Frequently Asked Questions ABOUT CLASS ACTIONS
A class action is a representative action that allows a person or entity to commence a lawsuit on behalf of other persons or entities who are in the same or similar circumstances. A class action is appropriate when many people have been affected by an unlawful course of conduct in a similar fashion. The class action device allows a person or entity with relatively small losses or injuries to seek compensation when individual actions may be too costly or impractical.
A securities class action is a lawsuit filed by a person or an entity who purchased a company’s debt or equity securities and who has suffered economic injury due to the disclosure of information about the company in violation of the securities laws. Securities class actions generally are brought under the anti-fraud provision of the federal securities laws including Section 10(b) of the Securities and Exchange Act of 1934 and the Securities Act of 1933.
A securities class action provides shareholders with the ability to litigate their claims on a level playing field with the large, well-funded corporations that have allegedly violated the securities laws. A class action allows investors who would never have brought an individual action against a company to seek recovery from the alleged wrongdoers without having to individually retain a lawyer and incur a legal fee.
A class period is the period of time during which the corporate actors are alleged to have been engaged in wrongful conduct. The class period is specified in the complaint and the notice that is published following the filing of the initial complaint. A class period may be lengthened or shortened after the initial complaint is filed, depending upon the facts and circumstances of the case.
If you purchased the securities of a company that is involved in a class action (usually as a named defendant) during the specified class period, then you are automatically considered a member of the class, even if you do not retain a law firm to prosecute claims on your behalf.
The concept of class membership also applies to consumer fraud class actions and antitrust class actions. For example, if you purchased a product from a company that is alleged to have engaged in improper marketing practices during a certain time period (the class period), you would be a member of a consumer fraud class, even if you did not personally retain an attorney.
Can I participate in a securities class action if I purchased shares before or after the class period?
Only those shares purchased during the class period will be the subject of the litigation. However, the class period may be extended in light of further findings in our ongoing investigation. In that event, shares purchased before or after the class period may be subject to the litigation.
Can I recover damages if I sold my securities before or during the filing of a securities class action?
A valid claim for relief in a securities class action depends on when the stock was purchased. If you purchased your stock during the class period and suffered an economic loss in response to the disclosure of the alleged fraud, you have a claim even if you sold your stock before the start of a securities class action.
You do not need to hold the security in order to participate in a class action or in a class action settlement. However, if you sell your security within the first 90 days following the corrective disclosure, your damages will be capped at the difference between the price at which you purchased the security and the price at which you sold it.
If I continue to hold my stock after a corrective disclosure, will I be precluded from participating in any settlement of the action?
No, you can still participate in a settlement. In the event that you continue to hold the stock, your damages will be limited to the difference between the price paid for the stock and the mean trading price of that security during the 90-day period following the corrective disclosure.
Yes, as long as the shares were acquired during the class period.
Typically, in class action litigation, such as securities class actions, several law firms will file similar complaints and provide notice about the litigation in a widely circulated business publication or news wire service. The primary reason for multiple lawsuits is because different shareholders or consumers contact and retain different law firms to pursue the same matter. Generally, the separate actions will be consolidated and heard by the court as one action, with each law firm participating on behalf of their clients in a capacity to be determined by the court.
If more than one law firm filed a lawsuit related to the same securities violations, do I need to retain every law firm?
No. You should not retain more than one law firm to represent you for the same claim. You cannot improve the amount of your recovery by retaining more than one law firm.
A lead plaintiff can be a person, a group of persons, an entity (such as an institution), or a group of entities that is appointed by the court to represent the interests of all members of the class. In securities class actions, for example, the lead plaintiff generally possesses the largest financial interest in the outcome of the cases. Subject to court approval, the court-appointed lead plaintiff retains lead counsel. Together, the lead plaintiff and the lead counsel determine how the litigation should proceed and eventually be resolved. In consumer class actions brought under state law, the lead plaintiff appointment process will vary based on the factual circumstances of a given case
The lead plaintiff is a proactive member of the class who acts as a representative party for all members of the class. Your participation as a lead plaintiff helps to convey the importance of the lawsuit. This is true whether you are a small investor or an institutional investor. By taking a proactive role, you are also demonstrating to the court that investors are serious about prosecuting their claims and that you – as one of many aggrieved members of the class – are committed to proceeding with the action to its conclusion.
