A class-action lawsuit is defined as a legal action brought by one person, or a small group of people, on behalf of a larger group. This group has all suffered the same, or a very similar, injury, allegedly as a result of the defendant’s actions. The lawsuit is brought against the defendants because they are allegedly responsible for widespread harm.
Taking all of this together, a class-action lawsuit is a single lawsuit that is brought to the courts by a class of representatives (who are known as the plaintiff or plaintiffs), for a large group of injured people, known as the ‘class’.
The class is everyone who has been similarly harmed by the defendant’s alleged conduct. There are no size limits on the class – it could be a couple of dozen people or millions of individuals.
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Common Reasons for a Class-Action Lawsuit
There are a few common reasons as to why class-action lawsuits are created. These include (but obviously are not limited to):
- Medical devices, or dangerous drugs
- Defective automobiles, vehicles, or parts
- Other defective products that have caused harm
- Violations of environmental regulations
- Misclassification of employees or independent contractors
- Wage, hour, or overtime violations by an employer
- Other unlawful employment practices
- Violation of civil rights
- Unfair or deceptive business practices
- Predatory lending practices
- Unlawful debt collection practices
- Consumer fraud
- Securities fraud
Ways You Can be Involved in a Class-Action Lawsuit
There are a few different ways that you can be involved in a class-action lawsuit. These include:
- If you are the first (or one of the first) people to notice the harm allegedly being caused by the defendant, then you may then become a class representative: Therefore, you’ll be part of the group that files the class-action lawsuit and remain actively engaged in the process as it goes through the courts.
- Your involvement in a class-action suit can also be more passive: If you are part of a large class of people who have been harmed by the defendant, you will receive a letter or an email telling you that a case that involves you is occurring, and why it is being taken to court. You will then have the option to opt-in or out of the case.
- If you choose to opt-out, then you won’t be involved in the suit in any way: You do not have any claim to the potential settlement at the end of the class-action suit. I.e., if the class-action representative and their lawyers are successful in the suit, and you have chosen to opt-out, then you will not receive any compensation.
- Conversely, if you have chosen to opt-in, you don’t have to directly or actively participate in the court case: However, if the class representative is successful, then you might be able to recover some compensation. Usually, if you want to opt in to a class-action suit, you don’t have to do anything, as not replying to the notification is regularly seen as consent to inclusion.
After reading through this, your first thought might be to immediately opt into a class-action suit that you are involved in. However, there are some advantages to opting out of a class-action suit.
When you opt out, you retain your right to file an individual lawsuit. This is important (and can work to your advantage), if you believe that you were one of the more severely harmed members of the class.
What are the Benefits of a Class-Action Lawsuit?
You might be wondering why someone would bring a class-action suit on behalf of a large group, rather than the simpler and easier undertaking of just filing their own lawsuit against a company. There are a few reasons why a class-action suit is a more preferable option for some.
Sometimes, the injury or harm caused by the defendant may only be relatively minor. Plenty of class-action suits are brought by people who have only suffered small loss or injuries.
For example, a class-action could be taken when a company’s deceptive business dealing may have led to an individual’s financial loss. A group of class representatives may only have lost a few hundred dollars each, meaning that it is not worth their time and money on an individual lawsuit.
However, if a group of people who have all suffered a financial loss get together, the amount lost quickly adds up. If 5000 people around the USA have each lost $250, then that quickly adds up to millions of dollars. This means a lawsuit is definitely worth the time, effort, and money between the group, especially if you end up making the company change its overall business practices.
A second benefit of class-action rather than individual lawsuits is that the class only has to prove their injury (and the defendant’s unlawful conduct) once. Rather than each injured person having the burden to prove their injury, harm, or loss in court. Instead, the class representative(s) and their class-action attorney tackle the burden one at a time.
The plaintiff of a class-action suit may also receive an ‘incentive award’ for legally serving as the class representative. Though they will exert more time and effort than any other member of the class during the legal process of a class-action, this award is intended to compensate them for filing the suit itself and for their active participation in the case.
