Knowledge Makes It Easier to Get Most from Class-Action Lawsuits

Article excerpt

They show up without warning in your mailbox, intimidating and drenched in legalese -- but piquing your interest with the veiled promise of money.

Notices of class-action lawsuits or settlements are widespread and often confusing. Attorneys file them on behalf of consumers everywhere who were injured or cheated by a manufacturer, employer or securities issuer.

"The problem was you had to know exactly the amount of shares you had for a certain period of time to determine the amount of money you're due," said Zandrea Ambrose, 38, of the North Side.

She got a legal notice a month ago saying a mutual fund hadn't reinvested dividends correctly, cheating investors in the process. Her notice said the lawsuit applied to those who owned shares between 1999 and 2003.

"But I don't have that paperwork anymore," she said. "So it was basically useless."

Ambrose's quandary is common. But here are the rules of thumb, say experts, when you get a notice of a proposed class-action settlement:

In most cases, you are considered a member of the plaintiff's suit, unless you actively opt out of the lawsuit. But read the notice, as you still might need to submit a proof of claim, such as dated receipts showing you bought a product or trading records showing you purchased securities.

The reverse is true with a wage and hour class-action lawsuit alleging an employer violated overtime, minimum-wage or employment discrimination laws. If you receive a notice of the proposed settlement, you must actively opt into the lawsuit if you want to reap any of its payout.

"There, if you do nothing, you won't be a participant," said Gary Lynch, a class-action attorney at law firm Carlson Lynch, Sewickley. "If you want to get some money as a result of an outcome, you want to pay attention to the notices and respond."

For example, shareholders of Education Management Corp., Downtown, were notified of the class-action lawsuit Aug. 12 against the operators of post-secondary proprietary schools. The lawsuit, filed Aug. 11 in federal court in Pittsburgh, alleges the corporation "propped up" profits by "fraudulently inducing students to enroll."

"They took all these kids on and allegedly gave them plans to get in government loans, knowing full well that upon graduation (they) didn't stand a chance of repaying their loans," said attorney Neil Rothstein, of counsel to Kahn Swick & Foti, Madisonville, La.

Education Management called the lawsuit "without merit" and said it intends to "vigorously defend itself."

Consumer product makers are a frequent target of class actions. For example, a dozen companies that produced lawn mowers between January 1994 and last April were sued in federal court in Milwaukee.

Perhaps you recently got notice the class action against those manufacturers was settled, entitling consumers to receive "up to $35 for a walk-behind mower and up to $75 for a riding mower." The lawsuit, filed in May 2009, alleges the manufacturers "overstated the horsepower of their lawn mowers," a claim the mower makers deny. …