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A touch of class (action)

Congratulations! You've just been invited to join a class action lawsuit. Now what?

Like everything else that promises money for (nearly) nothing, you've got a little homework to do.

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First things first. Pour yourself a super-caffeinated espresso and read the notice -- all of it. The first time through, just look for the basics: What is the action about? Who are the plaintiff's attorneys? Why are you eligible?

For Richard D. Freer, a professor at Emory University law school in Atlanta, two questions are key: How much could you recoup? And how much are the plaintiff's attorneys getting?

"[The notice] is in legalese, but if you read it with those questions in mind, it will help," says Freer, who specializes in civil procedure and complex litigation. Many times in more common class action suits, the attorneys -- not individual defendants -- take the largest piece of the pie.

Often, Freer says, the invitations are not to join, but to opt out of the class.

"The only reason you want to opt out is if you're bringing your own suit," said Freer. "If you suffered major damage, you probably will opt out."

But if the damage -- and the potential reward -- is slight, then it makes more sense to remain part of the class.

Know the class
Also, determine what kind of class action suit you are potentially joining. There are two major categories, says Robert H. Klonoff, partner in the Washington, D.C.-based firm Jones, Day, Reavis & Pogue and author of Class Actions and Other Multi-Party Litigation in a Nutshell.

In a settlement class, the lawyers on both sides have already reached a tentative agreement, but a litigating class is headed for court.

Still have questions? No wonder. Even lawyers have trouble plowing through some of the notices that hit the mailboxes.

A Federal Judicial Center team, which included several lawyers, studied the language of class action suit notices in the mid-'90s.

"Nobody could understand those things," said Thomas E. Willging, a senior researcher at the center and a member of the team. "One of our conclusions was that they are not decipherable."

As a result, the center drafted guidelines to help lawyers prepare reader-friendly notices.

In spite of that, class members still have trouble with the fine print. So do you need your own attorney -- or your cousin who is in her third year at the local law academy -- to help you get through the process? The truth is, it's probably not worth it.

"It all depends on the size of your claim," Freer says.

If you're going to get a few hundred dollars, then it wouldn't pay to have a lawyer look over the paperwork. But if you've been hurt in a severe way, lost a loved one or sustained a personal injury, then you probably want your own lawyer -- and your own lawsuit.

If the potential reward is small, then you have to stay informed and read all the fine print -- not only on the initial notice, but also on the release you will sign prior to getting your check. Sometimes the reward won't be money at all, but discounts or coupons for future purchases.

Even if there is money involved, you might decide it isn't worth the hassle. Often, especially in large-scale actions with the potential for many plaintiffs, the financial rewards are minuscule.

Atlanta-based consumer adviser Clark Howard recently received his own invitation to a suit.

"I got the exciting news that I'm one of the claimants, and I'm going to get a check for $6," says Howard, host of a nationally syndicated radio show and co-author of Get Clark Smart: The Ultimate Guide for the Savvy Consumer.

His advice: Before you sign on the dotted line, make sure the reward is worth whatever minutes you have to invest -- whether its reading through the legal forms or digging up a receipt for a product that may be years old.

"Usually it's not going to be a scam," says Howard. "You just want to [make sure] the money is worth your time."

Free advice
So you read through the notice until your eyes glaze over, and you still have a few questions. You also have a couple of options. First, call the plaintiff's attorneys, Klonoff says.

"Usually there is an (800) number [on the notice] to talk to the plaintiff's lawyers and ask them what is going on," he says.

Things to ask: What is required to be a class member? What do you have to do -- if anything -- to prove you're in the class? What's the potential reward? And is this a settlement offer or is the case headed for court?

Keep in mind too, says Freer, that while the plaintiff's attorneys technically work for you, they may not be disinterested third parties.

Class members get to vote on accepting the proposed settlement.

Only when the settlement deal goes through does everyone's lawyer get a check. In addition, many lawyers get paid based on how many plaintiffs they sign -- giving the lawyers a valid reason to want you on board.

"Remember, you're going to someone who's got every incentive in the world to make your fears go away," says Freer.

Second, if you are not satisfied with what you hear from the attorneys, Freer suggests you write a note to the judge with any questions you might have. But you may or may not get an answer, and this is not the best tact to take if you got your notice at the last minute.

Could I get stuck with the tab?
Real-life chances of a class member getting stuck with the tab: "Close to zero," says Klonoff.

If it's a settlement class, then by the time you are invited to participate, the terms likely have been ironed out by all the involved parties, except for the judge, says Freer.

If the judge doesn't approve the settlement -- and if the case goes to court and the plaintiff loses -- theoretically, members of the class could be called on to pay the lawyers. While it has happened in a couple of cases, it's extremely rare. The vast majority of class actions are settled out of court, and attorneys' fees are included in the settlement, says Freer.

Even in a litigating class, in the vast majority of cases the plaintiffs' attorneys collect a fee only if they win, says Klonoff. At that point, they are paid either as a percentage of the settlement or by the defendant separately.

"It is generally not a concern that a class member will personally have to bear attorneys' fees, particularly in the absence of a recovery," says Klonoff.

Best advice, says Freer, do your own research and "trust your own instincts."

Dana Dratch is a freelance writer based in Atlanta.

 
-- Posted: Jan. 16, 2002
   

 

 
 

 

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