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What is a Class Action?

What is a Class Action?

A class action is a procedural device by which one or more individuals (class representatives) may bring a lawsuit on behalf of a large number of individuals (class members) who have the same or substantially similar claims against the same defendant or group of defendants.  While there is no strict limit or cap on the amount of damages that each individual can claim or obtain as damages as a class member in a proposed class action, traditionally class actions were designed to benefit individuals who have smaller damage claims and who, therefore, financially might not be able to otherwise bring a lawsuit against a defendant or group of defendants.  Litigating a lawsuit, including conducting discovery and retaining experts, against a defendant or group of defendants can be a costly and risky undertaking.  Thus, permitting individuals with smaller damage claims to join or consolidate their claims together through the procedural mechanism of a class action gives them not only the incentive but the realistic ability to file such a lawsuit. 

For basically the same beneficial reasons, our law permits attorneys representing plaintiffs (i.e., the people filing the lawsuits) to enter into a contingency fee contract with such plaintiffs whereby the clients only have to pay the attorneys if a settlement, jury verdict, or court judgment is obtained in their favor and then the payment is an agreed upon percentage of such recovery.  Additionally, the law permits the attorneys to advance the costs and expenses of litigating the lawsuit and to obtain the payment of such costs and expenses from the client at the conclusion of the lawsuit from the funds recovered whether by way of settlement, verdict, or court judgment.  This arrangement places most, if not all, of the financial risks on the attorneys, rather than the clients.  Accordingly, in order to file any lawsuit, both the client and the attorney must have a sufficient financial motivation to justify filing the lawsuit in light of the risks inherently involved.

Permitting a class action to be filed essentially gives both the clients with smaller damage claims and plaintiff attorneys, with contingency fee contracts, the incentive or justification to bring such lawsuits because it increases the amount that may ultimately be obtained by way of settlement or trial to a sum that makes the risk worthwhile to pursue.  While there are several types of class actions that may impose some additional requirements or parameters, all types require that there be a sufficient number of potential class members (numerosity) and that the claims of class representatives be both typical (typicality) and common (commonality) with those of the class members.  Additionally, both the class representatives and attorneys must be adequate representatives of the proposed class, meaning that neither can have any conflict of interest in representing the class members and the attorneys must have sufficient skill and experience to litigate the case on behalf of the class.  If an attorney can reasonably predict that these foundational requirements can be met, they are likely to seriously consider bringing a class action for claims that otherwise might not be affordable to bring individually.

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