What are Class Action Lawsuits and How Do They Work?

A class action lawsuit is, in a nutshell, a civil lawsuit brought by one or more people on behalf of a potentially much larger group of individuals with a similar claim. These types of lawsuits can be brought in state or federal courts. They generally come about when multiple people have been negatively affected by a common claim. This could be related to an injury, a faulty product, misleading advertising, or many other conditions. In this article, we will take a scrutinizing look at class action lawsuits, how they work, and the features and benefits involved.

Typically, a class action suit comes to fruition when a group of people carries a similar grievance against a company, product, an event, or a similar issue. Sometimes class action suits are referred to as mass tort litigation or multi-district litigation, MDL. There are many reasons for seeking justice through a class action lawsuit. Injuries caused by defective products, automobiles, medical devices, or untoward side effects from medications, are just some of the many reasons that can spur a lawsuit of this type.

Other previously litigated reasons for a class action lawsuit have included consumer fraud, employment practices, corporate misconduct, or securities fraud among many others. Mass tort litigation is another form of a class action lawsuit. In this situation, a suit is brought forth by a multi-party consisting of people injured due to a massive accident like a plane crash or a large group of people that were hurt by a medical device or a defective product.

In many cases, the individuals involved in the suit may have experienced minor injuries that if on their own, may not have pursued a legal route. However, when multiple people band together, the value of their claims, and therefore the suit, become stronger. In addition, the resources are consolidated, meaning the attorneys, evidence, witnesses, and many other aspects are combined. If a single product injures hundreds of people, it becomes extremely impractical, if not impossible, to process each claim of injury as a separate lawsuit. Typically, the group files the suit with a “named” or “lead” plaintiff who is at the forefront of the suit.


Examples of Class Action Lawsuits

There are many excellent examples of the kinds of suits seen in this area of law. A group of people employed by the same business that were subjected to racism is an example of a class action. Individuals who took a prescription medication that produced detrimental side effects, residents of a town with a toxic spill that were injured or had property damaged, or a group of travelers that were hurt as a result of improperly maintained conditions at a hotel pool are other ideas of subjects of a class action lawsuit.


Who Joins a Class Action Lawsuit and How?

Anyone that is believed to be affected by the court’s ruling in the class action is entitled to be a part of the lawsuit. In many cases, individuals will receive notice that the action has started, but unfortunately, it’s impossible to notify every person in every case. The court will request that the lead plaintiff or class representative and their law team make a reasonable attempt to notify anyone unknown that is considered a class member by making announcements through the media such as a television commercial, a magazine advertisement, or perhaps by posting a flyer. Depending on the facts of the case, the court will tailor the kind of notice required for possible participants.

After seeing a notice or being notified of a pending class action, potential class members have the opportunity to “opt out” of the lawsuit which means they will not be participating or they can “opt-in,” meaning they will participate and receive part of any settlement reached. In some cases, there may not be an option to opt out of the lawsuit which means that any people similarly affected by the same defendant are automatically included in the class action and must abide by the outcome of the case.

A class action case often involves extensive research, more so than that required in an individual lawsuit situation. The attorneys work as a team in gathering evidence to prove the claim that the defendant caused harm to the class members. The number of individuals involved also has a direct effect on the amount of work involved.


 How do Class Actions Become Certified?

After one or more plaintiffs have filed a lawsuit they have the option of requesting that the court certify the suit as a class action. In order to have their case certified the plaintiff and their legal team must demonstrate that the case meets particular criteria.

  • A legal claim against the defendant must be proved.
  • There must be a significantly large sized group of individuals that have received similar injuries as the plaintiff. Individuals having radically different injuries would need different evidence to support their claims making it a separate case from the plaintiffs.
  • The lead plaintiff is a typical representation of the class members and possesses the ability to adequately represent the class as well as a reasonable plan to do so. This person must also have no known conflict of interest with other class members. They must agree to accept the same settlement as all of the other class members.


Class Action Lawsuit Benefits

Class action lawsuits allow the justice process to be carried out at a much higher level of efficiency. Imagine if each person that was eligible to be part of a 500-member class action sued individually for their injuries. This situation would incur thousands of hours of time on behalf of lawyers and court employees. They monetary costs involved would also be exorbitant, reducing the amount of money available as a settlement do to paying both court and lawyer fees 500 separate times. A class action reduces these costs and the time it takes for plaintiffs to see any payments if the suit wins.

