Many people have heard of class actions, but just exactly what are they? A class action is a case in which a small number of people represent a larger number of people for alleged wrongful conduct by one or more defendants. The wrongful conduct impacting all of the other would-be class members must be sufficiently similar for the case to hold together and be presented to the court or jury in a manageable and practical way. Class actions are among the rarest of all cases because of their complexity, expense, and duration, typically taking twice as long as an average case.
What Kind of Cases Work as a Class Action?
The most typical kinds of class actions are those involving a common question, such as a breach of contract, an anti-trust violation, a securities law violation, or a violation of a statute protecting consumers. We receive many calls regarding potential class actions, although only a small percentage of these cases actually work because of the importance of focusing on a small number of questions which can be decided in one case.
Who Can Be a Class Representative?
Anyone can be a class representative whose claims are typical of those of the rest of the class members and who are “adequate” as that term is defined by case law. In general, a class representative cannot be subject to individual defenses that are not common with the other class members. A class representative also should not have any “axes to grind” with the defendant. They must be able to interact with class counsel, understand the case as it develops, and provide appropriate feedback to counsel. They must also be willing to participate in discovery, including being deposed, and must place the interests of the absent class members ahead of their own interests. In this sense, they are fiduciaries to the class.
To be an adequate class representative, a would-be class representative also has to hire competent counsel. Only a small number of lawyers file and defend class actions, although we have frequently co-counseled with attorneys who are experts in a particular subject matter who are not experienced with class action litigation.
How Are Class Action Lawyers Paid?
If we are paid, it is almost always a percentage of whatever it is that is recovered for the class by way of a settlement or, in rare circumstances, a judgment. I put the emphasis on “if” because class actions are difficult and can be lost at many different stages. Class actions are also subject to appeals after the class certification decision and sometimes before discovery on the merits of the case.
Why Are Class Actions So Difficult?
Class actions are difficult because the parties and the court are making important decisions that impact hundreds, thousands and sometimes millions of people who are not before the court. Because the rights of those individuals are being decided in a class action, it is crucial that the class representative and counsel be deemed adequate and competent. If the court certifies the case as a class action and that decision is sustained on any appeal, then notice goes out to the class members in almost all circumstances, and they have a right to stay in or to opt out. Later, if a settlement is presented to the court, it must first conduct a preliminary determination to see if there are enough signs that the settlement is fair and that notice of the proposed settlement should go out to the class members. Class members then have an opportunity to object and tell the court why they object. Ultimately, the court must determine that the settlement is fair, reasonable and adequate if it is to be approved.
Why Are Class Actions Important?
Modern class actions as we know them today have only been around since 1966, although some older rules allowed something vaguely similar as far back as 1842. Since that time, they have only grown in importance for several reasons. First, society has grown increasingly complex, and all of us, in our roles as consumers, homeowners, bank customers, etc., deal with many companies and institutions. In many of these transactions, the amount of money is relatively small. As companies have become larger and larger, they deal with thousands and even millions of individuals. When mistakes are made, intentional or not, the cumulative impact of relatively small amounts on millions of people can be very significant. Class actions are the only efficient way of addressing these potential harms because no one individual has enough of an interest to file a lawsuit and retain counsel.
Another reason that class actions have grown in importance also relates to the complexity of modern society. It is simply not possible for legislatures and regulatory bodies to keep up with all of the changes occurring in our economy, and class actions are an essential tool for leveling the playing field and asking our fellow citizens – the jury of our peers – whether they think conduct by large institutions is fair and reasonable or whether it violates our sense of what is fair and right.
Additional Questions?
The lawyers at Murray & Murray have recovered hundreds of millions of dollars for many class members over many decades and collectively have hundreds of years of class action experience. If you think you might have a class action, or you are an attorney who has a client who you think might have been harmed in a case that should be brought as a class action, contact Murray & Murray or call (419) 624-3000, and we will help you work through the relevant questions.
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