When Should You File a Class-Action Lawsuit?

by | Jul 19, 2021 | Product Liability | 0 comments

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Overview:

The saying “United we stand, divided we fall” suits well a class-action lawsuit. A class-action lawsuit is often filed by one or more plaintiffs on behalf of a group of people who are injured or affected by the action of the same individual or manufacturer or the industry. When numerous litigations are filed against the same defendant for the same allegations, a class-action suit is advocated.

A class-action lawsuit claiming multiple million dollars involving hundreds or thousands of plaintiffs will be worthy of the time, money, and effort of the class of plaintiffs and litigators. Sometimes, the damages claimed by each individual are smaller for individual claims to make them worthy litigations. When all these small claims are aggregated together represented by one or more plaintiffs, the clogging of litigations in the courts can be prevented.

Injuries caused by defective products, pharmaceutical drugs, hand sanitizer, medical devices, and defective auto parts, labor laws or deceptive practices by corporate negligence, or misconduct stand a chance for class action lawsuits. Even if affected by false advertising of a consumer product, inflation of prices, investment fraud, or market manipulation, you can go for a class action with other affected plaintiffs.

How Does A Class-Action Lawsuit Work?

A class should be certified by a judge before proceeding to file a class-action lawsuit. One or more members or an entity, which is representing the class must elucidate before the judge that all the class members have the same valid claims against the perpetrator.  After evaluation, the plaintiffs will be notified that the class is certified to continue with the legal proceedings.

All the plaintiffs who applied will be automatically included in the class. However, they are given the chance to opt out of the litigation, if they follow the requisite procedures. If a plaintiff thinks that his damages are larger than the rest of the class and wishes to file an individual claim against the defendant, he/ she can opt out. However, when the class wins against the defendant, the opted-out individual cannot get a part of that compensation.

In group litigations like the class actions, all the other class members will be passive as the representative is given the charge to communicate with the litigator and the class. The attorney also finds it easy as he needs to communicate the vital matters only to the lead rep. Most of the lawsuits are settled out of court. As there are numerous plaintiffs, the defendants are compelled to settle the case before going to court.

How Does It Differ From Mass Tort?

Class-action differs from mass tort mainly in how the court considers the plaintiffs. Both involve multiple plaintiffs suing one or more defendants or a company for the same type of physical or financial damages. Both include multiple smaller claims joined together to be filed as single litigation. In a mass tort, the court considers the plaintiffs not as an entity but as individuals considering each one’s injuries. Each individual is responsible for proving the liability of the defendant in causing each one’s injuries in mass tort, whereas the class action has to prove its case as a whole.

Responsibility of the Lead Plaintiff:

The rep or the lead plaintiff acts as the communication bridge between the class and the litigator/court. He or she has the right to hire a lawyer. Represents the class and communicates and consults with the lawyer about the legal proceedings throughout the process. Becomes the public face of the class related to the litigation. The lead plaintiff plays an active role in the litigation until the end of the litigation, even if it takes years to complete. The lead plaintiff can decide either to agree with the settlement amount or not. The lead plaintiff is responsible for protecting the interest of the class.

For playing an active role in the litigation, the lead plaintiff is given a larger percentage of the compensation or the settlement than the other members of the class. There are no special criteria to decide the percentage of the compensation for the lead. The judge decides the percentage considering the degree of injuries and the final settlement amount.

Pros and Cons of Class Action Lawsuit:

Pros:

  • Unity is strength: When all the affected people stand together against the corporate titans, you get a fair chance to win your litigation. As an individual claimant, you cannot fight against the well-qualified defendant attorneys.
  • Less litigation cost: As more people are involved in the class action, the attorney charges get divided among the class members. For fewer charges, you can hire an experienced and qualified attorney to fight for you and can ensure the win.  If you stand alone, you may not recover much remuneration after deducing attorney charges.
  • No clogging of multiple cases in the courts: When numerous small claim suits are joined together as a class-action, courts will be relieved of the backlogging of cases. One jury and one court are enough to handle the case.
  • Free of the worries: As the representative takes care of the legal proceedings, others need not worry about the intricate legal matters. Claimants with similar injuries are treated equally.
  • Assured recovery: When a class-action case is settled, you will be ensured of your indemnity, even if it takes eons to end. 