Since a class action brings together multiple and in some situations, thousands of claims at once, the process is streamlined and efficient. The judge assigned to the case determines the outcome for all of the class members. This means either all of the class members win or none of them do. If the judge deems the class action lawsuit not to have merit and rules in favor of the defendant, then no one in the class action can bring forth another lawsuit against them over the same issues. If the class members win the lawsuit, the court finds that the defendant is, in fact, liable for injuries caused by the plaintiffs and the recovery amount will be divided among the class members.

Another excellent benefit in choosing a class action route lies in the fact that the attorneys who litigate these cases are extremely well trained and versed in this specific area of law. They have specialized in this area and are experienced in managing complicated lawsuits. The work load is considerably heavier than a typical civil lawsuit which makes having a seasoned lawyer an incredibly vital asset.

A class action is also unique in that this type of suit seeks to ensure each injured class member receives something. If a defendant is found liable and is unable to pay each individual the full amount entirely, a class action will ensure that everyone receives at least some payment. If each person had sued on their own, any chance of receiving payment would occur on a case by case basis.


How Does a Judgement in a Class Action Work?

After a decision on the class action has been reached by the court, it applies to each and every person who made a choice to opt into the class. The court’s decision is final and binding to all individuals that fall under the original definition of who is considered a class member by the court. This holds true whether the person was never actually at a court proceeding or otherwise participated in the class action.

Under normal circumstances, the payment made to the class members follows a “plan of distribution,” developed by the judge alongside the legal teams for both the plaintiffs and defendants. The agreed settlement is distributed among the class members after the fees for the legal team and litigation are deducted. Each of the class members might be given a percentage of the total amount in the settlement fund or a specific dollar figure.

Depending on the details of the case and severity of injuries experienced, in rare cases the attorneys may seek to obtain permission to utilize an in-depth review of each individualized claim. In doing so, the amount of the settlement fund awarded to each person is tailored to fit the “value” of their specific situation and claim. If both the parties involved in the case decide to settle, the judge presiding over the case will determine of the proposed settlement is fair to all involved before approving it.


How to Find a Class Action Lawsuit to Join

There are several ways to find a class action that pertains to you and join. If a lawsuit has been certified as a class action, the legal team will be ordered by the court to notify all people potentially affected by the suit. This can be done by direct mailings or through the use of the internet or media. Acceptance into class membership is usually automatic except in rare cases. Each individual affected by the product or action in question will be included as a class member unless they decide to opt out.

Unless they will be providing direct evidence, class members aren’t typically involved in any decisions of whether a settlement is accepted or not. The lead plaintiff will consult with the legal team for the class action to create a case strategy and to accept or deny any offers of settlement. The other members of the class only have the choice to opt out or accept the terms.

With most class action lawsuits, each person that was injured in the way described by the lawsuit will be included automatically, so there isn’t a need to join the class. The judge will order that all identifiable members be notified when the class action is certified and when a settlement has been proposed. In addition to mailings, notices may be placed in newspapers, magazines, television radio advertisements, or on the internet. Even if a class member fails to receive notification, they are still included as a class member.


Finding a Class Action to Join Through the Internet

The internet is a terrific place to search for any class actions you may be a part of already. There are several websites dedicated to providing information regarding open class action lawsuits, how to determine if you are a class member, and many even include direct links to fill out paperwork to be included in any potential settlements regarding your injuries. Attorneys working on class actions also create websites specifically for that particular suit to allow interested parties to gain information on the suit, the class certification, and any relevant contact information.


What Happens if You Didn’t Receive a Notice?

Any qualifying member can be a part of the class. If you failed to receive notification, you could contact the attorney for the class action so that your name may be added to the registry. Registration in the class guarantees that you will receive future notices regarding important information and settlement details. If you have any information, documents, or evidence that may be useful to the legal team you should contact the attorneys to let them know.


A Class Action Lawsuit Compared to A Private Lawsuit

Now that we’ve taken a look at the question of what is a class action lawsuit and how to join one, we can examine what makes them different from a private lawsuit. Class actions are filed on behalf of larger groups of people who have been harmed by the person or company being sued. While class actions have a lot of wonderful benefits, sometimes it may be more appropriate to consider filing a private suit instead.


