Is Class Action Right for You?

At this stage, you have four options. You can choose to ignore the suit and say it's not worth it, especially if your damages are $20. You can also object to the settlement, which is a good idea if the defendant plans to pay out in stock warrants and you have big losses that you want paid in cash. You can also file an individual lawsuit against the company or, obviously, you can join the class-action suit.

For people with huge losses, going it alone may be a wise move because you'll recoup less money in a class-action suit.

"If you're an institutional investor with substantial losses, I can't think of any advantage from taking part in a class-action case as opposed to having an individual suit," said David Marder, partner in Robins, Kaplan, Miller & Ciresi, a national law firm based in Minneapolis. Marder noted, though, that shareholders with losses in the mid six figures should sit down and do a cost-benefit analysis before joining a class-action lawsuit, as individual suits can be time-consuming and can involve big court costs.

Regardless of whether you decide to go with an individual suit or a class-action one, "it's important to participate in some recovery mechanism to seek justice," said J. Boyd Page, partner at Page, Gard, Smiley & Bishop and counsel in a successful class-action suit against Marriott in 2000.

"There's a real sense that class-action suits do help, that they send a message," Page said. "The more an individual investor stands by and doesn't object, the easier it is for this kind of conduct to continue. Maybe it's time for all investors to say we're mad as hell and going to do something about it."

>To order reprints of this article, click here: Reprints