Opting Out of A Class Action

Corporations are typically class action defendants, but in some kinds of class actions they may be plaintiffs. As such they generally are distinct from consumer or employee class members both in their financial might and the dollar value of their claims.

If a court allows a case to proceed on a class basis, class members have two options: staying on the sidelines and accepting their share of any recovery or “opting out” in favor of filing a separate action. Potential recovery in the latter circumstance for corporations and large investors can be substantial, and they have the resources and sophistication to pursue individual lawsuits.

Plaintiffs opting out of securities and antitrust class settlements routinely garner payments many times what they would have recovered in the class settlement, but there is a lack of uniform guidance about when opt-out decisions need to be made. The authors discuss the optimum timing of such a decision and offer advice about tolling and the mechanics of class certification.

Claims asserted in a putative class action can be a significant asset to class members with large claims of their own. To take advantage of that asset, however, advance preparation is indispensable. To facilitate moving swiftly on an individual action once certification is decided, a member of a putative class that might want to pursue its own claims should consider engaging counsel to investigate the issues, assess potential recovery and plan a course of action before a decision on class certification.