Class Action Lawsuits
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Did you receive a check in the mail to settle claims against a major hotel chain for undisclosed fees charged to your bill without being disclosed? Or a small check because your password to a website was hacked? If so, you were (perhaps unknowingly) a participant in a class action lawsuit.
A class action lawsuit is method by which a wrongdoer can be held responsible for doing a small amount of damage to a lot of people. The most famous recent example of a class action suit involved Blockbuster. Blockbuster was accused of improperly charging late fees to its customers. The damages to individual member was small: a $1 here, $3 there. It was impractical for each individual Blockbuster member to sue to get their money back. The profit to Blockbuster was huge: some portion of nearly $796 million in late fees. But a class action allows a lawsuit to be brought by a handful of people to represent the interests of everyone involved and everyone’s money back.
There are four elements to every class action suit which must exist: Numerosity, similarity, adequacy and commonality. Numerosity means that there are a number` of people—it does not need to be a large group of people—have a similar case against the same defendant. Similarity (or typicality) means that the claims involve the same or substantially similar legal and factual issues. The claims and circumstances do not need to be identical. But there must be a certain amount of repetition that makes it practical for one judge and jury to resolve the facts and law. Adequacy refers to whether the people bringing the suit can fairly and adequately represent the group of people—the class—harmed by the conduct. For instance, the class plaintiffs in the Blockbuster case had to be former members of Blockbuster. Commonality refers to the harm. Is there a group of people that suffered the same harm? All four of these elements (numerosity, similarity, adequacy and commonality) are required before a court will allow a class action (called “certification”) to go forward.
There are four general categories of class action lawsuits:
Employment Class Actions
These types of lawsuits are typically brought on by a group of employees because of an issue at their workplace. The most common of these suits are unpaid overtime or the failure to properly calculate the appropriate wage to be paid.
Consumer Class Actions
Consumer class action lawsuits are started by consumers who were hurt by the illegal practices of a company. This can include a deceptive business practice (like Blockbuster’s late fee).
Product Liability Class Actions
Product liability class action lawsuits may arise when a consumer good hurts its intended user. It may include suits against a company that developed and sold malfunctioning or defective products. Or, it can be a suit against a manufacturer for the risk of use (asbestos or cigarettes as examples) that is known to the manufacturer but not shared with the consumer.
Pharmaceutical Class Actions
Pharmaceutical class actions involve suits against drug or medical device companies. the incorrect use of medications or medical devices – some with serious side effects – that lead to serious injuries and some cases, death.
Any entity—except for the governments generally—capable “of causing harm” to a group of people can be sued in a class action. These entities include banks and other financial institutions, insurance companies, automobile dealerships, manufacturers, healthcare providers, telecommunication services and governmental entities. These parties can adopt policies, enter into standard form contracts or otherwise engage in uniform transactions which affect large groups of individuals in the same or similar ways. The uniformity of a defendant’s treatment to the class members gives rise to common issues among them. These common features often render a class action the most efficient means to resolve a dispute.
The general timeline of a class action involves filing the initial complaint and requesting certification. If a class is certified, then the parties define the class. For example, all members of a club during a range of dates are considered to be part of the class. Class counsel then notifies the members of the class that they have a claim. This can be done my email, regular mail, and newspaper or TV advertisements. Potential class members can bring their own suits or agree to be part of the class. The case is then litigated like a normal case until the end. The court decides how to award the money if any is recovered.
There are some clear advantages to bringing a class action suit. Most situations where misconduct targets a large group of individuals do not justify bringing individual cases. Given the unfortunate realities of the costs of litigation, individual lawsuits are not economically viable unless a significant amount of money—usually tens of thousands of dollars—are the issue. The class effectively pools their harm together to make it worthwhile to hire an attorney to pursue the claim and seek justice. It also allows the plaintiffs to share legal research, experts, and evidence which can be very cost effective.
Another reason is the process of a class action suit which can be more efficient that simply each person hiring their own lawyer and pursuing each individual claim. The Class Action allows the court and parties to deal with issues once instead of multiple (perhaps even thousands) of times.
Courts closely monitor the progress of a class action lawsuit. A class action must be certified by a trial court before the class plaintiff can represent the interests of everyone involved. The case must be litigated and settled “in the interest of the class.” That means a court has to approve the settlement, and the settlement must benefit the entire class.
While Class actions are not well-suited for all controversies, in many circumstances they can be an indispensable tool in protecting consumers and discouraging corporate misconduct. A class action usually demands a commitment of vast financial and other resources. Before pursuing a case as a class action, our firm carefully analyzes the suitability and advantages of this approach.
Our attorneys have represented thousands of consumers and taxpayers in class actions.
If you believe your situation may satisfy the requirements for a class action, we would be pleased to explore this option with you.