Count Me Out! Considerations in Determining Whether to Opt Out of a Class Action Lawsuit

A class action lawsuit claiming a product defect is used to recover damages for a large group of people harmed by the product. When receiving notice of a class action that may involve a product in one or more of your cases, you do have some decisions to make. If you have concerns that the amount of damages awarded to each claimant is too small, then you will need to determine, if available, if you wish to “opt out.” Each claim and each class action presents different factors that should be considered when determining whether to opt out. The size of the claim and the type of damages sought by the class action are two of the most important factors to consider.

• The claim is substantially larger than the typical class members’ claim

One benefit of a class action is that it allows for litigation of small claims that would not otherwise be economically feasible to pursue. The compilation of these small claims can result in a very low recovery amount to each class member. When the amount of a subrogation claim is substantially larger than the typical class members’ claim, and the amount of the claim justifies the cost of litigation, it is generally more effective to opt out of the class and pursue an individual claim against the manufacturer. Further, class action lawsuits are oftentimes pursued for many, many years, meaning that any recovery in an individual lawsuit will likely be received long before any recovery in a class action lawsuit.

• The class damages are limited

Oftentimes damages sought in a class action lawsuit are limited to the cost of replacing or repairing the defective product. This excludes the cost of repairing the damages the defective product caused, which is generally the larger, insured claim. In that situation, if the claim is not excluded from the class action by opting out, any claim for additional property damages will be barred by the legal defense of res judicata. Any additional property damages then become non-recoverable, so special attention should be paid to the opt out date noticed in a class action lawsuit.

It is important to consider each loss independently in determining whether to opt out of a class action lawsuit. Although the amount of the claim and the type of damages being pursued are some of the most important factors to consider, attention should be given to the particular facts of the case and the provisions of the order certifying the class action.

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