Class Actions FAQs

A class action is a type of lawsuit where procedural rules permit one or more persons, known as the class representatives or lead plaintiffs, to sue a common defendant as a representative of a larger group. The class representative then, through their class counsel, prosecutes the action against the defendant not only on their own behalf but also on behalf of the larger group which has all been similarly affected. Then, if the class is “certified,” meaning allowed to proceed by the court, the class representative is given the opportunity to prove or settles the claim against the defendant not only for themselves but for the entire group. Not all circumstances will support the filing of a class action, and there are certain legal requirements that must be met before a class action can be certified.

Circumstances in Which a Class Action May Be Helpful

Typically, a class action is filed when there is a numerous group of plaintiffs, known as the “class,” who all claim to have suffered a common injury at the hands of one or more defendants. In such circumstances suing as a group of either individuals or small businesses can help level the playing field when suing a large company who has lots of resources.

In addition, the defendants who are sued in class actions typically are alleged to have engaged in widespread harm, but the damages incurred by each individual are relatively small. When we refer to small damages, it is not necessarily a trivial amount, but small in the sense that investing the resources in a lawsuit individually against a big company to recoup damages may not be a reasonable investment of time and money.

Without the procedural mechanism of a class action there would be many completely valid causes of action which would not be worth pursuing on an individual basis. However, class actions can reduce these inefficiencies, and make bringing such valid causes of action more cost effective. For example, by consolidating the action into one lawsuit instead of many can increase the efficiency of the legal process, such as only establishing common facts once instead of in hundreds of individual lawsuits. Further, the smaller recovery per plaintiff no longer becomes an obstacle because this procedural mechanism keeps each plaintiff from bearing the costs of an individual lawsuit, with instead resources and costs shared amongst the group. Finally, class actions can decrease the instances of inconsistent results by the court, with some plaintiffs recovering while others, with the same facts, do not.

Legal Criteria Required For Filing and Maintaining a Class Action

Not every lawsuit against a large company can be brought as a class action though. Here are some of the criteria a court must determine exist to have a class action “certified,” meaning it is allowed to proceed.

• The class is so large that actually naming and joining each of the individuals would be impractical.
• The questions of law and fact must be common amongst the members, and these questions must outweigh any individual questions of fact or law.
• The class representatives or lead plaintiffs must adequately represent the interests of their class, and further their interests must be typical of the
  rest of the members of the class.

Sometimes causes of action that do not meet these, or additional legal criteria to proceed as a class action, can still proceed as a mass tort, which is a slightly different type of action.

Criticisms of Class Actions and Our Response

There is a perception, often promoted by Big Business, suggesting that class actions benefit lawyers more than they benefit class members. This perception has been put in place to try to change laws and policies, and otherwise limit the effectiveness and utility of this legal procedure, which traditionally and at its heart is designed to put consumers on a more equal footing with an adversary who has more resources, lawyers and money to fight than each individual does on their own.

In fact, class actions are one of the best ways that private attorneys can help represent and protect the interests of consumers against Big Business. Although there are laws and regulations in place, designed to protect consumers, the government officials charged with enforcing them, such as state attorney generals, are often overworked and under funded, and therefore cannot deal with each instance of wrongdoing. The procedural method of class actions allows attorneys to act like private attorney generals to enforce the rights and protect the interests of consumers. This is a major deterrent to prevent Big Business from engaging in low-level wrongdoing on a wide-scale basis.

Further, there are many procedural safeguards in place to make sure any class action settlement is fair for members of the class. For example, before any class action may be settled the judge presiding over the case makes sure notice of the proposed settlement is provided to all members of the class. Then, members of the class are provided with an opportunity to share their opinions and/or objections to the proposed settlement terms. Finally, the judge must approve the settlement. In addition, the judge approves the amount of attorney’s fees paid to class counsel, and there are legal requirements that the fees awarded must be both fair and reasonable.

Importance of Hiring Experienced Legal Counsel for Your Class Action

When considering whether a class action may be a viable procedural mechanism for your claim it is important to discuss your potential case with experienced legal counsel who can determine if you have a valid case, and also whether it may meet all the requirements necessary to proceed as a class action.

