Class Actions

Class Action Basics

Read the newspapers, watch TV or surf the web on any given day and you'll likely come across something about a class action lawsuit. Do you know what they're supposed to do and how they work?

Find out what's behind all those TV ads and the class action settlement notices you receive in your mail from time to time. A class action could mean the chance to resolve a legal claim, large or small.

What and Why of Class Actions

You may have a legal claim connected to a problem with a product or service, but righting the wrong through a lawsuit just isn't practical for you. Sometimes, you and several others have the same legal problem, but again separate lawsuits aren't practical or an efficient use of legal resources.

Class actions solve these problems by allowing representatives of a group to go to court and obtain a judgment or settlement benefiting all group or class members.

Common Types of Class Actions

Class action lawsuits have been used in many types of cases, such as

Class Action Prerequisites

Class actions are governed by federal and state court rules. A class action can't take place unless the requirements in these rules are met:

  • Numbers. There have to be so many possible plaintiffs and lawsuits against a defendant that it's not practical for them to file their own suits. Often, possible plaintiffs number in the hundreds or thousands
  • Same claims. Claims need to raise common legal and factual issues, making it efficient to deal with all claims together. Thousands of claims against a manufacturer for a faulty dishwasher switch causing a fire hazard is a good example
  • Typical cases. The named plaintiffs, the representatives, have the same claims and defenses as the others in the class. In the dishwasher example, the named plaintiff's claim can't be connected to defective pump causing flooding
  • Representatives provide fair and adequate protection for the class. The named plaintiffs and class lawyers must look out for the interests of everyone in the class. The lawyers' competency is the main focus here, but courts look at the representatives, too

Court Certification

A court must certify the class for the lawsuit to go ahead as a class action. The court sees if the above elements exist, and it certifies the class if a class action is the best way to manage the claims. Certification is usually granted when the class wants the defendant to do or stop doing something, such as stop making or fix the defective dishwasher switch.

Next Steps for the Case

Once started, the case could take more or less time to resolve than an individual lawsuit. Much depends on the defendant and how hard it fights the class' claims. Also, both sides of the case continue investigating the claims, which takes time.

A case may go on for years. A judge or jury may decide who wins, but quite often class actions end with a settlement.

Proposed Settlement and Opting In or Out

Class members accept or reject settlement terms by opting in or out. Depending on the case, you may have to "opt-in" and complete a form. Sometimes you don't have to do anything at all.

Opt-out if you don't want to participate in the settlement. You may want to pursue your case on your own, for example.

Court Approval is Needed

The court needs to approve the settlement. It has to be fair and reasonable to the everyone in the class for a court to approve it.

Attorneys' fees are part of the approval process. They're typically a percentage of the funds paid to the class. Some criticize that class actions reward attorneys with windfalls, while class members may recover small amounts of money, coupons or account credits. However, the fees are paid for services to the entire class.

Reviewing the Proposed Settlement

Read the fine print on a proposed settlement, and know what you're agreeing to when you opt-in or -out. Look for:

  • The payment or benefit you'll receive. Even if it seems small, such as a rebate on a new appliance to replace a defective one, you may find it's a great value
  • The release of claims should match the complaint in the case. For example, if the lawsuit was over one product or defect, the release shouldn't apply to other products or problems
  • Look for indications that the settlement actually benefits the class. Attorneys' fees should be disclosed and the case investigation should be summarized

Can a Class Action Help You?

Where should you start if you have a problem that could be solved through a class action? Chances are good there's already a class action over it:

  • The internet is a good place to start. Use search terms including the product or company name and "class action"
  • Community discussions are a good way to connect with those with similar problems

Do your research whether you're thinking of filing a new class action or joining a pending one. Review the attorney's experience and ability to handle a class action case.

An individual lawsuit might be best for you. Read and review class action settlement notices, and watch for those requiring you to opt-out to preserve your right to sue individually.

The larger your loss or damages are, the greater your need is to consult with your attorney to decide if the class action is right for you.

Questions for Your Attorney

  • Can you help me decide whether to join an existing class action?
  • Does a manufacturer have to notify me about a class action over its product if I own that product?
  • I "opted-in" to a class action and my claim was denied. Can you help me prove I'm entitled to part of the settlement?

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