In Class action suits how are settlements distributed?

Asked over 2 years ago - Bethesda, MD

When class action suits are won how are the final awards decided or distributed if only one or two plaintiffs last till the end of the suit?

Attorney answers (2)

  1. Eric Lechtzin

    Contributor Level 16


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    Answered . Any settlement of a class action must be approved by the court pursuant to the requirements of Federal Rule of Civil Procedure 23. If the settlement includes monetary compensation for the class, the proceeds of the settlement are distributed in accordance with a plan of allocation. The court reviews the plan of allocation proposed by the attorneys for the class. If the court finds that the plan of allocation is fair, then the proceeds of the settlement will be distributed to the class in accordance with the terms of the plan of allocation.

    You ask, "how are the final awards decided or distributed if only one or two plaintiffs last till the end of the suit?" It sounds like you are confusing the named plaintiffs in the law suit and the absent class members. In order for a case to qualify as a class action, there usually needs to be at least 40-50 members of the class. The named plaintiffs in a class action lawsuit are entitled only to receive the same pro rata share of the settlement as the other members of the class. However, in certain cases, the court will award the named plaintiffs a stipend that relects the amount of time that the named plaintiffs devoted to representing the absent members of the class. The court may also provide the named plaintiffs an incentive award for coming forward and bringing a successful class action. Any stipend or incentive award is entirely at the discretion of the court. Moreover, in certain types of class actions, such as cases alleging violations of the federal securities laws, incentive awards are not permitted. Since you have not indicated the type of class action in which you were involved, I have no way of knowing whether an incentive award would be legally available to the named plaintiffs.

    In any event, you indicate that only 2 plaintiffs remain in the case. I believe that you mean 2 named plaintiffs remain. However, if this is a class action there must be hundreds if not thousands of absent class members who would be entitled to their pro rata share of the recovery. In other words, don't expect to get a windfall. Also, don't expect class counsel to be able to tell you what you will receive, since it is impossible to know until the claims administration process has been completed and the total number of valid claims has been determined.

    Legal Information is Not Legal Advice My answer provides information about the law based on the limited... more
  2. Thomas H Howlett


    Contributor Level 6


    Lawyer agrees


    Answered . The short answer to your question is that final awards are determined by the terms of a settlement agreement or a judgment, either of which must be approved or entered by the judge to whom the case is assigned. A class member is entitled to notice of a settlement or a distribution of proceeds from a case that should contain an explanation as to how any award is to be determined. If the case has been settled, a claims administrator may have been appointed to answer specific questions that you may have.

    While neither I nor my firm can offer any specific legal advice or undertake any legal representation via Avvo, I... more

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