Frequently Asked Questions About Class Action Lawsuits and Class Action Settlements

What is a class?

In a class action, one person (or a small group of people) files a lawsuit on behalf of a larger group of people. The "larger group" – the group of people the lawsuit represents – is the class. When a lawsuit is filed, it will define the proposed class. Anyone who meets this definition will be known as a class member.

Can a corporation be a lead plaintiff in a class action?

Yes, although a corporation is usually the defendant in a class action.

What is class certification?

Although a lawsuit may be filed and proposed as a class action, it doesn't officially become a class action until the judge in the case issues a ruling known as class certification. In granting class certification, the judge is giving the go-ahead for the case to proceed as a class action. In a federal case, the judge will certify a lawsuit as a class action only if the attorneys for the class are able to satisfy several requirements.

What is the fairness hearing in a class action?

The judge presiding over a class action will conduct a fairness hearing to determine if the terms of a proposed settlement are fair and offer adequate compensation to the class members. If any class members object to the terms of the proposed settlement, they will have an opportunity to testify at a fairness hearing to voice their concerns. After the hearing, the judge will issue a ruling either approving the proposed settlement or rejecting it.

What is discovery?

Discovery is the pre-trial phase of a lawsuit. During discovery, attorneys representing the class members will request that the company being sued turn over all documents relating to the allegations contained in the lawsuit. This includes both written documents and electronic communications, including company e-mails. These documents may then be submitted to the court as evidence to prove or defend against claims made in the lawsuit.

Lawyers for both sides may also conduct depositions during the discovery phase of a lawsuit. At a deposition, a lawyer will ask a witness questions under oath regarding the facts that form the basis of the lawsuit. Lawyers for all parties to the case may be present at the deposition. The transcript of the deposition becomes part of the record in the case and may be used by either side as evidence during the trial.

What happens if you lose a class action?

Keep in mind that, in most cases, you are not the one who actually filed the lawsuit; so, technically, you can't lose a class action.

If the case, however, is dismissed or a jury rules in favor of the defendant, both the person who filed the suit and the class members will not be entitled to any settlement money.

Furthermore, while you cannot "get in trouble" for participating in a class action, even one that is unsuccessful, you may be prevented from filing another lawsuit involving the same allegations. Essentially, the legal system has already given you – and potentially thousands of others – a chance to recover compensation, and, for whatever reason, decided that the claims alleged in the class action did not have merit or should not be resolved in consumers' favor.

Can I get fired for participating in a class action lawsuit against my employer?

If you participate in a class action against your employer alleging workplace discrimination or violations of wage and hour laws, federal law protects you against retaliation by your employer.

What is the difference between a class action and a multidistrict litigation?

A class action is a lawsuit filed on behalf of many individuals who have suffered a similar financial harm or physical injury. A multidistrict litigation, on the other hand, is made up of many individual lawsuits filed in federal district courts across the country. Click here for more information about multidistrict litigation.

How do class action lawyers get paid?

If a class action is successful, the attorneys representing the class members usually receive a percentage of the amount that is recovered by the lawsuit or a fixed amount that is separate from the settlement fund.

The judge presiding over the class action must review the attorneys' request for fees to make sure it is reasonable.

What is a class action grievance?

In a unionized workplace, a grievance is a complaint filed by an employee against an employer alleging that the employer broke an obligation outlined under a collective bargaining agreement. A collective bargaining agreement is the contract that governs the terms of conditions of employment for unionized workers. A class action grievance is a complaint alleging violations of a collective bargaining agreement that affect a large group of unionized employees. Most collective bargaining agreements require that class action grievances must be submitted to an arbitrator for adjudication.

What is a bellwether trial?

The judge overseeing a mass tort multidistrict litigation may order that several individual cases be tried. Thousands of lawsuits may have been filed involving the same mass tort, but a handful of cases – the bellwether cases – will be sent to trial as "test runs." These bellwether trials provide meaningful information and experience to both sides and can help indicate how the litigation could resolve.

The attorneys learn the strengths of their legal arguments and gain insight into how juries could rule. While the results of the bellwether trials are not binding on other plaintiffs, the attorneys may use the results of the bellwether cases to negotiate a settlement.

Who is the lead plaintiff?

