Opting-Out of Large Securities Class Action Settlements and Antitrust cases can be Profitable

In three cases identified in an analysis of opt-out results in securities class actions, the claimants who pursued individual claims recovered a total of over $1.5 billion.  The cases involved WorldCom, AOL Time Warner and Qwest Communications.  In the study by Cornerstone Research, the authors examined 1,272 class action settlements that occurred from 1996 to 2011.  They identified 38 cases in which at least one party from the putative class opted out and filed a separate suit against the defendants.  The results of the study indicate that in many large securities class action settlements it is worthwhile for holders of large claims to opt-out of the class and pursue their own action.  For example, the average total opt-out settlements were $85.4 million, representing 12.5 percent of the average class action settlement for those cases.  And while it’s difficult to determine what amounts would have gone to these opt-out plaintiffs had they remained in the settlement, this study provides strong incentive for claimants in large securities class action settlements to opt-out and pursue their individual claims.

It is worth noting that the decision to opt-out in any particular case should be made carefully with counsel knowledgeable about the issues.  The authors of the study noted one case, for example, where the opt-out plaintiff could not recover because they could not establish reliance. A careful analysis of the risks and benefits of opting out should be made in each individual case.

Another area where we see large opt-out claims being pursued by individual plaintiffs, even before a settlement is reached, is in antitrust price fixing cases.   In the In re TFT-LCD (Flat Panel) Antitrust Litigation, Case No. M-07-1827 in the Northern District of California, the indirect purchasers we represent settled their class claims for $1.1 billion.  Individual Plaintiffs pursuing their own claims include computer manufacturers like Gateway and Acer and retailers like Best Buy, among many others. And in the CRT Antitrust Litigation, Case No. M-07-5944, also in the Northern District of California, Plaintiffs pursuing individual claims alongside the class claims include Best Buy Stores, Sears Roebuck & Co., and K-Mart Corp.

The Cornerstone Research study of opt-out claims in securities cases can be found here:  http://www.cornerstone.com/Publications/Press-Releases/Securities-Report-Provides-Class-Action-Opt-Out-Statistics.

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