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Class Actions 101
Monday, February 6, 2023

While you probably have heard of class action lawsuits, you might be wondering what they actually entail. A class action is a type of lawsuit that allows a group of people who were negatively impacted in the same way by a defective product, discriminatory practice, environmental hazard, consumer rights violation, and more to pursue compensation for their losses. Class action lawsuits can be complex, but here is what you need to know prior to joining a class action lawsuit or hiring a class action law firm.

What is a Class Action Lawsuit?

A class action lawsuit is a legal proceeding in which a group of people who have been wronged by the same individual, organization, corporation, or event join together and file a lawsuit seeking compensation from the defendant(s): the potentially responsible party.

Unlike other lawsuits where only one person sues, with a class action lawsuit, each plaintiff (the individuals who have been harmed) has an equal share in the outcome. Sometimes, this can result in each class member receiving a small sum if the harm they suffered was minimal and there were many other qualified class members. Other times, class members may receive a few hundred dollars each.

Class actions are, however, the most economical avenue to pursue justice and compensation for small injuries and losses. For example, if an app failed to warn you of a hidden fee, you deserve to be compensated and the company should be held accountable, but you may not feel the need to hire a lawyer on your own and invest the time necessary to bring them to justice. With power in numbers, class actions make it feasible for consumers to come together to pursue justice and ensure corporate wrongdoing does not get swept under the rug.

In a class action lawsuit, at least one individual who has been injured by the defendant will be named the class representative. Class action lawsuits may involve illegal or unethical employment practices, deceptive advertising, hidden fees, insurance claim disputes, toxic exposure, dangerous pharmaceutical drugs, and more.

Do I Have a Case?

If you feel like you have been wronged by a company or organization and your situation is not unique, you could potentially have a case. However, in order to know for sure, it is important to first take an honest look at the facts of your case. If your case meets certain requirements, it may be eligible for class action certification. Certification requirements vary from state to state, however generally the following must be true:

  • One or more of the plaintiff’s experiences is representative of all class members

  • Each class member’s injuries hinge on the same elements of the law and questions of fact

  • Due to the number of potential plaintiffs, individual lawsuits would be impractical and make it more difficult to hold the defendant accountable

Benefits of a Class Action Lawsuit

Class action lawsuits allow people who have been injured by the same product or entity to join together in one lawsuit against the company in question. This allows for groups of people who suffered similar injuries or harm to be compensated without having to file their own lawsuits. The advantages of filing a class action lawsuit as opposed to individual lawsuits include:

  • Class action lawsuits are practical and efficient since class members share the same evidence, witnesses, experts, and legal resources. This can allow one law firm to handle the case as opposed to multiple, making it less expensive and time-consuming than if multiple law firms were trying multiple cases.

  • Class action lawsuits allow plaintiffs to seek smaller amounts of money that otherwise would not have made sense economically to pursue on their own.

  • Class action members do not need to invest any of their time or money into the case, nor do they need to appear in court or worry about hiring a lawyer if a class action lawsuit has already been filed and certified. In many cases, they do not need to do anything other than complete a short claim form once the settlement has been approved which will allow them to receive the portion of the money they are entitled to.

  • Class action lawsuits reward all plaintiffs equally and fairly. When multiple lawsuits are filed separately, settlement and verdict amounts may vary.

Types of Class Action Lawsuits

While a class action lawsuit can be brought over a number of different issues or concerns, most class action lawsuits fall under these five categories:

  • Employment: Employees who experience issues like discrimination, wage or hour issues, immigration issues, or workplace injuries may qualify to bring a class action lawsuit against their employer.

  • Consumer: Consumer class action lawsuits may concern a variety of different situations like deceptive or false advertising, data breaches of personal or financial information, hidden or unlawful fees, or deceptive warranties.

  • Product liability: Class action lawsuits that fall under product liability generally involve a defective product that physically harms multiple people. Common examples are dangerous pharmaceutical drugs or medical devices that cause adverse health effects or defective electronics that catch fire unexpectedly. Often, these cases are pursued as part of a multi-district litigation (MDL).

