Do class action lawsuits really benefit royalty owners?

After receiving yet another very small class action settlement check in the mail the other day, I am seriously considering “opting out” the next time I am given the opportunity. I would rather do this than tacitly accept a settlement that is of dubious benefit to me. I question even whether class actions in general are the great equalizers they claim to be. While they are often touted as such, experience has taught me that remaining a class member often benefits the class attorneys, a few named plaintiffs, an over-burdened court system, and even the defendant more than it benefits the class members; especially when they are settled out-of-court, and most are.

Settling is often to the detriment of class members, who often receive relatively little compensation for participating in a settlement, while their attorneys receive millions without having to actually win at trial. The defendant also benefits from settling because in doing so they admit no wrongdoing, are insulated from future lawsuits, and avoid the risk that a jury, at trial, might force them to paymuch more than they bargained for. A settlement also provides no “injunctive relief” that would put a stop to similar wrongdoings by the company in the future since by settling they were convicted of nothing.

Since it benefits both the plaintiff attorneys and the defendant to settle, there is temptation for collusion between the parties to settle rather than going to trial. The motivation to settle also makes it more likely that plaintiff attorneys will attempt to have even weak cases certified as class actions, knowing such cases will likely be settled out-of-court while still resulting in a large payday for them. Additionally, since attorneys on both sides prefer to include as many people as possible in each class (bigger class equals bigger settlement and less people left to sue the defendant), even large settlements are diluted to the point where only a small percentage of class members receive any significant benefit.

Requiring potential class members to opt in to these suits in order to be part of them rather than tacitly participating by doing nothing (as is now the case) would result in attorneys being motivated to pursue only cases that could be won at trial, resulting in a larger payday for everyone, including them.

Another reason I dislike seeing class actions settled before being fully litigated is that estimating what my share of a proposed settlement might be prior to the opt-out deadline is ­­nearly always an exercise in frustration, since neither class counsel nor the settlement administrator seems to ever be able to furnish this information in a timely manner. By the time I find out what my share is, it’s far too late to dispute it. Fortunately however, opting out of the settlement altogether is a fairly simple process, and one that you should seriously consider the next time you are given the opportunity.

By not objecting to or opting out of settlements that are of unknown and often dubious benefit to you, you only continue to tacitly endorse and encourage them. Why remain a party to a class action where you will receive little money, and in addition give up forever your right to sue the defendant on your own for a potentially much larger payoff? There are attorneys out there who will take strong cases to trial and win. Why not encourage this instead of encouraging the bringing of weak class actions that are destined to be settled out-of-court for pennies-on-the-dollar?