Class Actions FAQs

What Is a Class Action?

A class action is where a number of people who have the same legal complaint bring a lawsuit as a group, called the "class". The basic requirement is that there be "similarly situated" individuals with common factual and legal concerns. Class actions are most valuable in areas where it would not make sense or be economically feasible to pursue numerous, small, individual claims. Consumer fraud claims are an excellent example of a situation where, if cases are not brought on class-wide bases, they probably would not be brought at all. In that situation, a company would wrongfully be able to keep its profits from its actions in having fleeced consumers.

What Are the Benefits of Class Actions?

A class action puts the class in a much stronger position to litigate against the defendants. Because the class is, by definition, numerous, the defendants' potential liability is much greater than it would be if the class representative were only suing on his or her own behalf. As a result, defendants must take the litigation much more seriously than if they were being sued by an individual person.

Who May Bring a Class Action?

A class action can be brought by anyone who has individual standing (that is, has been harmed or injured by a particular person or entity in violation of a law or laws) and, in general, who has claims that are typical of other class members, has no conflicts of interest with other class members, and has retained competent, experienced counsel. The class representative must be knowledgeable about the lawsuit, available to consult with his or her attorneys regarding the status of the case, and be available to execute affidavits and appear at deposition or trial, if required.

What Types of Claims Are Brought in Consumer Fraud Class Actions?

Consumer fraud class actions generally fall into several categories. Many allege that merchandise, services or products are not performing the way they were represented or advertised to perform (because of false advertising, product defects, or other reasons). Class actions also often involve situations in which consumers are being overcharged or improperly charged for goods or services. Another fertile ground for class actions are situations in which companies form contracts (such as, for example, insurance contracts, mortgages, or loan agreements) in ways that disadvantage consumers.

Most states have laws prohibiting unfair or deceptive trade practices and false advertising; class actions often allege violations of these statutes. Class actions often also allege breach of contract, negligence, and fraud, and other causes of action.

However, just being unsatisfied with something you have bought may not be a sufficient basis for a class action. The defendant's conduct is the key. In class actions alleging that merchandise, services or products are not performing the way they were represented or advertised to perform, it is generally necessary that there be a deception on the part of the defendant in order to recover in a consumer fraud class action. In some instances, it is possible to recover for innocent, as well as willful, misrepresentations or false statements. It is important to remember that an omission of a material fact can be as misleading as a false statement, and can form the basis for a class action.

In What Other Areas Are Class Actions Common?

Class action lawsuits are potentially available in all areas of law.

How Do I Bring a Consumer Fraud Class Action?

Contact a lawyer with experience handling consumer fraud class actions.

What Does it Cost to Bring a Class Action?

If you bring a class action and are represented by an attorney, usually you will not have to pay any attorneys' fees or costs, as these are ordinarily advanced by the law firm.

How Long Does it Take for a Class Action to Be Resolved?

It varies. Some cases settle shortly after the action is brought, and some cases may be litigated for years and eventually go to trial.

Should I Bother to Start a Class Action If I Know That an Action Has Already Been Commenced?

If you have suffered meaningful losses, you should exercise your right to choose the best available lawyers to pursue the claims of the class. Selecting experienced counsel insures that your claims will be pursued diligently.

What is a Lead Plaintiff in a Class Action?

A "Lead Plaintiff" is a term generally used in connection with a securities fraud class action. The law governing securities fraud class actions is the Private Securities Litigation Reform Act of 1995. The Lead Plaintiff is a representative person(s) or entity appointed by the court to stand in for and act on behalf of the other class members in the litigation. The Lead Plaintiff is involved in determining the course and direction of the litigation and works with court appointed "lead counsel." To appoint a Lead Plaintiff, a court must determine whether the proposed Lead Plaintiff's claims are similar to those of other class members, and whether this plaintiff will properly represent the interests of the entire class. Sometimes there can be more than one class member who serves as Lead Plaintiff.

How Does the Court Determine Who Will Serve as Lead Plaintiff?

The most adequate Lead Plaintiff is the person or group of persons who, in the determination of the court, has the "largest financial interest" in the relief sought by the class. The determination of the largest financial interest can be made using the dollar amount of the loss due to the securities law violations alleged or the percentage of net worth lost.

strong>I Am One Person with a Small Claim. What Should I Do?

The class action is designed for people with individual claims that evolve from a common practice. In a securities class action, your rights are most likely protected by those with more significant losses who have already filed a securities class action or are acting as Lead Plaintiff. The same holds true in consumer fraud or other types of class actions. In most cases, you do not need to do anything if you would like to remain a class member.

Are All Class Members Forced to Participate in the Class Action?

Generally not. In most consumer and investor class actions, after the court certifies the case as a class action, members of the defined class are given an opportunity to "opt out" and pursue individual class actions against the defendant, if they so prefer. If, however, class members choose not to opt out, they are generally bound to the results of the case and automatically share in any recovery obtained for the class.

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