Legal Help to Decide Where Direct Action or Opting Out if Right for You
Participating in a class action litigation is not always the best route for purchasers to recover losses caused by an antitrust conspiracy. Opt-out litigation (also known as direct action litigation) is an important alternative in which a purchaser or small group of purchasers “opt out” of a class action and pursues claims in a lawsuit separate from the class action. The alternative may be difficult to understand, and consulting with antitrust lawyers is often the best course of action.
The potential risks and rewards of opting out of a class action and filing a direct action are fairly straightforward. One significant risk is that a plaintiff in an opt-out action is open to discovery and subject to other legal obligations imposed in connection with the lawsuit. An opt-out plaintiff may have to gather and produce documents (including documents that are proprietary and confidential in nature); answer interrogatories; and prepare and designate employees for deposition. In contrast, a company that chooses to remain an unnamed class member is generally immune from discovery obligations in the class action. Additionally, a direct action may lead to a worse result for an opt-out plaintiff than if they had remained a class member in the class action. For example, the class action could prevail in its lawsuit while the direct action fails. Or both actions could be successful but the pro rata share of the class verdict/settlement is larger than the pro rata share of the direct action verdict/settlement.
In spite of these risks, direct action is often an attractive option. Opt-out lawsuits offer a variety of benefits, including greater control over case decisions, the ability to name additional defendants, and a potentially greater recovery than class actions. In an antitrust action where the plaintiff has been significantly damaged by anticompetitive conduct, an opt-out plaintiff has a better chance to recover a sum closer to its actual damages than a member of a class action. This is the result of several factors, including that class counsel is focused on developing a damages model that fits the class as a whole, not on recovering every dollar owed to each class member.
Experienced Antitrust Lawyers Can Help You Decide
Deciding when to pursue an opt-out action requires consideration of thorny legal and strategic questions. Choosing to opt-out late in the class action litigation (e.g., after the court certifies a class) typically allows an opt-out plaintiff to benefit from any merits discovery conducted by class counsel. But opting out late imposes some tradeoffs as well. A late opt-out plaintiff may be restricted from conducting its own merits discovery on the basis that the defendants should not be forced to undergo duplicative discovery. Additionally, the court may require a late opt-out plaintiff to set aside a portion of their settlement or recovery to compensate class counsel for the work performed prior to the opt-out. Opting out earlier in the litigation reduces these risks.
The decision whether and when to opt-out requires a careful legal analysis (regarding, among other issues, potential barriers posed by statutes of limitations). If you are considering opting out of an antitrust action, please contact Glancy Prongay & Murray and speak to our experienced antitrust lawyers. Complete our contact form or call one of our New York or California offices to schedule a consultation today.