In addition, courts often require the class’ counsel to be experienced with this special type of litigation. Starr Austen & Miller has national experience in class actions, and has participated in numerous consumer and securities cases. A court will not generally allow a class action to be brought without experienced counsel assisting the class with the case.

[Sources: DMLaws.com, SFMSLaw.com]

If you believe you have been harmed by a defendant, and likewise believe that others may have been similarly harmed, you may be considering becoming a class representative to bring a class action lawsuit against that defendant. It is only natural to wonder if there are any benefits to you taking the time, and taking on the responsibilities of becoming a class representative.

By law a class representative cannot be promised any special treatment above the treatment which may be awarded to other class members, and we do not make any such promises either. However, if successful, class counsel will ask the judge to award the class representatives additional compensation for the extra time and effort that they expended on behalf of the class, and for having the courage to challenge the defendant’s conduct. Although courts typically grant such an award, this will be discretionary with the court and there is no guarantee.

If you believe you have a potential class action lawsuit you can call Starr Austen & Miller to set up a free consultation to discuss your case, and potential remedies, including but not limited to, monetary compensation you might seek based on the specific facts of your case.

[Source: SFMSLaw.com]

There are many types of class action lawsuits which can be brought on behalf of a group of class members who have all been harmed in a similar fashion. Many of these are based on the type of laws alleged to be violated by the defendant. Here is a list of some of the most common varieties:

1. Anti-Trust. These types of class actions allege that a defendant illegally overpriced a product or service in violation of the anti-trust laws. Examples of illegal overpricing include price fixing, agreements to segment market share, or to otherwise enter into an agreement to reduce or eliminate competition.

2. Employment. Employment laws are in place for a variety of areas including discrimination, overtime, benefits, and more. Typically, if a class action is being filed there is an allegation that a very large company has systematically violated one or more of these employment laws against all or many employees.

3. Consumer Protection. There are a wide variety of both state and federal consumer protection laws in place, including laws related to telemarketing, fees and bills for communication services, credit records, the collection of debts and truth in lending. When any of these laws have been violated by a defendant it often results in a class action lawsuit because so many similarly situated class members are affected.

4. Defective products (products liability). If a product is defectively designed or manufactured, or there is a problem with the instructions or warning label, for example, and the product injures or harms a large group of people a class action may be brought. In addition, such suits may be brought for breach of warranty.

5. Environmental. Environmental class action lawsuits allege that a large group of plaintiffs were all injured because of exposure to an environmental hazard.

6. Medical devices or pharmaceutical personal injury. Medical device and pharmaceutical class actions are a special kind of personal injury class action focusing on the harm done by defectively designed or manufactured medical devices, or prescription or over the counter drugs. These injuries can range from side effects, serious injury or even death.

7. Securities and investor fraud. These types of class actions are brought on behalf of a group of investors who have suffered a loss because of a broker or brokerage firm’s actions, which could include such wrong doing as investment fraud, unsuitable investments, churning, or other such practices.

8. Bank Fraud. These types of class actions are brought on behalf of a group of bank clients who have been mistreated by the bank in a certain way, such as interest overcharges, mismanagement of trusts, etc.

[Source: ArticlesBase.com]

No. Just because you have a potential cause of action against a business does not mean your lawsuit can be brought as a class action. As explained in more detail in the description of a class action there are several legal requirements necessary to proceed in this type of procedural action. One of these criteria is that the questions of fact and issues of law must be common amongst all members, and these must outweigh any individual questions of fact.

Starr Austen & Miller will make a preliminary determination of whether all the legal criteria have been met for a case to be certified as a class action before a lawsuit is ever filed. Further, the court in which the case is filed makes a final determination of whether the case can proceed as a class action.

[Source: SFMSLaw.com]

Typically, no. During the course of the litigation all potential members of the class are generally provided with notice of the lawsuit and given a chance to “opt out” of the class. If a potential member of the class opts out this means they can decide whether to pursue their own individual remedy or action against the defendant if they so choose.

