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What is a Class Action Lawsuit? What You Need to Know

Riddle Brantley LLP   |  May 10, 2019   |  

What is a class action lawsuit?

Class action claims are different from individual claims.  A class action lawsuit is one in which a group of people with the same or similar damages caused by the same product or action sue the defendant as a group. In a class action, the members of the “class” are represented in court by a Lead Plaintiff(s) and their attorneys.

What is a Class Action Lawsuit - Riddle & BrantleyPeople may use class action lawsuits when they seek justice for injuries caused by defective products such as cars, pharmaceutical drugs, and medical devices, among others. Additionally, class action lawsuits can be filed against companies for consumer fraud, corporate misconduct, securities fraud, employment practices, data loss or misuse, and other malicious and/or negligent activity.

Class action lawsuits can be brought in federal or state court. Class actions are often a preferred method of trying complex cases with many injured parties because they streamline the process and ultimately save the courts time.

In a class action lawsuit, the damages to an injured party may be small enough that it would not be worth someone’s time to individually sue the defendant(s). Collectively, however, damages in class action lawsuits often amount to millions of dollars or more for all members of the class.

How does a class action lawsuit start?

To start a class action lawsuit, a case must first be certified by the court.

Requirements vary by state, but in general, in order for a case to be certified as a class action, the Lead Plaintiff(s) and attorneys must demonstrate that:

  1. There is a legal claim against the defendant(s)
  2. There is a “significantly large” group of people who have been injured in a similar way, and that all cases involve similar issues of fact and law
  3. The Lead Plaintiff(s) is typical of the class members, has no conflicts, and has a reasonable plan and ability to represent the class

Once the class action is certified, the judge directs notice be given to any parties with similar claims during a particular time frame, so they may be informed and potentially join the case.

Membership in Class Action Lawsuits - Riddle & BrantleyTypically, notice is given via direct mail, Internet communications, and the media.

In most class action lawsuits, class membership is automatic unless an individual decides to “opt out.”

Those who opt out of a class action lawsuit have no further say in the case and can either drop the matter or bring action on their own behalf. Those who decide to remain a party to the class action case are typically bound by the terms of any eventual settlement, and therefore are prohibited from taking further action on the matter.

>>If you’re unsure whether to opt out of a class action lawsuit or not, consult with an experienced class action lawyer.

How are settlements divided?

If the judge or jury decides in favor of the plaintiffs, a settlement (also called “recovery”) is awarded. In this case, the plaintiff’s class action lawyers are compensated with an amount often calculated as a percentage of total recovery. The Lead Plaintiff(s) is awarded an amount based on their participation in the lawsuit, and the remaining settlement is divided among the other members of the class action lawsuit.

Major class action settlements include:

  • $206 billion from Philip Morris, RJ Reynolds, and other tobacco companies to cover medical expenses for smoking-related illnesses (1998)
  • $20 billion from BP to resolve civil claims resulting from the environmental damage of the Deepwater Horizon oil spill (2016)
  • $14.7 billion from Volkswagen for buybacks and compensation to owners of certain diesel vehicles after the company cheated emissions testing
  • $7.2 billion from Enron to compensate victims of securities fraud
  • $6.2 billion from WorldCom to compensate victims of accounting fraud

Tobacco Companies Class Action Settlement - Riddle & BrantleyIf a class action settlement is reached, or damages are recovered, the court will typically instruct the class attorney(s) to send a settlement notice to all members of the certified class.

How long do class action cases take?

While class actions can certainly help streamline complex cases with multiple injured parties, they nevertheless can take a very long time to resolve.

In fact, it is not unusual for a class action lawsuit to stretch out for several years.

Class action lawsuits can be resolved in either of two ways:

  1. A class action lawsuit may be settled out of court and given to the court for approval.
  2. The case may go to trial, and a judge or jury makes the decision. If the plaintiffs (the injured parties) win the judgement over the defendants (the company being sued), they will be notified and given instructions on how they can collect damages.

Do you need a class action lawyer?

If you are part of a large group that has been affected in a similar way, by the same action, you may need a class action lawyer. Having the right class action attorney can be the difference between winning and losing your case.

If you feel you have a class action lawsuit, the attorneys at Riddle & Brantley may be able to help.  With nearly 200 years of combined experience, our North Carolina class action lawyers are available to answer your call and your questions.

Please call us at (800) 525-7111 or complete the free, no-obligation form below. We will be happy to answer any questions and let you know if we think you have a case. As always, there are no attorney fees unless we win your case and get you financial compensation.