What Is a Class Action Lawsuit?
While you’ve probably heard about class action lawsuits, you may wonder what they involve. A class action is a kind of lawsuit that allows a group of people who suffered similar harm due to discriminatory practices, defective products, consumer rights violations, environmental hazards, or something else to pursue compensation for their losses. Class action lawsuits can be complicated, but Class Action U can help you understand how they work and what you can expect if you decide to join one.
- Class action lawsuits group together many people’s similar complaints, making it easier and cheaper to sue large companies.
- Joining a class action usually doesn’t cost anything upfront; fees are taken from the settlement if the case wins.
- Class actions can prevent companies from repeating harmful actions by making them pay for their mistakes.
- If you join a class action, the decision affects everyone involved; if your case is different, you might choose to opt out.
- Class actions can take a long time to settle, but they aim to fairly represent everyone in the group.
How Do Class Actions Work?
A class action lawsuit allows multiple injured parties to sue the same defendant in court. Each “class” is made up of individuals who suffered similar harm due to the defendant’s conduct. A class representative is a plaintiff who files a claim on behalf of all class members who suffered similar injuries.
Class actions are helpful because they allow courts to streamline lawsuits that would be difficult to manage if each class member filed an individual lawsuit. They also allow people who suffered similar harm to have their cases heard and pursue fair compensation for their losses efficiently.
Class actions can be brought in federal or state court. Though governing statutes vary by jurisdiction, there are certain basic legal requirements for filing a class action:
- The group comprising the class must be so large that it would be impractical to handle their cases separately.
- The class members must have similar claims with overlapping questions of fact or law.
- The claims of those who serve as class representatives must be typical of those claims of the entire class, ensuring everyone’s interests are adequately represented.
- The class representatives and the lawyers handling the case must have the experience, skills, resources, and ability to adequately represent the class.
Class actions involve a notice process in which potential class members are informed of their rights and how they can opt in or out of the group claim. You may not need to do anything to join a class action lawsuit.
Types of Class Actions
The type of class action filed depends on the circumstances and allegations made by the plaintiffs. Some of the most common types of class action lawsuits involve:
- Consumer fraud – Consumer fraud class action lawsuits arise when corporations deceive consumers for monetary gain, including in situations involving defective products, automatic subscriptions, or misleading advertising. It can also address issues where financial institutions might engage in deceptive or unfair practices, such as bank fees.
- Securities fraud – People who file and join securities class action lawsuits are usually investors who lost money due to false information provided by a corporation, brokerage firm, or other party.
- Employment – Employment class action lawsuits can cover many violations against employees, such as unpaid compensation, unlawful discrimination, and misclassification of independent contractors.
- Environmental – An environmental class action can be filed if a corporation releases a toxic substance or otherwise causes an environmental hazard that places individuals or property in danger.
- Antitrust claims – These are filed by consumers claiming they were manipulated or forced into paying more for goods or services due to unfair and unlawful collusion within an industry.
- Consumer rights and privacy – Consumer rights and privacy class actions address issues related to collecting or spreading personal information in violation of consumer rights laws, such as the Fair Credit Reporting Act (FRCA) or the Telephone Consumer Protection Act (TCPA). Common examples of cases that lead to these types of class actions include data breaches.
- Civil rights – A group of individuals can pursue a class action when corporations or public entities violate their collective rights by discriminating against them or otherwise acting unlawfully.
Benefits of Class Actions
The benefits of filing class action lawsuits instead of individual lawsuits include the following:
1. Save Money
One of the biggest advantages of filing class action lawsuits is that they can save time and money. Litigation is costly and time-consuming. A class action can streamline the process by allowing a single case to represent the interests of many people.
2. Strength in Numbers
Another benefit of filing class actions is bringing together many people who suffered similar harm. When these individuals unite under a common cause, their collective voice is stronger than the voice of a single person.
3. Level the Playing Field
Taking on a powerful entity like a major corporation can be intimidating and logistically difficult. Class action lawsuits can level the playing field against these actors and hold them accountable for their wrongdoings.
4. Deter Negligence
Class action lawsuits are a critical legal mechanism for addressing widespread harm. From defective products and industrial pollution to price gouging and unlawful discrimination, a class action lawsuit can send a strong message to defendants and their industry that deters similar conduct in the future.
Does Joining a Class Action Cost Money?
Joining a class action lawsuit normally won’t cost you anything upfront. Usually, the plaintiffs’ attorneys will receive a fee calculated as a percentage of the total compensation awarded to the class at the end of the case. The rest of the award is divided among the class members.
Risks of a Class Action Lawsuit
Joining a class action lawsuit is not without risk. For example, the class representatives will have the power to make essential decisions, including whether to settle. Class actions usually settle before reaching trial, and this is normally the most economical and positive result for plaintiffs. However, unlike in a case filed individually, you will be bound by the outcome.