Settlements for Private Lawsuits and Class Actions

While most class action lawsuits eventually come to a settlement, the time for them to do so can vary widely. The same holds true for private lawsuits filed by one person. In both cases, the suit can be settled relatively quickly, or in some cases, they can drag out for years and years. If you have a smaller claim, your chances for a favorable outcome regarding getting a settlement increase in a class action where the total amount is significant enough to cause the defendant to be worried. However, if the injury you received is more easily proved than the injuries inflicted on the other class members, you might be better off going with a private lawsuit. The benefits for each type of lawsuit depend heavily upon the details surrounding the case and your injuries.


The Bad News About a Class Action Lawsuit

There are downsides to every type of suit, class actions included. Class members have no control or say in how the lawsuit is handled and how it progresses. You may also be considered a class member even if you never received proper notification of the impending suit. Individuals that received significant injuries or those that have injuries that are different or more complex than other class members should seek a consultation with their attorney. Filing a private lawsuit may be the better option for the people.


Abuses in Class Action Lawsuits

In recent years, class action lawsuits have been the source of a large amount of criticism. This is due to cases where lead plaintiffs and the attorneys reached a class action lawsuit settlement that pays out millions to the attorneys, but the class members only receive a coupon for a product or a service. In most of these cases, none of the class members were seriously injured which may indicate that the case matter wasn’t truly suited to be a class action in the first place. In lawsuits involving defective products, a settlement offering coupons given to the class members on behalf on the defendant for a replacement could be considered inadequate as the members may not want to risk receiving another defective product.

In the situation of a class action where an abuse has occurred, the lead plaintiff and the attorneys fail to represent the interests of the class members adequately. Additionally, the court has also failed to utilize discretion in the determination of a fair outcome for all class members. It’s been suggested that this phenomenon occurs as a result of class action lawyers participating in what has been dubbed as forum shopping. Forum shopping involves attorneys looking for state courts that will allow questionable settlements, making them more desirable for obtaining the result they want.

These types of abuses led to Congress passing the Class Action Fairness Act of 2005. The Class Action Fairness Act of 2005 makes it easier for class actions to be removed from state courts and placed instead into the federal court forum by the defendant. The law was enacted to prevent class action attorneys from forum shopping, ensures a more favorable outcome for class members, provides more consistency and helps keep the judicial process fair and just.


What to Do if You Receive a Class Action Notice

In the event that you receive notice of a class action suit, your first step should be reading through the literature with extreme care. Notices are created and delivered to class members at various times throughout the lawsuit process. A first notice is usually delivered at the same time that the lawsuit becomes certified as a class action. Usually, you are included automatically within the class if you fit the description of a class member. In this situation, you do not need to take action.

In general, you’ll have three possible choices once you’ve received a class action notice.

  1. You can elect to participate as a class member.
  2. You can decline to participate or opt out.
  3. You may participate as a named plaintiff in the lawsuit.


Becoming a Class Member

You may already be included in the class action due to circumstances of your injury. In this case, you will automatically be included, and you won’t need to take additional steps at this time. It’s important to understand, though, that by participating in the class, you give up your right to pursue a settlement for your injury by filing a private lawsuit. If you didn’t intend to file a lawsuit for your injury, then participating in the class action means you have nothing to lose and possibly a settlement to gain.


Opting to Opt Out

If you decide you do not want to participate as a class member, you can choose to opt out. There will be instruction in the notice about the suit on how to accomplish this. There will be a specified date when you can no longer choose to opt out, so it’s imperative you decide before then. Otherwise, you’ll be considered a class member and lose any rights to file a private suit. You can also check online for information pertaining to the class action and cut off dates.

There are many reasons someone may want to opt out of a class action. For example, if you have a large amount of money or interest at stake and are preparing to file a private lawsuit. Your situation might be considered different or more serious than typical class members. You might feel as though your interests will not be properly addressed by the class action. In any of these cases, your best course of action may be to opt out.


Going on Record as a Named Plaintiff

The final option for individuals that receive a class action notification involves becoming a named plaintiff. This choice allows you to retain your own attorney while participating in the class action lawsuit. This may be a better option for you if your damages are larger and you wish to have a more active role in the suit as opposed to simply being a class member.

