How do I join?
When this question is asked, it is virtually always accompanied by the next question of “How do I join?” The answer to both of those queries deserves a slightly involved explanation due to the complexity of the subject. Few people seem to fully understand what it means, and a short explanation seems to confuse them further.
Class action law suits are initiated by an attorney(s) and a lead plaintiff(s) on behalf of a particular group of people (the “class”.) Once the grievance is filed, then the process very slowly moves along. A corporation like Verizon uses this “discovery” period to do everything it can to have the suit thrown out for any number of reasons. Many times when it is initially unsuccessful, a corporate defendant (like Verizon) will file numerous appeals which slow the process even further. Any tactic which will delay, thwart or hold up the case will be used by a conglomerate. It is their hope that the plaintiffs will become financially exhausted, emotionally drained or that some new piece of information or evidence will help them in avoiding a trial.
If a class action makes it beyond this point, then the people involved in the class are contacted. The company’s records are used to contact everyone who was affected during the stated period of time. Usually a short note or post card is sent that states you are part of the suit unless you indicate otherwise. In other words, you are part of the suit without having to do a thing. The only reason you might want to exempt yourself from a suit is if you were planning on joining or initiating another one on your own.
At this point in the process, the suit would usually be settled out of the courtroom. Seldom do these suits ever go to trial, and when they do, it’s often over much more than just money. Why? For one, simple reason: image. Early in the process, most everyone knows (particularly Wallstreet), that these cases almost never reach a courtroom, but once they do, it can have severe repercussions.
What if it did go that far? Well, instead of being forgotten about, suddenly the case becomes front page news almost everyday. Information begins to surface that the world suddenly takes an interest in instead of only a few parties who would have been the only ones to hear it. Most importantly however, the stock begins to be affected…and that’s where the problem is. For Verizon to pay tens of millions of dollars in a court award is paltry, however when a stock depreciates by $.50, $1.00, $3.00 per share because of some negative news, it’s a different game. If you do the math, you will soon realize that it can cost the company (and shareholders) far more than it would have cost to simply pay a lump sum out of court. Additionally, what happens to senior staff when stocks drop? It does not look good. What happens when senior staff do not look good? Suddenly it may seem attractive to replace them.
In the eyes of Verizon and other large conglomerates, an admission or a verdict confirming that they are guilty of wrongdoing is completely unnacceptable. This is why settlement agreements always contain language that explicitly states that the settlement is not any indication of guilt.
Speaking of settlements….
So when the case is settled for an agreed upon sum, the attorney makes a killing, the lead plaintiffs do very well and everyone else receives a small check from what is left. How much does the average person typically receive? Of course it depends on the settlement amount, however it seldom goes above lunch at McDonalds.