Opting Out of a Class Action Lawsuit
When you join a class action lawsuit, you relinquish your individual right to recover compensation through another lawsuit for the same underlying harm. If you have injuries and damages that are substantially worse than the average member in the class action, you may wish to opt out and pursue a case individually.
If you don’t, you will be considered a member of the class. When you receive notice of the class action, you should receive a deadline for opting out of the lawsuit.
What To Expect With a Successful Class Action Lawsuit
While class action settlements can be substantial, the money must be divided among many individuals, including the lead plaintiff and their legal counsel. The average payouts in class action lawsuits can vary widely depending on several factors, including:
- The number of lead plaintiffs in the lawsuit.
- The total number of class members who participate in the lawsuit.
- The legal costs associated with proving liability.
If you have questions about your situation, Class Action U can help. Reach out today to learn more.
How Long Does a Class Action Lawsuit Take?
The question of how long class action lawsuits take is complex. Ultimately, there is no concrete answer because every case is different. Some will settle quickly, while others will end up going through lengthy trials. Depending on the complexity of the case, class action lawsuits can take several months to years to resolve. They can also be extended if the defendant appeals a verdict.
One factor affecting how long a case will take to resolve is the class size. A class composed of hundreds or thousands of plaintiffs may be a powerful force, but their case can also be more cumbersome to litigate. If the facts of the case are disputed or there are procedural delays, this can also increase the time to reach a resolution.
In the United States, both federal law and state law establish rules governing class action lawsuits depending on the jurisdiction. Here are some of the steps involved in the process of most class action lawsuits:
- Seek legal assistance – An individual who suffered harm caused by potential defendants contacts a qualified class action attorney for assistance. The attorney will determine if there is cause to move forward. If there is not already a class action lawsuit filed, the victim who reaches out first could be named as the lead plaintiff.
- File a lawsuit – Most class action lawsuits start with filing a complaint naming at least one class representative. That person would file the lawsuit on behalf of the proposed class.
- Get class certification – After filing the complaint, the class representative will ask the court to certify the proposed class. To get approval, there must be a viable legal claim, a lead plaintiff representative of the class, and a qualifying group of class members.
- Notify class members – Once the court certifies the class, anyone qualifying as a class member must be notified and given instructions on how to opt out if they wish to pursue an individual case.
- Conduct discovery – The legal teams for both sides will gather evidence to prove their cases in a process known as “discovery.” This might include collecting documents, taking depositions, and other types of legal investigation.
- Settle or litigate – Many class action lawsuits are settled before reaching a resolution in court. However, if a case goes to trial, the court can award monetary damages through a verdict. Whether the case settles or a verdict is handed down, class members will receive instructions on receiving their portion of the settlement, usually by submitting a simple claim form.
Notable Class Action Lawsuits
Class actions are often high profile and receive lots of media attention. Some well-known class action lawsuits in the United States include the following:
Tobacco Master Settlement Agreement
The 1998 Tobacco Master lawsuit resulted in the biggest class action settlement in U.S. history—$246 billion. More than 40 states sued major tobacco companies, claiming they shouldn’t have to pay for the costs of smoking-related diseases caused by the defendants.
BP’s Deepwater Horizon Oil Spill
In April 2010, a BP oil rig in the Gulf of Mexico blew up. Over the next 87 days, roughly 5 million barrels of oil spilled into the Gulf of Mexico, widely impacting coastal communities and wildlife. In 2015, BP and its subsidiaries settled a class action lawsuit filed by the federal government and five Gulf Coast states for $20 billion.
VW Emissions Scandal
Volkswagen admitted that it falsified emissions test results for its diesel cars to make them appear environmentally cleaner. In reality, the vehicles were emitting up to 40 times more pollution than permissible levels. Vehicle owners in the U.S. filed a class action lawsuit and settled for $14.7 billion in 2016, in addition to striking a buy-back deal for the vehicles in question.
Enron Securities Fraud
Enron was an energy trading company that committed securities fraud by hiding tens of billions of dollars in debt, ultimately leading to the company’s demise. Defrauded shareholders fought back by filing a class action lawsuit. In 2008, a Texas judge approved a $7.2 billion settlement to reimburse investors who purchased the company’s stock.
Difference Between a Class Action and a Mass Tort
The term “class action” is often confused with “mass torts.” The latter is a generic term for widespread harm suffered by many individuals because of one or a few defendants. Though class actions are one legal mechanism for litigating mass torts, they are not the only one.
Multidistrict litigation (MDL) is another method of handling these situations. MDL consolidates separate but similar lawsuits to streamline pretrial processes, such as discovery. Unlike class actions, where one lawsuit represents all plaintiffs collectively, MDL cases remain individual but are managed together for efficiency. After pretrial proceedings, MDL cases normally return to their original courts for trial, ensuring efficiency while preserving the individual nature of each case.
If you want to learn more about your legal options, contact Class Action U. We can answer your questions and connect you with a lawyer skilled in handling class action lawsuits. We offer free, no-obligation consultations, so there is no downside to speaking with a member of our team.
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