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What is a Class Action Lawsuit?
Every year, consumers miss out on countless dollars and unscrupulous corporations sell defective and mispresented products without consequence, all because of misconceptions about class action lawsuits. While some of these misconceptions are driven by deliberate misinformation campaigns, others stem from understandable misunderstandings of this more complex (but vastly more efficient) litigation process. This article explains the mechanics of class actions and outlines some matters to consider when deciding between individual or class action litigation.
Parker Waichman LLP: Class Action Lawyers Dedicated to Protecting Your Rights
Many of us have been part of a “class” covered by a class action lawsuit, whether or not we knew of it. Class members not involved in the actual litigation may be unaware of the case until they receive a postcard or seemingly random email notifying them that they might be eligible for some compensation. Oftentimes, the available reward is money, but it might also be a gift card, store credit, rebate, or other economic benefit. Depending on the case, the value of the award may range from a few dollars to thousands.
Class action litigation is an invaluable tool for protecting the rights of consumers in circumstances where bringing their cases individually would be cost-prohibitive—that is, where the costs and expenses associated with bringing suit would cancel out or exceed the expected recovery. By aggregating the claims of multiple injured consumers, class actions provide a means to right wrongs that would otherwise slip through the cracks.
Furthermore, class action lawsuits play a vital role in holding careless or unscrupulous companies responsible for causing financial injuries to or violating the rights of a large group of individuals. Even if an individual consumer is out only a few dollars because of defective or misrepresented product, the company that sold the product might reap millions in extra profits when thousands of other consumers are subjected to the same wrong. But, a class action allows injured consumers to likewise benefit from aggregation when it comes to obtaining reimbursement. In a class action, the few dollars spent by each consumer add up to a massive liability threat and thus a true incentive for the company to change its unfair practices. In this manner, class actions not only remedy injuries but also prevent them from occurring in the future, and, by punishing deception and product defects where they hurt—the company’s bottom line—class actions prevent unscrupulous companies from gaining a competitive advantage over honest competitors.
Yet, like any case, a class action must begin with one or a small group of injured consumers. Someone has to initiate the lawsuit, and the person who does so is probably someone just like you.
National Law Firm With Sterling Reputation Offers Information Regarding Class Action Lawsuits
Parker Waichman LLP is a national plaintiffs law firm that is based in New York but has served clients throughout the country. Parker Waichman’s class action lawyers have vast experience in assembling class action lawsuits and aggressively pursuing the rights of their clients in court. Possessing the skill, knowledge, and resources available to them to pursue justice both for you and for similarly situated class members, Parker Waichman’s class action attorneys have faced many of our country’s largest and most powerful corporations and, as a result of their relentless pursuit of justice, have recovered over $2 billion in financial compensation for their clients.
Class Action Lawsuit Defined
A class action lawsuit does not differ much from the traditional lawsuit, especially in the initial stages. The case typically begins like any other civil lawsuit, with a plaintiff—the person or entity that has suffered some personal or financial injury—and a defendant—the entity plaintiff claims is responsible for those damages. The plaintiff institutes the lawsuit by a filing a complaint, a document wherein the plaintiff alleges the specific legal violations committed by defendant and requests specific remedies from the court. Unlike a conventional action, however, the plaintiff in a proposed class action asserts these claims not just on his or her own behalf, but also on behalf of a class of similarly situated individuals. In other words, the plaintiff bringing suit indicates to the court that there are many other people who were similarly damaged by and thus have similar claims against the defendant.
The mere allegation that many others were similarly damaged does not, however, create a class action automatically. Rather, the plaintiff must prove that the case satisfies certain requirements (described in the following section). Because the information needed to establish compliance with these requirements is often in the sole possession of the defendant, plaintiffs rarely have enough proof at the outset of the case. Some amount of official pretrial discovery—that is, the court-ordered exchange of documents and information, taking of depositions, inspections of facilities, and the like—is usually necessary to obtain the evidence needed to show that the requirements are met and that class treatment is appropriate.
What are the requirements for establishing a class action lawsuit?