Cons:

  • Litigations prolonged years: As the class action lawsuits have complicated procedures, it will take ages to settle.
  • No voice in the proceedings: The individual claimants will not have any voice in the legal proceedings or the decision-making about the settlement, as the lead plaintiff is the authority.
  • Recovery not under control: The individual plaintiffs do not have any control over the compensation they are aiming at. When the reimbursement is settled, it is divided among the members of the class.
  • Coupons or rebates instead of cash: Sometimes, the claimants will receive only coupons or rebates instead of cash settlements.
  • Poor litigator, no recovery: Hiring an inexperienced attorney by the lead will affect all the members of the class and may end up with less/no compensation.
  • Cannot reapply: In case the plaintiff’s side or the class-action failed, one cannot reapply against the same contender for the same case.

Class Action Fairness Act:

Congress enacted the Class Action Fairness Act on February 18, 2005, amending Title 28 of the U.S code. Class Action Fairness Act, signed by President Bush, was enacted mainly for expanding the federal diversity jurisdiction over most of the class actions and mass actions. CAFA allowed the federal court to preside over certain class-action lawsuits in diversity jurisdiction when the aggregated compensation exceeded $5 million, the class consisted of a minimum of 100 claimants, and at least one of the class members is from a different state or country. CAFA pertains to all the class-action lawsuits filed on or after the ratification of it.

CAFA permits the district courts to deny jurisdiction when more than 1/3 of the plaintiffs, and the primary defendants, are citizens of the state in which the action was brought, using a mélange of things to guide the district court’s decision. Moreover, the district court should deny jurisdiction when more than 2/3 of the plaintiffs are citizens of the state in which the class filed the action, and at least one respondent belongs to that state. This theoretically helps CAFA in maintaining the structure of diversity in suits with plaintiffs or defendants from other states.

How to choose a dexterous lawyer?

The guidance of competent class-action lawyers can do wonders in understanding the severity of grievances of not one but all the plaintiffs.  They can make the litigation more plausible and effective to recover the maximum restitution. The lead plaintiff is responsible to win the claim suit for the sake of all the plaintiffs. Therefore, when you choose a lawyer to take your litigation forward, keep the following in mind. The class-action attorney must

  • Be well-experienced in class-action lawsuits to ensure victory in your litigation.
  • Belong to a law firm with requisite resources to analyze and administer the lawsuit.
  • Have handled and won similar cases like yours.
  • Be adept in appropriate jurisdiction to handle nationwide cases.
  • Be amicable and easily approachable to convey what you wanted.
  • Have a feasible fee structure for you to afford.

Class-action settlements:

Most of the class action claims are settled out of court. Once the defendants agree to a certain settlement, the lead plaintiffs decide whether to consent to it or not. The absent class members will be notified about the details. If the members have any objection to the proposed settlement, they can notify their objection or opt-out of the claim.

Settling a class action claim gives rise to many challenges and obligations in protecting the interests of all the plaintiffs. Once both parties agree to the settlement amount, the court should be notified about it. The judge then reviews the offer to check if the settlement is fair and requisite. Once he approves, the settlement will be divided among the class members.

Based on the active participation and the degree of damages, the lead plaintiff or plaintiffs will be given more percentage of the compensation. Then the attorney’s reasonable fee is deducted since most of them work on contingency. The remaining class-action payout will be dispensed among the other class members.

Final Thoughts:

If you are one among many who suffered or were injured by the intended action of a corporate, you can analyze the possibilities of being a part of a class action. Think well and consider the pros and cons of the class-action lawsuit before deciding to join one. When a class action lawsuit is filed for a certain issue that affected many, it will be announced or reported. To reduce the cost of filing an individual claim suit, you can look for such notices and join the same.

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