Mass torts and class actions have many similarities, so it can be easy to get the two confused. The main difference between mass torts and class actions is how individuals are joined in the two types of litigation. In mass torts, legal counsel sign-up individuals who have been injured or have sustained damages from the same event or occurrence. In comparison, class actions have a class representative that legal counsel represents on behalf of a class of people injured from the same event or occurrence.
For example, cases involving prescription drug injuries are often class actions. Prescription drug litigation frequently involves class actions because the individuals who sustained injuries from taking the drug cannot be easily identified. One or more persons who took the drug will serve as the class representatives. These class representatives will be the people directly represented by legal counsel. However, any settlement the legal counsel obtains will be on behalf of the entire class. The settlement will not just be for the class representatives, but it will belong to the class as a whole. Since the class members are usually not aware of the litigation until a settlement is in the approval process, they are identified and sent notice of the litigation by means determined by the court overseeing the litigation. This notice will provide the settlement terms and instructions on how to opt out of the litigation if the class member chooses to do so.
In contrast, mass tort litigation involves legal counsel representing several individuals. Legal counsel litigating mass torts are able to represent several individuals directly instead of a class of individuals indirectly because those injured from the event or occurrence are usually easier for legal counsel to identify and locate. Those injured from the mass tort sign up for the litigation by contacting the counsel involved in the suit. Contact is usually through phone, email, or on a designated website. One example of this is the wildfire cases against PG&E in California.
Despite differences between class actions and mass torts, these two types of litigation have the same procedure at settlement.
Requirements for Settlement
There are four requirements for a class action and mass tort settlement. These requirements are:
- Notice
- Fairness Determination
- Filing of any Collateral Agreements
- Opt-Out Opportunity
Notice
The first requirement for settlement is notice. For a proposed settlement to be approved, the parties to the litigation must give notice to all class members or individuals that would be bound by the settlement.[1] For the notice requirement to be met, the notice must be reasonable in its manner and content.[2] Usually, the notice should include:
- The terms of the proposed settlement
- Whether the class representatives are to receive any additional benefits
- The proposed terms for attorney’s fees
- The time and place for the hearing that the court will hold to consider approving the settlement
- The method for objecting to the settlement
- The proposed method for the distribution of settlement funds[3]
Courts commonly order notice to class members to be provided by mail, but courts are increasingly allowing notice to be provided by email and other methods.[4]
Fairness Determination
Regardless of whether the settlement is for a class action or a mass tort, the court must approve the settlement before the claims can be dismissed and the settlement can be distributed.[5] Court approval is required to “ensure that other unrepresented parties (absent class members) and the public interest are fairly treated by the settlement reached between the class representatives and the defendants.”[6] To approve a proposed settlement, a court must determine that the settlement is fair, reasonable, and adequate.[7]
In determining whether a proposed settlement is fair, reasonable, and adequate, a court must consider the following factors:
- The class has been adequately represented by the class representatives and class counsel
- The settlement resulted from good-faith bargaining
- The settlement is adequate for the class, considering:
- The costs of litigation
- The effectiveness of the chosen method for distributing the settlement
- Proposed attorney’s fees
- The existence of any side agreements to the settlement
- The settlement treats class members fairly[8]
At the fairness hearing, class members may object and present evidence to convince the court to reject the proposed settlement.[9] Courts are required to hear objections from class members and must consider objections when determining whether to approve the settlement.[10]
Collateral Agreements
Sometimes, parties enter into agreements related to the class action that do not affect the class action itself.[11] These are commonly called “collateral agreements.”[12] If any of these agreements exist, the parties to the agreement must file a statement with the court that identifies the agreement.[13]
Opt-Out Opportunities
Class members must be given the opportunity to opt-out of the settlement in favor of pursuing an individual claim in court.[14] If a class member does not opt out of the settlement agreement, they are bound by the agreement’s terms.[15]
Although class actions and mass torts are different in how individuals are connected to the litigation, both types of action have the same process for settlement. Whether you are a member of a class action or an individual in a mass tort, you can rest assured that no settlement will be approved without a court determining that it is fair and in the best interest of those affected by the litigation.
Written by:
Bailey VanNatta
Law Clerk
WATTS GUERRA LLP
Four Dominion Drive, Bldg. Three, Suite 100
San Antonio, Texas 78257
Phone: (210) 447-0500
Frank Guerra
Board Certified – Personal Injury Law
Texas Board of Legal Specialization
WATTS GUERRA LLP
Four Dominion Drive, Bldg. Three, Suite 100
San Antonio, Texas 78257
Phone: (210) 447-0500
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