Tips For Approaching Class Action Law Suits And Settlements

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Class action lawsuits and settlements involve a group of individuals or companies harmed by certain activities of an organization, group of entities, or particular people. Either way, these litigations involve hefty punitive damages that can sometimes go into the millions or even billions of dollars.

In 2022, the total amount awarded in various types of class actions was upwards of $63 billion. Of almost 635 actions brought forward in the year, 15 were worth more than $1 billion individually. The biggest category was product liability in which more than $50 billion was awarded in different cases, an amount that was 267% higher than the previous year.

Consumer fraud was the second largest category, followed by antitrust actions, with sizes of settlements being close to $8.6 and $3.8 billion, respectively. In each case, the punitive damages have increased substantially compared to 2021, signifying a host of factors like rising awareness and increasing resources to pursue litigation.

Historical class action lawsuits

Before diving into how to approach a class action, let’s shed some light on significant cases that have taken place in history. For instance, the largest ever class action settled amounted to a mammoth USD 246 billion. This was an action filed collectively by all 50 states against different tobacco companies for damages caused to citizens’ health.

A similar but smaller case was related to exposure to contaminated water in Camp Lejeune, North Carolina, between the 1950s and 1980s. With 17 million already awarded in settlements, another 100 lawsuits have been brought forward in this regard since Camp Lejeune Justice Act that was recently passed by the current president opened a two-year window for claims to be submitted by victims and their families.

If you are an aggrieved family, you can get in touch with a reliable Camp Lejeune law firm to submit your claim to a North Carolina federal court and have relevant compensation awarded after a necessary review of the particular details of the complaint.

Approaching class action lawsuits

Any settlement awarded in a class action affects the interests of a far greater proportion of absent class members in addition to the listed parties who negotiate the settlement. Rule 23(e) of the Federal Rules of Civil Procedure (FRCP) requires courts to approve class action settlements before they are final in order to safeguard the interests of absent class members and to make sure the settlements are adequate, reasonable, and fair.

While class action rulings in state and federal courts vary slightly, many state procedural laws substantially resemble those outlined in Rule 23. Therefore, it is crucial that the named litigants take the necessary actions to guarantee that class action settlements are approved by the court.

Here are some steps through which the individuals negotiating the settlement can do justice to the absent members of the class:

1. Make sure to get a preliminary approval

Once a final settlement amount is negotiated between the concerned parties, the case appears before a court for preliminary approval. This is an important part of the process during which the respective judge takes a lot of factors into account. However, before that, the negotiating groups must ensure that the settlement filing is fit for preliminary approval.

The judge in question considers the following things, which is why it is imperative to make sure that these items are in order:

• That the proposal submitted not only treats the class members equally, but also ascertains that the class was adequately represented by the respective counsel and delegates.
• The settlement is negotiated at “arm’s length”, meaning that unbiased and unrelated parties came to a fair conclusion about the amount to be paid in the case.
• The amount proposed has accounted for all necessary obligations, costs, and risks. Also, there is an effective disbursement method in place that both parties agree upon.

2. Provide a notice to the class members that are absent

Although it is not always a requirement, absent class members must be sent a formal notice once the court grants preliminary approval. Since they are not actively part of the negotiations and other direct meetings between relevant parties, absent members should be notified that the preliminary approval has been granted.

Under Rule 23, the court itself is required to direct the disbursal of a relevant notice to each member with respect to the proceedings. The class administrator needs to send this notice out and the concerned parties need to coordinate with this person for prompt action. At the same time, any absent members who wish to opt out of the settlement must also be monitored during this process.

3. Respective government officials need to be sent a CAFA notice

According to the Class Action Fairness Act of 2005 (CAFA), each defendant must notify the appropriate federal official relevant to the class action lawsuit and the appropriate state official as well in each state where a class member resides. This action needs to take place within 10 days after filing a proposed settlement with a federal court.

However, this applies to cases where the settlement exceeds a sum in controversy of $5 million. Before the settlement’s ultimate court approval, CAFA gives government officials 90 days to consider it. Officials complete the requirements, and if there are any objections, the concerned representative or department can flag it for resolution too.

4. Be ready for objections and deserters

While all is well and good, when the class action is under due process, things can change over the course of time. Given the fact that even the absent class members have the choice to opt out or raise objections on a settlement before the final approval, it is usually the case that at least one or even a few people will pick either of these two options.

The opting-out clause can allow the settling defendants to include a blow-out condition in the settlement proposal, which entails that if a certain number of class members opt out, the entire proposal could fall apart, and no one gets anything. However, since this is a legal right, nothing can be done about it other than ensuring you are ready for such a situation.

Conclusion

Class action lawsuits are collective action where although a particular individual or group are negotiating the relevant terms, they are doing so on behalf of a lot of people. As a result, there is a significant responsibility that falls on their shoulders to approach the procedure as carefully as possible.