What is a Class Action Lawsuit?

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What is a Class Action Lawsuit?

A class action lawsuit is a type of lawsuit in which a group of people with the same or similar injuries band together to sue a defendant. “Injuries” typically include monetary losses caused by a defective product or service.

For example:

One year ago, Sally purchased a new car, but in the time she has owned the car, she has had to take it back to the dealership several times for numerous repairs. After taking it in for the fourth time, Sally decided to do some research.

She found an online forum where several owners of the same make and model said they are having the same exact problems that she is having. After doing some further research, Sally found news reports that the automaker knew about the problems associated with her specific model before they released it to be sold to the public.

This is a perfect scenario for filing a class action lawsuit.

Why File a Class Action Lawsuit?

Class action lawsuits provide legal recourse when several people have been harmed by the same company, and they have suffered the same injuries, incurring similar costs. This group of people make up the “Class.”

For example, in the scenario above, Sally would file a class action lawsuit that would include anyone who has purchased the same make, model and year that her car was made, in which the vehicles have needed the same repairs. In this case, the damages or costs to the consumers would also be similar, making it a perfect candidate for a class action lawsuit.

Types of Class Action Lawsuits

The class action lawsuit filed by Sally would claim that the automaker made a defective product, meaning that it didn’t function the way it was supposed to. She would also charge the automaker with deceiving its customers and the public by withholding information about the alleged defects, and deceptively marketing the product.

Other types of class action lawsuits include, but are not limited to:

• False advertising
• False labeling
• Data breach
• Violations of federal or state laws that are designed to protect consumers
• Deceptive practices
• Failing to disclose information
• Privacy violations
• Unpaid wages by employers
• Making a harmful product
• Disability violations
• Discrimination

What to Expect After Filing a Class Action

Class action lawsuits that are successful typically take the following path:

• The class action lawsuit is filed in state or federal court by the lead plaintiff.
• The company facing the class action lawsuit contests the allegations and asks the judge to dismiss the lawsuit.
• The judge upholds some or all of the charges.
• The plaintiff asks the judge to certify the Class.
• The judge certifies the Class.
• The parties go to mediation.
• The parties reach a class action settlement agreement.
• The judge grants Preliminary Approval to the settlement.
• A Settlement Administrator is hired to manage the settlement process. The Settlement Administrator reaches out to potential Class Members notifying them about their rights in the proposed settlement (i.e., how to object or exclude themselves, or how to participate by filing a claim to receive settlement benefits).
• A website is set up by the Settlement Administrator where Class Members may begin filing claims to participate in the settlement.
• The judge grants final approval to the class action settlement.
• Class Members that file valid and timely claims are paid.

This process can take one to two years, and in some cases more, depending on the number of objections and/or appeals. It’s important to note that the path a class action lawsuit will take can vary widely.

If a judge dismisses some or all of the allegations after the company asks for the lawsuit to be dismissed, the plaintiffs may file one or more amended complaints. And the company may attempt to dismiss the class action lawsuit several times before it moves forward.

What’s the Difference Between the Lead Plaintiff and the Class Members?

The person who initiates the lawsuit is called the Plaintiff or Lead Plaintiff. Sometimes there are more than one lead plaintiffs. This person is often chosen as the Class Representative and typically will receive a larger reward since they were willing to initiate the lawsuit.

Class Members are anyone that the class action lawsuit applies to, according to the class definition. Only Class Members qualify to submit a claim to benefit from a class action settlement.

What Isn’t a Class Action Lawsuit?

While they may seem similar, mass torts are not class action lawsuits.

Both class actions and mass torts involve large groups of people suing the same defendant over the same or similar injuries. However, a class action lawsuit is a single lawsuit filed by a group of people. Class Members who are part of a class action lawsuit share the same attorney or attorneys and are paid similar awards.

A mass tort is a group of individually filed lawsuits that have been centralized — or moved to — a single court to be overseen by the same judge. Plaintiffs in mass torts are represented individually by their own attorney and receive an individual settlement award that is based on their specific injuries.

Mass torts typically involve lawsuits over defective drugs, defective medical devices and other defective products. Since the severity of injuries in these cases can vary widely, these lawsuits are treated individually.

What is the Purpose of Filing a Class Action Lawsuit?

Class action lawsuits provide a way for consumers to hold companies accountable for allegedly deceptive and harmful activities and practices. They also provide a way for consumers to be compensated for any injuries they have suffered.

The main benefits of filing a class action lawsuit or joining one are:

• It doesn’t cost anything. Class action lawyers are paid only if a settlement is reached. They are allowed by the court to take up to 30% of the settlement money for attorneys’ fees.

• It doesn’t take personal time. Unlike a typical lawsuit plaintiff, Class Members are not required to go to court, provide depositions, or spend other personal time fighting the case. This is good news, considering that many class action lawsuits can take several years to be litigated.
• It gives consumers power. Most people are not going to spend the time or money it takes to sue a large corporation over the loss of a few hundred dollars or less. Oftentimes, the amount of money you want to sue over is too small to justify the expense of hiring your own attorney, paying legal fees, and spending time away from your job to go to court. But by banding together and suing as a group, consumers have the power and resources to hold a company accountable for deceptive business practices.