As well as benefits to the individual involved in a suit, class-action also helps the court system out. If all members of an injured class were to file their own individual lawsuits, then the court system would become overly burdened with dozens, hundreds, or thousands of very similar cases.
How to Bring a Class-Action Lawsuit
A class-action lawsuit isn’t brought in the same way as an individual legal claim – there is a different and specific legal process that must be followed when filing the suit.
Under Texas law, class-action lawsuits can be brought in a Texas court, or in a federal court.
Generally, the majority of class-actions are brought in federal court under rule 23 of the Federal Rules of Civil Procedure, as individuals involved and affected are located across the country. If you bring a class-action lawsuit to a Texan court, you must abide by Rule 42 of the Texas Rules of Civil Procedures.
The document that sets the ball rolling in a class-action lawsuit is called a class-action complaint. After the class representative has secured an attorney, and that attorney has reviewed and investigated all the factual and legal issues at hand (so that they can determine if there is enough evidence to file a class-action lawsuit), they will draft a class complaint.
This complaint describes the events that resulted in injury or financial harm to the client. The complaint also has to state that the lawsuit seeks to recover compensatory damages for the lead plaintiff, as well as for all the other individuals who have suffered the same type of harm.
For example, if you are filling a class-action sit against an employer, you might seek compensation for yourself, and all other employees in the company who have also faced the same issue.
Once you have filed your class-action lawsuit, the next legal step is to ask a judge to verify the class. To do this, the class representative and their lawyers together must prove that the injured individuals’ situations have shared or very similar facts.
They must also prove that it would be impractical, inconvenient, and overly costly for every member of the class to file their own lawsuits. I.e., they must prove that it would be inefficient for the courts to have all these suits going on, or that class members’ damages may be too small – in terms of financial compensation – to subsidize and justify the cost of everyone’s individual litigation.
To quickly summarize, there are a number of key questions that a judge must consider upon the filing of a class-action lawsuit – these include (but are not always limited to):
- How many people have been affected by the issue?
- Do class members share common questions of law and fact? I.e., are there factual and legal issues that are common to all the class members, and have they all suffered the same injury.
- Are the lead plaintiff’s legal claims typical of all of the class members?
- Is the class adequately represented? I.e., do the plaintiff and their attorneys have sufficient interest in the case, and do the lawyers have adequate experience in handling complex litigation.
At this stage, if the judge certifies the class, they also have to define the scope and size of the class, i.e., they determine exactly who is and who isn’t a part of the class.
Once the size and scope of the class has been determined by a judge, the next step in a class-action lawsuit is class notification. All of the individuals that fit into the determined scope of the class have to be told that the suit is occurring, and then given the choice to opt in or opt out.
This notification typically happens through letters and emails. Sometimes if the class is very large, and there aren’t adequate records of who could have been affected, TV and radio commercials are broadcast to reach a wider range of people who may have been affected by the same issue.
After the two special steps of class certification and notification have occurred, a class-action lawsuit proceeds just like any other lawsuit, until there is a settlement or a verdict.
Once the courts have reached a potential resolution to the suit, the class-action lawyers must present a plan to ensure that all members of the class receive their portions of the financial compensation.
What Happens with a Class-Action Settlement?
The amount of money involved in a class-action lawsuit can be really significant. However, the individual recoveries doled out to class members are divided among the group, and vary depending on a few different factors.
Class-action suits are typically paid for out of the settlement itself, or out of the jury award. This means that once the case has been resolved, legal fees will be one of the first things deducted. After this, the compensation must be distributed to all class members.
How much of the settlement each member is given depends on their circumstances, each member may receive the same percentage of the compensation, or certain class members that have been deemed to have been more seriously harmed may receive more.
What is a Mass Tort, and How is it Different from a Class-Action Suit?
