What Does Opt Out Lawsuits Mean?

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What does Opt Out Lawsuits mean? Read on to discover the definition & meaning of the term Opt Out Lawsuits - to help you better understand the language used in insurance policies.

Opt Out Lawsuits

Opt Out Lawsuits

A type of lawsuit in which an individual plaintiff "opts out" of the larger securities class action lawsuit that is also being brought against the same corporate defendant. Opt-out suits are most often filed by an institutional investor (e.g., a bank, insurer, or pension fund). By making a claim that is separate from the larger class action, an individual plaintiff can sometimes negotiate both a larger and more rapid settlement recovery than if the plaintiff was a more passive beneficiary of the class action lawsuit. In addition, by settling on an accelerated basis, an opt-out plaintiff gets "first dibs" at the defendant's directors and officers (D&O) liability insurance policy proceeds. This is important because the defense expenditures required by complex, protracted securities litigation rapidly depletes and frequently exhausts D&O policy limits, often before monies are available to make actual claim settlements.

We hope the you have a better understanding of the meaning of Opt Out Lawsuits.

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