  • Securities: Securities class action lawsuits usually concern situations where investors are injured by improper conduct, including securities fraud.

Stages of a Class Action Lawsuit

A class action lawsuit can be a powerful tool for individuals who have been wronged or injured by a company and want restitution. In the United States, the rules governing class action suits are set by federal law and vary from state to state. Here is how a class action lawsuit moves from a complaint to a settlement:

  1. An individual contacts a class action attorney for help. The first person who starts the lawsuit is typically the lead plaintiff, or class representative, and is usually the only named class member. A class action attorney will be able to determine if a prior lawsuit claiming the same injuries or losses has been filed, if there is a high likelihood that other people have been injured in the same way, and if the incident occurred within the statute of limitations (or the deadline to file a lawsuit).

  2. A formal complaint is drafted and submitted to the court. The complaint will describe the details surrounding the case and the harm suffered, relevant evidence that shows the potential liability of the defendant, the class that is involved, and how much compensation is being pursued.

  3. A judge reviews the lawsuit for possible class action certification. Until a judge confirms that the case meets the qualifications for a class action lawsuit, it is considered a putative class action. To gain this certification, the judge will determine if the issue’s prevalence is significant enough to represent a number of different consumers.

  4. Class members are notified. Once a class action is certified, anyone who was likely similarly affected by the issue will be notified. In most cases, class members will be contacted through mail, email, and even text message. Class members will receive instructions on how to opt out of the lawsuit if they wish. Typically, this is only done if the individual wants to pursue a lawsuit on their own.

  5. The discovery period continues. Attorneys for both sides will gather evidence that backs up their cases. The defense may question the class representative, while the plaintiffs’ attorney may request records and information from the defendant that may support the class action lawsuit.

  6. The lawsuit settles or is tried in court. While most class action lawsuits are settled outside of court, some may require a trial. The settlement offer should describe how the compensation will be divided amongst class members. Class members will receive instructions on how to receive their portion of the settlement (typically by submitting a simple claim form). Many class action settlements are also advertised online.

How Do I Join a Class Action Lawsuit?

In most cases, you do not have to do anything in order to join a class action lawsuit because most cases are considered “opt-out lawsuits.” This means that class members who qualify for the lawsuit are included unless they choose to opt out. In these cases, you will not have to take action until the case settles and you receive a class notice describing how you can claim your share of the compensation.

Some employment class action lawsuits are “opt-in lawsuits” that require class members to declare their participation if they want to be included in the claim and any settlements that may result. Information on how to opt into the lawsuit can be found in the class notice.

How Much Money Can I Get from a Class Action Settlement?

The amount of compensation you may receive from a class action settlement depends on a few factors. The extent of the harm suffered and the number of people involved will play a large role in how much you can expect to receive. For example, if there are only a small number of plaintiffs but their claims are significant, then they may receive more money than if there were many plaintiffs with smaller claims.

How Does a Class Action Lawsuit Differ from an MDL?

In a multi-district litigation (or MDL), each injured person files their own lawsuit in order to receive compensation. However, like a class action lawsuit, evidence and witnesses are shared among plaintiffs and their lawyers. The main difference between a class action and an MDL is that all class members are compensated equally in a class action lawsuit, whereas in an MDL, each plaintiff’s case is dealt with individually and compensation amounts vary depending on the extent of the injury.

How Much Does it Cost to Join a Class Action Lawsuit?

Joining a class action lawsuit is free. Class action lawyers only take fees if a settlement is reached, meaning any attorney’s fees would be deducted from the final settlement or jury award.

What Should I Do if I Have a Potential Class Action Lawsuit?

If you have been wronged by a large company and want to take action, you should contact an experienced class action attorney who can review the losses you suffered and advise you on whether or not it makes sense to pursue a class action lawsuit. If they believe you may have a case, they can help you collect evidence and file a complaint.

While you can file a lawsuit on your own, it is wiser and more efficient to get help from an attorney who specializes in class action lawsuits. They know the ins and outs of the law as well as how to present your case to make sure you will win.

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