What Is a Class Action?
A class action allows people who have been harmed or whose rights have been violated in similar ways to join together in a single lawsuit. One or two members of the class are designated as “class representatives” to bring and prosecute the claim on behalf of the entire class. Thus, a class action is an efficient and economical way to resolve large numbers of similar claims. In addition, where each claim is relatively small and may not justify bringing an individual lawsuit, a class action makes litigation much more feasible.
How Does a Class Action Start and Proceed?
A class action begins in the same way as any other lawsuit, by one or more persons (known as the "plaintiffs") filing a complaint in court. However, in a class action, the plaintiffs are described in the complaint as "suing on behalf of all others similarly situated." Just saying that a case is a class action doesn't make it so, however. At some point the court must certify the case as a class action in order for the plaintiffs to be able to obtain relief on behalf of a class. Certain legal criteria must be met before a court can certify the case as a class action, such as whether there is a sufficient number of class members, whether there are common issues, and so forth. If the court agrees that the case should have class action status, then all potential members of the class are notified.
How Does Notification Work?
If a case is certified as a class action, notice to potential class members is usually required. Depending on the nature of the case and the size of the class, notice can be given in one or more ways — direct mail, publication in newspapers and magazines, internet postings, and so on. The notice explains what the case is about, the relief being sought by the class, and what each person needs to do, if anything, in order to become part of the class.
How Do Class Actions Get Resolved?
Like all civil lawsuits, a class action can succeed in one of two ways: the plaintiffs can reach a settlement with the defendant(s), or the plaintiffs can be awarded a judgment by the court. Most civil lawsuits, including class actions, are resolved by the parties reaching a settlement agreement. If that occurs, each class member is notified of the settlement and given the right to accept it, "opt out" of it, or object to it. Then, the court holds a hearing to determine if the terms of the settlement — including items such as attorney's fees and costs — are fair and reasonable. If the court finds that they are, and no appeals are taken, then the settlement becomes final and the class members receive the relief to which they are entitled.
How Are Attorney's Fees and Costs Paid?
If the case succeeds, either as a result of settlement or judgment, the fees of class counsel will be either paid by defendant(s) directly or as a percentage of a common fund established by defendant(s) for the benefit of the class. In either scenario, the court must approve the amount of the fees to be paid to class counsel. The defendant(s) will also be responsible for reimbursing the costs of bringing the case, providing notice, and carrying out the terms of the settlement or judgment. Thus, in a successful class action neither the plaintiffs nor class members incur any out-of-pocket expenses.
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