Opting Out of a Class Action: When & Why You Should

Opting out of a class action means formally excluding yourself from the settlement so you can pursue your own individual lawsuit against the defendant. When you opt out, you give up your right to any payment from the settlement fund, but you retain the right to sue on your own terms — potentially for a larger amount.

For the vast majority of class members, opting out does not make financial sense. It is a serious decision that should only be considered in specific circumstances, which this guide covers in detail.

How Opting Out Works

The opt-out process is straightforward but has strict requirements:

1. Receive the settlement notice. Every class action notice explains your right to opt out, including the deadline and the method for doing so.
2. Submit a written request. You must send a letter to the settlement administrator or the court stating that you wish to be excluded from the settlement. The letter must include your name, address, the name of the case, and a clear statement that you want to opt out.
3. Meet the deadline. Opt-out requests must be postmarked or received by the specified deadline, which is typically 60 to 90 days after the notice is mailed. This deadline is usually earlier than the claims filing deadline.
4. Receive confirmation. Some administrators send a confirmation that your opt-out request was received. If you do not get one, follow up to make sure your request was processed.

When Opting Out Makes Sense

Opting out is worth considering only in limited situations:

• Your damages are significantly larger than the settlement payout. If the class action settlement offers $25 per person but you suffered $50,000 in damages, an individual lawsuit may be justified.
• You have strong evidence. Individual lawsuits require you to prove your case on your own. If you have medical records, extensive documentation of harm, or other strong evidence, an individual suit may succeed.
• An attorney recommends it. If a personal injury or consumer rights attorney reviews your situation and advises that an individual case would yield a substantially better outcome, opting out may be the right move.
• The settlement terms are genuinely unfair. In rare cases, a settlement may be so unfavorable to class members that opting out and pursuing individual claims is a better strategy. However, you can also object to unfair terms without opting out.

When You Should Stay In

For the vast majority of class members, staying in the settlement is the right decision:

• Your individual damages are small. If the product cost $10-$50 and the settlement pays $5-$25, hiring a lawyer for an individual case makes no financial sense.
• You do not want to deal with litigation. Individual lawsuits take years, cost thousands in legal fees, and have uncertain outcomes. Filing a claim form takes minutes.
• The settlement terms are reasonable. Most settlements are reviewed by the court for fairness. If the judge approves it, the terms are generally adequate for the class.
• You just want your money. The simplest path to compensation is filing a claim. For consumer product settlements, this is almost always the right move.

Opt Out vs. Object

Many people confuse opting out with objecting, but they are very different actions:

Opting out means leaving the settlement entirely. You get no payment and are not bound by the settlement terms. You retain the right to sue individually.

Objecting means staying in the settlement but formally telling the court that you believe the terms are unfair. The court considers objections at the fairness hearing and may modify the settlement in response. If the settlement is approved despite your objection, you still receive your share of the payout.

You can object without opting out, but you cannot do both. If you opt out, you have no standing to object to the settlement terms because you are no longer part of the class.

What Happens After You Opt Out

Once you successfully opt out of a class action settlement:

• You receive no payment from the settlement fund.
• You are not bound by the settlement terms or the release of claims.
• You retain the right to file an individual lawsuit against the defendant.
• You will need to hire your own attorney if you want to pursue an individual case.
• The statute of limitations for your individual claim may still apply, so act promptly.

Keep in mind that opting out does not guarantee a better outcome. Individual lawsuits are expensive, time-consuming, and uncertain. Many people who opt out never end up filing an individual case.

The Opt-Out Rate

In practice, very few class members opt out of settlements. Research shows that opt-out rates are typically below 1% and often closer to 0.1%. The overwhelming majority of class members either file a claim or do nothing. This is partly because opting out only makes sense when damages are large enough to justify individual litigation, which is uncommon in consumer class actions.

Frequently Asked Questions

What does it mean to opt out of a class action?

Opting out means you formally exclude yourself from a class action settlement. By opting out, you give up your right to any payment from the settlement but retain the right to sue the defendant individually. You must submit your opt-out request in writing before the deadline specified in the settlement notice.

Should I opt out of a class action settlement?

For most people, opting out does not make sense. You should consider opting out only if your individual damages are significantly larger than the settlement payout, you have strong evidence to support an individual case, and you are willing to hire a lawyer and go through individual litigation. For typical consumer product settlements paying $5-$50, staying in the class and filing a claim is almost always the better choice.

What is the deadline to opt out of a class action?

The opt-out deadline is specified in the settlement notice you receive. It is typically 60 to 90 days after the notice is mailed, and it is usually earlier than the claims filing deadline. Missing the opt-out deadline means you remain part of the class and are bound by the settlement terms.

Related Terms

• Class Action Lawsuit — The case you are considering opting out of
• Class Member — Your rights as a member of the class
• Statute of Limitations — Time limits for filing an individual lawsuit
• Settlement Fund — The money you give up by opting out