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Class Action FAQ
What exactly is a class action law suit?
A class action lawsuit is a lawsuit in which a person or business acting as the plaintiff in a lawsuit represents a larger group of people that have similar legal claims against a particular defendant or group of defendants. For example, a homeowner or consumer who is injured or whose property is injured by a defective building product may bring a class action lawsuit against the manufacturer of the product on behalf of himself or herself and all other homeowners and consumers harmed by that behavior. The person or business entity who brings the lawsuit on behalf of the others is referred to as the "class representative." The class representative serves in a fiduciary role to all others who are similarly situated (i.e., the "class" of members), much like the board of directors of an association or a corporation serves in a fiduciary role for the benefit of its members or shareholders.
What function do class action lawsuits serve?
Class actions serve several important functions in our legal system. Of primary importance, class actions enable a large group of people injured by similar misconduct or a defective product to have their claims joined together in a single lawsuit. This is critical in situations involving hundreds or thousands of class members, where individual damages maybe small compared to the cost of a lawsuit so that no one individual would bring a claim because it does not make economic sense for them to do so. In this regard, a class action provides a way for persons and businesses with relatively small claims that would not, by themselves, justify hiring an attorney, to pool their claims against an alleged wrongdoer.
This pooling of claims levels the playing field against a typically larger and more well capitalized wrongdoer by leveraging all of the smaller claims into one large claim to be handled in a single case. The class of claimants gains "strength in numbers" in making their claim that they would not otherwise have when making an individual claim. This ability to form and bring a class action consolidating the claims of many claimants into one serves an important function of deterring harmful or damaging behavior by persons or entities who have a responsibility to deal fairly and reasonably with the public.
A class action further serves to save time and money to our system of judicial administration. By allowing similar claims to be lumped together in one case, a class action relieves the extreme burden on our court system that comes from having jury after jury seated to listen to thousands of cases, all involving the same claims.
And lastly, the class action procedure also provides persons and businesses who cannot otherwise afford legal representation with access to qualified and experienced legal counsel who will represent them and the class as a whole with regard to their meritorious claims.
Who can become a class member in a class action lawsuit?
Every class action lawsuit defines a "class" of individuals or entities on whose behalf the lawsuit is brought. The definition of the class is set forth in the class action complaint, which is the document that is filed with the court that initiates the lawsuit against the opposing party. The court must then determine whether the lawsuit meets the legal requirements of a class action-that there are numerous claimants with common questions of law and fact and that the class representative will adequately represent the class with qualified and experienced legal counsel. The court must approve the definition of the class; this stage of the lawsuit is called "class certification." Any person or entity that meets the definition approved by the court is automatically a member of the class in the lawsuit, but any class member is normally always given a chance to opt out (decline to be considered a member of the class) if he or she wants to pursue another remedy or no remedy. However, in order to be eligible to receive any benefit, relief or monetary recovery that a court may eventually order as a result of the lawsuit, class members must not opt out and they must submit a claim to the law firm that is representing the class or to a claims administrator approved by the court.
What are the obligations of class members in a class action lawsuit?
Class members are under no legal obligations other than to be truthful in the submission of their claim forms. They are not responsible for paying any fees or costs associated with the lawsuit. Generally, class members are not called upon to assist in any way with the litigation although they may voluntarily offer information to the legal counsel representing the class in order to help the class' claims. Class member may also normally "opt out" of the resolution of a class action lawsuit even after the case has been settled or otherwise concluded. In the event that class members do not like the proposed resolution or wish not to be involved with the action, they may usually exclude themselves from the class at the appropriate time set by the court. One exception to this general rule is the case where it is established by the court that there are limited funds available to resolve the lawsuit. In this unfortunate situation, the court will not allow any class members to opt out because the court will not allow any further lawsuits against the broke defendant. Still, no class member is ever forced to do anything in a class action. A class member even in a non-opt-out class action can decide not to participate however, when they do opt out, they must realize that they are precluded from further pursuing any of their claims against the defendant(s).
How is a Class member informed of his or her rights?
If the court allows a case to proceed as a class action, the court authorizes a notice to be sent to class members informing them of their rights. The court will order the best and most practicable method of notice, which is often an advertisement in a newspaper, a first-class mailing or both. Recently, the court has also approved and encouraged the use of internet websites to serve as an additional means of dissemination of the notice information. Accordingly, a class member may search the internet to find out about class action resolutions and related information. However, in order to insure that you receive notice, you may register your claim with the plaintiffs' attorneys representing the class, who will send registered class members individual communications regarding the lawsuit.
Why and how does a Class member register a claim?
Class members who register their claim will be assured of receiving notice directly from the lawyers representing the class if the court grants class certification to the lawsuit. Also, all registered class members can receive periodic status reports on the progress of the case. Registration also helps the lawyers from the class explain to the court why class certification is necessary (i.e., there are numerous claimants) and it provides a statistical basis for trying to determine the total number of class members and the amount of proceeds necessary to resolve the case. Finally, registered class members will have advance knowledge of when a case is resolved, and therefore they will be able to situate themselves to take quicker advantage from the resolution.
Who pays for the lawyers?
In most class action lawsuits class members are represented by attorneys who are paid on a contingency fee basis. This means that the attorneys representing the class do not receive compensation unless the lawsuit results in some significant benefit to the class. In this regard, class action lawyers allow their compensation to be approved and awarded by the court based on the common good achieved for class members. If class counsel recover nothing for the class, then they are not rewarded for their efforts. If a recovery is obtained, application for payment of the legal fees is made to the court and the court approves and awards the amount to be paid. Class members and class representatives do not pay for any legal fees associated with the case. This is also true of the costs incurred in litigating the class action case. All of the costs of the case are incurred by the counsel representing the class and reimbursement of those costs are sought from the court after a recovery has been made for the class. Class members and class representatives do not pay for these costs.
Class action litigation is very risky for lawyers because a lot of work and expense must go into investigating a case and trying to get it certified as a class action. Class certification is complicated; therefore, only experienced and competent attorneys should be retained by class members to bring their claims. Even when a case is a strong one, there is considerable risk to the lawyers and the class that it may not get certified as a class action. When that happens, then each class member is forced to hire and pay his or her own lawyers if they want to continue with their claim.
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