What is the Difference Between Opting in or Opting Out in a Class Action Lawsuit?

Participating in a class action lawsuit is entirely up to you. There is no law that requires an individual to take part in a class action suit.

In most cases, you are notified by email or postal mail to take part in a class action lawsuit. If, however, you do not respond to the request, you will automatically be registered to participate.

If you choose to take part in the class action, also called opting in, you can receive the full reward or compensation granted by the court. However, you also waive your right to sue the defendant if you opt-in.

If you choose to not partake, or opt out, of the class action suit, you waive your right to receive any reward or compensation should the class happen to win. Alternatively, by opting out you maintain your right to sue the defendant if you believe you are justified in doing so.

In some instances, you may have to opt into a class action lawsuit. During these rare occurrences, you will have to submit a form confirming your wish to opt in. Opting out will always require the submission of such a form expressing your decision to do.

Usually, you will receive a class action notice by a judge informing you of the class action before it takes place. As already mentioned, this will come either by postal mail or email.

You should read this notice carefully as it contains pertinent information regarding the class action suit, as well as further information detailing with your opt in and opt out rights and how to request either, as the case may be.


Advantages of Opting In

The main benefit of partaking in a class action lawsuit is that every member of the class is eligible to receive some form of reward or compensation if the class is victorious.

Another advantage of joining a class is that the legal expenses are shared between each member.


Disadvantages of Opting In

If you choose to opt into a class you should know that one member of the class, a chosen representative, gets to represent all the interests of the group and makes all the decisions in regards to the case. This means you give up your rights to affect the outcome of the case in any way, shape, or form.

As stated earlier, you also give up your rights to sue the defendant when you opt in. Therefore, if the class does not win the decision, you will not be able to go after the defendant for compensation, even if it is warranted.


Advantages of Opting Out

If you choose to opt out, you do not have to worry about the outcome of the class action lawsuit as you are not bound by the decision. You can still sue the defendant even if the class does not win the case.

If the class does happen to win, the shared compensation may not be enough to cover your injuries and expenses, and so you might want to seek further compensation by filing your own lawsuit. Since you opted out, you have the right to do so.


Disadvantages of Opting Out

While opting in allows you to share in legal expenses with the other members of the group, this may not always be to your advantage.

For instance, if the defendant uses all of their resources in defending themselves in the class action, they may not have enough money leftover to compensate you should a private lawsuit be ruled in your favor. In this case, you will end up receiving nothing from either lawsuit.


How long does a class action lawsuit take?

The time it takes to resolve a class action lawsuit and be awarded compensation depends entirely upon the specifics of each case. Since each case is different, there is really no set time limit in which a class action suit needs to be resolved.

If the case is relatively a simple one, it can take a month or so to reach a verdict. For more complicated cases, you can expect a decision within a couple of years or longer. Typically though, most class action cases take around two or three years to completely resolve and that too depends on if there are any appeals made after the verdict.


Large Company Settlements

If you were involved in a situation where a company or corporation blatantly misrepresented a product or failed to disclose pertinent information regarding a product or service, then the case may be settled rather quickly as most companies wish to avoid bad publicity and so quickly rectify the situation.

This, however, is more a statistical mean than it is an absolute rule. Some class action lawsuits against large corporations which were clearly negligent have taken 20 years or more before the class members involved actually received any remuneration.

Such was the case with the Exxon Valdez oil spill of 1989. The class members weren’t awarded their $2.5 billion until 2008.


Phases of a Class Action Lawsuit

Whether the class action lawsuit is relatively simple or highly complicated, each case must go through the same formal process before it reaches completion.

To be exact, the stages are as follows:


  1. A complaint is filed.
  2. The plaintiffs petition the court to file a class action lawsuit.
  3. A certification order is issued and class members are notified of the class action suit that is going to take place. At this, they can choose to opt out or remain a class member.
  4. Lawyers gather evidence, interview witnesses, and share what they have learned with lawyers from the opposite side.
  5. Settlement hearings begin. If a settlement is not agreed upon at this time, the case goes to trial. If, however, a settlement is reached, then the judge will either approve it or modify it.
  6. The settlement is brought to a preliminary trial where class members can vote for or against the settlement.
  7. After the settlement is approved, claims are finally processed and compensation calculated and distributed amongst the class members.

You can now see that even with the simplest of cases, the formal proceedings for a class action lawsuit can take some time to complete. Just imagine how much longer it would take when the case is complex, the court is busy, and a large number of disputes are raised in regards to the settlement.


What can you win in a class action lawsuit?

Many times when a class action lawsuit takes place, the defending party is usually a company or organization. This does not mean though that you should immediately opt into one because you think the defendant has big pockets and therefore you are going to make millions should the plaintiff win.

If you have received a notice to partake in a class action lawsuit, consider that in most cases the attorney and the named plaintiffs are the ones who will receive the largest payout should the class members win.

Why is that? Think about it. You are only a member of the class and not a named party, which means that you could be one of the thousands of other members that are taking part in the suit. If this is the case, you are going to have to split the rewards with thousands, and sometimes even millions, of other members which reduces the payout significantly.

Therefore, you should do your due diligence and see how many members are involved before you choose to opt in, especially if your goal for doing so is to get rich and retire early.


Settlement Agreement

Since the actual payout is only disclosed once a settlement has been agreed upon, the actual payout cannot be figured out beforehand. However, most class action lawsuits settle before the case goes to trial, so you will probably not have to wait that long before you get the good or bad news about your winnings.

Settlements are not always given in cash, although this is the norm. This is good to know beforehand as there can be no surprise if you are ultimately compensated in airline tickets or credited for future purchases of a company’s product or service.

