How Settlements Work

Commercial class actions are lawsuits brought on behalf of hundreds and even thousands of businesses (called “the class” or “class members”). Unlike the typical lawsuit where you hire the lawyer, in a class action, lawyers sue on your behalf, request to be appointed as your lawyer by the court, and then pursue the case until its conclusion.

Commercial class actions frequently result in substantial settlements in the hundreds of millions and even billions of dollars. These settlements must be approved by the court before businesses can collect their benefits.

A typical approval process includes:

  • The parties agree on a proposed settlement.
  • The court grants preliminary approval of the settlement.
  • Businesses are notified of the settlement directly by mail/email and/or through a publicity campaign approved by the court. The method for notifying the class, including any media campaign, is outlined in a document called the Notice Plan.
  • The Notice Plan typically includes a timeline and deadline for class members to object to the settlement, opt-out of the settlement, or file a claim.
  • Objections sometimes result in changes to the Settlement before its final approval.
  • Class members that opt out can choose to pursue their own lawsuit independent of the class action, in lieu of participating in the settlement.
  • A settlement is only final after a fairness hearing in which the court grants final approval.
  • Once final approval is received, the settlement benefits are distributed to the class using a plan of distribution created by the attorneys and approved by the court.
  • Class members must file a claim with the Claims Administrator by the claim filing deadline in order to receive benefits.
  • Settlement benefits are distributed in a variety of ways. Some settlements are distributed pro rata, meaning the total class participation in the settlement affects the benefits paid to individual class members. In other cases, unclaimed money is given to charity or may even rebound back to the defendants.