Class actions can be filed in federal or state court. Rule 23 of the Federal Rules of Civil Procedure establishes the criteria for certification of a class action in federal cases (and is largely mirrored by analogous rules in most states). Under Rule 23, a class action is appropriate where four universal requirements are met and the case falls into one of three categories. First, case must fulfill the following four prerequisites from Rule 23(a):
- “Numerosity”—the proposed class includes so many people (class members) that adding all of them to the lawsuit as additional plaintiffs would not be practical
- “Commonality”—there are at least some legal or factual issues common to the entire class—in other words, some common thread at the core of each class member’s claim
- “Typicality”—the claims or defenses of the named plaintiff [who now seeks to be named the official representative of the class] are typical of the claims or defenses of the class members
- “Adequacy”—the named plaintiff and his or her attorneys will fairly and adequately protect the interests of the class
While all class actions must meet these four fundamental requirements, this is not the end of the court’s inquiry. A class action is appropriate where the above prerequisites are met and the case falls into one of the three categories described by Rule 23(b):
- Requiring each case to be litigated individually rather than as a class action would risk inconsistent verdicts and rulings, which might result in conflicting claims among class members and/or conflicting standards of conduct for the defendant going forward
- The Defendant has acted or refused to act in a way that affects the entire class, so that the class as a whole would benefit an official declaration of certain rights or facts or from an injunction requiring or prohibiting some action by the defendant
- Questions of law or fact common to class members predominate over questions unique to each class member’s specific circumstances, and a class action is superior to other available methods for fairly and efficiently resolving the controversy
If the four prerequisites above are met and the case falls into one of these three categories, it will be certified as a class action, officially covering not just the named plaintiff but also the class of unnamed individuals who meet certain criteria. The specific scope of the covered class, often defined in terms of timeframes or types of injuries incurred, will be set forth in the Court’s accompanying ruling and may deviate from the precise definition sought by the plaintiff to the extent the court considers necessary under Rule 23.
What are the Advantages of Class Actions?
Class actions provide an efficient and effective means of addressing wrongs which might otherwise slip through the cracks and forcing unscrupulous businesses to correct rather than cover up their misconduct.
On the individual level, class actions enable consumers to obtain compensation without the substantial time, effort, and expense involved in individual litigation. In many cases, the cost of prosecuting an individual lawsuit far exceeds the money a plaintiff might expect to recover. Consider, for example, a circumstance in which your bank charges you a monthly fee of $2.99 per month for ATM use at your banking institution, in violation the terms of your ATM usage agreement. If you file suit individually and the court finds in your favor, the judge might be expected to order that the bank cease charging the fee and reimburse you for the unlawfully collected amounts. You would recover approximately $36 in damages for a year’s worth of fees. Contrast that award with the time an attorney would need to investigate the matter and the time you would need to take away from your daily life to assist, and the diminishing returns are evident. While the ends of justice might be satisfied with the final result, exhaustively pursuing this matter is entirely illogical in an economic sense. Even without an attorney, the filing fees alone would almost certainly exceed your financial recovery. From a practical standpoint, it is much easier to part with the $36 a year to avoid the nuisance, or better yet, withdraw your money and go to another bank. For a national bank, $36 improperly charged to you and millions of other customers might add up to hundreds of millions of dollars per year, which the bank can continue to assess with no particular threat of being held responsible in any meaningful way.
However, class actions remedy this problem by aggregating the claims of all similarly situated individuals. On this large scale, the case makes financial sense. (All the more so because, as explained below, the fees and costs associated with prosecuting the action are awarded separately, rather than reducing class member awards.) Moreover, from the bank’s perspective, a class action entails the threat of an award proportional to the nine-figure scale of its ill-gotten profits and thus provides a real incentive for the bank to cease and remedy the effects of its misconduct.
These advantages of class action litigation are not limited to small-scale cases like the above illustration. Class actions just as frequently involve large purchases such as vehicles, HVAC units, shingles, flooring, and windows. While such cases involve far greater damages to each class member, they may also entail far greater litigation expenses, as the technical matters involved may require expensive expert testing and testimony. As with the ATM-fee example, class actions prevent a scenario in which a plaintiff’s recovery is effectively cancelled out by litigation expenses. In cases involving more significant and more varying individual expenditures, each class member will receive differing compensation, determined based on a formula or claims process, but these cases are no less suited to take advantage of the class action form.
How Do I Know If I Should File or Participate in a Class Action Lawsuit?
The class action lawyers from Parker Waichman LLP possess tremendous experience pursuing class actions against large corporations and institutions. You can ask their advice on whether your claim might best be pursued individually or is more suited to a class action.
Some legal actions like car accidents or consumer claims against a small business like a used car dealership would be inappropriate for a class action, even if there are numerous plaintiffs. The cases will be so different because of injuries and monetary losses and the like. Besides, the number of plaintiffs in those types of cases, even if there are several of them, will not be “so numerous” that joinder is “impracticable.”
