Class Actions

Many of the most-lucrative and well-publicized court decisions arise from class action lawsuits. A class action involves a representative plaintiff or group of plaintiffs (called the class representatives) pursuing a legal action on their own behalf as well as on behalf of other similarly situated parties (the class members). The claims asserted must arise from facts or law common to the class members. In most cases, the class is a group of plaintiffs, but occasionally a class action can be filed against multiple defendants, creating a defendant class action. Because so many different individual parties and rights are involved, class actions require many legal protections and special procedures.

In federal court, lawyers and judges must follow the Federal Rules of Civil Procedure to establish a class. A class action starts like other lawsuits with a complaint and an answer; however, before the case can proceed further, the court must certify the class. A valid class includes the original plaintiff and can be defined by shared circumstances that make a joint resolution of any issues possible. By certifying the class, the court allows the case to continue as a class action, rather than as a suit by only the original plaintiff or plaintiffs.

In most instances, individuals identified as possible class members receive notification of the action and an opportunity to opt out of the certified group. If a potential class member does not actively exclude himself or herself, he or she becomes part of the class. By opting out, the individual preserves his or her own rights to bring a lawsuit against the defendant. Any result in the class action does not change his or her rights. The representative plaintiff and counsel need not provide this notice in class actions for injunctive or declaratory relief (seeking an order that a party behave in a certain way or explicating certain rights), rather than actions for financial compensation.

If the class members stay in the action, they are bound by court decisions regarding the case, including the amount of any financial awards. The advantage to staying in the group may be that an individual claim would not be worth suing over, but the conglomerated claims of the class may have considerable leverage.

Example: If a manufacturing plant's emissions cause discoloration of Len's car, he is unlikely to sue the manufacturer. The cost of litigation compared to the cost of repainting his car effectively prohibits him from proceeding. If the same damage happens to 5,000 cars in the area, the cost of litigation for the class is more reasonable when weighed against the total damage.

If a potential individual plaintiff suffers substantial damage or has a serious legal claim, a lawyer can help determine whether an individual lawsuit should be pursued. Since class actions start with individual plaintiffs, such a case could grow into a class action if others share the same types of damages or claims.

Where money damages are awarded, the class's lawyers receive a portion of the recovery they helped to create. For class actions that don't seek monetary relief, the original plaintiffs usually pay attorneys' fees, although losing defendants may pay these charges in some instances. Courts must review and approve attorney fee awards in class actions. Typically, if a class action results in a financial award, the attorneys receive a portion of the total recovery, eliminating payment of out-of-pocket expenses by the class members.

Worksheet: Calculating Plaintiff's Damages

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Calculating Plaintiff's Damages

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