Class Action Settlements: An Opt-In Proposal

The outcome of a class action binds all class members except the few who take the trouble to opt out. This default rule enables plaintiffs’ lawyers and defendants to settle class lawsuits on mutually beneficial terms that exploit class members. Judges approve such settlements be-cause, among other things, they have a strong incentive to clear their dockets. This article suggests changing the default rule so that class set-tlements include only those who expressly assent to the terms of the set-tlement by opting in. This change would be aimed at removing the incentive to settle collusively, discouraging frivolous class lawsuits, and rewarding those plaintiffs who have the most meritorious claims.

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