What is a Class Action Lawsuit

01.17.2019

If you are wondering what a class action lawsuit is, you’re not alone. Class action lawsuits tend to be highly complex, and they require an experienced lawyer at the helm. The actual definition of a class action, though, is fairly simple: in a class action, a person or group of people sues on behalf of a large group of people who all suffered the same legal injury.

For example, someone could file a class action suit on behalf of everyone who:

The person who starts the lawsuit is called the named plaintiff or class representative. The people proposed to be represented are called the class members. Class action lawsuits typically include hundreds or thousands of class members.

If you are having problems with a company—whether it’s a website, a company you invested in, or even your employer—many other people may be having the same problems. In these situations, a class action suit is often the best solution because it can allow many people across the country to benefit from a single lawsuit. It also empowers individuals who may otherwise lack a means of speaking out to stand up against a powerful company in court.

Any injured person can initiate a class action suit, but specific requirements apply. Below we outline the class action requirements and what you can expect as a class member or a class representative.

What Is a Class Action Suit?

A class action lawsuit serves several purposes. Most importantly, class actions deter corporate wrongdoing and allow people to join together to seek justice against a large entity when individual suits would be impractical. For example, if a bank unfairly charges you a $50 overdraft fee, it would be unrealistic to go through a lengthy, complex lawsuit for that relatively small amount of money. If, however, thousands of bank customers incurred unfair fees, a class action could be an efficient way to resolve the matter for many individuals at once. In general, a class action:

  • Litigates and resolves small claims: Small claims deserve attention, and the law entitles consumers to fair compensation for a range of corporate violations. Class action lawsuits make it possible to pursue small claims by grouping them into a single representative suit.
  • Represents individuals regardless of their financial situation: It does not cost anything to participate in a class action lawsuit. The attorneys advance case costs and get paid only if they recover money or other meaningful relief for the class. So individuals who usually lack the resources to win a big case can prevail on claims against giant companies when they join in a class action lawsuit.
  • Solves problems efficiently: If a million Americans had the same claim, it would not make sense to treat each case individually. That would be wasteful. A class action is an efficient way to solve the same problem for many individuals at once.
  • Deters corporate misconduct: Large corporations are less likely to act illegally or lie to consumers when there is a risk of facing a class action lawsuit as a result. A class action can cost a corporation millions of dollars and may also damage its reputation.
  • Provides finality: Because the ultimate judgment in a class action binds all class members who don’t opt out, the judgment lets the company move on, put the controversy to bed, and focus on doing business lawfully.

Who Can You Sue?

You can file a class action lawsuit against any corporate or government entity if your case satisfies the legal requirements. For example, lawyers at Girard Sharp recovered $5 million for consumers who bought falsely advertised Tyson Foods chicken. Depending on your case, you might sue:

  • Manufacturers: Any time you buy a product, whether it is a car, device, appliance, cosmetic, or food item, you have rights as a consumer. One of those rights is safety. A defective product may prove unsafe, giving you the right to take legal action. A class action lawsuit gives you the chance to connect with others who also purchased the defective product and seek justice. And if manufacturers get together to decide how much to charge for a product, the people who bought it and were deprived of competitive pricing can sue under the antitrust laws.
  • Financial institutions: Banks, insurance companies, credit unions, or any type of lender who charges unfair fees or imposes undisclosed, material changes in interest rates or policies could be a defendant in a class action lawsuit. Also, financial institutions and other publicly traded companies may be liable under the securities laws if they make fraudulent statements about their earnings or business.
  • Government agencies: Poorly maintained property, defective equipment or civil rights violations may provide a reason for a class action lawsuit against a government entity.

Whenever a company or organization acts wrongfully, whether through fraud, negligence or conspiracy, you have the right to seek compensation for your resulting injury. A class action enables you to march toward justice in court.

