How To Start A Class Action Lawsuit – For Beginners
What Qualifies For A Class Action Lawsuit?
Class action lawsuits are legal remedies brought on behalf of individuals or entities who have suffered injuries of a physical or financial nature from defendants who are usually companies or business entities.
When there are too many plaintiffs in a civil lawsuit than what is practicable, this usually becomes a class action suit.
A class-action lawsuit begins with the filing of a complaint, but it is yet to be determined whether a case will be filed as a standard personal injury lawsuit or a class-action lawsuit.
Criteria to Certify A “Class”
There are certain requirements or “criteria” that have to be fulfilled before a case can be qualified as a class action.
The requirements have to be certified by a judge based on the following criteria that certify a “Class”:
- the individuals in the class must be so many that it will be impractical for every consumer filing a case with similar claims to stand as a single plaintiff (numerosity);
- the lead plaintiff must bring questions of law or fact common among the class members (commonality);
- the claims and defenses of the lead plaintiff must be so typical to the members of the class (typicality); and
- The lead plaintiff’s ability must be fairly and adequately representative and protective of the interests of the class of plaintiffs (adequacy of representation).
When the judge determines that the complaint satisfies class actions’ criteria, the case then proceeds as a class-action lawsuit. If the judge does not certify the case, the lawsuit ends.
When one person has a valid complaint and decides to file a case in court, this starts a lawsuit. Legal grounds have to be stated in the complaint about a lawsuit to be filed.
The law firm that the complainant asks help from assigns an attorney or attorneys to the case.
If these attorneys find enough evidence to consider the case as a class action, they must then request the court to certify the plaintiffs as a “class.”
Plaintiffs In A Class Action
One person is enough to start a class action, but it can also be filed by a small group of people.
When the plaintiffs are certified as a class, the case is filed on behalf of all those who suffered the same injury or financial harm as asserted in the complaint.
Generally, when complaints are filed by several dozens of people, it becomes appropriate to file the case as a class action.
But the final decision falls on the judge, with consideration of the requirements for class certification.
The judge reviews the complaint to see if they meet the criteria and then determines whether the case can move forward or not.
Consultation With A Lawyer
Individuals who want to file a suit must first consult with lawyers, online, in person, or on the phone. Several law firms offer free consultations that any person can take advantage of.
During consultations, attorneys ask about the case details and may request supporting documentation, should there be any reason for attorneys to believe that a lawsuit can be filed.
Consumer fraud cases, for example, require photos of the fraudulent activity, such as proof of misleading representation or of the damaged items that may have posed a risk to the complainant.
Supporting documentation is also required for evidence, which may include proof of purchases or receipts of repairs or services.
Attorneys will ensure that the case has a valid claim, else it will be considered by the courts as a frivolous lawsuit and dismissed immediately.
Research then is part of the attorneys’ job and may include investigations into cases with similar allegations, understanding of the federal and state laws that were broken, if any, and the number of people that have been harmed similarly as their client or clients.
The Document That Starts It All
A class action complaint is a legal document that can start a class action.
When the factual and legal issues have been reviewed and investigated upon by the attorneys assigned to the case, they then determine whether a lawsuit can be filed.
When it is determined that the case can be filed as a class-action lawsuit, the attorneys will then draft a class action complaint describing the details and circumstances that led to the injury or financial harm that the plaintiffs suffered.
Compensation sought to be recovered by the lead plaintiff, or the person filing the lawsuit, and the individuals similarly suffering the same type of damage or harm is also stated in the complaint.
When a lawsuit seeks compensation for a case complaining of an employer who fails to pay employees for overtime pay, the lawsuit may represent other employees who also did not receive overtime pay from the same company.
Who Gets The Most Money In A Class Action Lawsuit?
Lead Plaintiffs In Class Actions
Lead plaintiffs in class action lawsuits are usually either the individual who initially filed the case or who the court deems as most representative of the class after several individual interviews.
They have to be capable enough to represent every class member’s interests and handle everything else that the role entails.
The lead plaintiff’s name is the one that will appear on the complaint.
A lead plaintiff is also known as the “Class Representative” and works closely with the attorneys and witnesses.
As the class representative, they are expected to be hands-on throughout the lawsuit’s lifetime and usually the ones who participate in the discovery process, attend the hearings, submit depositions and provide pieces of evidence to the case.
They make decisions on how to proceed with the case.
The most important role that the lead plaintiff plays is accepting or rejecting settlement offers and weighing the best interest of the class in the lawsuit.
