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What is a class action?
A class action is also known as a class-action lawsuit, class suit, or representative action.
Class actions are a type of lawsuit where one of the parties is a group of people or businesses who are represented collectively by a member or members of that group. It is most often used when a group of individuals is harmed by the actions of another person or entity and combine to bring their suit together against the other entity.
Class actions originated in the United States and are still predominantly a U.S. phenomenon, but Canada, as well as several European countries, have made changes in recent years to allow consumer organizations to bring claims on behalf of consumers.
Why do people use class actions?
Participation in a class action is voluntary, so why do people do it? The main reason behind participation in a class action is practicality. Class actions are an efficient and practical way to bring effectively the same case once rather than dozens or hundreds of times. It means one set of witnesses, being brought once, one set of pleadings, and one court. This efficiency makes it less expensive for the group as a whole.
Additionally, it is a way to combine lots of individual cases which may not individually justify the cost and expense of bringing their case. But those small cases combined may be worth lots, like multi-million lots.
Another benefit of class actions for plaintiffs is that it levels the playing field. The financial disparity between a large corporation and individual plaintiffs may be enormous. But combining lots of plaintiffs together increases the power of the plaintiffs and can help level the playing field.
Can all types of cases be class actions?
In short no. For a class action to be an option, there have to be multiple individuals or companies that are harmed in some way by the same source. So, you don’t see class actions in family law or criminal law, only in certain types of civil cases.
In what types of cases do you usually see class actions?
There are many different types of civil cases that can be brought as class-action lawsuits. The most common types of class actions fall into the following categories:
Securities
Securities class actions are brought by investors who were injured by a company’s improper conduct.
Examples include situations of investor fraud and whistleblower litigation.
Product Liability or Personal Injury
Product liability and personal injury class-action lawsuits are generally brought when a defective product physically harms many individuals.
Examples include pharmaceutical fraud which results in the manufacture and distribution of a harmful drug that is used by many patients. Other injury examples include mass disasters, human rights violations, sexual abuse, and sports litigation.
Consumer
These class actions hold accountable business entities who engage in systematic and fraudulent or illegal business practices that scam or harm consumers.
Examples include antitrust cases like price-fixing, market allocation agreements, and monopolistic schemes.
Employment
Employment class actions hold employers accountable for employment practices that harm the employee or violate federal or state employment laws.
Examples include situations where workers were discriminated against, workers who have hour and wage issues, and employees who have on-the-job injuries or suffer because of employer safety violations can bring class-action lawsuits against employers.
Class Actions in the News
You’ll often see ongoing coverage of large class actions in the news. These normally either have extremely large groups of plaintiffs or address extreme damages.
Most of us remember the Fen Phen litigation in 2000 that included nearly 600,000 plaintiffs and received an award of 4.75 billion, which is still the sixth largest class action settlement to date. The biggest class action settlements today include:
- $206 Billion Tobacco Settlement in 1998
- $20 Billion BP Gulf of Mexico Oil Spill in 2016
- $14.7 Billion Volkswagen Emissions in 2016
- $7.2 Billion Enron Securities Fraud in 2008
- $6.1 Billion WorldCom Accounting in 2005
Currently in the news are products liability class actions against several drug companies regarding manufacturing and marketing of opioid pain killers, as well as several class actions against companies for weed killers, including Roundup.
As of the beginning of 2022, there is a fast-growing class action against 3M Company for defective military earplugs.
