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An Overview Of Class Action Lawsuits

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Class Action LawsuitWe often hear about “class action” lawsuits, however , the particulars of this type of lawsuit are sometimes misunderstood.  You may have even received mail saying you have been identified as a potential member of a class who is eligible to join in the lawsuit.

Class actions occur where many people have been harmed by a particular product, action or policy of a company.

How Do They Begin?

Generally one person, or a small group of people, files a lawsuit on behalf of a proposed class of people.  Then they investigate to determine if others have been harmed in the same manner.  If the investigation shows there are others with similar claims, they will request that the court “certify” the lawsuit as a class action.

Requirements

Class action lawsuits are appropriate when a large group of people have been harmed by a singular policy, event or product.  There are a number of requirements that must be met before a lawsuit can be certified a class action.

Commonality – there must be common legal or factual issues (the same product or same event)

Adequacy  – the representative parties must adequately protect the interests of all members of the class

Numerosity – the number of plaintiffs in the class must be so large as to make individual lawsuits impractical

Typicality – claims or defenses must be typical of the plaintiffs or defendants

Analyzing whether these factors exist can be tricky, which is why you need knowledgeable class action attorneys.  Without these factors, there is not a viable class action, and precious time may have been wasted.

What Type of Claims?

There have been many types of claims used as the basis for class actions.  Among the more common:

  • Consumers who purchased a defective product
  • Employees harmed by a pattern and practice of discrimination (racial, gender, age)
  • Those prescribed dangerous drugs
  • Consumers and merchants who were victims of price-fixing schemes
  • Victims of stock fraud
  • Those affected by toxic spills or dangerous waste disposal
  • False advertising claims
  • Transportation accidents

Notable Class Actions Lawsuits  

There have been class actions brought for many types of products, such as dryers that catch on fire due to faulty lint traps, or drugs that claim to do something they do not do.  Banks which issue credit cards have been defendants in class actions for charging late fees inappropriately, or charging too much interest.  Airlines have been sued for price-fixing schemes or overcharging on particular routes.  Insurance companies have been defendants for denying claims for damages of natural disasters like Hurricane Katrina or Sandy.

A recent class action was brought by purchasers of the energy drink Red Bull, who sought relief alleging that Red Bull’s marketing and labeling misrepresents both the functionality and safety of Red Bull beverages. Plaintiffs made claims against Red Bull for breach of express warranty, unjust enrichment, and violations of various states’ consumer protection statutes.  Surprisingly, Red Bull does not in fact give anyone actual wings.  While this particular suit may seem frivolous, it was settled by the Red Bull company for 13 million dollars, to avoid costly litigation (and likely unfavorable press).  Each purchaser of Red Bull in the last 12 years is entitled to free Red Bull equaling $14 value or $10 cash– no proof of purchase necessary.

While individual recovery in these cases may not be much monetarily, the point is to prevent false advertising or price fixing or imposing illegal fees.

Other class actions may provide much more compensation to the plaintiffs, such as the suit against General Motors for the faulty ignition switch that has caused as many as 300 deaths.  In that case, after recall of a faulty ignition switch,  the suit was filed alleging GM knew that the switch was faulty and failed to do anything to remedy the problem.  The defect caused the car’s key to unintentionally move or switch to the “accessory” or “off” position, turning the engine off and causing the airbags to fail to deploy in a crash.  The fix for this was very inexpensive, but GM chose to do nothing.

When is a Class Action not a Class Action Lawsuit?

The short answer to this is when the United States Supreme Court says it is not a case suitable for class action certification.  The case informally known as “The Women of Wal-Mart” alleged a pattern and practice of discriminating against women employees in general, and was filed on behalf of more than 1.5 million women who worked for Wal-Mart .   The U.S. District court certified the suit as a class action.  Wal-Mart appealed.  The Ninth Circuit in three different decisions affirmed the certification of the class.  Wal-Mart then appealed to the Supreme Court.  The case never reached a trial on the merits, even after 10 years and hundreds of witnesses testifying in depositions as to the discrimination they experienced.  This ranged from lack of promotions, unequal pay for performing the same jobs as men, and even outright harassment all in violation of Title VII of the Civil Rights Act.

The Supreme Court found that the women seeking to be certified as a single class did not have enough in common to go forward with the lawsuit en masse, therefore the commonality requirement was missing.  It did not say discrimination did not occur, only that the lawsuit could not be certified as a class action.  Basically, the Court told the plaintiffs to pursue individual suits on the merits.

Other cases have limited the scope of class actions, but they remain a viable tool for many purposes.

Multi-District Litigation

Sometimes class actions are consolidated into something known as Multi-District Litigation, or MDL.  This happens when there are many similar lawsuits in different jurisdictions, and the courts want to streamline pre-trial proceedings and avoid the duplication of discovery by joining these similar suits into one action.  For example, much of the asbestos litigation has been joined into one MDL case in Pennsylvania.

A panel will decide whether a particular case is appropriate for MDL.  The panel considers three things:  whether there are one or more common questions of fact; whether the transfer is for the convenience of all of the parties involved; and whether the transfer will promote judicial efficiency, economy, and fairness.

How Do I Know If I Have a Class Action Lawsuit Claim?

Sometimes those initiating a class action lawsuit will seek you out as a potential plaintiff, but often you may not know until you consult an attorney experienced in class actions lawsuits.  For instance, if you have been injured by a defective product, a class action may already be in progress.   If you think you are only one of many who have been harmed in some way, you may be the one initiating a class action lawsuits.   An experienced class action attorney will be able to guide you through the process of a class action claim.

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