Money For Nothin’ (And A Lawyer For Free)

When I say the words “class action,” what comes to mind?  If you’re a small business owner, the answer might well be “nothing good.”  Class actions have a bad reputation in the business community as little more than vehicles for greedy lawyers to squeeze companies for failure to warn consumers not to do something that common sense should have prevented anyway.  But what if I were to tell you that class actions aren’t always bad?  Indeed, sometimes class actions can solve real problems that might otherwise be too expensive for you to address on your own.

Over the years, I have had the same scenario play out multiple times:  A client calls because they have a problem with an unscrupulous supplier or service provider.  They’ve recently read or heard that there were lawsuits filed, so they looked back at their own contracts and billing history.  In doing so, the client discovered that they overpaid for goods or services to the tune of $10,000 to $20,000.  The amount is enough to throw off a departmental budget or raise eyebrows at a small non-profit, but not enough to justify engaging outside counsel to file a lawsuit.  When I run a quick internet search to find some of these other lawsuits, I discover that there is a putative class action pending.  “Good news!” I tell the client.  “There’s already a class action on file!”  Frequently, clients are much less reassured by this discovery than I am.

If you are concerned to discover that your legal problem is already the subject of a class action, there are a few practical steps you can take to allay your concerns and ensure your rights are protected:

First, educate yourself about the action.  Contact interim class counsel for the putative class and ask for a copy of the complaint and any answer that may have been filed.  When you read it, pay particular attention to the description of the class.  Does the class period cover all of the years during which you suffered losses?  Is there anything in the proposed class definition that might exclude you from participating?  Before assuming that you can’t participate, talk to interim class counsel and ask whether they anticipate filing an amended complaint to expand the class or add more subclasses.  Explain that you have losses that occurred outside the class period or fall into a category that does not appear included.  Interim class counsel has every incentive in the world (including but not limited to significant financial incentives) to ensure that the class definition is broad and the number of class members is large.  They are likely to be relatively friendly and helpful on this point.

Second, raise your hand.  While you are contacting interim class counsel, be sure that they have your correct address, e-mail and other pertinent contact information.  If a class is certified for settlement or trial purposes, class counsel will be obligated to send a detailed notice to each class member informing them of their rights and potential recoveries.  Frequently, it is difficult for class counsel to ascertain the identity of each and every class member, so they send personal notice to those class members of whom counsel is aware and otherwise rely on publication or other impersonal means to reach other class members.  Providing your address, e-mail and other contact information to interim class counsel ensures that you will get the class notice.

If interim class counsel seems uninterested in getting your contact information (they should be eager to take it down), you can always write directly to the clerk of the court in which the class action is pending.  Reference the case number, inform the clerk that you are a member of the putative class and would like to receive notice if and when one is sent, and provide your contact information.  The clerk will usually inform the parties and the judge of your letter.

Third, watch the clock.  One question you may need your own counsel to answer is when the statute of limitation and/or statute of repose runs on your individual claim, and whether you need to take any action or refrain from taking certain actions to preserve your claim.  While the United States Supreme Court’s decision in American Pipe & Construction Co. v. Utah generally holds that statutes of limitations are tolled until class certification is denied or the class member opts out of the class, there is much devilry in the details of class tolling.  Counsel familiar with class action rules and tolling issues should be able to provide you with guidance specific to your state or circuit regarding statutes of limitations or repose and when to file your own separate lawsuit, should it become necessary to do so.  Knowledgeable counsel can provide this advice cheaply and efficiently.

Fourth, follow directions.  Assuming that a class is certified for settlement or trial and you want to participate as a class member, follow the instructions contained in the class notice for opting into the class and documenting the amount of money you are entitled to recover.  You will likely have to provide proof of purchase or damages.  Read the notice carefully, fill out any forms necessary to participate, and provide the documentation requested.

If you do not like a proposed class settlement or do not want to be bound by the result of the class action, you always have the option to opt out of the class action and pursue litigation on your own.  Of course, this leaves you right back where you started – the victim of an unscrupulous practice that is difficult to remedy because of the relatively small dollar amount in dispute.

At the end of the day, class actions are little more than a procedural vehicle for aggregating a large number of claims that turn on the same issue of fact or law.  There is no need for fear or alarm.  If you find yourself the member of a certified class (particularly a settlement class), take heart that you are getting legal representation and possibly money in your pocket with little or no outlay of cash on your part.

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