All consumers have rights that the law upholds. Therefore, they can rely on laws when they need to exercise their rights. For example, when a line of products causes harm to many, each individual is entitled to a compensation claim and can opt to take it to trial with a class action.
A class action lawsuit is a legal proceeding where a group of people called a class file a single lawsuit against any business entity that affected them negatively. This lawsuit provides consumers who sustained small damages an efficient way to claim compensation and gives it a strong foundation by forming a group with people who have a similar claim.
The outcome reached in a successful class action is a fair settlement for each member of the class. Claiming this settlement is the compensation a consumer deserves after being a business misconduct victim. In addition, class action settlements are the law’s way of holding businesses responsible for their actions.
Each class action lawsuits have a system in place to protect the class’s right to get redressed and the defendant’s right to a fair trial and settlement and hold the defendant accountable for paying the agreed settlement.
The U.S., Australia, and most jurisdictions have similarities in their class action settlements because it begins by requiring approval of the settlement negotiated by both parties.
Seeking preliminary approval of the settlement
Once the parties negotiate a settlement to resolve the class’ claims, they must seek preliminary approval from the court. During the preliminary approval process, both parties must demonstrate that the proposed settlement will likely be granted final approval and that the court will likely certify the class for purposes of judgment on the settlement proposal.
The court will take into consideration the following for the settlement to pass preliminary approval:
Provide notice to absent class members
In a class action proceeding, the class is represented by a single member or a group of members. These representatives attend all the hearings on behalf of the entire class.
While notice isn’t always required, the involved parties should anticipate that the court will require them to provide notice of the proposed settlement to the other class members. Once the proposed settlement passes preliminary approval, Rule 23 of the Federal Rules of Civil Procedure requires the court to direct notice in a “reasonable manner” to every class member the proposed settlement would bind.
Both parties should coordinate with the claims administrator to ensure that proper notice is disseminated to absent class members and monitor any absent class members who opt-out of the settlement.
Anticipating objections and class members who will opt-out
The settling defendants must consider that not all class members will agree with their proposed settlement. Thus, they normally consider including a “blow provision” in the settlement agreement, providing them the option to terminate the settlement agreement if a specified number of absent class members choose to opt-out of the settlement.
The class notice should also provide absent class members a deadline to file objections with the court before the hearing on final settlement approval. The parties should file a response to the objections before the hearing.
Seeking final approval of the settlement
After reasonably providing notices for absent class members, the class representatives and the defendant will ask the court for final approval of the settlement. During this step, the court will determine the settlement’s fairness, adequacy, and reasonability towards the class members.
In doing so, they’ll consider any objections filed by any absent class members. Finally, if the court determines that the settlement is fair, reasonable, and adequate, it will approve the settlement.
Then, there will be a distribution scheme to give the agreed amount of settlement to each class member who chooses to continue with the settlement.
You can learn about recent class action settlements by reading our newsfeed below: