US CLASS ACTION SUITS

The class action rule is intended to improve court efficiency by allowing a large group of people with similar claims to join together in one lawsuit. One or more representatives of the harmed group go to court on behalf of everyone else who was similarly affected. If those representatives meet certain criteria, they are allowed to prove and settle not only their own claims, but the claims of everyone in the larger group as well.

A potential class action lurks whenever a company’s actions harm lots of people. Class actions have been brought against the manufacturers and distributors of products as diverse as IUDs, computer monitors, asbestos and tobacco. Business practices that harm consumers, such as overcharging for banking services or using misleading information to sell products have spawned class actions.

Shareholders can bring class actions against companies for poor management or misleading investment literature. Employees can sue employers collectively for discriminatory practices or for violating employment or benefit agreements.

DEFINING A CLASS ACTION

Rule 23 of the Federal Rules of Civil Procedure usually governs class actions in federal courts. State courts have adopted similar rules with the same basic requirements. Both state and federal courts set strict parameters to assure that a few people can adequately represent the interests of many. The basic elements are:

Numbers: The actions of the defendant have to affect so many people that it is more practical for a few representative plaintiffs to address the claims than for all the individual plaintiffs to join together in a regular lawsuit. If twenty people are swindled in a business venture, they can file their own lawsuits. But if hundreds or thousands have been harmed, a class action allows a few to represent the multitude.

Common claims: The claims must raise similar questions of law or fact so that it saves time to lump everybody together. If a hundred people all bought cars with defective seatbelts from the same company, a class action may be the way to handle the complaint.

Typical cases: The people bringing the lawsuit on behalf of others (the “named plaintiffs”) must have the same claims and defences as those they are representing. For example, a person who claims his seatbelt doesn’t work cannot represent those who think the seatbelt works fine but the airbags inflate dangerously.

Fair and adequate representation: The plaintiffs and the class lawyers must be good caretakers for other people’s claims. A lawyer who has made major mistakes in other class actions or a representative plaintiff who has lied under oath may not meet this criterion.

If these five criteria are met and all the class wants is an order telling the defendant to stop doing something — dumping waste into a river, for example - a judge will usually agree to “certify” the class. Certification allows a few designated appointees to represent the other members of the class.

If the class also wants money, they have to prove that the claims and injuries are so similar that they can be well managed in one lawsuit. Mass tort cases, in which a lot of people have been physically injured in a disaster or by a dangerous product, are often denied class action status because the causes and extent of individual injuries vary so much from person to person.

GETTING LEGAL HELP

If you think you have a claim against a company that many others share, you should research whether a class action is already in progress. Thanks to the Internet, you can often find out if there is a pending class action against a particular company by searching for the company name and the term “class action.” If you’ve checked the Internet and find no evidence of a class action pending, either the case is too small to have attracted much attention yet, or no one has filed one.

In searching for an attorney to handle a class action case, follow all of the common sense rules you’d use to find a competent attorney for any kind of case. Successful class actions can be very lucrative for attorneys, leading some to claim an expertise they may just barely possess. Make sure you hire a specialist with a reputation for quality work. Check into the prospective firm’s financial stability and record for successfully pursuing class actions. Ask for a list of cases and find out how they were resolved. Track down previous clients through case names to find out how they felt about the firm’s performance and professionalism.

If you’re not interested in instigating a class action, but open the mail one day and find a notice saying you are already a class member, read the fine print before deciding what to do. Such notices are usually sent out when a case is settled. If you do nothing, you will lose the right to sue the company individually.

If you have developed a serious injury from a product, or lost a lot of money because of a company’s business practices, you’ll want to check with your own attorney before letting your rights become subsumed within a class. The more harmed you’ve been, the more wary you should be of a settlement that will be stretched among a large group of people. But if you reject a class settlement because you believe you can do better on your own, make sure you have an attorney willing to take your case.