What is a securities lawyer?
Should I opt out of a class action?
When can a class action suit be filed?
How long does it take to settle a security action?
This is a difficult question to answer. Securities class actions typically take a few years to settle, that is, from the filing of the initial complaint to the final approval of a settlement by the court you can expect at least two to three years. This is only a rough estimate and many factors can affect it. For example, when a judge grants defendants a motion to dismiss, she might also give plaintiffs a chance to amend their complaint instead of dismissing the case immediately. Then, an extra round of motion to dismiss briefing would ensue after the complaint is amended. In other cases, parties might appeal a district court’s order on a dispositive motion such as a motion to dismiss or a motion for summary judgment, and that often takes months, if not years, to resolve. After parties reach a settlement agreement, they also have to take the time to seek court’s approval and disseminate public notices of the settlement. A fairness hearing on whether the settlement is procedurally and substantively fair would also be conducted by the court before the issuance of a final approval order. Each of these factors can effects the time it takes to settle a case.
Should you join a class action?
How Long Does a Securities Class Action Suit Take?
The process for a securities class action case can take several years from start to finish. There are generally a few phases to the ligation:
CLASS ACTION SUIT COMMENCED IN COURT
A securities class action lawsuit is formally commenced when a complaint is filed with the appropriate court for alleged violations of securities laws. False and misleading conduct are the primary basis for the majority of securities class actions. Allegations typically include concealing or failing to disclose a material fact. Common issues involve missed earnings guidance, misstating the financial position of the company, or misstating company exposure to well-publicized events that affect stock prices, such as regulatory action, environmental disasters, data breaches, or sexual harassment revelations.
NOTICE TO SHAREHOLDERS
In most instances, a Notice of Pending Action- Class Action Complaint is disseminated to company shareholders. This informs the shareholders that a case has been filed against the company.
MOTIONS TO DISMISS
After a complaint is filed, the defendants will have an opportunity to ask the court to dismiss the case because it does not state a claim. Depending on the court’s schedule, this can take a year or more to resolve and is necessary before the case can move for the next phase.
If the defendant’s motion to dismiss is denied, the case proceeds to the discovery phase. In this phase of the litigation, the plaintiffs and defendants have the opportunity to seek information from each related to their claims or defenses. This is normally takes anywhere from six months to a year depending on the court’s local rules and the judge’s preferences.
At or near the end of the discovery period, the plaintiffs will typically ask the court to certify a class. The class is normally a group of people (here purchasers of the defendant’s stock) that were impacted by the same conduct. The plaintiffs may use the information obtained in the discovery phase to support this request, for example, by showing that what the defendant did impacted many investors in the same way. If a class is certified the court will typically order notice be sent to individual class members to inform them about the action.
Towards the end of the case plaintiffs and defendants will have the opportunity to ask the court to rule on specific issues in the case based on the evidence identified in the discovery phase. Any issues that remain in dispute and are not resolved at this stage will move on to be decided at trial.
Factual issues that remain after the summary judgment phase will be set for resolution at trial. This may occur before a judge (what is known as a “bench trial”) or a jury. The number of jurors depends on the jurisdiction where the action is filed. If a verdict is awarded in favor of plaintiffs members of the class may be able to file claims to collect part of that recovery as compensation for their claims.
If at any point during one of these phases the parties reach a settlement, members of the class will typically receive a “Notice of Settlement of Class Action” which provides investors who held shares during the class period with the details of the settlement and the information they must provide to in order to file a claim for a share of the settlement funds. The settlement notice should contain all the key dates, including the relevant time period of the alleged misconduct, deadline to opt out from or object to the settlement, and the class action claims filing deadlines.
What are the risks of joining a class-action lawsuit?
Joining a class-action lawsuit as a named plaintiff, like any litigation, comes with certain risks—including dismissal, denial of class certification, time intensive discovery, and in rare cases an adverse trial verdict.
A plaintiff’s class-action lawsuit can be dismissed at different stages of the litigation—including at the motion to dismiss stage and at the motion for summary judgment stage. If a class-action lawsuit is dismissed, then neither the plaintiff nor absent class members would receive any compensation.
The named plaintiff in a class-action lawsuit may also open themselves up to discovery. This potentially includes collecting documents and electronically stored information in their possession, responding to written request for information, and sitting for a deposition where they will questioned by defense counsel. If a case proceeds to trial, a plaintiff will also have to attend the proceeding and may be questioned again on the witness stand.
Finally, even if a class-action lawsuit survives dismissal, is certified, and proceeds to trial, then a plaintiff always runs the risk that a jury (or judge) will find in favor of the defendant. If the plaintiff loses at trial, then neither the plaintiff nor class members would receive any compensation.