Class actions allow similarly-affected claimants to litigate against a common defendant in one judicial forum, promoting judicial economy, efficiency, and fairness to the litigants. In other words, class actions are filed on behalf of a group–a class, suffering common injuries, having a common defendant, and having a common claim.
A member of the group or class is selected to represent the other members. The selected member must represent the class impartially and must not prioritize the group’s interests over individual interests. While the grievances of individual class members in action can vary, they must be based on a common question of law. Class actions are typically complicated and would need to be handled by class action lawsuit lawyers in California.
Common Categories of Class Actions
Class-action lawsuits are filed for two main reasons; holding the faulting party or recovering damages for injuries (loss) resulting from the in-hand issue. The common categories of class actions include:
- Securities Class Actions
Securities class actions are initiated by investors who have suffered financial loss thanks to improper conduct of an investment institution or organization. Improper conduct can include:
- Investor fraud;
- Price manipulation of securities;
- Violating state or federal statutes.
Securities class actions can be initiated by one investor and the lead plaintiff takes up the case on behalf of the class or group. These actions involve investors purchasing artificially inflated stock and shares, overvaluing the securities during the class period. A class period refers to the period within which an alleged offense occurred and it covers only the people who purchased the securities at this time click here.
- Product Liability Actions
Product liability actions involve defective products harming many people and they are common in the pharmaceutical sector where companies are sued for pharmaceutical fraud–manufacturing and distributing harmful drugs. Other examples include can include environmental destruction, human rights violations, and sexual abuse.
- Consumer Class Actions
These class actions are meant to address illegal or fraudulent business practices that scam consumers. These actions hold accountable businesses that engage in antitrust practices, such as price-fixing, unfair market allocation, and monopolistic schemes.
- Employment Class Actions
Employees can also combine efforts and sue the employer for discrimination, wage law violations, poor working conditions, and safety guidelines violations.
Minimum Threshold for Class Action Lawsuits
The Federal Rule of Civil Procedure outlines the threshold to be met when filing a class action. The following 4 prerequisites must exist to meet the minimum threshold:
Numerosity addresses the minimum number of people that can form a class;20 people can unite to form a class in most states but courts consider other factors before certifying a class-action lawsuit. A court considers the following factors before certifying a class action:
- Whether the issue can be resolved through civil action;
- Whether the minimum threshold has been met:
- The challenges of locating individual class members;
- Possibility of initiating separate civil actions.
- The complexity of the case.
- The complexity of individual claims.
The principle of commonality states individual claims should be related to a common aspect of the law although slight factual differences do not amount to a lack of commonality in a class. The lead plaintiff must demonstrate that a common legal question exists among all class members.
The principle of typicality states that the claim of a lead plaintiff must be similar to those of the other group members. In other words, the goal of the class representative and that of the class member must be the same.
4. Adequacy for Representation
Lead plaintiffs must be impartial and treat all members equally and fairly, including absentees. The court establishes whether the lead plaintiff’s interests and those of the group clash before the selected member is allowed to represent the group.
The lead plaintiff must explain why a class action was preferred over individual actions; the representative can cite any of the following reasons to justify their decision to file a class action instead of separate actions, according to Rule 23(b):
- Separate actions can be subjected to different litigation standards.
- The defendant has refused to meet the demands of the litigants.
- A class action will be the best recourse for justice.
Benefits of Class Actions
The benefits of class actions over individual actions include:
Litigation costs are shared by members of a class, meaning each member pays a small compared to private actions where one person settles the whole bill. Another good thing is that class action attorneys work on a contingency basis; plaintiffs only pay after winning the case.
- Facilitates Litigation
Class actions help plaintiffs bring a faulting party, person, or organization to accountability–it’s not always about money. For instance, a company that charges hidden fees to consumers is exposed. While a class action against such a company may be worth a few hundred dollars, litigants can also seek justice.
Class actions allow the grievances of plaintiffs in a similar situation to be addressed uniformly. Additionally, achieving the purpose of filing a class action is highly likely because class actions are typically subjected to the eye of the public.