When should I opt out of a class action case?
UPDATED: March 21, 2012
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Joining or opting out of a class action lawsuit can be a costly decision. The benefits and risks of one option over the other depend heavily on the type of lawsuit and a person's situation. Therefore, an individual should weigh the pros and cons of a class action suit before making a decision.
Common Class Actions
Many class actions are consumer protection suits, such as a software company forcing buyers to agree to certain restrictions with giving them proper information about those restrictions. In this case, the point of the lawsuit is to get the company to change its behavior and not necessarily to repay each buyer for any harm done. These types of suits are often posted publicly or noticed via mail or in retail stores. There can be thousands of litigants.
Most people would not think of filing a lawsuit on their own, but could benefit from staying in the class in the form of some small payment. If the amount a person would receive by suing individually is so small it wouldn't warrant the expense of filing a lawsuit, then it wouldn't make sense to pay the small claims fee to file the suit. In this type of suit, it is easier to stay in the class action.
That is the general advice about deciding whether to opt out or stay in. If a person has only been harmed in a small amount, it makes more sense to litigate in a class action. If a person has a specific injury or his loss is substantial, then opting out might be the best option.
Cost and Benefits of Class Action Lawsuit
The valuation of a case includes the amount of any loss or damages along with the costs of litigation, including attorney's fees. Because class action damages are divided into many parts after legal fees, the class amount may not be enough to cover an individual's loss.
A person's situation or interests may be significantly different from the rest of the class. An example may be a class action that involves an automobile defect, such as tail lights that are a fire hazard. While other class members may have had minor fires and damage related to the defect, if a person's car was destroyed or someone physically injured because of the defect, then opting out makes sense.
If a person has a reason to believe the lead plaintiffs and lead counsel for the class do not have his best interests at heart, or disagrees with the strategy, then staying in the suit may not be the right decision. If an individual want to play an active role in the case or want a certain level of control over the potential outcomes, this is another good reason for opting out.
Consult an Attorney
Before opting out, a person should consult with an experienced class action attorney. The decision to stay in or leave a class action involves more than checking a box on a card or calling plaintiff's counsel. There are filing requirements and deadlines that will need to be met. In some cases there may be an applicable statute of limitations. It is an important to analyze all the procedural requirements along with personal reasons before making a decision about any legal action.