Sometimes you may have a great deal more at stake than other class members. Individuals that were severely injured as a result of a defective product or that lost a significant amount of money should consult with an attorney before joining a class action. These cases are far more severe and may require a private lawsuit.


What Happens When You Receive a Class Action Settlement Notice?

You might receive another notice when the lawsuit reaches a settlement. Carefully read over the details of the class action lawsuit settlement. Make sure to visit the listed website in order to ensure you get all of the necessary details regarding the steps to get your share of the settlement. In some cases, you can make a decision based on whether to receive the settlement or opt out.


What’s in It for the Lead Class Action Plaintiff?

The lead plaintiff in a class action lawsuit is the named party or parties in the suit. Sometimes the lead plaintiff is referred to as the representative plaintiff, the named plaintiff, or the class representative. The lead plaintiff or plaintiffs are officially appointed by the court when the lawsuit becomes class action certified. They must be able to represent the class member’s interests.

The lead plaintiff is accountable for several duties. They handle the hiring of the class action lawyer and the filing of the suit. However, they are not responsible for the fees of the attorneys, so they do not take a monetary risk. The class action lawyers instead take the case on a contingency basis. This means they cover costs themselves and recover them and their fees if they win the case. The lead plaintiff is usually responsible for covering costs including travel, copies, and postage fees for the attorneys.

The lead plaintiff also consults on the case with the legal team and directly participates in the suit. That may involve the participation the process of discovery, which entails the gathering of evidence which may require written interviews, producing documents of evidence, or providing a sworn testimony in court. The lead plaintiff attends any hearings, trial dates, and any other relevant proceedings related to the case.

The lead plaintiff also has the unique advantage to consult directly with the legal team. They are the only class member that can disagree with and object to a settlement agreement offer. Additionally, the lead plaintiff may receive a larger percentage of the settlement at the end of the class action process, depending upon the magnitude of their specific injuries as well as their amount of participation during the case.

After a settlement has been reached, the court will ensure the distribution is fair. The court will award an amount to the attorneys for fees and expenses and will also award an amount to the lead plaintiff. The amount of recovery left is then divided among the class members. Class members may all receive the same amount, or they may be placed in tiers based on the severity of their injuries or losses with each tier receiving a specific amount.


How to Find a Class Action Lawsuit Attorney

If you are curious as to whether you have a valid claim for a class action lawsuit speak to a lawyer. A valid claim can include those based on an injury incurred through a product’s side effects, being treated unfairly by an employer, an environmental spill or event in your neighborhood, or a different civil wrongdoing that has affected multiple individuals, you should speak with a class action attorney. Seeking legal counsel for a class action is best done by searching for a lawyer that is trained and specializes in this particular area as opposed to a divorce lawyer or a contract lawyer. They understand the ins and outs of the process and are best suited to address your needs.

If you are interested in starting a class action lawsuit and feel that you could be the lead plaintiff, your first step is to find the right class action lawyer. Aim to choose an attorney that is experienced, holds a good track record, and possesses adequate resources to aid you in launching a successful suit.

A class action attorney must be competent in the specific area of law needed for your case. For example, a lawyer that usually takes on physical injury cases may not be as well suited for one that takes only defective product or security cases. You should select a lawyer who is talented in the area you need.

You should also consider the lawyers track record. Taking into account the percentage of cases they have won that are similar to yours can demonstrate an idea of how they can handle your case. Ask about the various settlements they have secured for previous clients as an indication of the type of result you may be able to expect. An attorney that secured millions for their own firm but hardly any money for their previous class action clients is probably not the kind you want to represent you and your interests. You can also ask for referrals from previous lead plaintiff clients.

A prospective attorneys access to resources is also a key consideration. You need to be sure they have access to the necessary resources to ensure your suit is successful. For example, examine if the firm is financially stable, the number of class action lawsuits they are handling, and how many lawyers they employee. If they have many cases but only a few attorneys, they may be lacking in resources or be overextended which means your case will likely not receive the attention it needs.

Finding a lawyer through personal or professional referrals can help. If you find yourself facing a difficult time in locating one, try searching the internet for similar class actions. Take a look at the lawyers involved in those. One might be perfect for you and your case.

In closing, A class action lawsuit can be a terrific tool in receiving justice for an injury or loss that you and multiple other individuals faced. The process may seem confusing at first, but it is relatively straightforward. Class action lawsuits have helped many people and will continue to do so.