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.
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.
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.
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.
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.
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]
by Scott Starr, Partner
