What Are Class Action Lawsuits?
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What Is a Class Action Lawsuit?
Class action lawsuits is brought by a large group of plaintiffs (a class) claiming that they have all suffered similar injury due to the defendant’s wrongful conduct. In such an action, a single plaintiff or small group of plaintiffs sue the defendant on behalf of the entire class.
The benefit of class action lawsuits and the reasons they are brought is mainly for efficiency and cost saving purposes. If every individual who is harmed were to bring a single action against the corporation for the same common dispute, not only would it be time consuming, but it will be very costly for the courts to administer each claim.
Requirements to Bring a Class Action
To bring a class action, the class must first be certified by a court. In deciding whether to certify a class, there are a few requirements:
- There must be common questions of law or fact as to all of the plaintiffs; this usually means that the class action has to arise out of a single act by the defendant or some pattern of conduct.
- It must be shown that the plaintiffs named in the lawsuit will adequately represent the interests of the entire class; they must be competent, and they must not have any conflicts of interest with the rest of the class.
- The class must be so large that it would be impractical for all members of the class to bring a lawsuit individually.
- Finally, the claims of the class representatives (named plaintiffs) must be typical of the whole class.
Every person who would be effected by the courts decision in the class action lawsuit is entitled to a notice that the class action has started. These notice can be from a formal letter and through TV media.
The notice must describe the claim, and inform them that they have a right to opt out of the class action. It must also warn them that if they do not opt out, they will be bound by the eventual judgment, and may not be able to bring their own action in the future.
Class Action Fairness Act
Many class actions can be brought in either state or federal court. Under the Class Action Fairness Act of 2005, class actions with more than 100 plaintiffs and more than $5 million at stake, and less than 2/3rds of the plaintiffs are from the state in which the action originated, any defendant can have the action removed to federal court. This law was passed with the belief that the class action device had been abused, and that state courts were too friendly to plaintiffs in class actions. If the action involves questions of federal law, defendants can also remove it to federal court.
Settlement of a Class Action
Because many class actions end in settlement, the settlement process in federal class actions is closely overseen by the court. The court must approve the settlement, class members must be able to opt out of any settlement, and any class member can go to court to object to the settlement.
What Are Some Types of Class Action Lawsuits?
Some examples of class action lawsuits include claims by:
- employees bringing a claim against their corporate where they are discriminated to a pattern of racial, age, gender, sexual orientation
- employees that are part of a large corporation who have all harmed by unfair business practice
- consumers who have been affected by the same defective product
- patients that have been prescribed or harmed by a medicine that has caused dangerous side effects
- merchants and consumers who have paid inflated prices for a specific type of product
- investors who have been victimized by fraud in connection with the purchase or sale of stock
In each of these situations, the resolution of the lawsuit binds all members of the class action to the decision of the court. Under federal law, the rules governing the class actions are found in Federal Rule of Civil procedure 23
What Are the Reasons for Class Action Lawsuits?
The public policy reasons supporting class action lawsuits are designed to serve many important goals. A class action lawsuits are usually brought when there is a large number of people that are harmed by a common dispute and each member of the group has only suffered a limited number of damages and the cost of each individual bringing a single claim against the corporation would not only be time consuming, but it will also be costly to the courts.
Also, the wrongdoer is usually a large corporation and if class action lawsuits are not brought against the corporation, the wrongdoer will have incentive to continue its fraudelent or wrong conduct without suffering much harm. Even if there are a couple lawsuits brought againts the multi-million dollar corporation, the payout to the individuals for their harm would not effect the corporation and they would continue their wrongdoing.
Do Class Action Lawsuits Always Win?
Not necessarily. Even though the amount of individuals who have been harmed by the wrongdoing of the large corporation is a lot, if a judge decides the basic question of whether the people have the right to bring a claim or believes that the defendant should win, the class lawsuit is dismissed and the individuals in the group are prohibited from filing new or individual lawsuits over the same issue againts the corporate defendant since the issue has already been decided on its merits and considered final.
Do I Need a Lawyer for a Class Action Lawsuit?
If you and a group of people have been harmed by a common issue from the same entity, a class action lawyer may be able to help you. Class action lawyers have handled many complex issues that may include defective products, employment discrimination, unfair business practices, and other corporate violations that have harmed a group or class of people. Use LegalMatch to hire a local class action lawyer to represent you and the class of members who have been harmed and help you recover money damages.
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Last Modified: 10-14-2015 02:01 PM PDT
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