The Importance of Opting Out on Time

A great story in today's Recorder, written by Marissa Kendall, about how even the biggest companies with the highest-priced lawyers can miss opt-out deadlines and kill their own lawsuits.

Samsung and Hitachi were sued in several class actions by multiple purchasers and competitors for price-fixing cathode ray tubes used in TV and computer monitors (when's the last time you saw one of those?). Big buyers like Sharp and Dell also filed individual lawsuits. When the class actions settled, notice was sent out to everyone and an exclusion deadline -- also called an "opt out" deadline -- was set. The usual practice.

Except Sharp and Dell both missed the deadline. Which means they needed to bring a motion before the judge handling the class action to ask for an extension of time. Judge Conti in San Francisco federal court approved Dell's request but not Sharp's.

Here's what the judge said, and I'm quoting from the Recorder article:

Sharp has offered no explanation as to why it missed the applicable opt-out deadline aside from mentioning that notice was ‘inadvertently not ... sent to outside counsel for the Sharp plaintiffs . . . Inadvertence and miscommunication are insufficient excuses.”

Conti was more lenient with Dell Inc., another plaintiff that missed the opt-out deadline. Dell’s attorneys with Alston & Bird in Georgia and Kerr & Wagstaffe in San Francisco told Conti they regularly checked the settlement administrator’s website for the opt-out deadline, but it was never posted. As proof, they provided the court with records of their Internet browsing history.

”The court finds this explanation shows an appreciable level of diligence and rises above the vague assertions of miscommunication and inadvertence other courts have rejected,” Conti wrote, granting Dell’s request for an extension.

What does this mean for Sharp? It means they have to share in the $43 million class action settlement with hundreds of thousands of others, who are likely getting only a fraction of their damages. Sharp said their purchases over the relevant period were more than $1.6 billion, so this is a huge loss for them. But not for Dell, who can effectively opt out and keep its individual lawsuit alive.

It's also a loss for the regular class members. As class counsel pointed out, the settlement wasn't designed with big direct purchasers like Sharp and Dell in mind. Sharp's participation in the class settlement means they'll take a big bite out of the $43 million, leaving even less for the regular folks.

Lesson for all of us is to keep track of those notices and talk about them with your lawyer when they come in. Also, it's probably good practice for plaintiffs' lawyers to follow class action litigation to be sure there's nothing out there that will bite them later. Lots of time and effort when into both of these individual lawsuits and it's a big disappointment all the way around.