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

Written by on June 19, 2013.

What does it meant to “opt-out” of a class action?
In her latest article, Siskinds Associate Linda Visser looks at what it means to opt-out of a class action. She considers the benefits of participating in class actions and provides an example of a situation where it may be worthwhile to not participate in a class action.This paper examines what it means to “opt-out” of a class action and the consequences of doing so. 

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

In simple terms, to opt-out of a class action is to exclude yourself from the class action.

To understand what it means to opt-out of a class action, it is first necessary to understand the fundamental nature of a class action.  A class action is an action brought by one or more persons (called the “representative plaintiff”) on behalf of a group of similarly situated persons (called the “class”).  If the action is “certified” as a class action, meaning that the court decides that the action can proceed as a class action, any settlements or court orders will apply to all members of the class unless the putative class member opts-out.  In Ontario, persons falling within the parameters of the class are automatically included in the class unless they opt-out.

What are the consequences of opting-out or not opting-out?

If a person opts-out of a class action, he or she will not be permitted to participate in any settlement or court award achieved in the class action, and will not be bound by any orders issued in the class action.  However, he or she will be able to pursue his or her claims on an individual basis.

Conversely, if a person does not opt-out of a class action, he or she will be permitted to participate in any settlement or court award achieved in the class action, and will be bound by any orders issued in the class action.  However, he or she will not be able to pursue his or her claims on an individual basis.
Simply stated, in deciding to whether or not to opt-out, you are deciding whether or not to be part of the class action.  You would only opt-out if you do not want to be part of the class action.

In what circumstances would a person want to opt-out?

Generally speaking, a person would only want to opt-out of a class action if he or she intends to bring individual litigation.  In most circumstances, it is more cost effective to participate in a class action because the legal costs are spread over a large number of people, making it more economic for any individual class member to obtain relief. 

That said, there are some situations where a person might want to opt-out,  Farkas v. Sunnybrook & Women’s College Health Sciences Centre, 2009 CanLII 44271 (ONSC) is a good example of one of those situations.  That case related to the disinfection technique used by the defendant for ultrasound wands used for prostate biopsies.  Having determined that better disinfection techniques had not been used, the defendant decided to change practices and give notice to past patients.  The notice advised that the disinfection technique might not have been adequate to eliminate the transmission of viruses such as Hepatitis B and C and HIV.  With the exception of one past patient (Mr. Turner), none of the class members were infected as a result of the biopsy and the claims were based on the psychological distress associated with receiving the news that they might have been infected with a virus and passed that virus on to their wives or partners.  Mr. Turner did not opt-out of the class action, but rather objected to the proposed settlement being applicable to his particular case and any similar cases (of which there did not appear to be any).  The court noted that, if Mr. Turner did not wish to be bound by the class action because his circumstances were different from class members, he should have opted-out.  The court observed that, at the settlement approval stage, his recourse is not to object to the settlement, but to seek an extension of time for opting-out, which might or might not be granted.

How does a person opt-out?

The notice advising of the certification of the action will describe the process for opting-out.  The process would typically involve either submitting a completed opt-out form or a signed written request to opt-out.  The notice would also advise of the deadline for opting-out.

What does it mean to “opt-in” to a class action?

In some jurisdictions, you must “opt-in” to a class action in order to be included in the class and part of the class action.  In other jurisdictions (i.e., British Columbia), persons resident in jurisdiction are automatically included in the class unless they opt-out, but persons not resident in the jurisdiction must opt-in to the class.  Thus, it is important to read class action notices carefully to determine what steps are required in order to participate in a class action.

Conclusion

The decision to opt-out is an important decision.  If you receive a class action notice, be sure to read it carefully and consider your options.  If you have questions about whether you should opt-out, you should consult legal counsel, either your own counsel or counsel for the class (the class action notice will contain contact information for counsel for the class and you will not be required to pay for their advice on this matter).

For information about class actions that Siskinds LLP is involved with, please visit our website at www.classaction.ca. If you have questions about your legal rights please contact Siskinds and ask to speak to
Linda Visser at 519-672-2121.

Posted in Class Actions, Publications