Under the Private Securities Litigation Reform Act of 1995, courts will appoint a person, entity, group of persons or entities from the class to serve as the lead plaintiff. The lead plaintiff usually has the largest financial interest in the relief sought by the class and is the class member most capable of adequately representing the interests of the class. Courts determine the “largest financial interest” in a variety of ways, such as by calculating the dollar amount of the loss due to the securities law violations alleged. Also, depending on the circumstances, several entities and/or individuals may be appointed to serve as a “co-lead” plaintiffs.
Once the lead plaintiffs are appointed by the court, they may select and retain counsel to represent the class. The lead plaintiffs are charged with the oversight of, and input into, the litigation of a class action beyond that of other class members
In class action litigation, Bernstein Liebhard LLP does not generally charge its clients attorneys’ fees or expenses. Instead, the Firm typically handles such cases on a contingent fee basis. This means that our fees and reimbursement of our expenses will depend on securing a successful outcome for the class. If a fund of money is created for the benefit of a class, we will seek approval from the court for a fee and expense award to be paid out of the recovery or directly by the defendants. The amount of the attorneys’ fees requested, and the amount awarded, ordinarily depends on a variety of factors, such as the size of the recovery, the amount of time expended by the attorneys involved in the action, and the complexity of the litigation
Each case is different; some cases settle shortly after the action is brought and some cases are litigated for years, concluding with a trial. A typical class action will take 1-3 years to be resolved. At Bernstein Liebhard LLP, we aggressively prosecute all our cases and are prepared to take a case to trial in order to obtain a recovery for our clients and the class that we represent.
The damages paid to the plaintiffs and the class depends on a variety of factors, such as the size of the recovery, the ability of the defendants to pay, whether the defendants are insured, and the number of persons who submit claims against the fund for their pro rata interest in the action. Damages are a complex legal calculation that may or may not equal your loss. To establish damages in securities class actions, for example, lead counsel will hire experts to calculate the monetary amount that a company’s stock was artificially inflated during the class period. Essentially, the experts will attempt to determine at what price the company’s stock would have traded during the class period, absent the defendant’s wrongful conduct. Lead counsel hire experts for this calculation because there may have been other factors that caused the company’s stock price to decline other than the alleged fraud.
Attorney’s fees are generally awarded as a percentage of the benefit achieved by the attorneys for the class. The percentages vary depending upon, among other factors, the size of the recovery for the class, the time and labor expended by counsel, the risks of proving the elements of the claim, and the length and complexity of the litigation. The court, after notice to the class, determines whether the requested fee is fair and reasonable.
In a securities class action, the best evidence of membership is the confirmation slip you received when you purchased the stock, or, if you no longer have the confirmation slip, your brokerage statement of account indicating when and at what price you bought the stock. You should be sure to keep these records in a safe place. You may need to submit them to the claims administrator after the case has been resolved. You will be notified by mail when to send this documentation. In a consumer class action, the proof required depends upon the particular facts of the case.
You will receive your share of the recovery at the successful conclusion of the case, after notice is given to the class members, and after the proofs of claim are submitted and processed.
Bernstein Liebhard LLP is one of the premier class action firms in the country. Since its founding in 1993, the Firm has recovered over $3.5 billion for victims of fraud and anti-competitive conduct. As a leader in the field of class action litigation, Bernstein Liebhard LLP has been chosen by the courts to serve as lead counsel or co-lead counsel in many cases, including numerous prominent and high profile class actions, such as the IPO Securities Litigation. In addition to the courts, which have singled out the Firm’s lawyers for the quality and effectiveness of their work, the Firm has been recognized by The National Law Journal 13 times since 2003 s one of the top plaintiffs’ firms in the country.