Are Class Action Lawsuits Worth It?

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Class action lawsuits can provide significant compensation to Class Members and plaintiffs, although this is not always guaranteed.

What is a Class Action Lawsuit?

In a traditional lawsuit, a plaintiff brings claims on behalf of themselves. Their allegations pertain only to the harm they have allegedly experienced.

Class action lawsuits differ from traditional lawsuits because the plaintiff seeks to represent a “Class” of similarly situated consumers. Classes can include hundreds, thousands, or millions of people who have experienced the same or similar issues as the plaintiff.

In order to represent a Class of consumers, there are a variety of rules a plaintiff has to satisfy including:

• The Class must be so numerous that each consumer being a plaintiff is impracticable;
• The plaintiff brings questions of law or fact which are common to all Class Members;
• The claims and defenses of the representatives are typical to members of the Class;
• The representative plaintiff will fairly and adequately protect that Class’ interests.

If a plaintiff does not meet these requirements while seeking to represent a proposed Class, the Class will not be certified. A plaintiff may then be required to tweak the terms of the Class and narrow inclusion so that they can serve as an adequate representative of eligible consumers.

Usually, class action litigation will take a significant amount of time. Class certification may only occur years after a complaint is first filed. Because there is much more at stake, corporations may fight harder against class actions than they would against normal lawsuits. This frequently means back and forth dismissal motions and other attempts to invalidate the other side’s argument.

After the issue is litigated, a class action lawsuit will end in one of three ways: a judgement, a settlement, or dismissal.

A judgement occurs when the court rules in favor of either party. If a judgement favors the plaintiff and Class, defendants may be ordered to pay millions of dollars in damages. If a judgement favors the defendant, the plaintiff is not allowed to bring the same claims again.

In a settlement, the defendant does not admit any wrongdoing but agrees to pay a lump sum to resolve the claims. If Class Members agree to the settlement and do not opt out, they are barred from bringing similar claims again in the future. However, they usually receive benefits from the settlement – typically eliminating the need for further action.

If the claims are dismissed, the court has determined that the plaintiffs do not have legal standing or that there is another flaw in the allegations. In some cases, plaintiffs are allowed to amend their complaint and try again.

Which Claims are Appropriate for Class Action Lawsuits?

In generally, class action litigation is suited for claims that affect a large number of people. Employment claims, drug or product defect allegations, securities claims, and other allegations would be appropriate for a class action lawsuit since the issues affect many people who have all had the same experience.

Personal injury claims and other individual allegations would not be suited for a class action since a Class of consumers is not usually involved.

What Are the Benefits of Class Action Lawsuits?

One of the biggest benefits of class action lawsuits is that it resolves a large number of claims all at once. If consumers were not allowed to litigate an issue in bulk through a class action lawsuit, they would each have to spend the time and effort it took to resolve the claims individually. Additionally, it would require significantly more time to litigate thousands of individuals lawsuits – meaning that class actions help resolve issues quicker for both defendants and consumers.

Through a class action, consumers are able to recover payments even if they have not put the time and effort into litigating the issue for months or even years. These actions also allow consumers to receive compensation if it would have been financially prohibitive to take action individually.

Benefits are also available to consumers who serve as Class representatives in class actions. A settlement fund or judgement will usually contribute to a service payment for plaintiffs which could range from a few thousand dollars to tens of thousands of dollars.

Another benefit of class action litigation is that each injured Class Member and plaintiff will receive something. If each consumer was required to take legal action against a company individually, the business may be forced to declare bankruptcy before each plaintiff could recover compensation. Through a class action lawsuit, a settlement or judgement ensures that each Class Member receives a proportional share of the settlement fund.

Bottom Line: Are Class Action Lawsuits Worth It?

In general, yes – class action lawsuits are worth it.

For Class Members who are able to recover benefits from a class action settlement, all it takes is filling out a claim form and potentially providing documentation. This can allow them to recover up to thousands of dollars in compensation.

In some cases, payouts are small. Some consumers may not view this as “worth it,” but small amounts can add up over time. Being diligent about participating in class action settlements can be a great way for consumers to rack up significant rebates.

Consumers who decide that a class action is not worth it for them are easily able to opt out of the claims by following directions on a settlement or Class website. This means that they will not receive the benefits that may be owed to Class Members, but it also means that they are able to bring similar claims against the company in the future. This option may be appropriate for consumers who feel that their damages are significantly higher than those of other Class Members.

If you have been injured physically, emotionally, or financially by a defective product, employment law violation, false promises by a company or other illegal action, you may be able to bring class action claims against the companies at fault. Speaking to a qualified attorney who specializes in your area can help you determine if filing a class action lawsuit is a good option.