While you may be able to file your own individual action, if your losses are too small to justify hiring a lawyer and filing suit, you or someone else may find a lawyer willing to take the financial risk of filing a class action. But once an action is filed you do not need to do anything to be a member of the class. Down the road, the Court may certify the class action for class treatment. At that time the Court directs the parties to publish notice and, usually, personally notify members of the class who are identifiable. The notice informs the class members of the action, gives them the opportunity to opt-out of the class action (in which case you are not bound by the class action results), and sometimes, if settled, the opportunity to file a claim.
What if I do not think the attorneys who file the class action are competent?
If you are not comfortable with the attorneys who filed the class action, or read their complaint, and are dissatisfied, you can always search for your own attorney to file a class action on your behalf, or file your own individual action. If you file a second class action, usually the court system will try to combine the class actions in one location, and require that they be prosecuted as one case. The Court will determine who should be appointed the lead counsel, at least initially. Down the road, once the Court appoints a representative plaintiff, the representative plaintiff can ask that different counsel be appointed.
In securities fraud class actions, the procedures are different. See next step.
How do I become a Lead Plaintiff, and what does that mean?
In a securities fraud class action, the Court must appoint the person or group who has the largest financial loss in the securities at issue, and approve that person's or group's choice of counsel. This became the law in 1994 when Congress passed the Private Securities Law Reform Act, to address the situation where a person holding a single share of stock could wind up controlling a lawsuit which could affect people with much larger losses.
Being a Lead Plaintiff means that you control the litigation and choose counsel to run the case. Both are subject to Court supervision, and require you to stay involved in the major decisions of the case.
To become a Lead Plaintiff, you must engage counsel to move on your behalf within 60 days of the first published notice that a class action, affecting the security you bought, has been filed. These notices are easily found on Yahoo Finance or other websites. Type in the ticker symbol in and look under news.
If I do no want to be a Lead Plaintiff how do I join the class action?
If you do not want to be a lead plaintiff, you can simply wait for a class notice to be mailed to you, and then do nothing, unless the notice informs you of a settlement. The initial class notice is sent to inform you, or WARN YOU, that a class has been certified, and that unless you opt-out within a certain numbe of days, you will be bound by the results of the action. If the attorney loses the case, and you did no opt-out, your individual claim will be wiped out too.
There is always the possibility that you will never receive a class notice. To avoid this, you might want to contact the plaintiff and defense counsel, and inform them of your contact information so that they can send you notice if the class is certified or settles.
Do I need to do anything to participate in a class settlement or judgment?
Absolutely. If the case is settled or won, a settlement notice will usually be sent to class members who did not opt-out, or if there was not prior settlement notice, to all potential class members counsel can identify. This settlement notice will usually include a claim form that you must fill out in order to get your allocated share of the settlement or judgment. Do not throw this away! Fill it out and send it in within the time frame set forth in the notice.
Do not put the notice aside to read another day. As difficult as it may appear, you have to find the deadline and calendar it before you put it down. Then, when you have a chance, fill it in. Also be aware that most settlement notices give you a right to object to the settlement if you think it is not fair or reasonable to the class under the circumstances. This date is usually sooner than the deadline for filing the claim form.