So, if those cases are inappropriate for a class action lawsuit, are there cases which are more likely the subject of a class action suit? The short answer is yes. Here are some examples:
- financial loss from the sale of a defective consumer goods such as defective medication, or a case similar to the Takata Airbag Class Action suit
- medical devices
- securities fraud
- widespread consumer fraud
- unfair or discriminatory employment practices
- Corporate wrongdoing
- mass-tort cases like airplane crashes
Even if your claim falls within the scope of an existing class action, this does not mean you cannot pursue it individually. Any potential class member whose rights might be affected by a class action has the right to “opt out” and retain the ability to proceed individually. When a class is certified, notice is sent to all potential class members explaining the nature of the case, the issues involved, and opt-out rights and procedures. The notice requirements for a class action lawsuit are fundamental. The court will order the plaintiffs’ attorney to diligently search for and notify every person they can about the pending lawsuit.
Can the Court Refuse to Certify a Class Action?
Yes. The judge can refuse to certify the class and order that each injured party must join the lawsuit as additional named plaintiffs or must pursue relief independently. Additionally, some statutes will prevent the filing of a class action lawsuit. For instance, the Federal Arbitration Act prevented customers of a major mobile telephone service provider from filing a class action suit against it because the service contracts contained an arbitration clause according to a recent ruling from the United States Supreme Court. The federal statute “pre-empted” the individuals’ rights to file an action in court but, instead, were obligated to file for arbitration which was to the advantage of the cellular company.
How Are Class Action Suite Resolved?
In this respect, a class action is like any other case. Both sides have the right to a trial and may the right to a jury trial, depending on the nature of the claim. If there is no right to a jury trial, then a judge would decide the case. The parties always have the option to resolve the matter before trial.
Cases frequently settle before trial. Since class action lawsuits involve the rights of people who are not immediately involved in the litigation, the judge must take extra precautions to prevent those people from suffering an injustice. How much money a class member receives depends on the nature of the claim. The lawyers and the judge work out a distribution plan from settlement funds provided by the defendant. The lawyers and judge then determine whether each class member should receive an equal sum or whether some deserve more because their damages are more significant. In the latter case, each class member’s compensation will be determined based on a formula or claims process.
After the distribution plan is established, the court and lawyers then determine the costs of the litigation and the appropriate amount of attorneys’ fees. The individual plaintiffs have no responsibility to pay attorneys’ fees out of their pockets.
What is the Statute of Limitations on Consumer Fraud Cases?
Additionally, there might be relevant federal laws that come into play regarding statutes of limitations.
Remember: class action lawsuits involve complex legal issues that cannot be handled by any law firm. Do not trust your valuable rights to just any law firm.
Why Hire Parker Waichman LLP? Awards and Accolades
At Parker Waichman LLP, we have ample experience assembling and pursuing class action lawsuits. Our lawyers are dedicated to superior advocacy, and we are proud to have received honors from the legal community and beyond, including:
- 9.8 (out of a perfect 10) rated by AVVO
- “Preeminent Lawyers” AV Peer Review Rating
- Highest Ranking of “5 Dragons,” by Lawdragon
- Listing in Best Lawyers Publication
Class action lawsuits are incredibly complicated to litigate. Courts require the plaintiff to assemble the action correctly and fulfill various requirements both before and after suit is filed. Having a class action lawyer who is part of a national law firm like Parker Waichman LLP will ensure your rights are protected.
Furthermore, as noted above, one of the inquiries a court must conduct when asked to certify the class is whether the attorneys who have filed the suit have sufficient experience prosecuting class action lawsuits and have the resources needed to pursue large-scale class litigation. Parker Waichman has the extensive resources of a large national law firm, and its class action attorneys possess the skill and experience required to navigate the complex procedures involved in a class action and maximize your financial recovery.
So, if you or a collection of individuals suffer an injury under the same set of circumstances, you could be eligible to bring a class action lawsuit against the perpetrator of those wrongful actions. All it takes to commence a class action is one person willing to come forward and pursue compensation for themselves and similarly injured consumers.
Speak to One of Our Class Action Attorneys Today
Parker Waichman LLP offers complimentary consultations for potential class action cases. As discussed above, we do not get a fee unless the court approves one and it never comes out of your pocket. Contact our national plaintiff’s law firm today to find out how we can best serve you. If you were or a loved one has a class action claim or thinks they might have one, call Parker Waichman LLP today by filling out our online form or by calling 1-800-YOURLAWYER (1-800-968-7529).