What You Didn't about Class Actions
- Author: Mary Singleton
- Posted: 2025-01-30
Class actions are one of the most powerful tools in the legal arsenal. When a company or organization commits widespread wrongdoing, a class action can provide a way for victims to seek justice and compensation that they might not otherwise be able to obtain. Class actions are also controversial, and defendants often go to great lengths to defeat them. If you're considering joining or bringing a class action, it's crucial to understand how they work and the risks involved.
Definition
A class action is a lawsuit in which a large group of people (the "class") sues another person or organization (the "defendant") over common claims. Class actions are a type of "aggregate litigation," which allows many plaintiffs with similar injuries to join together and pursue their claims as a group.
There are two types of class actions: "opt-in" and "opt-out." In an opt-in class action, only those plaintiffs who specifically choose to join the lawsuit are bound by its outcome. In an opt-out class action, everyone who fits within the defined class is automatically included unless they take steps to remove themselves from the lawsuit. Class actions proceed in federal court, but plaintiffs can file in state court.
Benefits
1. Class actions level the playing field between plaintiffs and defendants. When a company or individual wrongs a large group of people, class actions allow the group to pool their resources and take on the deep-pocketed defendant together. It would be nearly impossible for any one person to do it alone.
2. Class actions also provide a system for seeking relief when many people have been wronged. However, no single person's damages are large enough to justify the cost of bringing a separate lawsuit.
3. Class actions also promote fairness by preventing individual defendants from "picking off" the plaintiffs with the largest claims and leaving everyone else without a remedy.
Cases that become Class actions
Defective Products
If a defective product has injured you, you may be able to join forces with other people also harmed to take legal action. Many customers have sued companies for injuries caused by products like automobiles, pharmaceuticals, and medical devices.
Investment Disputes
Shareholders who have lost money because of corporate fraud or mismanagement can band together and bring a class action lawsuit to recover their losses. Many investment companies offer raw deals to investors, and class action lawsuits provide a way for investors to get compensated for the wrongs they have suffered. For example, in recent years, many class action lawsuits have happened against new investment firms that lure customers in with promises of high returns. The plaintiffs lost money in fraudulent or mismanaged investments.
Bank Fraud and misconduct
Customers who have been victims of bank fraud or misconduct may be able to take legal action by joining or starting a class action. In most cases, victims of bank fraud or misconduct are entitled to compensation for damages suffered as a direct result of the bank's activities. For example, if an error in your bank's computer system led to unauthorized withdrawals from your account.
As a result, you incurred overdraft fees and other charges. You would likely be entitled to compensation for those damages. In addition, ATM failures or outages can lead to class action lawsuits. If you were unable to access your money because of an ATM outage, you might be able to join a class action and receive compensation for damages suffered, such as late fees or other charges.
A work-related matter
When something wrong happens at work, it can feel like you're all alone. Sometimes, other people have experienced the same thing. When that happens, you may be able to join them and file a class action lawsuit. For example, illegal retrenchment, unfair labor practices, and discrimination are all class actionable.
The procedure of filing a class action
If you want to file a class action, the first step is to find out if anyone else has already filed a similar case. You can do this by searching online or contacting a lawyer. If someone has already filed a case, you may be able to join that case.
If there is no existing case, you must file your own. Filing a class action is similar to filing any other lawsuit. You will need to draft a complaint, a document that outlines your legal claim. You will also need to find plaintiffs willing to join your case.
Once you have filed your complaint and found plaintiffs, the next step is to serve the defendants with the complaint. The defendants then have the opportunity to file a response.
After the defendants have filed their response, the court will decide whether to certify the case as a class action. If the court certifies the case, it will allow the case to proceed as a class action.
If you consider joining a class action, ensure you understand the risks involved. Class actions can be time-consuming and expensive, and there is no guarantee that you will receive any money damages even if the case is successful. Before joining a class action, speak with an attorney to discuss your case and consider whether you need to join a class action.
