What Qualifies For A Class Action Lawsuit?
Many of us may have heard about class action lawsuits on the TV or have skimmed articles or news mentioning them over the internet.
Some of you may have even received a class action notice in the mail informing your eligibility to join a class action.
However, many people don’t know what a class action lawsuit is and what they should do next when they receive a notice informing them that they qualify for one.
Some people believe that the notice they receive is a scam, and emails containing a notice of such nature usually go directly to the spam or junk mail.
So what is a class-action lawsuit, and what qualifies as one?
Read our class action guide below to better understand what a class action lawsuit really is.
Guide to Class Actions
A class action lawsuit is a legal action that a person or a group of people files against one or more defendants.
The individuals in the group, each referred to as a class member, have all suffered the same injury caused by the defendant’s action.
These injuries may be physical or financial and may be caused by a range of actions such as defective products or deceptive practices.
Class actions are meant to right the wrong done by the defendant or defendants that affected a group of people.
A lawsuit is brought against them to hold them accountable for their actions and responsible for the harm and injury they have caused.
What Is The Criteria To Certify A Class Action Lawsuit?
For a lawsuit to be considered as a class action, they have to be certified by a judge. It should meet the criteria to certify a “Class,” which includes:
- numerosity, which means the individuals in the class must be so many that every consumer standing as a single plaintiff will be impractical;
- commonality, which means that the lead plaintiff must bring questions of law or fact common among the class members;
- typicality, referring to the claims and defenses of the lead plaintiff to be so typical to members of the class; and
- the adequacy of representation, referring to the lead plaintiff’s ability to fairly and adequately represent and protect the interests of the class of plaintiffs.
How Do Class Action Lawsuits Work?
The first step to file a class action lawsuit is for the law firm to determine whether the class action can be filed.
The attorneys assigned to the case will evaluate the complaint and find out whether it satisfies the following list:
- the number of people that are injured in the same way
- the existence of similar lawsuits with similar allegations
- the complainant’s ability to comply with the time limit for filing suits under the applicable statute of limitations
- the lawsuit’s success rate based on previous rulings and judicial opinions of lawsuits with similar claims
- the defendant’s capacity to be sued (i.e., not shielded from liability because of a bankruptcy filing)
- the need for a class-action lawsuit to be filed versus a regular lawsuit
When these are met, the attorneys then draft a complaint and files it in court.
The complaint describes the facts of the case and the damages that are sought.
It should also include the proposed “Class” of individuals who may have been affected and covered by the lawsuit. This can either be nationwide or state-wide.
The next step that logically follows is to certify the class. It goes under a class certification process where the court considers and determines whether the putative class action satisfies all the requirements in certifying a class (refer to the criteria to certify a class action lawsuit above).
When the action class has been certified, the lawsuit goes into the discovery process.
This is the investigatory phase where the law firm and the attorneys who work for the class will request documents from the defendants to investigate and prove the class allegations.
The law attorneys will also conduct depositions of individuals who have knowledge of the circumstances surrounding the complaint in the lawsuit.
When the law firm has all the documents and pieces of evidence they need, the suit then either goes to trial or is settled.
When an agreement is reached to a settlement, the defendant establishes a fund to compensate the class.
The court reviews the settlement to determine if the compensation is fair and adequate to the class members. The court must then issue an order approving it to make it final.
If the lawsuit progresses to trial, there is still a possibility to settle it even during the trial. If it does not settle, the jury then determines the final resolution.
After resolution, the attorneys will then issue a notice to the class members informing them of the settlement or judgment.
They will also be informed of their right to opt-out and exclude themselves from the case.
When members who are part of the class decide to opt-out, they can still file their individual cases for the same complaint and seek legal remedy outside of the class action settlement.
The choice to opt-out does not strip class members of their right to file independent cases.
The notice sent to the class action members will explain the case’s facts and the group of individuals who qualify to claim part of the settlement.
Some lawsuits send a notice after class certification and then again after the resolution of the case.
Failure by some members, who are part of the class, to claim their compensation at the set deadline will have the remaining fund either returned to the defendant, distributed among the rest of the entire group of the class, or donated to a charity or organization with a mission that aligns with the purpose of the case.
What Is The Difference Between A Class Action Lawsuit And A Regular Lawsuit?
Typically, a lawsuit involves an individual or a group of individuals acting as plaintiffs and filing a claim against a defendant or defendants.
The defendant then responds to the plaintiff’s complaint. The litigation may either proceed to a trial or reach a settlement to bring the litigation to an end.
Whereas a class action lawsuit is when multiple such lawsuits are judged together as one.
Regular Lawsuits VS Class Action Lawsuits
In a regular lawsuit, the plaintiff is usually an individual plaintiff filing a case against a defendant.
The nature of the case is more personal, and the defendant’s actions that are being complained about in the lawsuit do not affect other people.
When the lawsuit ends, full compensation is awarded directly to the plaintiff.
This is different from class actions in which a large number of people, called a “Class,” suffer similar injuries or financial losses brought about by the action of the same entity, usually a company, thereby prompting the filing of the class action.
This type of lawsuit is generally filed by a single individual or a group of people on behalf of all others who have been wronged in the same way.