There are similarities between mass torts and class-action lawsuits, but the two terms are not interchangeable.
Mass torts are usually made up of multiple individual lawsuits against one or a group of the same defendants.
All the plaintiffs have their own lawsuits, but claim that the defendant(s) caused all of them harm though a set of the same, or very similar circumstances. So, tens, or hundreds of different individuals might file their own lawsuits against a certain company that has caused them significant harm. In this way, they are similar to class-action lawsuits.
However, mass tort lawsuits can also include plaintiffs filing claims against different defendants, based on similar faulty products or services.
There are a few issues that are commonly resolved in mass tort lawsuits, which include:
- Dangerous drugs, or faulty medical devices
- Defective products
- Transport disasters
- Environmental disasters
- Exposure to toxic substances.
You will notice that there is similarity between the issues that lead to mass torts and class-actions. What makes mass torts different from other suits is that mass torts typically lead to pooled resources between plaintiffs. One law firm will take on multiple plaintiffs who are in similar circumstances.
This means that only one or a few firms have to do the legal leg work to gather and analyze the evidence, rather than dozens of firms doing the same work over and over again. In a mass tort, the firms can commit to an in-depth investigation.
Another difference is that mass torts are consolidated in the court system. Similar cases are able to move through the courts individually, but are consolidated in one or a few jurisdictions across the country. This is advantageous as jurisdictions become familiar with the cases, and are able to handle them as efficiently as possible.
Frequently Asked Questions
How Long Does a Class-Action Lawsuit Take?
Every class-action suit is different, and it can be difficult to say how long each one will take. They can be resolved in only a matter of months, whilst others can take several years to process through the courts.
In general, most class-action suits can take several years to resolve, though they may take longer, especially if court rulings are appealed by any party.
However, some companies do choose to settle class-action suits relatively quickly, which occurs mainly in cases that involve embarrassing allegations of corporate misconduct, or in cases where there is little doubt that the company’s product or service was defective, or advertised misleadingly, and as a result, harmed a large group of people.
Generally, settling out of court is to keep the company from negative publicity, and unwanted attention, that is associated with the claims contained in the lawsuit.
There is the total other end of the spectrum, however, where class-actions can take decades.
A class-action suit filed after the Exxon Valdez oil spill in 1989 went on for nearly 20 years before the class-action members were finally awarded $2.5 billion in settlement payments. Multiple appeals were filed during the legal process, and went all the way up to the US Supreme Court.
What is Discovery?
The discovery phase of a lawsuit is the pre-trial phase.
During this process, an attorney representing class members will request that the company being sued turn over all their documents relating to the allegations. This includes both written documents and electronic communications, like emails and texts.
These documents can then be submitted to the court to prove or defend against claims made in the lawsuit.
Lawyers on both the plaintiff’s and defendant’s sides may also conduct depositions during the discovery phase of the lawsuit.
At a deposition. Lawyers will ask a witness (who is under oath) questions that form the basis of a lawsuit. The transcripts from these depositions are retained on file, and can be used by either side as evidence during the trial.
What Happens if You Lose a Class-Action Suit?
If the case is dismissed or a jury rules in favor of the defendant, both the person who filed the lawsuit and all of the class members involved will not be entitled to any of the settlement money.
If you have ‘lost’ a class-action, then you may be prevented from filing any other lawsuits involving the same allegations.
This is because, essentially, the courts have already given you a legal chance to recover compensation, and has already made a decision that the claims made in a class-action lawsuit did not have merit, or should not be resolved in the consumer’s favor.
Final Thoughts
A class-action lawsuit can be an effective way to receive compensation if you are not the only individual who has been injured, mistreated, or affected by the same issue / company. As a member of a class-action, you are not individually responsible for organizing your own legal representation, or gathering evidence.
Generally, class-action lawsuits are quite successful, however, if a class-action suit that you are part of loses in court, you may not be able to file another lawsuit which involves the same allegations, so it’s worth bearing in mind.
