When a group of people feel they have suffered harm or injury from a similar situation or set of circumstances, rather than each person filing a separate legal claim or lawsuit they can join together and file just one claim as a group. This is referred to as a class action suit.
The advantage of a class action suit is the savings for both the class of people affected and the court. When a monetary compensation is involved, and the potential amount that can be recovered by one person is not significant, it may not be worthwhile for an individual to file a suit. The attorney and court costs could be more than the settlement. But when a large number of people join together they can each receive a reasonable settlement and the attorney and legal costs are paid from a common fund. And the court saves time and money by hearing one overall case instead of numerous individual suits that are the same or similar.
Examples of class action suits
Class action suits can arise for a number of different reasons. The common factor is that a number of different people have been affected and seek some type of remedy or compensation. Patients who believed that the drug Vioxx led to heart attacks or strokes filed a class action suit against the pharmaceutical company Merck, which withdrew the drug from the market. Enron Corp. shareholders filed a class action securities fraud lawsuit against the company’s banks and securities firms for their alleged role in the accounting fraud that eventually led to Enron’s collapse. Smokers filed a class action suit against Philip Morris and R.J. Reynolds Tobacco claiming they were misled about the health risks of “light” cigarettes.
How a class action suit works
One or more persons initiate a class action suit on behalf of all the people potentially affected by the situation or circumstances that are the object of the claim. This could be a defective product, a claim of discrimination or unfair practices by an employer, environmental pollution that affects all the residents of a certain area, an unsafe drug, or securities fraud.
The persons who initiate the class action suit are identified as the lead plaintiffs. The lawyers for these plaintiffs file and serve the complaint and request to proceed with the case as a class action. The defense would normally argue that the lawsuit should not proceed as a class action and may ask the court to narrow the issues, the class, or to dismiss the lawsuit. After a discovery period, the court rules on certification of the class.
The potential members of the class are identified through product registration data, pharmacy records, and other data based on the object of the suit. These people are notified, normally through a mass mailing. When the members of a class cannot all be identified, the notification of a class action suit may be made through a publication in a newspaper or magazine, or sometimes by radio or television. Rather than asking to join in a class action, members can opt out.
Once the court rules on a class action suit, the judgment is binding on the named plaintiffs and the members of the class they represent. If a settlement is reached, the judge presiding over the case approves the amount of compensation to be awarded to the class members. The attorney fees are generally paid out of this monetary compensation. In other cases, the class action suit may involve some type of injunctive relief, such as the defendant ceasing the behavior that is the subject of the complaint, such as discrimination or pollution.
Should you opt out?
If you choose not to opt out, the judgment in the class action will be binding. Generally in a class action the class members are treated equally, although in some cases there may be a distribution of the monetary award that provides for higher payments to people who are more severely injured or affected. But if you are more severely affected than the typical class members, you may be able to obtain a larger settlement or a more favorable verdict for you if you opt out and bring your own separate lawsuit. You should consult with your attorney before opting out of a class action suit.
Sources:
Aaron Larson, “Class Action Litigation” – Attorneys USA
Class Action FAQ – Lawyers.com
Litigation Articles – Legal Zoom
What is a Class Action? – Legal Match
