Can you be bound by a class action settlement you never joined?

A class action lets a few representatives sue for a large group. The point is to resolve everyone's claims at once, so the result has to bind the group or the company would face the same lawsuits again. Under Federal Rule of Civil Procedure 23(c)(3), a class judgment binds the class "whether or not favorable to the class," and in a Rule 23(b)(3) damages case it covers those to whom notice was directed, who did not request exclusion, and whom the court finds to be class members.

The Constitution allows this as long as absent members are protected. In Phillips Petroleum Co. v. Shutts (1985), the Supreme Court held that due process requires notice, an opportunity to appear, an opportunity to opt out, and adequate representation, and does not require class members to affirmatively opt in. The Court approved a procedure in which a fully descriptive notice was mailed first-class to each member with an explanation of the right to opt out.

Settlements add one more safeguard: court approval. Under Rule 23(e)(2), a settlement that would bind class members can be approved only after a hearing and a finding that it is fair, reasonable, and adequate. Our guide on how a class action works explains each stage.

Every settlement contains a release, a section of the settlement agreement listing the claims class members give up. Once the court grants final approval, class members who did not opt out release those claims against the company, usually including claims they did not know about, as long as they arise from the same facts.

Read the release before the opt-out deadline. It usually appears in the long-form notice and in full in the settlement agreement on the official website. Pay attention to:

• The released parties, often including affiliates, vendors, and partners of the company.
• The released claims, typically every claim "arising out of or relating to" the conduct in the lawsuit during the class period.
• What is carved out. Some economic settlements expressly exclude personal injury claims, and some exclude claims under specific statutes.

The release applies whether or not you are paid. In the FTC's 2019 study of 149 consumer settlements, the median claims rate was 9%, which means most class members in a typical case released their claims without collecting anything.

Some settlements soften this by paying people automatically, using the company's own records. In the PlayStation Store settlement, for example, the net fund is distributed by Sony directly to eligible class members' PSN account wallets, according to the official settlement FAQ. In those cases, doing nothing still gets you a payment, but you are bound by the release all the same. When a settlement requires a claim, the release is the price of the claim you did not file. That is why it is worth checking any notice you receive, even one for a small amount, before the deadlines pass.

You can still be bound. Rule 23 requires "the best notice that is practicable under the circumstances," including individual notice to members identifiable through reasonable effort, not proof that every person actually read it. Notices go out by mail and email, and some reach spam folders, old addresses, or people who throw them away. A settlement that met the court-approved notice plan generally binds members who missed their notice.

There is one notice-related exception written into federal law. Under 28 U.S.C. 1715(e), a class member may refuse to be bound by a settlement if the required notice of the settlement was never provided to the appropriate federal and state officials. That exception is about notice to government officials, not notice to you, and it rarely applies.

If you learn about a settlement late, act before the deadlines if any remain. Check the official website for the claim, opt-out, and objection dates, or browse open settlements. Our guide on how to know if you qualify explains how to read a class definition.

1. You opted out in time. A valid, timely exclusion removes you from the class. You get no money, and the release does not apply to you.
2. You are not in the class definition. If you bought the product outside the class period, live outside the covered states, or fall into an excluded group (often company employees, judges, and people who already settled), the settlement does not bind you.
3. Your claim is outside the release. A claim the release does not cover survives even if you stayed in the class.
4. No class was certified. In Smith v. Bayer Corp. (2011), the Supreme Court held that an unnamed member of a proposed class that was denied certification was not a party and could not be bound by the judgment in that case. The exception for binding non-named members applies only to properly conducted class actions.
5. Representation was inadequate. Since Hansberry v. Lee (1940), absent members may be bound only where they were in fact adequately represented. Challenging a judgment on this ground after the fact is difficult and uncommon.

Some classes do not allow opt-outs at all. Classes seeking only a court order under Rule 23(b)(2), and certain limited-fund classes under Rule 23(b)(1), can bind members without an exclusion right. Most consumer money settlements are Rule 23(b)(3) classes with an opt-out.

1. Confirm you are in the class by reading the class definition on the official settlement website.
2. Read the release to see which claims you would give up.
3. Decide before the deadlines. Stay in and file a claim, opt out to keep your right to sue, or stay in and object. See how to opt out or object.
4. If your harm is larger than typical, for example an injury or a large documented loss, get advice before the opt-out deadline passes.

For a full list of what class members are entitled to, see the rights of a class member. If you think you have a claim worth more than a class payment, a free case review takes about two minutes.