Starbucks to distribute settlement checks in $325,000 COBRA case, but only certain Americans qualify

Some Americans may be eligible for checks from a settlement tied to Starbucks, but they need to take action before the deadline passes.

The coffee chain is also continuing a wave of store closures, with at least 250 locations shutting down over the fall.

The case stems from a lawsuit filed several years ago that alleged Starbucks did not give departing employees proper notices under the Consolidated Omnibus Budget Reconciliation Act, known as COBRA.

COBRA is a federal law that lets employees and certain dependents temporarily keep employer-sponsored health coverage after losing a job or experiencing another major life event, according to the US Department of Labor.

It is not a new insurance plan. Instead, it allows former workers to continue the same medical, dental or vision coverage they had while employed.

Plaintiffs argued that although Starbucks sent notices about the Starbucks Welfare Benefits Plan, those notices did not clearly explain workers' right to continue coverage through COBRA.

Starbucks did not admit any wrongdoing, but it has agreed to a $325,000 class action settlement to resolve the claims.

To receive money from the settlement, people must be former Starbucks employees.

They also must have participated in the Starbucks Welfare Benefits Plan, including the Health and Vision Plans, while they were employed.

In addition, they must have received a COBRA notice and not elected continuation coverage.

Eligible former workers must submit a claim form by the deadline, and the exclusion and objection date is the same day.

According to the settlement information, approved claimants could receive between $30 and $74 each.

If 25% of class members file claims, the payment would likely be closer to $30. If only about 10% submit claims, the amount could rise to around $74.

Claim forms cannot be filed through the settlement website because they were already mailed to prospective class members.

However, claimants can use the notice ID and PIN included with the forms to update their mailing address online.

Americans should also be aware of other class action settlements with larger potential payouts.

Amazon is sending checks worth up to $5,000 in connection with a $308 million settlement, and claim forms must be submitted before the deadline.

Only a short time remains before a $4,480 payment tied to a data breach case disappears for good.

What is a class action settlement?

Class action lawsuits allow groups of people, known as classes, to join together in court.

These cases are often filed by one or a few people who say a company or another organization harmed a large number of people.

When a case becomes a class action, it applies to all class members, or people who may have similar complaints to the original plaintiffs.

Companies often choose to settle class actions by paying class members, who usually give up the right to pursue additional legal action if they accept the money.

Settlement agreements typically include a statement that the defendant denies wrongdoing. Businesses often settle to avoid the expense of continuing the case.

Pollution, discrimination and false advertising are among the issues that can lead to class action lawsuits.