What Is Class Action?

Federal Federal Rules of Civil Procedure, Rule 23, and comparable state rules allow a large group of people with similar legal claims to join together in one civil lawsuit.

Accutane Class Action - What Is Class Action?

The class action rule is intended to improve court efficiency by allowing a large group of people with similar claims to join together in one lawsuit. One or more representatives of the harmed group go to court on behalf of everyone else who was similarly affected. If those representatives meet certain criteria, they are allowed to prove and settle not only their own claims, but the claims of everyone in the larger group as well.

A potential class action lurks whenever a company's actions harm lots of people. Class actions have been brought against the manufacturers and distributors of products as diverse as IUDs, computer monitors, asbestos and tobacco. aBusiness practices that harm consumers, such as overcharging for banking services or using misleading information to sell products ("You're already a winner, send in your magazine subscription to collect your prize"), have spawned class actions.

Shareholders can bring class actions against companies for poor management or misleading investment literature. Employees can sue employers collectively for discriminatory practices or for violating employment or benefit agreements.

The Basic Elements

Both state and federal courts set strict parameters to assure that a few people can adequately represent the interests of many. Here are the basic elements:

  1. Numbers
    The actions of the defendant have to affect so many people that it is more practical for a few representative plaintiffs to address the claims than for all the individual plaintiffs to join together in a regular lawsuit. If twenty people are swindled in a business venture, they can file their own lawsuits. But if hundreds or thousands have been harmed, a class action allows a few to represent the multitude.
  2. Common Claims
    The claims must raise similar questions of law or fact so that it saves time to lump everybody together. If a hundred people all bought cars with defective seatbelts from the same company, a class action may be the way to handle the complaint.
  3. Typical Cases
    The people bringing the lawsuit on behalf of others (the "named plaintiffs") must have the same claims and defenses as those they are representing. For example, a person who claims his seatbelt doesn't work cannot represent those who think the seatbelt works fine but the airbags inflate dangerously.
  4. Fair And Adequate Representation
    The plaintiffs and the class lawyers must be good caretakers for other people's claims. A lawyer who has made major mistakes in other class actions or a representative plaintiff who has lied under oath may not meet this criterion.

If these four criteria are met and all the class wants is an order telling the defendant to stop doing something - dumping waste into a river, for example - a judge will usually agree to "certify" the class. (Certification allows a few designated appointees to represent the other members of the class.) If the class also wants money, they have to prove that the claims and injuries are so similar that they can be well managed in one lawsuit. Mass tort cases, in which a lot of people have been physically injured in a disaster or by a dangerous product, are often denied class action status because the causes and extent of individual injuries vary so much from person to person.

Who Pays The Lawyers In A Class Action Lawsuit?

In a class action for money damages, lawyers who represent the class are generally paid out of the money that's recovered - called a "common fund" - for the people they are representing. In class actions involving declaratory judgments or injunctive relief, lawyers may be paid by the people who hired them, or in some cases, by the people or companies they are suing. Attorney's fee awards are subject to court review and approval. Ordinarily, if an award is made in a common fund case, it will be awarded as a percentage of the total money available for the class. A benchmark award generally accepted by the courts is approximately 25 percent of the total, although the award may be adjusted higher or lower, depending on the specific facts of a case.

8 Advantages Of A Class Action Over A Regular Lawsuit

  1. Not Required To Make Any Payments
    Class members are not required to make any payments. The more your lawyers win for you, the more they get paid. It's in their best interest to gain the best settlement possible.

  2. Class actions allow people to file a claim as a group, when individually they cannot afford to do.
  3. Class actions create strength in numbers.
  4. Class actions force large corporations or entities to be held accountable for wrongdoing.
  5. Class action legislation extends the limitation period before which an individual action must be filed.
  6. Class actions place fewer obligations on class members than conventional lawsuits.
  7. Class actions are cost effective and increase judicial efficiency because they unite several plaintiffs under one case.
  8. Class actions run on contingency fees. That means your lawyers receive a portion of any settlement awarded.

What Is A Lead Plaintiff Of Class Action?

A lead plaintiff is appointed by the court to act as a representative for the class. Attorneys for the lead plaintiff are generally appointed as lead counsel in the case and responsible for overseeing the prosecuting of the litigation. In a securities fraud suit, however, you must meet the following qualifications in order to serve as a lead plaintiff :

  1. You must not have purchased the security in order to participate in the litigation, or at the direction of your attorney.
  2. You must have actually suffered damages as a result of the fraud.
  3. You must be available to testify at a deposition or at trial, if necessary.
  4. You must agree not to accept any payment for serving as class representative beyond your pro rata share of any recovery, except for your reasonable costs and expenses (including lost wages) directly relating to the representation of the class, which must be approved by the court.
  5. You must sign a certification that sets forth the above conditions and is filed with the court.