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What do you call the kind of class action damages where the is a pool of money and plaintiffs may claim money from the pool?

Long Beach, CA |

What do you call the kind of class action damages where there is a large award of damages placed in a "pool" of sorts and then those plaintiffs that have claims against the pooled funds may submit their claims, and where there is left over money at the end of a claiming period that money goes back to the defendants? (Also, is there anything online I could read that would cover all these class action basics? Thanks.)

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Posted

Mr. Lechtzin is correct about the situation you describe as being a "claims made" & "common fund" type of class action resolution. However, you stated "...where there is left over money at the end of a claiming period that goes back to the defendants" This part of your question is not exactly correct. Under California law, Code of Civil Procedure section 384, the residual amount (the amount in the common fund to be paid out to class members but never actually claimed by class members) is supposed to go to nonprofit organizations or charities that support projects that benefit the class members or promote the law that is the subject of the lawsuit (generally referred to as cy pres recipients). Even when checks are mailed to class members and never cashed, that money is supposed to go back to cy pres recipients and not the defendant. (See, Cundiff v Verizon California, Inc. (2008) 167 Cal.App.4th 718.) So despite what some people think, the money paid out by defendants and never claimed, does not always go back to the defendant.

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Posted

It sounds like you are describing a claims made settlement. In a claims made settlement, there is typically a predetermined remedy for each class member who makes a claim. In other words, the amount that each class member receives will not be diminished by the number of claimants.

Typically, the defendant will put a cap on the amount of claims it will potentially pay out. However, that is not always the case. Sometimes the defendant will not place a cap on the amount of the claims, but instead the defendant will take out a policy of insurance to cover any claims in excess of a cap that the defendant and the insurance company agree to.

The other kind of settlement is a common fund settlement. In a common fund settlement, the defendant agrees to pay a specific amount to the class, and the defendant does not get any of it back regardless of the number of class members who make claims. Under a common fund settlement, each member of the class gets a pro rata share of the common fund.

Legal Information is Not Legal Advice My answer provides information about the law based on the limited information provided in the questions asked and is not intended to provide legal advice or opinions, and does not constitute an attorney-client relationship. The answer to the question is for educational and informational purposes only. The law differs in each jurisdiction and may be interpreted or applied differently depending on the jurisdiction or situation. Accordingly, I highly recommend that you consult with an attorney to discuss the details of your problem so you can get legal advice tailored to your particular circumstances.

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Los Angeles County Superior Court has specific rules for class action procedures to protect class members. If you have specific questions about class actions, many LA lawyers handle consumer and employment law class actions.

David Mallen
www.elsegundocaemploymentattorney.com

David A. Mallen offers answers on Avvo for general information only. This offer of free, general answers is not intended to create an attorney-client relationship. If you need specific advice regarding your legal question, you should consult an attorney confidentially. Many experienced California labor and employment attorneys, including David A. Mallen offer no-risk legal consultations to employers and employees at no charge. David A. Mallen is licensed to practice law before all state and federal courts in California, as well as the California Labor Commissioner and the California Unemployment Insurance Appeals Board. Failure to take legal action within the time periods prescribed by law could result in the loss of important legal rights and remedies.

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