Class Action Lawsuits

A class action lawsuit is a civil lawsuit in which one or more plaintiffs file on behalf of a larger groupー known as the class. A class often includes a large group of members, each of whom was similarly harmed by a defendant. Class action lawsuits can be brought in state or federal court. The purpose of a class action lawsuit is to allow a group of individuals to pursue their claims against a defendant as a group where it is not “economically feasible” to do so individually. For example, it may not be economically feasible for an individual to file a claim against a defendant for $50.00 where to do so would likely cost the plaintiff far more than $50.00 in filing fees and legal representation. However, if that same defendant harmed hundreds of other individuals in a similar way, those individuals could unite as a class and pursue the defendant collectively in a class action lawsuit. Any amount awarded by the court would be divided among the class members.   

The Supreme Court of the United States has explained that “[t]he class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” As that court has also explained, the class action exception to this historical rule developed from the need, for example, to cover situations where the parties were so numerous that to require them all to appear before the court would be nearly impossible, or where the legal question at issue was general enough to necessitate a few individuals suing on behalf of a group. With the advent of a globalizing economy, courts began to recognize that “[c]ommon law models of litigation that envision one plaintiff sparring with one defendant were not designed to and cannot cope with harm experienced by huge numbers of geographically dispersed people.”⁴ In sum, the class action lawsuit was an innovative procedural device that has adapted to the evolving legal needs of a globalizing society.  

Threshold Requirements  

Class action lawsuits must satisfy certain prerequisites before a court will authorize them to proceed. The Federal Rules of Civil Procedure, upon which many states have modeled their own respective requirements governing class actions, state the following: 

One or more members of a class may sue or be sued as representative parties on behalf of all members only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. 

While there is no specific number of class members required to satisfy the first prerequisite, courts have noted that “numerosity is generally satisfied if there are more than 40 class members.” If any of the foregoing prerequisites is absent, a court may not permit the class action to proceed. In addition to these prerequisites, the federal rules also require that a court determine that one of the following is true: 

1. rendering individual rulings, instead of a collective ruling, would create the risk of inconsistent rulings or that doing so, viz., rendering individual rulings, would be dispositive of other members’ interests not parties to those individually adjudicated claims or would otherwise substantially impair or impede such a party’s ability to protect its interests; 

2. the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or 

3. the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. 

Though the foregoing rules governing class action lawsuits may appear convoluted, they are grounded in principles of common sense and are justified by considerations including “the protection of the defendant from inconsistent obligations, the protection of the interests of absentees, the provision of a convenient and economical means for disposing of similar lawsuits, and the facilitation of the spreading of litigation costs among numerous litigants with similar claims.” In short, class actions lawsuits are designed to be financially efficient and promote the interests of all parties involved. 

Tradeoffs 

While class action lawsuits have expanded access to legal remedies that would be unavailable if pursued individually, they also have significant drawbacks. This is especially true for potential plaintiffs. One concern, among many, is that a class action lawsuit may deprive potential class members of their procedural due process rights. “Due process requires notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of an action and afford them an opportunity to present their objections.” One inherent risk of a class action lawsuit is that it may proceed without the entire class of harmed individuals (or entities, if applicable). This is because the harmed individuals, who often reside in varying geographical locations, are not always aware that a class action lawsuit is proceeding on their behalf. Federal Rule of Civil Procedure 23 attempts to mitigate this risk by “directing the Court to provide notice to class members that is ‘practicable under all the circumstances.’” And while “[t]he notice provisions of Rule 23 are meant to protect the due process rights of absent class members,” this is not always practicable, or even possible, in practice¾especially when the class size is particularly inordinate.  

Class actions lawsuits are also criticized for resulting in diminutive payouts to class members once the award, if any, is distributed to the class members, since the representative plaintiffs and attorneys who represent the class may receive the lion’s share of any such award. One notable and recent example includes a case in which class members sued a defendant over the labeling of single serving coffee pods as recyclable, ultimately resulting in a $36 maximum reimbursement per household to class members. The class members’ attorneys in this case were eligible for $3 million in attorneys’ fees. Notably, this common refrain regarding class actions, i.e., that attorneys benefit disproportionately to class members, may be exaggerated according to some studies.  

In short, the decision to pursue a claim individually or collectively will always entail certain tradeoffs. The nature of such tradeoffs will depend on the complexity of the claim itself and the risk tolerance of the individual seeking to bring that claim.    

Conclusion 

The class action lawsuit, despite its historical roots, is still a modern, yet powerful, legal construct. These unique lawsuits often capture the attention of the public, and with reason: they typically entail (alleged) large-scale harm, household name defendants, and geographically diverse groups of plaintiffs. And despite the risks, a class action lawsuit can be an efficient procedural device compared to its cost prohibitive alternatives. 

This article does not constitute legal advice but presents only a general overview of common legal principles. Those principles may vary by jurisdiction. You should consult legal counsel regarding your specific situation. No attorney-client relationship is formed by the publishing of this article.