However, if a potential class member does not opt out then they become a member of the class and are bound to the decision or conclusion of the class action, once the class action has been certified, including sharing in any recovered obtained by the class.

[Source: SFMSLaw.com]

A class representative is a person (or multiple persons) who is similarly situated to the other members of the class, who has interests typical of the rest of the class, and can fairly and adequately represent all the other members of the class. Since not all members of the class are named in the proceedings the class representative stands in for all those allegedly harmed by the defendant.

How a Class Representative Is Chosen

Typically, it is a concerned consumer who is one of the first to contact an attorney regarding their complaints or problems with a defendant that ends up being named as the class representative of a lawsuit. That is because this is an individual who noticed the problem and cared enough to try to get it resolved, not only for themselves, but also for similarly situated individuals who this also happened to. However, it is the court that ultimately approves who can be the class representative for a given class action.

Responsibilities of the Class Representative

A class representative, because they are representing not just themselves, and their own interests, but that of the entire group has some additional responsibilities placed on him or her. These include, but are not limited to the following:

1. Represent the class. A class representative is the representative of a class of persons similarly situated to them and must represent the class to the best of their ability.

2. Protect the interests of the class. A class representative may not choose individual gain to the detriment of the class.

3. Understand the litigation. A class representative must be generally familiar with the litigation.  This does not mean that they must know every aspect of the litigation. Instead, attorneys for the class will keep the class rep informed of major events. However, they must have a general understanding of the case, such as knowing who the parties are and why they are suing. Of course, the class rep may and should confer with class counsel at any time they feel it is appropriate to do so.

4. Keep class counsel informed. A class representative must keep their counsel informed of their whereabouts and changes that may affect the litigation.

5. Cooperate and attend events when required. A class representative must cooperate in the preparation of the case, and be present on reasonable notice for any necessary appearances. For example, a class rep may be required to appear for deposition, hearings, trial and other meetings relative to their case. In addition, a class representative will likely be required to provide to counsel, and may not destroy, documents and things relative to their case.

6. Vigorously prosecute the litigation. A class representative must authorize class counsel to do what is necessary to successfully prosecute the lawsuit on behalf of the class, such as by signing the client agreement. Once that authorization has been made the class counsel will then vigorously pursue the matter.

7. Provide notice to the class. In some situations a class representative may be responsible for providing notice to the class, depending on whether the federal rules or the judge requires such notice. Typically, class counsel will undertake this task on behalf of the class representative and be responsible for all costs.

8. Hire lawyers experienced in class action litigation. Courts typically require that class counsel be experienced in litigating class actions, since this type of litigation is complex because of all the procedural and legal requirements, and because counsel will be representing the interests of a large group of plaintiffs. Therefore, a typical requirement of a class representative is to hire counsel which meets these criteria, to the court’s satisfaction.

Starr Austen & Miller has national experience in class actions and has participated in numerous consumer and securities cases, with aggregate recoveries and/or judgments in the hundreds of millions of dollars. If you believe you have a class action claim, call us to set up an appointment for a free consultation to let us help you determine the merits of your case.

What Is The Difference Between A Class Representative And A Lead Plaintiff?

Although the term “class representative” and “lead plaintiff” are often used interchangeably in common speech, there is actually a bit of a difference in the two terms. The term “lead plaintiff” is actually used for a particular type of class action, for securities fraud. These actions are governed by the Private Securities Litigation Reform Act of 1995. The term “class representative” is the more general term that is used for the other types of class actions.

[Sources: EHow.com SFMSLaw.com]

Starr Austen & Miller is paid on a contingency fee basis, meaning we only get paid attorney’s fees, and reimbursed for expenses and costs, by court order if the class action is successful, either through means of settlement or judgment. What that means for class members and class representatives is that they will not incur any out of pocket costs during the course of litigation.

Further, to get awarded attorney’s fees, class counsel must file a fee petition with the court. The attorneys for the class are only paid if the case is successful, and all attorneys’ fees awarded must be approved by the judge presiding over the case. The fee petition details all the work that the attorneys did on behalf of the class, and the court determines the fee awarded, taking several factors into consideration. In these types of cases the defendants are typically ordered to pay the class counsel’s attorney fees.