Remember, as a class member you do not have much of a say in how the rewards will be disbursed or in what means they will be disbursed. Just something else to consider before you choose to opt in or not to opt out, whichever the case may be.


Big Payouts

The purpose of the above information is not to discourage you from taking part in a class action lawsuit, but to inform you of the realities of what may or may not transpire during one, especially when it comes to payouts.

That being said, there have been large sums awarded to class members in the past, so you can never entirely rule out a big payday, if that is your ultimate goal in opting into a class action suit.

Just to give you an idea of what a class action payout typically looks like, the following list of class action payouts for 2014 against big name companies have been provided.

  1. LCD Settlement from major brands like Toshiba and Samsung: The total settlement amount was $1.1 billion dollars and the class members received between $200-$500 a piece.
  2. Apple iPod and iPhone warranty settlement: The overall settlement was $53 million and each class member was awarded $122 to $250.
  3. Honda engine settlement: Each class member received $235 to $300 for Honda engine misfires.

You can see from the above list that you can typically expect to receive anywhere from $100-$500 should you take part in a class action lawsuit against a large brand, company, or organization.


How do I join a class action lawsuit?

For most class action lawsuits you do not need to do anything to join. If you are legally entitled to remuneration from the defendant then you will automatically be included in the lawsuit unless you choose to opt out of it.

If you receive your class notice through email or postal mail, you can easily find instructions on what you have to do to participate and how you will receive compensation should the plaintiff and class members win the case.

If you are elected to participate in a class action lawsuit that requires you to opt in, you will find how to do so within the class notice itself. Usually, cases that involve salaries, wages, and hourly payments involved actively opting into the class action suit.


No Notice

If for some reason you do not receive a class action lawsuit notice by email or postal mail and feel that you are entitled to compensation from the defending party, you will have to go out and find how to join on your own. The way to do so is relatively simple.

First, you must contact the law firms defending the plaintiffs. To do so simply go to the Stanford Law School website and click the Securities Class Action Clearinghouse section.

Once you have entered this section and found out which law firm or law firm is handling the case, you have to contact the firm and prove to them that you are entitled to participate as a class member of the lawsuit. Basically, state your case and provide any documents or information they ask for.

If there is more than one law firm handling the case, you can contact and join any one of them as each individual case will be combined and the class members represented by all the law firms as a whole.


Finding Class Actions Online

If you feel you have been injured due to negligence by a product, service, company, organization, brand or any other legal entity, you can check the Internet for any information regarding potential class actions against the relevant party or brand.

Most law firms involved in any class action case provide information online on the class action itself, how to join, and most importantly, how to get in touch with the law firm to state your case.

Almost all class action lawsuits ranging from mid-level to very large cases will have a website dedicated to the case or be listed on websites that provide information on current class action lawsuits. This, however, is not always true for smaller class action lawsuits.

The easiest way to find such firms and cases is to perform a web search that includes entering the applicable company, product, or service along with the term, “class action” or “class action lawsuit”.

For example, if you were injured in some way by a particular brand of soap, just go to your search browser of choice and enter the name of the soap plus “class action lawsuit”. In other words, “soap brand class action lawsuit”. If you want to target a particular company just replace the brand name with the company. For instance, “company name class action lawsuit”.


What is a class action Lawsuit?

Class action lawsuits entail legal cases where a group of people who have been harmed in some way by a said entity join together and sue the company, organization, or people responsible for the injuries.

While the majority of the cases deal with personal injury, class action lawsuits can also cover employee situations, securities fraud, consumer fraud, and corporate negligence and misconduct.

Mass tort actions, where various parties sue a large organization over a large accident, also falls under the definition of a class action lawsuit. The most common example of a mass tort action is a plane crash.

The group of people who claim compensation from a defending party in a class action lawsuit are called class members and are represented by a chosen member of the group. The group is usually counseled by a single law firm or a group of law firms.

Class action suits began in the U.S. and only until recently have only been seen in U.S. courtrooms. Some countries in Europe, however, have now allowed consumer organizations to file claims at the behest of consumers, which very closely resembles class action lawsuits.


Federal Courts

Under the U.S. federal court system, class action lawsuits can be brought to trial. Such cases automatically fall under federal court guidelines and procedures.

In most federal class action cases, the class members constitute the plaintiff, however, they can also make up the defense as well.

Since most federal class action cases have historically been shown to favor the defense, the defending party in a state class action lawsuit many times take their case to federal courts. This usually happens if the defendants lose the case in state courts.

Federal courts, however, will only hear class action cases where damages are more than $5,000,000 and that is why most of the defendants in federal class action lawsuits are comprised of large corporations and organizations.


State Courts

Most states use the same guidelines they use in federal courts to rule over their class action lawsuits. However, some states use different court systems and rules when dealing with class action lawsuits.

For example, California uses a civil procedure system, New York limits the number of class action cases it will hear, and Virginia does not even recognize class action lawsuits at all.



Due to the fact that class action lawsuits bring a large number of people together as one unit, they can offer many advantages over private suits.

For one thing, class action lawsuits reduce the burden of courtroom procedures by shortening the amount of court time and limiting the amount spent to hear such cases.

Class action lawsuits also benefit the individual plaintiffs and lawyers as they can turn a small sum usually brought about by a private lawsuit into a larger payout.



One of the main disadvantages of class action lawsuits pertains to the paltry payouts class members may receive if the class group is extremely large.

In such cases, the reward may be bi, but once it is split up and the lawyers take their fees, there is little left for each individual that makes up the group.

Another major disadvantage of class actions is that they do not give the individual class members significant importance when it comes to the outcome of the case.

Once the class members have chosen their representative there is very little they can do after to affect the outcome. They basically have to sit back and watch things unfold.