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What is a Class Action Lawsuit? The Basics Of Class Action Lawsuits | TorHoerman Law

News » What is a Class Action Lawsuit? The Basics Of Class Action Lawsuits | TorHoerman Law

What is a Class Action Lawsuit?

The term “class action suit” is thrown around a lot. Maybe you’ve heard it in a late-night TV advertisement, or you might have received a class action lawsuit notice in the mail. While many people have heard the phrase, fewer understand the precise meaning or nature of these cases.

A class action lawsuit is a type of civil lawsuit in which a single plaintiff files a lawsuit on behalf of a larger group of affected parties. For example, if a group of lenders allegedly lost car owners’ titles, one person would serve as the named plaintiff to represent the hundreds of automobile owners who were affected. In 2022, class action lawsuits resulted in settlements that surpassed $63 billion.

How Do Class Action Lawsuits Work?

Class actions leverage collective power to represent people who have been affected by the same harmful or unlawful actions by a single person or organization. This helps to build a stronger case, and it lets courts manage lawsuits that would otherwise have too many individual plaintiffs.

Class action lawsuits are common in cases involving defective products, predatory or unsafe business practices, and employment-related claims.

In order to fully understand how a class action works, it is important to understand a few related terms. Most of the concepts and terminology are identical to other court proceedings, but the nature of a class action changes how some of these fundamentals work.

  • Lead Plaintiff: Sometimes referred to as “named plaintiff,” this person files the claim and serves as a representative on the lawsuit for all other affected class members.
  • Class Members: The class is the group of individuals who have been affected by the defendant’s actions. Each participating individual in the case is a class member. While the class members are not named in the lawsuit, any decision made about the lead plaintiff’s case applies to each class member.
  • Defendant: In class action cases, the defendant is the individual or group who allegedly committed an unlawful or harmful act against the plaintiff class.

Once a lead plaintiff decides to pursue the possibility of a class action lawsuit, there is a procedure that they must follow.

Steps to Start A Class Action Lawsuit

A class action lawsuit generally follows a process, which begins by consulting with an attorney and determining whether there is a potential case or not.

Determining Whether a Class Action Lawsuit is Possible

Class actions must meet a baseline of requirements before certification. Class action lawsuit requirements can differ from state to state, but most follow guidelines set by the Federal Rules of Civil Procedure (FRCP). Before proceeding, an attorney will want to confirm a few factors that will ultimately determine the case’s eligibility:

  • Number of individual plaintiffs: Class action lawsuits are used when it would be impractical to handle each plaintiff’s claims in individual cases. Local courts determine how many individual cases justify a class action lawsuit.
  • Common questions of law or fact: Each individual plaintiff’s case must be based on the same wrongdoing or harmful action allegedly made by the defendant.
  • Plaintiff and class representative consistency: The claim made by the case’s class representative must be consistent with the claims made by the other class members.
  • Fair and adequate protection: The lead plaintiff must provide sufficient, principled protection for all class members. This means he or she has adequate legal representation and serves each class members’ best interests.

If an attorney can confirm that a case meets these requirements, then they may be interested in helping to bring a case to trial.

Filing A Claim

Once an attorney has confirmed that a case has merit, a lead plaintiff can begin by filing a claim against the defendant. The plaintiff’s claim is made on behalf of all class members. This claim is almost always made with assistance from a prosecution lawyer. During this step, the plaintiff and their attorney often seek additional class members to help join and strengthen the case.

Class Certification

For the lawsuit to proceed, the plaintiff’s claim must be certified by the courts. The courts will confirm the case meets the requirements for a class action. During this stage, the defendant also has the right to object to the motion for class action certification. The defendant could make arguments that the requirements were not met, but ultimately it is up to the judge to decide.

Discovery

Similar to a standard civil trial, the discovery procedure is the pre-trial phase of the lawsuit in which both parties (the plaintiff and the defendant) and their representative attorneys gather information to strengthen their case.

Resolution of Claims / Trial

Once the plaintiff has gathered evidence and submitted the claim, a resolution is made. The two parties’ attorneys can decide on a settlement out of court. If a settlement is not reached, it is likely that the case will go to trial.

Notification of Class Members

After a resolution has been made, participating class members receive a notification of the resolution. In these cases, participating members earn percentages of the total compensation for damages.

