Class Action FAQ

1.  What is a class action lawsuit? 

A class action is a type of lawsuit in which the common claims and rights of similarly situated parties are collectively decided in a single case.  There is good reason to allow class action lawsuits. It permits individuals who have been harmed to be treated fairly and equitably when contending with defendants who often have significantly more financial resources than individual claimants.

2. Where are class action lawsuits heard?

Most class action lawsuits are filed in federal court. However, many states have adopted laws allowing class actions at the state level.  To determine whether a case may be brought as a state class action, state-specific jurisdictional laws must be reviewed.

3. How does a class action get into federal court?

Federal courts require that the plaintiff and defendant be from different states (diversity of jurisdiction) and the legislative minimum amount in controversy (currently $75,000).  If the claim arises under a federal law that establishes a cause of action (i.e., a federal question), the lawsuit will be tried in federal court

4. What is the advantage of filing a class action lawsuit?

In cases where individual damages would be too small to litigate individually, but where the cumulative harm is significant, a class action may be the only practical way to properly redress harms economically.

For example, assume there is a case in which you suffered $100 in damages from the negligent actions of a corporation.  Individually, the costs of litigation would be prohibitive for you; hiring attorneys, experts and court costs would be impractical and burdensome to cover on your own.  Now consider that yours is not the only case where the negligent corporation has harmed the public and that there are 100,000 cases like yours.  Total damages would then equal $10 million dollars.  By grouping all the individual actions together into a single class, plaintiffs with the help of a strong legal counsel can make the costs of litigation more affordable and increase their bargaining power against the defendant corporation.  Additionally, filing a class action assures that all plaintiffs receive an equal recovery under the law.  Class action suits have allowed individual citizens to hold to account juggernaut corporations who have harmed the public.

5. How do plaintiffs benefit from class action lawsuits?

Plaintiffs can benefit from joining a class action lawsuit in a number of ways.  As noted above, by banding together individual plaintiffs can achieve economies of scale in paying litigation costs, improve their negotiating position versus corporate defendants and ensure they are treated equitably. Another benefit to plaintiffs from participating in a class arises in instances where the defendant has limited funds. In such cases, a class action lawsuit provides equal relief to class members in the award or settlement against a defendant who doesn’t have enough funds to cover the claims.  If the cases were filed separately, those plaintiffs filing first would be compensated from the defendant’s limited assets.  Late plaintiffs might receive judgments that are not actionable due to the defendant’s bankruptcy or insolvency.  In a class action, the court can equitably divide the damages among all plaintiffs if damages are awarded.

6. How do defendants benefit from class action lawsuits?

Separate lawsuit arising from a defendant’s negligent act could potentially create incompatible standards for the defendant to follow or inconsistent application of the law among the plaintiffs.  Class actions prevent this issue by consolidating the plaintiffs’ claims into a single lawsuit that is tried or settled as a single matter.

7. What types of cases can be brought as class actions?

There are several types of federal class action lawsuits. Podhurst Orseck has expertise in representing clients in the following areas:

  • Consumer Class Actions:  Consumer class actions are generally brought when consumers are injured by a company’s systematic and illegal practices.  Claims are for economic losses, not personal injuries, and are normally too small to individually justify a lawsuit.  Examples include illegal penalties for late payments, illegal banking fees and circumvention of consumer protection laws.
  • Securities and Antitrust Class Actions:  Securities class actions are typically brought on behalf of a group of investors who have been injured as a result of misconduct, such as fraud, on the part of a company, partnership or investment firm in which they have invested.
  • Personal Injury and Product Liability Class Actions:  Personal injury and product liability class action lawsuits are generally brought when a design flaw in a product, such as a vehicle or aircraft, causes injury. This area includes claims arising from a mass accident, such as a commercial airline crash, that injures and/or kills many people.
  • Employment Class Actions:  Employment class action lawsuits are typically brought on behalf of employees of a company for violations of the Fair Labor Standards Act (FLSA), such as unpaid overtime and failure to provide breaks, as well as claims ranging from safety violations to systematic workplace discrimination.

8. How do plaintiffs become a class?

Under the Federal Rules of Civil Procedure, which has been adopted in substantially the same form by over 30 states, members of a class must share four common characteristics:

(1) Numerosity – the class is so numerous that joinder of all members is impracticable;

(2) Commonality – there are questions of law or fact common to the class;

(3) Typicality – the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) Adequacy of Representation – the representative parties will fairly and adequately protect the interests of the class.

9.  What is the process of forming a class action lawsuit?

One or more parties who allege that they have been wronged by a defendant or group of defendants file a lawsuit on behalf of the individuals and the class.  The court may formally recognize the case as a class action suit.  If the motion is granted, other people who were similarly wronged are notified of the class action and given an opportunity to participate in the litigation as a member.

Law firms invest significant firm resources and establish and train a sizeable support staff to service class action representation areas.  Podhurst Orseck has made class action litigation one of its core areas of service.  We assist individual clients seeking representation as well as law firms and attorneys seeking assistance in a class action or multi-district litigation matter.