If you wish to know what is a class action lawsuit, then you have come to the right place. We will give you a detailed view of this type of a lawsuit here.
A class action lawsuit is also called class suit, class action, or just a representative action. This is a type of legal action that is filed when a group of people suffer any injury and monetary loss due to the action of one individual, corporation or any other entity.
This type of lawsuit is useful when each plaintiff suffers a very small degree of damage—something that’s too small for making filing individual claims worth the effort.
When plaintiffs file a class action lawsuit as a group, they get all the resources that are necessary for hiring an attorney and getting restitution. This type of lawsuit also takes off the district court’s burden of having multiple hearings for such small claims.
Class action lawsuits are typically filed against financial institutions, government entities, retailers, manufacturers, and large-scale employers. Most of these lawsuits are initiated to get compensation for deceptive advertising, defective products, data breaches, unlawful employment practices, and discrimination.
Typical class action lawsuits involve a situation where plaintiffs file a case against one or more defendants for wrongdoing as a group. This type of lawsuit is different from the traditional ones. Class action lawsuits do not involve one party suing another party and do not require the presence of all parties in the court.
The standard procedures followed for filing such a lawsuit differs from state-to-state and country-to-country. However, a class action lawsuit is commonly filed when the number of plaintiffs who suffered an injury due to the wrongdoing of the same defendant is at least 40.
How Do Class Action Lawsuits Work?
There are three parties mainly involved in typical class action lawsuits. These include the following:
As mentioned above, a class action lawsuit is initiated by a group of people who select a representative to fight the case on their behalf. There could be a multitude of people who have suffered an injury due to the wrongdoing of a defendant. All these people who file the suit are called class members. These people are covered under any judgment or settlement resulting from the lawsuit.
2.The lead plaintiff
This is the individual or the group of individuals who are initiating the lawsuit. In these cases, the entire class is represented by a lead plaintiff. The name of the lead will appear on the complaint document, which essentially serves the lawsuit. The injuries suffered and the allegations brought up by the lead plaintiff should be similar to those of individuals comprising the class. In case any differences are found between the nature of the injury and claimed allegations, the lead plaintiff won’t be able to represent the members of the class.
The defendant can be an organization, financial institution or a group of individuals against whom the class members have filed a lawsuit seeking compensation for damages suffered.
How To File Class Action Lawsuits?
Now that you know what is a class action lawsuit, it’s time to delve deeper into its filing process. Before proceeding with a class action lawsuit, a judge will have to certify the plaintiff class. The lead plaintiff representing the class will have to demonstrate that the claims of the plaintiffs are valid and that all members of the class have similar damage claims. The lead plaintiff will also have to show that he or she can sufficiently and properly represent all class members in the case.
After a judge certified the class, all the plaintiffs will be notified about the class action lawsuit either by physical mail or email. All plaintiffs will be included automatically in the lawsuit unless they voluntarily choose to opt out. There’s a specified procedure set for plaintiffs to withdraw from a class action lawsuit. In case they don’t withdraw from the case as per the procedure, they will continue to remain a part of the plaintiff class.
Most of the class action lawsuits are usually resolved by opting for an out-of-court settlement. Each plaintiff filing the lawsuit gets a part of the entire settlement, which typically consists of a refund, service or any other compensatory benefit. In case you have to file a class action lawsuit, you can follow the process as given below:
1. Determining the grounds
Depending on the circumstances of your case and the injuries that you have suffered, you will have to approach a personal injury lawyer to file a class action suit. Once you contact one, your attorney will conduct a thorough evaluation of all facts pertaining to your case. This will help your attorney determine the grounds for filing a class action lawsuit.
During this process, your attorney will attempt to determine the number of people who have suffered a similar injury, filing of previous allegations, the applicable limitation statute, and the potential shield of the defendant. Your attorney will also determine if you should file an individual lawsuit, in place of class action. Frivolous lawsuits often stand dismissed by the court. So, it’s important to form a solid grounding before proceeding with class action lawsuits.
2. Filing the lawsuit
If your attorney believes that your case requires you to file class action, then he or she comes up with a draft complaint. This is essentially a legal document that is filed in the court to lay down the various facts of the circumstances under which the case has been initiated. This document will also lay down the names of the class members who have suffered damage because of the defendant.
The class of members filing the class action lawsuit may be determined either on a state-wide or a nation-wide basis. For instance, some class action lawsuits only involve individuals who reside in the same state where the individual filed the lawsuit resides.
3. Class certification
Initially, the lawsuit may be filed by the plaintiff(s) as “proposed” class action. However, the lawsuit does not become an official class action lawsuit until and unless the presiding judge awards the case this status under Rule 23. The entire process of getting the class action lawsuit status is called class certification. Numerosity, typicality, commonality, and adequacy are a few criteria under which the judge will certify cases as class action lawsuits.
