is mitigated by the fact that before a class action lawsuit can proceed very far, a judge must first certify the Class. This means that the judge has determined that the lead plaintiffs have demonstrated that their proposed Class has a valid claim against the defendants, and has shown that they, as the lead plaintiffs in the case, have a claim that adequately represents all members of the Class.

After a judge certifies a class action lawsuit, Class Members are contacted. The defendant, the plaintiffs, and the court each have a responsibility to identify Class Members and make a “reasonable effort” to contact them, notifying them that they are being included in a class action lawsuit. They then have the ability to opt out of the lawsuit, should they so choose. Sometimes, a potential Class Member may be overlooked. In this case, they may pursue the matter by finding contact information online or in their local newspaper, and be added to the class action litigation this way.

Do Class Members Have to Pay Fees After Losing?

Even though to lose a class action lawsuit means that no Class Members or plaintiffs will be compensated for the damages they’ve experienced, the good news is that the Class Members do not take on the responsibility of compensating the other side for legal fees.

On top of this, attorneys will generally agree to take class action cases on what is considered a “contingent fee basis,” meaning that an attorney will agree to a fixed percentage of an award that is agreed upon, but no fee if the lawsuit is lost.

There is no monetary loss for individual Class Members upon losing a class action lawsuit—only the fact that they cannot recover compensation for any damages.

Can A Former Class Member File Their Own Lawsuit?

When a person becomes a Class Member of a class action lawsuit, they also give up their right to file an individual claim over the same issue against the defendant. This means that once they opt in, the class action lawsuit is their one chance to receive compensation for whatever damages had been incurred.

The choice to become a Class Member in a lawsuit (or, more accurately, to not opt out, since Class Members are generally identified and notified that they are being included in a class action) can be a difficult one, with many factors to consider. It is important for potential Class Members to think carefully about whether or not they want to remain in a class action lawsuit or opt out, weighing the potential risks and rewards involved. Consumers may find discussing the issue with an experienced attorney can help them decide the best option available for them.