How Much Do Lead Plaintiffs Get In A Class Action?
Considering the time and effort that a lead plaintiff or class representative gives during the case, it would seem just fair that they get a larger share of the settlement compensation when the class action is won.
However, no rule or law guarantees that the lead plaintiff can get more of the share in the settlement fund granted when the class action lawsuit reaches a settlement.
In most cases, however, lead plaintiffs are granted an additional portion of the settlement based on certain factors, which includes:
- injury suffered
- level of involvement in the litigation, and
- the size of the recovery or compensation for the entire class
Since the court has to approve all settlements, additional amounts are often added by the court to cover legal costs and may sometimes include an “incentive award” that is given to the lead plaintiff.
This acts as compensation for filing the class action lawsuit and participating actively in the case.
Courts have full discretion on how a settlement is divided and often consider the factors mentioned above when deciding how to divide a settlement.
There are instances where there is no extra money for incentive awards, but some of the largest awards given to leads in a class-action lawsuit have reached nearly $100,000.
How Much Money Do You Get In A Class Action Lawsuit?
Class Members And Their Responsibilities
A class-action lawsuit involves a large number of people, some hundreds or thousands, whose legal rights are being affected by the allegations and circumstances surrounding the lawsuit.
They do not have to be specifically identified by name to be part of the class-action lawsuit. All that is needed is for them to be identifiable.
There has to be sufficient determination and definition of what constitutes a class member in the class-action lawsuit to make it easier for the court to determine whether an individual can be qualified as a class member and included in the class-action lawsuit.
Class members generally have no obligations in the class action lawsuit. Upon resolution of the lawsuit in favor of the plaintiff class, class members receive a notice and a claim form that instructs class members how to claim and receive a share of the settlement fund.
The only action that the class members can do with regards to the class action lawsuit is to opt-out of the lawsuit if they do not want to be included in the class-action lawsuit settlement.
How Money Is Divided Among Class Members In A Class Action Lawsuit
Before determining how money is divided in a class-action lawsuit, a fairness hearing is set by the court to ensure that class members agree with everything in the settlement and in how the fund will be divided.
Class members must notify the court of any objections to the proposed settlement at the fairness hearing.
According to the laws that regulate class action lawsuits, settlement cannot be approved by the presiding judge until there is an assurance of fair treatment given to each plaintiff.
After the judge determines that there is fair and adequate compensation in the class-action lawsuit settlement, the lead is awarded their percentage.
The lawyers or attorneys working on the class-action lawsuit will then receive their compensation for their legal fees and other related costs, usually restricted to a reasonable amount by the court.
The rest of the settlement fund will then be divided among the class members.
How Much Money Class Members Get In A Class Action Lawsuit
One of the benefits of joining a class-action lawsuit is that every class member wins something. If a payout is awarded by the court, every class member receives a share.
If the lawsuit was filed individually, there is a big possibility that the company would file for bankruptcy protection before all plaintiffs filing a lawsuit receives compensation.
However, compensation depends on the settlement that was reached and agreed upon by the plaintiffs and the defendant.
After legal fees, expenses, and other related costs have been deducted, what remains will be divided among the class members.
And even then, the payout amount will depend on how many class members are left after others have opted out or chose to be excluded from the settlement.
Because settlements usually don’t amount to much when divided among class members, it is often advised that members opt-out and not participate in the class if they suffered serious injuries or major financial damages.
The compensation would not be reasonable enough nor sufficient to cover the costs of the injuries or damages that they received or experienced.
Reasons For Smaller Payouts
Winning a class action lawsuit depends on a number of factors, and even then, the amount of the payout would depend on quite a few reasons. These include:
- The severity of injuries. A class-action lawsuit allows plaintiffs to seek damages for minor injuries that would usually not warrant a lawsuit on its own. Because of the nature of the case, they usually award smaller payouts.
- Cost of litigation. Personal injury law firms mostly operate on a contingency basis, which means the law firm usually bears the cost until a settlement has been reached. This means that class action lawsuits can be very expensive, especially when going up against big companies and entities that have the capacity to throw money into their defense.
- Legal Roadblocks. Unsolved issues can also affect the settlement amount.
Editor’s Note on How To Start A Class Action Lawsuit:
This article is created to inform you on how to start a class-action lawsuit.
If you have questions regarding this and feel like you have an eligible complaint to file a class-action lawsuit that you need help with, please tell us about it and send us a message! We would be glad to help!