Good question—and this week, Pleading Ignorance answers it. It’s a question a lot of people have: Can I still file a lawsuit if there’s already a settlement? I spoke with attorney J. Benton Stewart of Stewart Law, P.L.L.C. to better understand the in’s and out’s of class action settlements and when it’s best to file your lawsuit.
Class action lawsuits can be opt-in or opt-out lawsuits.
If they are opt-in, then you have to ask to be part of the lawsuit. Typically, with an opt-in class action, you have to submit a claim form indicating that you wish to be a part of the class action—you have to officially “opt in”. If on opt-in class action lawsuit settles and you weren’t part of the class, you’re still free to bring about your own lawsuit. If you were part of the class, then you can’t bring one of your own.
In an opt-out lawsuit, you’re automatically part of the class regardless of whether or not you meant to be—you have to tell the claims administrator that you don’t want to be part of the class before you’ll be taken out. In this situation, if you haven’t told them that you do not want to be part of the class and the lawsuit settles, you can’t bring your own lawsuit. Basically, if you’re included in a class that settles, either because you chose to be or because you didn’t opt-out, you can’t bring your own lawsuit.
Bottom line, if you think you may want to file your own lawsuit against the defendant in the class action lawsuit, you cannot have been a member of the class (ie, the plaintiffs) of the class action. Still with me?
Of course, there’s more to it than that because of how settlements normally work.
Once a settlement is announced, usually a pool of money is set aside to pay all the claims. Instead of filing a lawsuit, claimants then file a claim to prove they fit criteria to receive money from the fund.
The United Healthcare (UHC) Out of Network class action is an example of this—if you wanted to be included in the distribution of settlement funds, you had to submit a claim. The UHC lawsuit required a lot of information from claimants—proof that you were insured, that you paid out of network charges while insured, etc. Most settlements require claimants to provide documentation or other “proof” that they are, indeed, part of the class.
With a settlement, the defendant puts a certain amount of money in the fund, but once that money is gone—i.e., paid to claimants—it’s gone. In some cases, such as tobacco or asbestos mesothelioma cases, the courts might rule that a defendant only has to put out a certain amount of money to cover all the court cases, including covering lawsuits brought by people who opted-out of a class action. In those cases, people who bring separate lawsuits are only able to collect money from that same settlement pool.
No matter what, however, there is no benefit to you if you wait to file a lawsuit. The amount of money put into a settlement pool is based on the number of people who have filed claims and the damages they’re believed to have suffered. So, if only 100 people have joined a class action, the settlement pool is based on those 100 people, regardless of whether there are another 1,000 potential claimants waiting in the wings. If those 1,000 people file a claim on the settlement after the settlement amount was determined based on 100 people, there simply won’t be enough money to go around.
If there’s not enough money to go around, you could be forced into filing a lawsuit, but you’d be bringing it as an individual and not as part of a class action, which could be costly both financially and to your case.
Now, it’s possible that even after a settlement has been announced more money will be included in the settlement pool. But by waiting to see if more money is included in that pool, you’re really taking a gamble, because there’s no guarantee that more money will become available.
“It’s a race to the settlement,” Stewart says. “You want to be in the first tier of settlements. Take Avandia. If there’s $460 million available ($60 million announced for 700 claims and then an additional $400 million announced later) $60 million is already gone. It might not be too late now, but at some point, it will be too late. People might hear that there’s still $400 million available, but it won’t be available for long.”
In other words, if you fit the criteria for a settlement, you should contact an attorney right away. If you don’t, you might miss out on settlement dollars and you might not have the opportunity to bring your own lawsuit.
“There is no advantage in waiting,” Stewart says.