What is a Class Action?

Many of the most-lucrative and well-publicized court decisions arise from class action lawsuits. In a class action suit, a representative group of plaintiffs — known as the "class representatives" — pursue a legal action on their behalf and on behalf of the class members, made up of other similarly situated parties. The claims asserted in the class action suit must arise from facts or law common to all of the class members.

The class in a class action usually refers to a group of plaintiffs, but occasionally a class action can be filed against multiple defendants, creating a defendant class action. Regardless of the nature of the suit, the variety of individual parties and rights involved in a class action can bring into play many special procedures and legal protections.

To establish a class, lawyers and judges in federal court must follow the requirements set forth in the Federal Rules of Civil Procedure. As with any lawsuit, a class action suit begins with a complaint and an answer. Before the case can proceed, however, the class must be certified by the court. To be certified, a valid class must include the original plaintiff; the class should 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.

People identified as possible class members usually 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.

If the class members do elect to stay in the action, they are bound by court decisions regarding the case, including the ultimate outcome of the case and the amount of any financial awards. If class members are not satisfied with the amount of money they are to receive from the suit, they do not have the option of filing a later, individual suit on their own.

On the other hand, class actions allow many plaintiffs to bring cases that would not be feasible to bring as individual lawsuits. For example, if an electronics manufacturer has a history of supplying an music device with faulty earphones, the total loss for each person who purchased the device may be only a few dollars. In this situation, it would likely not be financially feasible for any individual to sue the company, since lawsuits can cost many thousands of dollars. On the other hand, if 10,000 purchasers of the product banded together to file a class action claim, by sharing the cost of the litigation amongst themselves, the claim then makes financial sense.

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.

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