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What Does It Mean to ‘Opt Out’ of Class Action Litigation?

A class action lawsuit is readily identifiable as litigation where the common interests of a large number of plaintiffs are implicated and where it would both inconvenient and prohibitively costly for a single individual or entity to commence a claim for damages. Product liability cases are frequently pointed to as typical class action examples, as are securities cases alleging wrongdoing that has harmed many investors.

The term "opt out" is frequently seen in the context of class actions.

What does it mean?

Some class action plaintiffs -- in the case of a securities class action, typically larger and deep-pocketed institutional investors -- sometimes see an advantage in removing themselves from a class action and going it alone. Their motivation in litigating a matter separately obviously owes to a belief that they can obtain a greater recovery as a single plaintiff than they can as a class action member.

As we note on a website page of our firm devoted to opt-out litigation in the realm of class actions, an opt-out strategy raises uncertainty and risks for both plaintiffs and defendants in securities class action litigation.

As to the former, opting out might indeed yield a greater recovery, but is also risky for its lack of any guarantee.

And we note that, as for the latter, a sudden opt-out decision of a prominent plaintiff -- which often occurs as a settlement date looms -- brings "unpredictable exposure … over and above the class action settlement or trial award."

Attorneys from Shepherd, Finkelman, Miller & Shah, LLP, collectively command many decades of on-point experience that they bring to bear on behalf of both plaintiffs and defendants in securities and additional class action matters. Our legal team works out of offices that broadly span the country, with our applied acumen and advocacy routinely benefiting diverse clientele nationwide.

Class action litigation is an encompassing and complex process. Proven attorneys with a deep well of experience in this singular legal sphere can help clients optimize their strategies and pursue best-case outcomes.

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