Do I have a Class Action?

A class action is intended to improve court efficiency by allowing a large group of people with similar claims to join together in one lawsuit. One or more representatives of the harmed group go to court on behalf of everyone else who was similarly affected. If those representatives meet certain criteria, they are allowed to prove and settle not only their own claims, but the claims of everyone in the larger group as well.

A potential class action lurks whenever a company's actions harm lots of people. Class actions have been brought against the manufacturers and distributors of products as diverse as employment matters, defective products and tobacco. Business practices that harm consumers, such as overcharging for banking services or using misleading information to sell products ("You're already a winner, send in your magazine subscription to collect your prize"), have spawned class actions. Shareholders can bring class actions against companies for poor management or misleading investment literature. Employees can sue employers collectively for discriminatory practices or for violating employment or benefit agreements.

There are strict rules for class actions to assure that a few people can adequately represent the interests of many. Here are the basic elements:

  • Adequate Number of People: The actions of the defendant have to affect so many people that it is more practical for a few representative plaintiffs to address the claims than for all the individual plaintiffs to join together in a regular lawsuit. If twenty people are adversely affected by an employer in his hiring practices, they can file their own lawsuits. But if hundreds or thousands have been harmed, a class action allows a few to represent the multitude.
  • Common Claims: The claims must raise similar questions of law or fact so that it saves time to lump everybody together. If a hundred people all had the same problem with their employer from the same company, a class action may be the way to handle the complaint.
  • Claims of Named Plaintiffs are Typical: The people bringing the lawsuit on behalf of others (the "named plaintiffs") must have the same claims and defenses as those they are representing. For example, in a race discrimination case a person who claims his employer discriminated against him because of his race doesn't work as a class action unless everyone in the class can represent that they were discriminated against because of their race.
  • Fair and Adequate Representation: The plaintiffs and the class lawyers must be good caretakers for other people's claims. A lawyer who has made major mistakes in other class actions or a representative plaintiff who has lied under oath may not meet this criterion.

If these criteria are met and all the class wants is an order telling the defendant to stop doing something - dumping waste into a river, for example - a judge will usually agree to "certify" the class. (Certification allows a few designated appointees to represent the other members of the class.) If the class also wants money, they have to prove that the claims and injuries are so similar that they can be well managed in one lawsuit. Mass tort cases, in which a lot of people have been physically injured in a disaster or by a dangerous product, are often denied class action status because the causes and extent of individual injuries vary so much from person to person.

Types of Class Actions

Class actions may involve a variety of legal claims, and have been used to bring:

  • Employment Law Class Actions, like those involving discrimination, unpaid or improperly paid overtime and commissions, not being given breaks and time for meals, not being paid for preparing to work, or being forced to work off the clock;
  • Consumer Protection Class Actions, like when a company uses unfair, deceptive or misleading business practices or advertising or breaching of a contract or warranty agreed to with their customers;
  • Product Liability Class Actions, include when there are defects in the way a product is designed, manufactured or marketed
  • Securities & Investment Fraud Class Actions, like if a group of investors have lost money as a result of stock fraud or a violation of securities laws; and
  • Toxic Exposure Class Actions like cases where a large number of people have been exposed to a toxic chemical or substance, like asbestos, mercury or radiation.

How Does a Class Action Work?

Depending on the defendant's posturing, a class action may take many times longer or quite a bit shorter than individual cases. Some drag on for many years, while others settle in several months. The usual order of events is that after a complaint is filed, the parties do limited investigation into whether the action fits the class action requirements. The plaintiffs then ask the court for class certification. If the court says yes, there may be more investigation or the case may settle.

In order to protect the interests of absent class members, any settlement or dismissal of a class action requires court approval. The judge presiding over the class action must approve the fairness and appropriateness of the proposed settlement of the claim. The judge, however, does not engage in the actual settlement negotiations. Once negotiations have been completed, and a settlement agreement has been reached and presented to the court, the judge determines whether the terms of the agreement are fair and in the best interests of the class members.

The vast majority of class action cases are settled if they are certified or if the defendant believes they will be. The class members are notified of the proposed settlement and given an opportunity to join in or object to its terms. Some types of class actions require that you send in an "opt-in" form to join. For others, you're in if you do nothing. After the class members respond to the proposed settlement, a court determines whether the settlement is fair and reasonable.

The main benefit of class actions is that they level the playing field when individuals join together to take on a big company.

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