Dear Help Squad,
I have a question I’m hoping you can answer for me. From time to time people will get notices in the mail that they could be a member of a class action lawsuit. Is this the modern day version of the Publisher’s Clearing House sweepstakes or are people potentially throwing away money by not following up with it?
Thanks,
Karen
Glenview
This is a great question. By the way, if anyone out there has a similar consumer-focused curiosity, send it to Help Squad and we will do our best to find an expert to answer it for you.
In this case, our expert is Ines Monte, a Chicago-based employment lawyer with The Monte Law Firm, Ltd., who has extensive experience as both a plaintiff’s and defendant’s class action attorney. Ines’s short answer to Karen’s question is yes, you may be throwing money away if you don’t reply to a class action notification. There is no real downside to responding. The only caveat to this would be if you felt your rights or safety had been violated in a way that would merit your pursuing an independent lawsuit. Once you become a class member, you waive your rights to future litigation relevant to the same harm.
The purpose of a class action suit is to provide a more efficient way for the courts to litigate a claim that could potentially affect thousands – or even millions – of individuals. Class actions also address harms that might be perceived as too small for pursuit by an individual but in the aggregate is a very large harm.
The example Ines cites is that of a company with hourly workers that is not in compliance with state and federal wage-per-hour laws. For example if a worker is shortchanged a few hundred dollars over the course of his/her employment, it is likely too costly for him/her to pursue legal action to rectify the wrong.
Ines explains that once someone receives a class action notification, there has already been preliminary approval of a settlement by the courts; a judge has approved an amount against which claims can be submitted and as a result a pot of money has been set aside. Interestingly any money left unclaimed goes back to the company being sued, so if class members don’t file against it, the company avoids paying that portion of its penalty.
It is sometimes the case that all class members, regardless of whether they have filed a claim or not, simply receive a check in the mail for their portion of a settlement. In such cases it has been determined that everyone was harmed in the exact same way and opting in as a claimant was not necessary.
Help Squad wanted to know, is it ever the case that a class action notification is a scam? Ines says she has not personally encountered such a situation, but cautions that if ever you receive a notice requesting a social security number or other personal identity data, you should think twice before providing it. There is always a case name and number, as well as an address and phone number, provided on every legitimate class action notice. If you are at all skeptical, call the number and/or do your due diligence via the Internet before signing on.
One rather interesting industry insight Ines shared with Help Squad was that for a time it was somewhat common for class action lawyers to recommend their clients make settlement payments via coupons. This meant that claimants would receive a coupon for discounted services or merchandise from the very company they had just sued!
When judges suggested that lawyers be paid in coupons if that was the way class members were to be compensated, this practice (shockingly) slowed significantly.
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