What Are Class Actions Anyway?

Our mission on this blog is to take the mystery out of class actions. So maybe it makes sense to lay out, in plain English, what class actions actually are—at least in the United States (different rules apply in Countries that also have class actions).

So here it goes.

The Short Answer

When people have their legal rights violated, it gives rise to “claims.” Having a claim means you have the right to sue the person or company who violated your rights. When a company violates the rights of its customers in the same way, each customer has claims that are similar to each other. These claims will be proven using much of the same evidence, and there’s no need for hundreds or even thousands of trials.

When the facts meet the requirements for maintaining a class action under Federal Rule 23 (or whatever applicable state rule, if the case is in state court), the claims can be heard before a single court in a class action. Because the cases can proceed together if they’re certified, they give Plaintiffs a larger voice in getting a larger recovery from the defendant.

The Deep Dive

It all starts with “legal claims.” Everyone has legal claims. Having a legal claim means that you have the right to sue someone. To sue someone, they must have caused you some type of legal injury or violated your rights in some way. Some claims are obvious—if you are crossing the street at a crosswalk and a car hits you, you have a claim (likely several, with names like negligence, assault, intentional infliction of emotional distress and others) against the driver.

Legal Claims and You (and Others Like You!)

Sometimes though, a person or company causes injury or violates the rights of a lot of people in the same way. This can be when a chemical plant doesn’t properly secure its facilities leading to an explosion, when the NFL hides information from players about the long-term risks of concussions, when employers don’t classify their employees properly, or when companies violate the rights of their consumers. It literally happens all the time.

For example, a federal law—the Telephone Consumer Protection Act (“TCPA”)—prohibits companies from calling cellphones and sending text messages without the cellphone owner’s consent. Violations allow people to sue for $500 - $1,500 per call. People get spammed on their cellphones all the time and the TCPA entitles each of them to sue for these amounts.

This is just one of hundreds of examples of federal and state laws that give rise to “claims” when violated. (BTW: when you sue someone, you file a complaint, which contains a statement of the claims being asserted.) In fact, people have all sorts of claims that they probably don’t even know about.

Combining Claims in a Class Action Under Rule 23—All it Takes is One (Who Has the Same Claims as Everyone Else)

Now, let’s take the example of the person who received the spam cellphone calls without their permission, which can be terribly annoying (so much so that Congress actually passed a law against it!). Again, to sue under the TCPA a person must be called on their cellphone without their permission using an automatic telephone dialing system (“ATDS”). If the person received 1 call, the TCPA allows them to sue the company who called them for $500 - $1,500—hardly a large enough sum of money to justify a lawsuit.

But let’s say the company also called 10,000 other people. If it called everyone just once, then the TCPA claims of those 10,000 people are collectively worth between $5,000,000 and $15,000,000 ($500 x 10,000 to $1,500 x 10,000). The prospect of that type of recovery is enough to justify lawyers to bring the case—if a class action can be obtained.

It works like this: any of the 10,000 people who were called can contact a class action lawyer about the case. All it takes is one member of the class to file the complaint. The person who is ultimately going to ask the court to be the class representative is named as the plaintiff in the complaint “on behalf of him/herself and all others similarly situated”. The only real difference is that the complaint must also include facts that plausibly satisfy Federal Rule 23’s requirements (or the requirements of whatever applicable state rule) for a class action), Then the case proceeds with “discovery”1 related to the class certification issues and, after Plaintiff moves for certification, the court will review the evidence and determine whether the case should proceed as a class.

If a case proceeds as a class, then there will be one trial where everyone’s claim is decided together. Instead of a $500 case, the lawsuit is worth $5,000,000.

NOTE: class actions are different from “mass actions.” As we will detail in a future post, mass actions (also known as mass torts) generally involve pharmaceutical cases and defects in medical products. In mass actions, every individual harmed by the drug files his/her own case, which is centralized with other cases in front of a single judge. Though discovery and settlement negotiations may be coordinated, if the cases proceed to trial, they’ll proceed to be tried separately—resulting in potentially hundreds of trials.

Stay tuned for the next installment, where we explain what Federal Rule 23 requires for a class action.

__________________

1 Discovery is the period of time when the parties are exchanging information through things called interrogatories (written answers to questions), document requests, requests for admission, declarations and depositions (sworn testimony).


Featured Posts
Recent Posts
Search By Tags
Archive
No tags yet.
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square