How to Start a Class Action Lawsuit

If you’ve suffered a loss or injury due to corporate misconduct, you can take steps to initiate a class action lawsuit immediately. Although you will need to contact a competent class action lawyer when it’s time to take your case to court, the following steps will help you determine if you have a case and prepare to meet with a lawyer:

  • Determine the cause: The first step is to think in general terms about what a jury might find wrong about what happened to you. Reflecting on your harm using the filter of how a jury would view it can help you tell your story to a lawyer, and in turn can help the lawyer evaluate your claim. For example, if you purchased a brand-name appliance that did not work as advertised, chances are many other people went through the same thing. If, however, you suffered a substantial or unusual loss, such as a house fire due to a defective product, a lawyer might recommend that you file an individual lawsuit instead of a class action.
  • Find others in the same boat : One way to determine if you have a case is to see if other people experienced the same thing. Search online news sources or forums for stories similar to your own. If there are hundreds of people who’ve made the same complaints about a product or service, you might be able to join together to pursue recovery in court. Class actions can represent organizations, small businesses or pension funds in addition to individuals.
  • Consider the requirements: A class action lawsuit requires a judge’s approval before it can proceed. To get a judge’s approval, you need to meet various legal requirements. In general, you need at least several dozen injured people with a common claim arising from the same set of facts. We describe the legal requirements for a class action in more detail below. In general, a judge will move forward with a class action if it is the most efficient solution and superior to the alternatives.
  • Contact a lawyer: If you believe your case might qualify as a class action, you should contact an experienced lawyer who will review your case and help you decide if you should file an individual lawsuit, a class action, or no action at all. Reach out to a lawyer who has dealt with cases like yours and who has an excellent track record in class actions. Class action suits are complex and usually require a mountain of research and evidence. You’ll also be up against a company with ample resources. For these reasons, it is critical you contact a reputable and trustworthy lawyer.

Your lawyer will consider several factors when determining if a class action is the best option for your case. He or she will weigh the pros and cons and carefully examine the information you provide.

If your lawyer decides to take the case, you will then need to choose whether or not you wish to be a named plaintiff (or class representative). You are not obligated to be a named plaintiff, but someone will need to fill that role for the case to go forward. Named plaintiffs are much more involved with the lawsuit than the other class members. As a named plaintiff, it will be your duty to adequately represent the entire class, for instance by giving testimony at a deposition. You will work closely with your lawyer and other lawyers who may help with the case.

To start the lawsuit, you’ll work with your lawyer to draft and submit a complaint. A judge will decide whether or not the case can proceed as a class action. The judge’s approval is called class certification.

Federal and State Law

Federal and state rules govern class action requirements. In federal court, the Federal Rules of Civil Procedure (FRCP) apply to class actions and other civil lawsuits.

Most states' procedural rules mirror the FRCP.

Even in a case that involves state law violations, the defendants may take the case to federal court, under the Class Action Fairness Act (CAFA), if the controversy is for more than $5 million. CAFA aims to ensure fair and consistent outcomes in major class action lawsuits.

If your lawyer decides to take the case, you will then need to choose whether or not you wish to be a named plaintiff (or class representative). You are not obligated to be a named plaintiff, but someone will need to fill that role for the case to go forward. Named plaintiffs are much more involved with the lawsuit than the other class members. As a named plaintiff, it will be your duty to adequately represent the entire class, for instance by giving testimony at a deposition. You will work closely with your lawyer and other lawyers who may help with the case.

To start the lawsuit, you’ll work with your lawyer to draft and submit a complaint. A judge will decide whether or not the case can proceed as a class action. The judge’s approval is called class certification.

Legal Requirements for Class Actions

Rule 23 of the FRCP addresses the requirements for class actions. First, there is an initial set of four legal tests:

  • Numerosity: The class must be so numerous that addressing individual claims separately would be impractical. Class actions typically involve hundreds, thousands or even millions of class members.
  • Commonality: Although not every class member’s situation needs to be the same, the class must share a common question of law or fact that will drive the outcome of the case as a whole.
  • Typicality: The representative parties, or lead plaintiffs, must have claims that are typical of the class. This requirement is satisfied if the claims involve the same legal theory and the same unlawful conduct.
  • Adequacy of representation: The lead plaintiffs must represent the class fairly and adequately. If you agree to be a lead plaintiff in the case, you will be responsible for protecting the interests of all class members. For example, you will be the one who decides whether to accept or reject a settlement offer.

A judge will consider your case and whether it meets the above requirements. Your case must also meet one of the requirements listed below.

