What is a Class Action Lawsuit

It is often said that there is strength in numbers. Class action lawsuits are a prime example of the accuracy of this maxim. Take some time to learn about this highly effective legal mechanism to see if it might be beneficial to you or someone you know.

What Are Class Action Lawsuits?

There are times when several claimants, sometimes hundreds, thousands or even millions, have a common concern directed against one defendant. The class action lawsuit gives these entities a vehicle to litigate their numerous claims all at once. This type of lawsuit serves to promote judicial efficiency and fairness to the client group as a whole.

How A Claim Becomes A Class Action Lawsuit

If an attorney wants to represent an entire class of plaintiffs who have suffered similar injuries or other difficulties, they must satisfy several requirements under federal laws as well as under Civil Procedure 23. These include the following:

  • Numerosity. Although this requirement does not focus just on a specific number of claimants, most class action suits do not proceed with less than 20 members of the class. In order to satisfy this requirement, the class should consist of a group of people who would probably not be well served by a standard lawsuit. For example, a group of 30 people injured in a train accident would probably be better off filing separate standard civil suits, whereas 30 individuals scattered throughout the country who were injured by a defective toy would be excellent candidates for class action.
  • Commonality. There must be at least one question of law or fact that is common to everyone in the class. Additionally, everyone in the class must show that the ways in which the claim came about are shared by all members of the class.
  • Typicality. This requirement specifies that the claims of the named class representative are typical of everyone else in the group of claimants.
  • Adequacy. Again, this requirement refers to the class representative. To satisfy it, this entity must show that they will adequately and fairly stand up for the interests of the entire class of plaintiffs. There should not be any conflicts between the representative and the other members of the class, and injuries must be similar. Furthermore, the attorneys representing the class must demonstrate that they have the competence and expertise to fulfill their duties.

Once class certification has been granted, the representative must show that the case satisfies one of the following additional reasons why the lawsuit should continue as a class action instead of via a standard civil action:

  • Separate litigations would risk inconsistent rulings and might be harmful to other class members.
  • The actions or inactions of the defendants are applicable to the class as a whole.
  • It is better for the case to be brought by the entire class because common issues of fact and law predominate over the claims of any individual class member.

Next Steps Of A Class Action Lawsuit

After the class has been certified and fully approved, all members of the affected group of defendants must be told about the lawsuit and learn their rights in relation to it. In general, this step is accomplished by mail. Potential class members then have the following options:

  • Opt out totally, choosing not to be part of the class. Although this person will not benefit from the class action lawsuit, they can bring their own separate cause of action. People tend to choose this option if they believe they can realize a larger settlement by moving forward independently.
  • Do nothing, but remain part of the class. In this case, this person will share any judgment or settlement that results from the lawsuit. That being said, this individual cannot bring their own separate action and is bound by whatever happens.
  • Retain their own attorney to represent them in the class action.

Example Of A Class Action Lawsuit

In the most substantial class action lawsuit in U.S. history, 46 state Attorneys general brought action against Philip Morris, RJ Reynolds and two other tobacco companies in 1998. When all was said and done, they agreed to a minimum $206 billion settlement to cover the medical costs for smoking-related illnesses to be paid over the next 25 years. Other significant class action suits include litigation against BP due to the Gulf of Mexico oil spill ($20 million), Volkswagen because of emissions fraud ($14.7 billion) and Enron for securities malfeasance ($7.2 billion).

Benefits Of Class Action Lawsuits

There are several upsides of these types of litigation:

  • Courts do not need to hear the same case countless times requesting similar damages from a particular defendant or defendant group.
  • Litigation costs for plaintiffs can be reduced.
  • Class action suits are often settled out of court due to corporate reluctance to become involved in this type of action.
  • Settlements can be delivered more efficiently.
  • Fairness is greater since all plaintiffs are treated equally.
  • There is strength in numbers and a greater chance of victory.

Disadvantages Of Class Action Lawsuits

Even so, there are problems associated with this type of litigation. They include the following:

  • Attorney fees can be higher.
  • Settlements can sometimes consist of goods or services instead of financial remuneration.
  • Compensation received by individual plaintiffs can vary and may not always be perceived as fair.
  • Class action lawsuits are complex and can take a long time to resolve.
  • If the attorneys representing the class are lacking in skill, the whole group of defendants suffers.

In the realm of the class action lawsuit, there are a few important takeaways. They can be very effective if a large group of individuals has a grievance against one defendant that has resulted in similar damage to everyone. A lead plaintiff is appointed to represent the entire class throughout the case. Once the case is completed, settlement can occur in the form of cash, services or other benefits that are distributed among all members of the class. Given these facts, it is easy to see why this legal tool has become such a popular way for large groups of injured people to receive the justice they deserve.