Class Action Lawsuits

Understanding the Process for Group Litigation

You’ve been injured because of a dangerous or defective product, or because toxic waste was dumped on or near your property. You’re among a large group of people who have suffered similar injuries. Individually, your losses may not be substantial, and bringing a lawsuit to recover only your damages may not make financial sense. That’s when a class action lawsuit can help protect your right to compensation.

What Is a Class Action?

A class action is a civil lawsuit that seeks damages or other relief on behalf of a group of people who all have similar injuries caused by the wrongful actions of the same person or company.

The History of Class Actions Lawsuits in the United States

Though the concept of group or class litigation dates back to before the Norman conquest, the concept first gained traction in the United States in 1820, when a federal circuit court judge reiterated the “general rule…that all persons materially interested, either as plaintiffs or defendants in the subject matter…ought to be made parties to the suit, however numerous they may be.” This ruling provided precedent for federal class action proceedings until 1938, when Rule 23 of the Federal Rules of Civil Procedure adopted standardized rules for class actions in federal court. All state courts except Mississippi and Virginia also allow some type of class action litigation.

Understanding How a Class Actions Works

While the rules governing class actions may vary if you’re in state court rather than federal, there are some common elements:

• A class action is always a civil action, where the person bringing the action seeks civil relief—typically compensation—for injuries caused by the wrongful acts of another party.
• The person filing the lawsuit represents a number of other plaintiffs (parties seeking relief) who have all suffered similar injuries because of the actions of the defendant.
• The attorneys for the person filing the lawsuit represent all similarly situated parties, and any verdict or settlement is shared among all the members of the class.

Requirements for a Class Action Lawsuit

The requirements for a federal class action are found in Rule 23 of the Federal Rules of Civil Procedure. Rule 23(a) mandates that a group of people may bring a class action only if they meet all the following requirements, as determined by the court:

• The number of potential class members is so large that joining them all as plaintiffs in a lawsuit would be impracticable;
• Common issues of law and/or fact apply to all members of the class;
• The claims of the representative parties of the class are typical of the claims of all class members; and
• The representative parties will fairly and adequately safeguard the rights and interests of all members of the class.

Many states have requirements that are essentially the same as the federal rules.

Types of Class Actions

In addition to the requirements of Rule 23(a), the court also must find that the case fits into one of the following types of class actions outlined in Rule 23(b):

• Litigating the claims in separate actions would risk inconsistent rulings or would potentially be dispositive of the legal rights of others not joined in litigation.
• The party opposing the class action has acted, or refused to act, in ways that apply generally to the class, such that a ruling against that party would affect the class as a whole.
• The court determines that common questions of law or fact among class members predominate over issues affecting individual members.

The Stages of a Class Action Lawsuit

To successfully litigate a class action matter, you need to start with an experienced law firm, one that has been involved in class actions in the past, as the rules can be complex and confusing. Next, you’ll file a lawsuit, naming at least one person as representative of the class of plaintiffs seeking relief. The defendant(s) can then respond to your complaint.

Once the complaint and answer have been filed, you must file a motion with the court to certify the proposed class. To do this, you will need to show the court that the proposed class meets all the requirements of Rule 23(a) and that the case falls into one of the class action types described in Rule 23(b). Among the things you will need to show are the following:

• You must demonstrate to the court that there is a valid legal claim against the defendant(s).
• You will identify a person to act as lead plaintiff. That person will work with the law firm and approve any proposed settlement.
• You must show that the proposed class is large enough. Although there is no minimum required number of class members, it can be difficult to get a class certified if it has fewer than 20 members.
• You must show that it will be beneficial to all parties involved to resolve the claims in one proceeding.

Generally, once the class is certified, notice must be sent out to all potential class members, allowing them the option to either join or opt out of the litigation. In most instances, all parties who meet the definition of the class are automatically members and lose their rights in the class action only by affirmatively opting out. Individuals might opt out of a class action if they would like to bring their individual claim against the defendant separately.

The Effects of a Class Action Lawsuit

Any verdict or settlement in a class action lawsuit affects only the legal rights of those individuals who are members of the class. As a general rule, persons who meet the definition of members of the class are automatically members unless they affirmatively opt out. Those individuals who do opt out will not be able to claim any benefits from the class action verdict or settlement. Conversely, those individuals who did not opt out must accept the outcome of the class action lawsuit, though the representative plaintiff may file an appeal, if appropriate.

Class Action Legislation

The Class Action Fairness Act of 2005 gives the federal courts expanded jurisdiction over class action lawsuits. Proponents of the legislation say it minimized “forum shopping,” in which class action lawyers look for a representative in a state with favorable laws or friendly courts and file the claim there. The lawsuit also mandates greater federal scrutiny of class action settlements, seeking to avoid excessive attorney fees.

What Are the Benefits of a Class Action?

Class action proceedings offer a wide range of advantages:

• Class actions level the playing field and allow individuals with relatively small or moderate injuries to come together and collectively take on large companies.
• The costs of the litigation are shared by all the parties, making the process much more affordable for each individual class member.
• Small or moderate payouts to every member of a large class can add up to a significant amount the defendant must pay, serving as a deterrent to future bad behavior by the defendant and others.
• The process benefits the court system, as multiple claims are handled in a single lawsuit, freeing up dockets for other filings.
• Class actions produce more uniform results for defendants.
• The notice requirement of a class action can protect individuals who might not otherwise know they have a claim.

Criticisms of Class Actions

Among the disadvantages of a class action lawsuit are:

• Loss of control—Typically, the representative plaintiff(s) and their legal counsel make all decisions on behalf of the class.
• Settlements often include rebates or discounts for future services, rather than a cash payout.
• The representative claims must be strong, or all other parties to the class action litigation may suffer.

Examples of Class Action Lawsuits

The class action process has been used to successfully resolve a broad range of civil matters, including:

• Personal injury claims, most often related to dangerous or defective products, such as auto components or household goods. Class actions are often an effective approach to resolve personal injury claims involving medical devices or pharmaceutical products.
• Consumer fraud claims against manufacturers, wholesalers, and retailers who have made false claims with respect to a product, or who have engaged in anti-competitive behavior, such as price fixing, collusion, or illegal monopolies.
• Employment controversies, from wage and hour disputes to worker safety violations. They have also been used in employment cases involving businesses or institutions with cultures that condoned or failed to address widespread racial or gender discrimination or sexual harassment.

Among the more famous class action proceedings in American history are:

• State of Tennessee v. John Thomas Scopes (1925), also known as the Scopes Monkey Trial, which struck down a law that forbid the teaching of evolution in Tennessee public schools.
• Brown v. Board of Education (1954), which overturned laws that forced black students to attend schools separate from white students.
• Exxon Shipping Company v. Baker et. al, filed on behalf of thousands of commercial fishermen affected by the oil spill from the Exxon Valdez.

Summary

Under certain circumstances, if you and others have similar claims against a person or business, you may be able to consolidate your claims in a class action lawsuit. A class action will typically cost far less than filing your own claim, making it much more attractive when you have moderate losses. To successfully use the class action process, you must have your class certified by the court. As a general rule, any verdict or settlement in a class action is binding on anyone who has not affirmatively opted out of the class.