Class Action Litigation
A class action is a legal procedure used to prosecute efficiently a lawsuit in which a large number of people have been injured by a common act or set of actions. In a class case, one or two named plaintiffs stand in for the entire group of similarly aggrieved persons during the course of the litigation.
In order to meet the requirements for adjudication as a class action, the Plaintiffs must meet certain elements. In federal court, the procedures for "certifying" a class (making the lawsuit a class action) are governed by Rule 23 of the Federal Rules of Civil Procedure. These elements include:
- Numerosity – are there enough people affected by the alleged illegal practice to justify a class action.
- Adequacy – will the named class representative(s) and the lawyers litigating the class action act in the best interest of the class; do the lawyers have experience in class action litigation.
- Typicality – are the claims of the named plaintiff(s) typical of the claims of the class members.
- Commonality – are the facts and legal issues common among the class.
Class actions are particularly useful for people who have suffered relatively small economic losses, that in itself may not justify the hiring of a lawyer. This is because a class action lawsuit allows one person or a small group of people to be represented by a law firm and sue on behalf of hundreds, thousands or hundreds of thousands of different people with similar complaints. Because there is strength in numbers, a class action lawsuit is a powerful tool that individuals can use to enforce the law against large corporations and governmental entities.
The Stages of a Class Action.
Filing and Discovery Phase – after the class lawsuit is filed the respective parties will typically engage in a sometimes lengthy and complex exchange of information and documents called “discovery.” In some instances, discovery is “bifurcated” or split into two phases. The first is the class certification phase and the second is the merits phase. In class certification discovery the parties limit discovery to those issues relevant to whether the court should certify the matter as a class action. These include factors such as numerosity, adequacy, typicality and commonality. In the merits phase, the parties conduct discovery on issues of damages and liability. Because of the complex nature of class action discovery, this part of the litigation can take up to two years.
Class Certification – Although a case is filed as a “class action,” it is not a class action unless and until the court determines that the case is appropriate for class treatment or “certifies” the class. This will include determining what persons or entities are included in the class (the “class definition”); the period for which relief for the claims is sought (the “class period”); and the process by which the members of the class will be notified of the class action (the “class notice”). The class notice will explain to class members the claims in the case and inform them of their right to be excluded from the class action if they so choose.
Settlement – Although class action settlements may occur at any time, it is more common for settlement to occur after a class has been certified and the parties have engaged in discovery which tends to prove or disprove the allegations set forth in the complaint.
Settlement Notice and Hearing – When a class action settles, the judge presiding over the case must approve the fairness and propriety of the settlement. This is done via a “fairness hearing” during which the judge will listen to evidence from the parties and from anyone who objects to the settlement. After a settlement is reached, the court will notify all class members via a “class settlement notice” (done primarily via mail, but can be done by publication). The notice explains to the class member the terms of the settlement, explain the class members right to opt-out of the settlement (if an “opt-out” class action) and explain to the class member their right to object to the settlement if he/she chooses. The notice will be sent out in advance of the fairness hearing so that anyone objecting to the settlement will have the opportunity to submit evidence in support of his/her objection.
Trial – Class action trials are relatively rare. Most class actions are either resolved through settlement or dismissed. If tried, a class action trial may take weeks or even months.
Appeal Following Trial or Settlement – Following a trial or class settlement (if anyone has objected), any party or objecting class member, may appeal to the appropriate appelleate court. If there has been a settlement or judgment in favor of the class, the payment of any funds or relief will be delayed pending resolution of the appeal.
Class Action Frequently Asked Questions