Class Actions

Overview

The Basics of Class Actions

A class action is a lawsuit filed on behalf of a group, or "class," of individuals with similar legal claims. A plaintiff, or small group of named plaintiffs (plaintiffs whose names appear on the face of the legal filings), submits a lawsuit representing a larger group of plaintiffs (of which the potential size may be several thousands of individuals) who are unnamed. The unnamed plaintiffs are identified as members of a class by virtue of a shared legal grievance with the named plaintiff(s). For example, a plaintiff with a legal claim arising from employment at a particular entity might file a class action on behalf of all similarly-situated employees of that entity during the relevant time period, in the belief that such individuals possess a similar claim. Once a plaintiff files a class action, the judge must approve, or "certify," the class before it may proceed.

Unnamed plaintiffs are not obligated to be part of the class. They may chose to litigate their legal claims themselves, or not at all. After certification of a class, notification is sent to the unnamed plaintiffs to inform them of the lawsuit and they are given the opportunity to opt-out of the class. Individuals who so choose are not members of the class, and the class action litigation will not impact their legal rights. Therefore, the final resolution of the class action, whether by settlement or judgment, is not binding upon persons who opted-out of the class. Likewise, non-members of the class are not entitled to any recovery which may be awarded to the class; however, they may bring their own separate lawsuits asserting their own legal claims.

Where Class Actions Occur

Class actions are only allowed in civil cases. Class actions originated in the United States but have since been adopted, in varying form, by other nations.

In the United States, class actions may be brought in federal or state court. The Federal Rules of Civil Procedure (FRCP), in Rule 23, sets forth the requirements for a class action in federal court. Each state has its own rules for class actions.

Some Pros and Cons of Class Actions

Class actions provide a means through which plaintiffs may bring small legal claims that would be too costly to litigate individually. Additionally, class actions can equalize the difference in power between robust entities and individuals without significant resources. As a group, individuals amplify their ability to litigate, negotiate and settle disputes.

While the size of a class provides strength to its members, it also limits their choices and options. Unnamed plaintiffs (those who chose not to opt-out), have the least amount of control over the case. For instance, the named plaintiffs can accept a settlement, which is binding on all class members, regardless of whether un-named members want the case to be determined by a verdict after a full trial. (In federal court, FRCP 23 requires judge approval of class action settlements, which may help to safeguard the interests of the class as a whole.) Finally, the complexity of class action cases makes them difficult and expensive to litigate, requiring greater time and resources of the attorneys and the court.