In law a class action is a practical procedural device in litigation for determining the rights of and remedies, if any, for large numbers of people who have in common questions of law and fact.
Class Actions in the United States
Class Action lawsuits may be brought in Federal court if the case involves issues that affect potential class members in different states and has a nexus with federal law. However, such class action suits must have a certain equality of issues across state lines. This may be difficult as the civil law in the various states has significant differences and thus each state's set of claims may have to be handled separately or through the device of multi-district litigation (MDL). It is also possible to bring class action lawsuits under state law, and in some cases the court may extend its jurisdiction to all the members of the class both within the state and without (even internationally) as the key element is the jurisdiction that the court has over the defendant.
The procedure for filing a class action is to file suit with one or several named plaintiffs on behalf of a putative class. The putative class must consist of a group of individuals or business entities that have suffered a common wrong. Usually these kinds of cases are connected to some standard action on the part of a business, or some particular product defect or policy that was applied to all potential class members in a uniform matter. After the summons and complaint is filed the plaintiff usually has to bring a motion (sometimes at the same time as filing the summons and complaint) to have the class certified. In some jurisdictions class certification may require additional discovery in order to determine if the proposed class has any cohesiveness.
Upon the motion to certify the class the defendants may attack the named plaintiffs, their relationship with the law firm or firms handling the case, and their ability to finance the litigation. As well the court will examine the ability of the firm to prosecute the claim for the plaintiffs and their resources for dealing with class actions that usually require complex notices to be sent, published, or broadcast to the public where the class members can be found.
As part of this notice procedure there may have to be several notices, first a notice giving class members the opportunity to opt out of the class, i.e. if individuals wish to proceed with their own litigation they are entitled to do so, only to the extent that they give timely notice to the class counsel or the court that they are opting out. Second if there is a settlement proposal, the court will usually direct the class counsel to send a settlement notice to all the members of the certified class and all the members of any subclasses (that might have slightly different but uniform claims) informing them of the settlement offer being made by the defendants and the fact that the named plaintiffs have agreed to accept the settlement. Usually the court will also state the legal fees being paid to the class counsel as part of the settlement, which may be considerable shich makes class actions appealing to many plaintiff law firms.
In federal civil procedure law, which has generally be accepted by most state, the class action must have certain definite characteristics, (1) the class must be so large as to make individual suits impractical, (2) their must be legal or factual claims in common (3) the claims or defences must be typical of the plaintiffs or defendants (4) the representative parties must adequately protect the interests of the class.
Criticisms of Class Actions
There have been many criticisms of class actions. Some say that many class actions are brought by lawyers too willing to settle for coupon settlements for their clients when they can get very substantial legal fees for their efforts. These coupon settlements (which usually allow the plaintiffs to receive some kind of minimal benefit such as a small check or a coupon off future services or products with the defendant company) are also a way that the defendants forstall major liability because if a large number of people do not litigate their claims separately then the business is not adversely affected.
Some conservative critics also attack the institution of the class action as being a form of taxation upon large business corporations that prevents them from innovation. By forcing these businesses to defend these class actions prevents innovation and makes the burden on these corporations immense. This is generally the argument of those involved in tort reform.
Advantages of Class Actions
On the other side of the debate many lawyers see class actions as one of the most important legal tools to develop in the twentieth century. Class actions make it possible for a few people to change corporate practices and to bring wrongs to the attention of the court on more than a piecemeal basis. The claims may result in a settlement but they usually force the defendant business into adapting their policies to eliminate the practices that lead to the class action. In this way all of society benefits in way that are hard to quantify beyond the members of the class who receive compenstation.
Finally there are several other mechanisms which allow the litigation of large claims by a small number of law firms. The most well known is mass tort litigation which has been used in asbestos claims and also with various drugs that have had adverse effects after being released by major drug companies such drugs as Rezulin, Propulsid, and Serzone to name a few.
Availability
Many jurisdictions (for example: Germany, Austria) do not provide Class Action lawsuits.
