What is a Class Action?

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WHAT IS A CLASS ACTION?

A class action is a lawsuit brought by one person, known as the "representative plaintiff", on behalf of not just himself or herself, but also on behalf of many other people who are in the same situation.

WHAT TYPE OF CASES ARE APPROPRIATE FOR A CLASS ACTION?

Some examples of cases that can be appropriate for a class action are:

• If you are an investor who was misled by a false statement issued by the company you invested in
• If someone you bought a product or service from committed a consumer fraud or an unfair business practice
• If you bought a product that is defective or dangerous

Class actions often are most appropriate in a case where each person’s individual loss is relatively small. Such a relatively small loss would not justify expensive separate lawsuits by each person who has been harmed. As a result, the wrongdoer might get away with its unlawful conduct. A class action, however, puts together in a single case thousands or even millions of people who have suffered the same loss. With a larger potential recovery, it becomes economically worthwhile to pursue the case.

WHY ARE CLASS ACTIONS A GOOD THING?

Courts have recognized that class actions are very socially worthwhile. They allow people who have been harmed to band together to fight for their rights against large corporations who, otherwise, could easily defeat a single individual. Courts sometimes refer to persons who bring a class action as “private attorneys general.” That is because class actions supplement the efforts of overworked and understaffed government agencies, which cannot pursue every wrongdoer.

HOW DOES A CLASS ACTION WORK?

The representative plaintiff and his or her attorneys must persuade the court that the case is appropriate to be treated as a class action. They must also show that the representative plaintiff and the attorneys are adequate representatives of the class. Once that happens, a notice is sent to members of the class. Normally, class members who do not want to be part of the case are given the right to exclude themselves from it. The case then proceeds on behalf of everyone in the class.

HOW DO CLASS MEMBERS LEARN ABOUT THE RESULT OF A CASE?

If there is a settlement or a verdict in the case, class members are notified about the result. That notice also explains how class members can take advantage of the benefits of the settlement or judgment. No settlement can be agreed to without the approval of the court.

WHO PAYS THE LAWYERS?

An important feature of class actions is that neither the representative plaintiff nor any class member has to pay their attorneys anything. Class action attorneys such as LDGR handle class action cases on a purely contingent basis. That means they will be paid a fee only if they are successful in the case. The court decides how much of a fee the attorneys have earned. The court also decides how the fee is to be paid. Most often, the defendant pays it, in addition to the benefits that the defendant pays to the class, or the attorneys get a share of what they recover for the class.