How Long Does a Class Action Lawsuit Take?

The time it takes for a class action case to reach settlement is dependent on a variety of factors. Some cases have been resolved in just a few months, while others have lasted nearly two decades. Generally, most class action lawsuits are settled within two to three years. Cases where a ruling is appealed often take longer.

How Much Do Lead Plaintiffs Get in Class Action Lawsuits?

Payouts in class action lawsuits vary on a case-by-case basis. The lead plaintiff, also known as the class representative, usually receives a larger percentage of the case settlement than the other class members. This is because this person typically puts more time and effort into the case.

The court decides how much the lead plaintiff receives based on the individual’s involvement in the case, the overall settlement awarded to the entire class, and the injuries or damages the plaintiffs suffered. Note that these steps and requirements differ for claims made against government agencies.

Pros And Cons Of Class Action Lawsuits

While class action cases can be an effective tool for a group of plaintiffs, they’re not always the best legal option. Let’s take a look at some of the positives and negatives of class action lawsuits.

Advantages

A class action lawsuit can offer benefits for both the plaintiff and the defendant. Advantages of class action lawsuits include:

  • Increased negotiating power: Class action lawsuits give plaintiffs more leverage in negotiations than if they tried to file a claim individually. For example, 400 people affected by a company’s actions will make a greater case than one person fighting alone. Class action cases often motivate the defendant(s) to settle to avoid needing to make individual payouts.
  • Lower litigation costs: Class action cases let the class members split litigation costs and attorney fees. This can also help them receive better restitution.
  • Judicial efficiency: Class action lets courts handle multiple people’s claims under a single representative suit.

This increases judicial efficiency by reducing the number of cases in court.

Drawbacks

There are also some potential issues with class actions that should be considered before pursuing this legal option. Disadvantages of class action lawsuits include:

  • Longer settlement time: Class action lawsuits are complex. They involve multiple plaintiffs and are frequently appealed. Because of this, they often take a long time to reach settlement. The statute of limitations can also differ for class action claims.
  • Less control for class members: Class action gives multiple plaintiffs the power to act as a group, but each class member also gives up some power and autonomy. The class representative and their lawyer are in charge of representing the whole. This also makes it difficult to address individual needs, such as when compensation is needed in a personal injury lawsuit to address medical expenses.
  • Lost ability to make a private claim: Once an individual joins a class action suit, he or she surrenders the power to make an individual claim. This is a major blow if the suit is not successful.

A poorly planned case can end up hurting class members while taking away their right to sue independently. While class action lawsuits might seem complex, having the right information and representation will increase your chances for success.

Tips Regarding Class Action Lawsuits

Class action lawsuits are an effective tool for multiple plaintiffs taking on an unlawful individual or organization. These suits leverage collective power to help individuals make a greater case. Unfortunately, they can also be hard to navigate.

It is advised that you seek guidance from an experienced injury lawyer before joining or filing a class action suit. Read on to learn more about how to effectively join and start a class action case.

How To Join an Open Class Action Settlement or Rebate

Many people don’t even know they are eligible for class action lawsuit rebates and settlements. Class action cases are common with defective products, false advertising claims, and bad medication. Knowing where to find open settlements and how to join a class action lawsuit requires a bit of research.

Resources such as the Consumer Action Database provide information on open class action suits, listed with the claim deadlines. This can help give a head start for finding eligible suits and potentially receiving payment.

Action, Consumer. Consumer Action – Class Action Database, www.consumer-action.org/lawsuits.

Bonner, Marianne. “What Is a Class Action Lawsuit?” The Balance Small Business, www.thebalancesmb.com/what-is-a-class-action-lawsuit-3623787.

Komando, Kim. “Getting Money You’re Owed from Class-Action Lawsuits Has Never Been Easier.USA Today, Gannett Satellite Information Network, 9 Sept. 2019, www.usatoday.com/story/tech/columnist/2019/09/05/class-action-settlements-find-out-if-you-are-owed-money/2209550001/.

Rule 23 – Class Actions.2020 Federal Rules of Civil Procedure, 29 Nov. 2019, www.federalrulesofcivilprocedure.org/frcp/title-iv-parties/rule-23-class-actions/.

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