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Know the Law: How Do Class Action Suits Work?

Published in the Union Leader (9/29/2019)

Q: I received a notice of class action lawsuit. What does this mean, and what should I do?

A: Class actions are designed to bring a number of plaintiffs before a court at the same time to address harm to each individual that is the same in nature.

Class actions usually cannot address personal injuries because those harms are unique to each individual. They are good at addressing financial harm and often arise from product defects, unfair business practices, securities disputes and employment claims.

This notice is informing you that based on the characteristics of the lawsuit and what harm it is intended to fix, you have been identified as a plaintiff.

One plaintiff starts a lawsuit as the “class representative” and stands in for all the other plaintiffs. That individual’s counsel, “class counsel,” with input from the defendant(s) and the court, creates a statement about the litigation as well as instructions for all the potential plaintiffs. That is the notice you received. The way you were selected depends on the type of case.

In most class action lawsuits, once you have received the notice of suit, you do not need to do anything else. Whatever happens with the litigation will bind you unless you act. Usually the lawsuit will settle, and you will be entitled to your portion of the settlement proceeds approved by the court. In some cases, you need to file a claim to join as a class member, but the notice will tell you this along with how to file a claim to join the class.

If you do not want to be bound by the outcome of the litigation, you need to “opt out,” which you would do if you believe that your harm is different from the type the lawsuit was intended to address, and you believe you can get a better outcome suing the defendant(s) individually.

For example, in a class action arising from a false advertisement for a vehicle you purchased — the manufacturer touted advanced navigation software, but it has never worked correctly — you may be a class member for a lawsuit seeking reimbursement for the value of the malfunctioning software.

However, if that piece of software in your specific vehicle caused the engine to overheat and catch fire, and you had physical injuries or losses to your personal property, that would be a harm that is different in nature than what the class action is trying to address.

You should “opt-out” of the class action, and instead consult an attorney about how to bring an independent claim. If you do not opt out, you could be bound by the outcome of the class action and precluded from bringing future claims against the company relating to the product at issue in the lawsuit.

Ashley Campbell can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm St., Manchester, NH 03101 or emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

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