5 Facts About Class Action Lawsuits

Class Action Lawsuits are often the subject of television “public service announcements” concerning suits against pharmaceutical companies and other corporations. The ads urge people to contact the law firm representing the plaintiffs to join the suit, claiming they may be “eligible for significant compensation.” While the allure of a possible windfall engages many people, they should understand this type of suit before joining it. Here are five facts about Class Action Lawsuits everyone should know.

1. They Are Uniquely American.

They did not begin in this country, but the American justice system embraced and redefined them. Actually, the concept began in England as something called a Bill of Peace. It soon was adopted in this country and in 1842 was designated as a form of litigation under Equity Rule 48 as a “representative suit where the parties are too numerous to be conveniently brought before the court” In the 1960’s these suits became a tool of the civil rights movement to fight discrimination. Although they have their beginning outside of the United States, few countries utilize them the way America does.

2.They can Contain Any Number of Plaintiffs.

While any number of people may be represented in the suit, it usually involves hundreds or even thousands of litigants. The perception is that having many people included increases the validity of the complaint. It also translates to muscle; a large group of plaintiffs will probably have more success in pursuing a suit against a corporation with a legal team. That might actually work against the suit; some corporations want this type of legal action because it may limit their liability and often leads to out-of-court settlements for the minimum recovery.

Related Resource: Top 10 Online Paralegal Degree Programs of 2016

3. People Who Join These Suits May Lose Some Rights

People who join the group suit cannot then file suit individually. Whatever the verdict is, it is final. In some instances, though, a single litigant might have been seen as more deserving by the court and awarded a larger settlement. The chances are that individuals within the class action may recover very little. The person with the most to gain financially from the suit is the attorney. In suits against large corporations, it isn’t unusual for attorneys to collect multi-million-dollar fees. In addition, these suits are not always successful.

4. They Are Not Always Pursued Primarily for Money.

The suits brought against corporations in the 1960s alleging discrimination carried with them negative publicity about the companies. The procedures became tools to force businesses, especially in the south, to abandon discrimination in their hiring procedures and schools to admit more racially diverse student populations. Governments can become defendants in these suits as well. Recently the District of Colombia was sued for not planning adequately to serve people with disabilities in disasters.

5. There are Different Types of Class Suits

A securities suit is filed by investors or shareholders of a company because the business engaged in improper or fraudulent procedures. Consumers may pursue a suit against a company for product liability. This can include pharmaceutical companies that fail to warn of the side effects of a drug and industries that cause chemical spills or dump wastes negligently. Consumer suits are those filed against a company for unfair policies like charging exorbitant penalties for late payments or not complying with consumer rights laws. Employees might file a suit against corporations who violate labor and wage laws, who discriminate in hiring and promoting or who fail to provide safe working conditions.

The use of this legal tool ensures that people who do not have the financial means to sue will not be stripped of their rights to a legal remedy. People often must waive their participation in the suit in writing to be excluded. Although there certainly is some abuse of Class Action Lawsuits, they are a means to hold large corporations, governments and organizations accountable for their actions.