[Source: SFMSLaw.com]

It is impossible to say until the litigation is underway, and even then all estimates are that, just estimates, which are subject to change. For example, Starr Austen & Miller have handled class cases that were resolved within one year and have also handled cases that lasted three years or more. There are many factors which can lengthen this time period even further, such as the complexity of the case, the number of parties, defendant’s interest in getting the case settled, any appeals, etc.

Starr Austen & Miller keeps in contact with all clients with regard to the status of the case as it progresses through the legal process. This allows clients to be aware of what is going on in their case, and also to know what is upcoming in their matter.

[Source: SFMSLaw.com]

One of the most obvious differences between a class and mass action are the number of plaintiffs named in the lawsuit. Class actions have only one or a few named plaintiffs, who act as representatives of the entire class, because, as Trial Rule 23 says, the class is so large joinder of all the members would be impracticable. That means technically there are only a few named parties to the lawsuit, and those class members not listed as class representatives have very limited input and responsibilities with regard to the lawsuit.

Those absent class members normally don’t have to answer discovery, go to depositions or court hearings, and don’t have to prove their claims individually (at least not their liability claims). Instead, although there are some chances along the way for them to opt out or contest any settlement, for example, even class counsel only has to communicate with class members during certain limited times during the lawsuit. The other side of the coin of this representation, however, is that if the class is certified the results of the lawsuit are res judicata for all class members — whether named or not. That is why to get certified as a class the court must determine that the class is adequately represented by both the class representatives and the attorneys for the class.

On the other hand, mass actions typically have many allegedly injured parties too, but instead of choosing one or two people to represent everyone, each person is individually listed as a plaintiff in the lawsuit. Since the Class Action Fairness Act (CAFA) was signed into law in 2005, whenever such a mass action lists over 100 plaintiffs though, it is typically deemed to be a class action removable to federal court by defendants. 28 U.S.C. 1332(d)(11). Further, when many lawsuits, even across districts, deal with the same issues they are often brought together with federal multi district litigation, governed by the procedural rules found at 28 U.S.C. 1407 and 2112.

Unlike with class actions, each plaintiff in a mass action has responsibilities for doing all the activities that any regular plaintiff must do, like discovery, etc. Further, although there are some procedural mechanisms that can be put in place to try to prove some elements of the case across the board for all claimants, at the end of the day each person’s case ultimately is decided individually.

The other major difference between a class action and mass action is whether the claims are similar enough, either factually and/or legally, to be able to prosecute them as a whole. Class actions can only be brought if they meet all the requirements of Federal Rule of Civil Procedure 23 (or a similar state rule, such as Indiana Rule of Trial Procedure 23), whereas mass actions are a default when all such requirements cannot be met.

There are many procedural rules set in place for determining when a class action is appropriate, but ultimately the idea behind each of them is to make sure that the person who is the class representative can adequately represent the interests of his or her fellow class members. This was touched upon above, but it also is important for the other two major requirements for a class to be certified — commonality and typicality. The idea is that a class representative could not adequately represent another absent person if they do not pose questions of law and fact common to the class, and if the named parties claims or defenses are not typical of the class

Often, when you hear about class actions you will also hear the term “mass tort,” or “mass action” also discussed. The reason is that there are some definite similarities between a mass tort and a class action.

For example, both types of procedural actions share these similarities:

• Large group of plaintiffs have been allegedly harmed.
• The same common defendants are alleged to have caused that harm.
• The lawsuit is consolidated into one action, and not into separate individual lawsuits.

The key difference between mass torts and class actions has to do with how, procedurally, the large group of plaintiffs is treated.

Mass torts often involve injuries to a distinct group of individuals who may reside in the same geographic area. The number of people injured in mass tort cases are sometimes smaller than those injured in larger class actions.

With mass torts each plaintiff, even though they are part of a large group, is treated as an individual. That means, for instance, that for each plaintiff certain facts need to be established, including anything individual to that particular plaintiff, and how that person has been damaged by the actions of defendant.

