Class action settlement
A class action settlement is an agreement that ends a lawsuit brought on behalf of a large group of people, where the defendant pays into a fund that group members can claim from without suing individually.
One person, or a handful of people, sue a company on behalf of everyone who was affected the same way. If the case settles rather than going to trial, the company agrees to pay a sum of money and usually denies doing anything wrong. A judge has to approve the deal before anyone can be paid.
You are almost never asked whether you want to join. If you fit the definition of the class, you are in it by default, and you have two choices: file a claim to get your share, or opt out to keep the right to sue on your own. Doing nothing usually means you get nothing and still lose the right to sue.
The amount an individual receives is often small, because the fund is split among everyone who claims. That is the trade: nobody could afford to sue over a fifteen dollar overcharge alone, but ten million people can do it together.
Related terms
Settlement administrator
A settlement administrator is the company the court appoints to run a settlement: it sends the notices, takes in claims, checks them, and pays out the money.
Opt out
Opting out means formally removing yourself from a class action settlement, which gives up your right to any payment but keeps your right to sue the defendant yourself.
Claim deadline
The claim deadline is the last day the administrator will accept your claim form. Miss it and you almost always get nothing, even if you clearly qualified.