Types of Class Actions

Second, in addition to passing the four tests outlined above, a class action requires one or more of the following:

  • Individual cases would create a greater risk of inconsistency. If individual cases would create a risk of inconsistent rulings or impede the ability of class members to protect their interests, a class action lawsuit might be the best method of resolution for all parties involved. This requirement is seldom invoked.
  • The defendant has acted in a way that affects the whole group. Under this alternative requirement, the defendant must have acted or failed to act in a way that affects the entire group of class members. That means the court could order the defendant to stop an action that harms the entire class. This requirement was designed to allow for desegregation orders in the civil rights era, but it applies to any class action seeking such an injunction.
  • Common questions predominate. Finally, if the court finds that the common questions of law or fact in the case predominate over questions specific to individual class members, and if a class action is a superior way to address the controversy, the case can be maintained as a class action. Under this well-known “predominance” requirement, a class action seeking money damages must be shown to be the most efficient way to resolve the claims of many individuals or businesses with the same alleged injury.

Class Membership

A class action usually involves thousands of people who have no way of knowing they are in the class and part of the case until they receive a notification. So after a class is certified, lawyers and class representatives are required to notify as many class members as reasonably possible. If they do not have each plaintiff’s contact information, they must provide notice in newspapers or magazines or on websites. But notifying class members personally, by mail or email, is the most effective method.

The notice must include state:

  • The reason for the action
  • The class definition
  • The class claims or issues
  • That a judgment in the case will bind them and prevent them from suing on their own
  • The option to participate by making an appearance through a lawyer
  • The right to opt out of a class action for money damages, and how to opt out

Often class members do not have to do anything to be part of a class action lawsuit unless they wish to opt out — the suit automatically includes them. But in some cases that seek an injunction instead of money, plaintiffs do not have the option to opt out. Sometimes class members have to take action by making a claim to get part of the recovery. The notice tells class members their rights and what, if anything, they need to do to participate. Class members also should receive an update with specific information and directions if a settlement is reached.

If you are interested in joining a class action lawsuit or are currently part of a class action, you might have a few questions. We address common class member questions below.

  1. Where did the court get my information? The discovery phase, which is part of the pretrial process, requires plaintiffs and defendants to exchange requested information. The plaintiff’s lawyer may, for example, request a list of customers, from the defendant, to be able to contact each class member.
  2. How will I know if I am part of a class action suit? If a lawyer has your contact information, you will probably receive notice of the class action by either mail or email. If not, you might hear about the case from an ad in the paper or on a website. Usually, class action lawsuit notices will tell you where to find more information or how to claim part of the settlement.
  3. What happens if I don’t participate? The notice will tell you how to opt out of the class action if you choose not to participate. If you opt out, though, you won’t be able to claim any part of a recovery.
  4. Does it cost anything to be part of a class action? No, it does not cost anything to participate in a class action lawsuit. The lawyer handling the case advances all court costs and gets paid only if the class wins a recovery or other meaningful relief. Class action settlements and fees for class counsel must be approved by the judge.
  5. Why would I opt out? If you received a notice to be part of a class action, you might choose to opt out if you have a robust individual case or have suffered substantially more than other class members. To sue separately, you must opt out after class certification. Speak with your lawyer to determine if it’s best for you to pursue a separate case or remain in the class.

Class Action Lawsuit Settlements

Most class action cases settle before going to trial. Sometimes, they settle during the trial. No matter what, a class action cannot be settled, preventing future class member claims, without court approval and notice to the class.

If the parties reach a settlement agreement, they must present it to the court. The court will then determine if it’s a fair settlement. If the court approves, the class must receive notification of the proposed settlement and of the right to attend a fairness hearing and oppose the settlement. After the fairness hearing, the settlement may be approved.

Many class action settlements provide cash, but other forms of relief for the class are also common. For example, a defendant might agree to discontinue harmful practices.

In many cases, class members will need to visit a website and fill out an online form to claim their portion of the settlement. Sometimes, class members will automatically receive their portion of the settlement without filling out a claim form. For example, they might get a check in the mail without having to do anything.

If the court approves, the named plaintiff may receive a higher compensation amount for participating in the case. This is called a service or incentive award.

Contact Girard Sharp Today

Class action lawsuits often help thousands of people—but they only take one person to get started. If you believe you might have grounds to initiate a class action, you can contact a lawyer today and set the process in motion. Our civil justice system only works if people step up.

You need a powerful advocate to take on a powerful company. At Girard Sharp, our lawyers have years of experience handling — and winning — complex class action lawsuits. We strive for excellence and are eager to use our strategies, knowledge and creativity to help you win. To speak with one of our class action lawyers, call toll-free at 1.866.981.4800 or contact us today.

Main Menu