On the other hand, in a class action the large group of plaintiffs, known collectively as the class, are represented by a class representative, who stands in for the rest of the class. This means all members of the class are treated as one plaintiff, not separately.

Which Type of Action Is Proper For a Particular Case?

Mass torts are often used when one of the legal criteria for proceeding as a class action is not met. For example, often a mass tort action is used when each plaintiff in the group has so many individual and uncommon factual circumstances that they outweigh the common issues of fact and questions of law necessary for proceeding as a class action.

There are a lot of complex considerations that are made in determining whether a case should proceed as a class action or a mass tort. Starr Austen & Miller have handled a number of mass tort actions where the groups ranged in size from 25 to as many as 150 persons.

[Source: ArticlesBase.com]

Before filing a case on behalf of multiple people who have been injured, either physically or monetarily, an initial decision must be made of whether to bring each person’s claims individually, or as a group. If you believe bringing the claims as a group would be more beneficial for purposes of economy of scale, greater bargaining power collectively, and efficiency, the next issue that needs to be decided is whether to pursue the case as a class action or a mass action. These two types of procedural mechanisms for bringing a group of claims together are appropriate under different circumstances, and each have their own pros and cons.

Sometimes the decision of which type of action to pursue is easy, while other times there is some strategy and weighing of options involved, as well as legal considerations of whether the proposed class meets the criteria for certification. Here are some considerations to keep in mind when making this decision with your clients:

• How many plaintiffs can be practically joined? Can they represent others or just themselves?
• How similar are the plaintiffs claims in regard to both commonality and typicality?

Mass Torts Sometimes Are Not The Right Fit For Class Actions

A common example of claims that are sometimes not appropriate as class actions are mass torts, where multiple people are injured such as in a large accident. Mass torts can include such things as injuries from pharmaceutical drugs, large scale accidents and even products liability claims. In fact, the comment to FRCP 23(b)(3) explicitly cautions against the use of the class action device in mass tort cases. The reasons for this include that these cases involve personal injuries and sometimes even death, meaning that each claim is not easily described as “typical,” because there is a need for individual evidence of exposure, injury and damages for each plaintiff, not just class representatives.

Here in Indiana we are unfortunately too familiar right now with such a large accident, the stage collapse at the Sugarland concert at the Indiana State Fair. In that case the victims have brought a mass action, not a class action, against various defendants alleging fault for the accident. It would not have been appropriate to try to bring a class action because there was no commonality regarding the injuries, and therefore each plaintiff’s case ultimately must be decided on its own. On the other hand, the State Fair stage collapse case is perfect for a mass action as the liability claims (what caused the stage to collapse and who is responsible) will require the same proof for all the injured parties.

There are both factual and legal differences between individual claims in mass actions. These differences make it impossible to fulfill the elements of typicality and adequacy which are required for Rule 23(a). Further, these same differences make it difficult to demonstrate that the putative class has the requisite “cohesiveness” which is required in Rule 23(b)(2) and makes it difficult to demonstrate that the putative class as common issues which “predominate” which is required for Rule 23(b) claims.

Another reason not mentioned in procedural rules themselves, but which often is an important factor in why class actions do not practically work for mass torts is that when someone suffers a personal injury they and the courts have major concerns about autonomy, and being properly represented as a class member. Each plaintiff has significant interest in individually controlling the prosecution of separate actions, and a substantial stake in making individual decisions on whether and when to settle. This came into stark focus when, for example, in the nationwide asbestos settlement classes proposed in Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997) and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) the individual absent class members had concerns so great about the proposed class action settlements that they pursued their objections all the way to the United States Supreme Court on multiple occasions.

While there are many legal and practical differences between class actions and mass actions, they often have the same general goal in mind — get relief for the injured parties as quickly, efficiently, and in as cost-effective manner as possible. Certain factual situations lend themselves better than others to one procedural mechanism or the other, so the first step is to examine the facts of the case and decide which has a better chance of achieving the goals of your clients before going forward.