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A class action lawsuit allows a single plaintiff to represent many who have suffered the same wrong. The legal device can save time and money in cases with common questions of law and fact.
How Class Actions Work
A class action lawsuit allows harmed individuals to pool their resources and file a single claim against a large company, giving them strength in numbers. It also lowers the cost of legal claims, allowing more people to get justice than they would otherwise be able to pursue on their own.
Class actions are typically brought by victims who suffered damages too small to justify pursuing individual claims. For instance, if a bank wrongly charged millions of consumers fifty million each for unjust fees, it would not be worth the time and expense for individual clients to fight these cases individually. However, one can take on this injustice by holding the bank accountable.
Throughout the litigation process, attorneys work to prove their case by requesting documents from defendants and conducting depositions of individuals who have information about the events that led to the class action lawsuit. This is known as the discovery phase of the case. For example, in class action, plaintiffs’ lawyers requested design and engineering documents from the manufacturer to show that the dryer was not designed properly and that the defects resulted from this.
Once the court certifies the class action, it must then notify anyone who is a part of the group. This is done through mail, email, and even text messages and includes instructions on opting out if an individual wants to pursue a claim independently. Once the class action is settled, members receive their monetary compensation.
Class Action Settlements
In class action settlements, the plaintiffs receive a portion of the total monetary award. This money is usually distributed to the class members as a coupon that can be used for future services or products offered by the defendant company.
Some people might not receive much in a class action settlement—perhaps five dollars in the case of Facebook, ten dollars in other cases—but aggregated together, the value increases dramatically. Class actions are an under-appreciated tool for consumer protection.
The aggregation process for class action investigations can be long and complex. Defendants often argue that the criteria for a class action lawsuit haven’t been met or that the claims would be more efficiently resolved individually.
Many people don’t bring individual lawsuits against companies over minor damages because the cost and time involved don’t make sense. But when the cracks of millions of individuals are consolidated into one lawsuit, the cost and time to bring such a case becomes more manageable for class action lawyers and the courts. Ultimately, the court will only approve the settlement if it is fair, adequate, and reasonable. According to experts, the court also evaluates whether the intended distribution plan aligns with the attorneys’ interests and those of the class members.
Class Action Lawsuits
When a company suffers from a crisis that affects a large group of people similarly, those affected can come together and file class-action lawsuits. These lawsuits allow one attorney to represent multiple individuals in a lawsuit against the same defendant. The cases are often consolidated into a single trial, which can be less costly for plaintiffs than bringing individual lawsuits against the same defendant.
Class actions can also level the playing field for victims against large corporations. It is difficult for a small law firm to defend a single claim against a large corporation financially. However, a law firm brings multiple lawsuits against the same defendant in a class action, making it easier for the court to compensate each victim.
Ultimately, the most crucial purpose of class actions is that they can help to deter future wrongdoing. A corporate defendant will think twice about engaging in mischief if they know that the cost of doing so will spread to thousands, millions, or billions of people.
The other key reason for class actions is to compensate injured victims. Victims can receive monetary compensation depending on the case to cover their financial losses, medical expenses, and other costs. Those who don’t want to participate in the settlement are usually allowed to opt out, though the details should be clearly outlined in the notices sent out to all potential class members.
Class Action Attorneys
While class actions get a bad rap for splitting results among all participants, they help people secure justice that might otherwise have been impossible. For example, suppose an injured person cannot bring a personal injury case against the party responsible for their injuries. In that case, they may be able to join a class action and be represented by attorneys who have expertise in those cases.
In addition, class actions allow groups of plaintiffs to take on companies for small wrongs that wouldn’t be worth the effort for individual lawsuits. For example, it would not make financial sense for an attorney to represent millions of clients who bought a misrepresented product. But a group lawsuit against a company that charged illegal consumer fees could yield compensation that covers the cost of hiring lawyers for each of those millions of clients.
Another significant benefit of a class action is that attorneys do not require class members to pay upfront legal fees. This is because class action attorneys are paid on a contingency basis, meaning they collect a percentage of any verdict or settlement payouts made to the plaintiffs.
Aside from class actions, other types of litigation can be filed against a corporation for corporate wrongdoings. These include securities fraud claims, employment discrimination cases, and other civil rights claims.