The cases are combined into one, giving the lawsuit more weight than when it was filed individually.
Class action lawsuits are launched mostly over defective products, deceptive practices, labor laws, neglectful care, and other similar cases that may have affected consumers or employees in the same manner.
When the lawsuits come to an end, a judge determines how compensation will be awarded, and other terms that can be granted to ensure fair compensation is given among the class members.
What Is A Settlement?
A settlement is an agreement voluntarily entered into by the plaintiff and the defendants to end litigation without determination of liability.
This seeks approval from a judge and is usually settled through a monetary award.
Some settlements may include other terms such as future policy changes or a review of the defendants’ practices by a third party agency.
If no settlement has been agreed on, the lawsuit proceeds to trial and falls under the court’s judgment to reach a fair decision and accordingly award damages.
What Is An Example Of A Class Action Lawsuit?
An example of a class-action lawsuit, and one that is fairly common, is consumer fraud.
Consumer fraud class action lawsuits give legal remedies to consumers who felt deceived and deprived of their rights for monetary gain.
It involves a wide range of complaints about fraudulent practices by a company or a business and includes:
- Defective products
- False or misleading advertising
- Violations of consumer protection laws
Case In Point
One example of a consumer fraud class action is the Chapstick Natural Claims Class Action Lawsuit, which you can find under the name Moore et al v. GlaxoSmithKline Consumer Healthcare Holdings (US) LLC and Pfizer Inc., Case No. 20-cv-9077, ND. CA.
In this suit, GlaxoSmithKline Consumer Healthcare Holdings and Pfizer, the makers of Chapstick, were accused of allegedly advertising Chapstick products, falsely claiming that it is a natural product.
Consumers assert that the products, in fact, contain synthetic, artificial, and highly-processed ingredients.
According to the complaint, the companies deceived consumers and gained an unfair advantage over their lawfully acting competitors for falsely and misleadingly labeling their Chapstick products with claims of “100% Natural,” “Natural,” “Naturally Sourced Ingredients,” and/or “100% Naturally Sourced Ingredients.”
The Federal Trade Commission (FTC) has warned marketers and companies about using such terms.
GlaxoSmithKline Consumer Healthcare Holdings and Pfizer have been accused of a breach of express warranty, unjust enrichment, and unjust, fraudulent, and unlawful conduct violating the Unfair Competition Law (UCL) and the False Advertising Law of the California Business and Professions Code, and the Consumers Legal Remedies Act of the California Civil Code.
If we break this down, we see that the lawsuit has a plaintiff that represents a large number of individuals who have been or may have been similarly deceived out of their money from the purchase of the Chapstick product by the company, who is the defendant in this case.
What Are The Types of Class Action Lawsuits?
Class action lawsuits are categorized as:
- Consumer fraud
- Employment class actions
- Securities fraud
- Environmental disasters
- Antitrust complaints
- Privacy and consumer rights, and
- Violations of the Americans With Disabilities Act
- Violations of Federal Rules and Laws
Who Can Be Sued in A Class Action Lawsuit?
A class-action lawsuit can be filed against:
- Consumer good and appliance manufacturers
- Debt collection agencies, including banks and mortgage companies
- Employers that discriminate against employees with fair wage and hour law
- Food companies falsely and deceivingly advertising their products
- Insurance companies
- Car manufacturers
- Companies selling construction products
Government agencies can also be sued for injuries related to their employees’ negligent and wrongful acts; federal government-owned and -operated equipment and machinery that are found to be defective; and federal government-owned and -maintained properties that have been neglected and may cause harm to the public.
The Federal Tort Claims Act requires that a law firm on behalf of the lead plaintiff in class actions must first submit a written claim to the federal agency complained of in the planned class action before cases can be filed and legal claims sought.
The attorneys must inform the federal agency of the intent to sue and the amount of compensation sought.
An investigation of the allegations will be then launched by the same federal agency.
A written notice is then sent to inform the complainant if compensation will be offered or not.
Why Are Class Actions Important?
Class action suits are legal remedies that help the public pursue justice efficiently as it allows the resolution of large numbers of claims all at once.
In a lot of cases, only one judge is presiding. Combining the cases together makes the litigation process smoother and faster for all the involved parties.
These types of lawsuits also offer uniformity when it comes to decisions and settlement. Defendants get a sense of certainty as they often are left with only one decision to make.
Another benefit is that compensation becomes easier to distribute, saving time and effort for the parties involved.
Class members are paid equally and in proportion to their injuries. Class action suits mitigate the potential risk of defendants being able to compensate earlier complainants but not being able to do so with those who will be filing their own suits later.
Litigation costs for class members are also lower because it will be divided among them; they also get a chance to be compensated for a claim that may have been impractical to file individually as the costs would outweigh the compensation they can receive.
Therefore, class actions are important because it makes filing a lawsuit and receiving damages faster and smoother, which would otherwise have been difficult and longer to process should individual cases have been filed.
Editor’s Note on the Topic of Class Action Lawsuits:
This guide is created to inform you of what class action lawsuits are and how they function.
If you have questions regarding this and feel like you have an eligible complaint to file a lawsuit that you need help with, please tell us about it and send us a message! We would be glad to help!