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What Is a Class Action Lawsuit?
A class action lawsuit is a legal action taken by a group of people who have suffered similar harm from a company or organization. Together, the group members sue the company or organization.
This type of lawsuit provides a way for individuals who may not have the resources to pursue a legal claim on their own to join forces and pursue their case as a group in order to seek justice and compensation.
Class action lawsuits are typically initiated by one or more individuals who are called class representatives. Representatives file a lawsuit on behalf of themselves and all others who have been similarly affected.
The members of the class benefit from consolidated claims and the possibility of a significant financial award or settlement.
While individuals can still file their own lawsuits, class action suits provide a practical and cost-effective alternative for pursuing legal claims. Some lawyers and law firms specialize in this area of litigation.
Keep reading to learn about class action lawsuits, including how they work, why they are significant, and what to keep in mind if you believe you may have a claim.
How Class Action Lawsuits Work
In a class action lawsuit, one or more individuals file a lawsuit in the court system against a company or other entity that has harmed multiple individuals.
Eligibility for Class Action Lawsuits
To be eligible for a class action lawsuit, individuals must have suffered similar harm from one or more defendants. This harm may have been caused by a defective product, false advertising, or employment discrimination, among other issues.
Eligibility requirements can vary depending on the details of the case and the laws in the jurisdiction where the lawsuit is filed.
In general, individuals must be able to show that they have suffered harm or damages as a result of the defendant’s conduct in order to participate in a class action lawsuit.
Cost of Class Action Lawsuits
The costs of class action lawsuits can vary depending on factors such as medical treatment, attorney fees, and court fees. In personal injury cases, the cost of medical treatment and ongoing care can be a significant factor.
One of the benefits of class action claims is that the costs are typically split among the members of the class if the lawsuit is successful.
In federal court, there are specific rules that apply to class action lawsuits, and individual claimants may have to pay some costs associated with the lawsuit.
Class Actions vs. Multidistrict Lawsuits
Class action lawsuits involve a large group of people with similar legal claims, while multidistrict lawsuits (MDLs) consolidate multiple individual lawsuits.
In a class action case, one or more individuals file on behalf of the entire group, while in multidistrict litigation, each individual plaintiff’s case is typically treated separately.
The choice of which type of lawsuit to pursue depends on the specific details of the case and legal strategies.
Reasons to File a Class Action Lawsuit
There are many reasons why individuals might choose to file a class action lawsuit instead of filing an individual claim.
Reasons for filing a class action lawsuit include:
- Class action lawsuits can be more economical and practical than pursuing dozens or even hundreds of smaller lawsuits.
- A class action lawsuit requires only one set of witnesses, experts, and exhibits, making it easier for courts to manage.
- It can result in compensation split evenly between the number of plaintiffs, even if their individual claims are small.
- A class action lawsuit can lead to a fairer distribution of compensation. Sometimes the first few lawsuits in multidistrict litigation receive the larger settlements.
- Class action settlements also provide a powerful incentive for corporations to change their behavior and prevent similar harm from occurring in the future.
Stages of a Class Action Lawsuit
Class action lawsuits can be a complex and lengthy process. Though each may differ, here are the general stages.
- File the lawsuit. The first stage in class action litigation involves filing the initial lawsuit on behalf of the class. This can be done by a named plaintiff or individuals who have suffered similar harm as a result of a legal issue, like product liability or unfair business practices. Lawyers typically file class action lawsuits on behalf of the class.
- Obtain class certification. The court must then determine whether the lawsuit meets the requirements for class certification. This involves showing that the proposed class is large enough (numerosity) and has common legal claims (typicality).
- Notify class members. Once the court certifies the class, class members must be notified. This typically involves sending a notice to potential class members and publishing the notice in relevant media outlets.
- Allow class members to opt in/out. Class members are given the opportunity to opt-in (join) or out of the class action lawsuit. This allows individuals to pursue their own lawsuit if they choose to do so.
- Negotiate a settlement. After the opt-in/opt-out period, the parties may move to settlement negotiations. This is an opportunity for the parties to reach a mutually acceptable agreement that addresses the harm suffered by the class members. The court will consider the adequacy of the proposed settlement and whether it fairly compensates the class members.