The person or persons filing the suit will be referred to as the lead or named plaintiff(s). He or she may also be known as the class representative. This person will work closely with the attorneys representing the class and will have control over the lawsuit and the direction it will take. The lead plaintiff(s) may need to appear in court in the same way someone who filed an individual lawsuit would.

Is a class action considered to be a civil lawsuit?

Yes, a class action is a type of civil lawsuit. A civil lawsuit (also known as a civil action) is a case involving a legal dispute between two or more parties. A criminal action, on the other hand, is a suit filed by a government prosecutor against a person or corporation that has allegedly violated a criminal law.

What is a putative class action?

The word "putative" means "assumed to exist." When a class action is filed, it may be referred to as a putative class action. This is because the case does not officially receive class action status until the judge presiding over the suit grants class certification.

What is the Class Action Fairness Act?

The Class Action Fairness Act was signed into law on February 18, 2005 by President George W. Bush.

The Act grants federal courts exclusive jurisdiction over class actions when the amount in controversy exceeds $5 million.

Under the Class Action Fairness Act, if a class action is filed in a state court and the total damages in the case will likely be greater than $5 million, the company being sued can request to have the class action transferred to a federal court. Corporate lobbying groups strongly supported the law, which was enacted to combat perceived abuses in the class action litigation process.

What is a common fund?

A common fund is a pool of money created to provide compensation to class members. A common fund may be established because of a settlement or a court's ruling in favor of the class members. Each class member may be required to file a claim either in writing or online to receive compensation from the common fund.

What are punitive damages?

In lawsuits involving reckless or intentionally harmful conduct, the judge may order that the company being sued pay punitive damages to the class members. Punitive damages are intended to punish the wrongdoer and discourage other companies from engaging in similarly dangerous or harmful conduct.

Can a class action be filed in state court?

Most states allow class actions to be filed in state court. Others have restrictions on the types of lawsuits that can be filed as class actions. Additionally, Virginia has an outright ban on class actions in state courts. For Virginia residents, class action lawsuits must be filed in federal court.

What is the difference between a class action and a collective action?

In most class actions, you are automatically included in the class unless you choose to "opt-out" of the case. In a collective action, however, you must "opt-in" or "join" the case. Collective actions usually involve failure to pay overtime, failure to pay minimum wage or workplace discrimination. The attorneys representing the plaintiffs in these cases will send "opt-in" notices to anyone whose rights could be affected by the suit. This notice will inform them of their right to join the lawsuit. Only those employees who choose to "opt-in" to a collective action will be eligible to receive compensation if the lawsuit is successful.

What is the difference between a class action and a representative action?

A representative action is an umbrella term that refers to any type of lawsuit where one or several people sue on behalf of themselves and all others who have suffered a similar financial harm or physical injury. A class action is a type of representative action. Other types of representative actions include collective actions and class action grievances.

What is the difference between a class action and a mass tort?

The main difference is that a mass tort case is filed on behalf of one person, while a class action could potentially affect thousands of people. Mass torts usually involve dangerous drugs and medical devices. Click here to learn more about mass torts.

What is a securities class action?

Federal and state laws protect investors from securities fraud. These laws give investors the right to sue if a corporate executive makes false statements about a company's financial health. Shareholders who have suffered losses because of misrepresentations about a company may be able to recover compensation through a securities class action lawsuit.

What is a shareholder derivative class action?

A shareholder derivative lawsuit protects the interests of corporate shareholders when the directors or officers running a company fail to act in the best interests of the corporation and its shareholders.

A shareholder derivative suit is filed by a shareholder (or a group of shareholders) on behalf of a corporation against an executive, officer or director whose alleged negligent or criminal actions have resulted in a loss to the shareholders.

Derivative class actions allow shareholders to file a lawsuit on behalf of the corporation against high-ranking employees who have caused financial harm to the corporation. Many shareholder derivative class actions seek to require a corporation to adopt policies and procedures to prevent negligent or wrongful conduct from occurring in the future, thereby making the company stronger.

What happens to leftover settlement money?

In most cases, one of three things will happen. It will be returned to the company being sued, distributed to remaining class members or donated as a "cy pres" award. Under the "cy pres" legal doctrine, once a settlement deadline closes, any leftover money is to be distributed to "the next best use." This may include a charity or non-profit organization whose mission aligns with the subject matter of the case. For instance, in a case involving unpaid overtime, the remaining funds may be dedicated to an organization that helps further workers' rights.