Settlement Tiers

Settlement tiers are case-specific categories that assign different benefits, payment limits, or documentation requirements to groups of eligible class members.

A settlement may use tiers when class members experienced different types of loss or when certain benefits require more support than others. The documents may separate people by documented expenses, time spent, account type, purchase history, exposed information, injury level, or another criterion connected with the case.

Not every settlement uses tiers, and the phrase does not have one universal legal definition. A claim form may instead use labels such as payment option, benefit level, documented loss, alternative cash payment, or subclass. Some options are arranged from lower to higher potential payments, while others are simply different benefits. A credit-monitoring option and a cash option, for example, may be alternatives rather than better and worse tiers.

Federal Rule of Civil Procedure 23 requires a court reviewing a federal class settlement to consider whether the proposal treats class members equitably relative to one another. That standard does not require every person to receive the same benefit. Differences can be permitted when the settlement provides a supportable reason for them.

The Equifax data breach settlement provides one case-specific example. The FTC’s Equifax settlement summary describes separate benefits involving out-of-pocket losses, time spent, cash payments, credit monitoring, and identity restoration. Those categories applied to that settlement and should not be treated as a formula for another case.

When a claim form offers several tiers or benefit paths, read the requirements for each one before choosing. Request only a benefit whose criteria you can truthfully satisfy, submit the records the form asks for, and avoid claiming the same loss twice if the instructions prohibit duplication. More documentation does not automatically produce a larger payment because individual caps, a limited fund, and pro rata reductions may still apply.

A payment tier is also different from a payment election. The tier determines the type or amount of benefit available under the settlement terms, while the payment election usually concerns how an approved benefit will be delivered.