- Try the class action lawsuit. If a settlement is not reached, the case may proceed to trial. In this stage, the plaintiffs must prove their case before a judge and/or jury.
Top Class Action Lawsuits
There have been many consumer class action lawsuits filed by large numbers of people that are notable for one reason or another.
Some notable class action lawsuits include:
- Tobacco Industry (1998): This class action lawsuit involved 46 states and several big tobacco companies. The plaintiffs alleged that the companies engaged in fraudulent business practices and misled the public about the health risks of smoking. The settlement amounted to $206 billion over 25 years and included changes to the way tobacco products were marketed and sold.
- Enron Securities (2006): This class action lawsuit was brought against Enron Corporation, its auditors, and several investment banks for securities fraud. The case was settled for $7.2 billion, which was distributed among thousands of shareholders who had lost money as a result of Enron’s collapse.
- BP Oil Spill (2010): This class action lawsuit was filed against BP for the Deepwater Horizon oil spill in the Gulf of Mexico. The settlement amounted to $20 billion and provided compensation to affected individuals, businesses, and governments.
- National Football League (2013): This class action lawsuit involved former NFL players who alleged that the league concealed the risks of head injuries and failed to take appropriate safety measures. The $1 billion settlement provided compensation for retired players who had suffered neurological damage as a result of their football careers.
- Volkswagen “Dieselgate” (2016): This class action lawsuit was filed against Volkswagen for installing software in diesel vehicles that cheated emissions tests. The settlement amounted to $14.7 billion and affected approximately 500,000 owners of affected Volkswagen, Audi, and Porsche diesel vehicles.
- Wells Fargo Unauthorized Accounts (2016): This class action lawsuit was filed against Wells Fargo for creating millions of unauthorized bank and credit card accounts without their customers’ consent. The settlement amounted to $142 million and affected approximately 2.5 million customers who had been charged fees for accounts they didn’t authorize.
- Apple iPhone Battery (2017): This class action lawsuit was filed against Apple for slowing down older iPhone models without notifying users. The settlement amounted to $500 million and affected millions of iPhone users.
Learn More About Joining Class Action Lawsuits
If you’re interested in learning more about joining class action lawsuits and your rights as a consumer, consider working with a class action attorney. They can answer common questions and provide guidance on consumer protection issues.
Don’t hesitate to seek legal help if you believe you have been wronged. An experienced class action attorney can help you pursue compensation and justice.
Class Action Lawsuit Definition FAQs
What is a class action lawsuit?
A class action lawsuit is a type of lawsuit brought on behalf of a group or “class” of individuals who have sustained similar injuries as a result of a defendant’s conduct.
How do class action lawsuits start?
This type of lawsuit is initiated when one or several individuals file a lawsuit on behalf of others who have suffered the same injury (harm in commonality) from a corporation or other entity.
These lawsuits are handled by attorneys with experience in class action litigation. The attorneys file the lawsuit on behalf of the class representatives and handle all other aspects of the lawsuit.
What is a lead plaintiff in a class action lawsuit?
The lead plaintiff is the individual or group of individuals who act as the representative of the class in a class action lawsuit.
This person or group is responsible for communicating with the attorneys, providing information, and making decisions on behalf of the class.
How do I know if my case is too small for a class action lawsuit?
The decision to pursue a class action lawsuit depends on a number of factors, including the number of people affected and the nature of the harm suffered.
A class action attorney can provide a free consultation to help you determine if your legal issue is suitable for a class action.
How many people does it take to start a class action lawsuit?
There is no minimum number of people required to start a class action lawsuit.
However, the court will need to certify the class, which typically requires demonstrating that there are enough people with similar claims to justify a class action.
How is money divided in class action lawsuits?
The Class Action Fairness Act of 2005 regulates the distribution of funds in class action lawsuits to ensure fairness to all parties involved. If a class action lawsuit is successful, any financial award or settlement is divided among the members of the class.
The amount each individual receives depends on a number of factors, including the severity of the harm suffered and the number of people in the class. In some cases, the court may also award legal fees and expenses.