Before the presiding judge gives the case a class action status, these lawsuits may be called putative class suits. These are fundamentally considered as representative action lawsuits, but they do not become official until the presiding judge gives the ruling. For cases that are initiated in the country’s federal court, it’s important for the lead plaintiff to meet a couple of legal requirements. This includes the establishment of the exact number of claimants who are covered under the lawsuit. The number should be large enough that filing many individual lawsuits looks inefficient and impractical.
4. Investigatory phase
The investigatory process in class action lawsuits is about attorneys discovering pieces of evidence that go against the defendant. Your attorney may request a few documents and papers from the entity being sued. These documents can be used by attorneys to match claims with evidence and come up with a conclusion.
During the investigatory phase, your attorney may also contact individuals to gauge their knowledge and disposition pertaining to the circumstances and events of the case. They can dig deeper into the wrongdoing and churn out facts that will support your case in the court.
5. Trial or settlement
Most class action lawsuits are settled out of court, but there are a handful of them that require the intervention of the court. When settled, these lawsuits can result in compensation for the plaintiff(s). The presiding judge may order the creation of a fund by the defendant for the purpose of compensating the plaintiff(s). He or she reviews the settlement and establishes the fairness and adequacy of the compensation being given to all class members. After the review, the judge will pass an order to approve the final compensation.
In case class action lawsuits do not reach a settlement, it will be brought before the jury for a trial. When the trial goes on, the person filing the lawsuit will be requested to testify. Along with this individual, other members of the class will also have to come forward to give their testimony before the jury.
The class action lawsuit may get settled in the course of the trial. But there are times when it does not. In such situations, the case will go to the jury’s hands. It’s then the jury who’s responsible for deciding whether the verdict should be in support of the plaintiff(s) or the wrongdoer(s).
6. Notification to class members
Once a class action lawsuit is resolved, your attorney will issue a written notice to all class members, announcing that the case is settled and that they are entitled to receive compensation. This notice will clearly lay down the facts underlying the lawsuit as well as mention the names of those people who will be entitled to receive the compensation from the defendant.
In some class action lawsuits, this notification is given to class members after the presiding judge certifies the case and gives it a class action lawsuit status. However, mostly the notice is given after the class suit is settled. In case a few class members are unable to collect their monetary compensation before the deadline, then the amount may be:
- Returned to the defendant,
- Given to other class members,
- Donated to a non-profit or charity organization.
The Class Action Fairness Act (CAFA)
Both federal and state courts have laid down mechanisms to ensure that all parties involved in representative action lawsuits get a fair and just settlement. Depending on the nature of the damage suffered and other circumstances of your case, you may decide to file a class action lawsuit either in a state or the federal court. State courts are preferred by the plaintiff(s) owing to their friendliness compared to federal courts, which are skewed more towards defendants.
The Class Action Fairness Act (CAFA) was passed by the Congress in 2005 to protect business organizations from frivolous, abusive lawsuits. Before the enforcement of this law, it was seen that the attorneys of plaintiffs forum-shopped quite often so that they could initiate the lawsuit in the most favorable state possible.
CAFA made it quite simpler for defendants to transfer their lawsuit to the federal court. This only required them to amend their requirement. The enforcement of the law made it possible for defendants to take a class action lawsuit to the federal court without having to meet stringent diversity jurisdiction requirements. The lawsuit can be taken by a plaintiff to the federal court if the case has at least one individual on the plaintiff’s favor and one on the defendant’s favor, even if these citizens hailed from different states or countries.
It is, however, important to note that the defendants in class action lawsuits cannot take their case to the federal court if the damages claimed by the plaintiff(s) are below $5 million. At the same time, the plaintiff class will have to have at least a hundred members for the case to move from a state to the federal court.
Advantages and Disadvantages Of Class Action Lawsuits
The pros of a class action lawsuit include the following:
· Provides desired restitution to those filing the case.
· Helps the court in reducing the number of hearings.
· Lowers overall litigation costs.
· Ensures consistent treatment of all parties involved.
The cons of a class action lawsuit include the following:
· The attorney fee may be high and the plaintiff(s) may not receive adequate compensation.
· Complex procedures may delay the settlement of the case.
· Class members are required to give control to the lead plaintiff.
· Class members give up their right to independently file a suit against the defendant.
If you wish to know more about what is a class action lawsuit and how you can file one, then our lawyers at Kuzyk Law are there to assist you. Get in touch with us at (661) 945-6969 at any time of the day.