Class Action Basics
Frequently Asked Questions
A class action is a type of lawsuit in which the claims and rights of many people are decided in a single case. Specific plaintiffs are named in the lawsuit to assert the claims of the entire class so that everyone with the same claim or injury doesn't have to file their own separate lawsuit. Also, because they allow people whose damages are too small to warrant an individual lawsuit to try their cases together, class actions can often be the only practical way to stop illegal practices and recover ill-gotten gains. Class action suits have allowed individual people to stand up against the most powerful industries in the world and to hold them accountable for their actions.
Read an article, published in the SF Chronicle, on The Beneficial Effects of Class Action Suits, written by Mills Law Firm founder Robert Mills.
The typical class action lawsuit involves a situation where a large group of people is injured by the same conduct. There are four primary types of class action lawsuits:
- Securities Class Actions: Securities class actions are typically brought on behalf of a group of investors who have been injured as a result of a improper conduct, such as misstating earnings, concealing or misrepresenting risks, or otherwise engaging in activity detrimental to a company, partnership, or individual investors.
- Product liability/Personal Injury Class Actions: Product liability and personal injury class action lawsuits are generally brought when a defective product, such as a drug with harmful side effects, or "mass accident", such as a toxic spill harms many people.
- Consumer Class Actions: Consumer class actions are generally brought when consumers are injured by a company's systematic and illegal practices. Examples include illegal charges on bills, illegal penalties for late-payments, and failure to comply with consumer protection laws.
- Employment Class Actions: Employment class action lawsuits are typically brought on behalf of employees of a company for violations of the Labor Code, such as unpaid overtime, failure to provide breaks, as well as claims ranging from safety violations to systematic workplace discrimination.
A class action is generally initiated by one or more people who feel that they, along with a group of other people, have been wronged. A lawyer then files suit on behalf of the individual(s) and the class. At the appropriate time, the lawyer files a motion asking the court to formally recognize the case as a class action. If the court grants that motion, the other people who were similarly wronged are notified of the class action and are given an opportunity to participate in the class action as a member of the "class."
Although it sometimes helps if several people are named as plaintiffs in the suit, a single person is generally enough to file a lawsuit so long as the attorney for the class has a good faith belief that a number of other people were injured in a similar way. It generally takes at least 30-50 people with similar claims, and sometimes many more, to qualify as a class action.
Generally, the lawyer advances all of the costs and fees and, if the lawsuit is successful, petitions the court to award attorney fees and reimburse out-of-pocket costs. If the case is unsuccessful, the plaintiff's lawyer absorbs the loss.
People have different reasons for taking part in class actions. Many class members take pride in forcing a giant corporation that is breaking the law to change its ways and in helping to recover often millions of dollars for the other victims. Others bring class actions to recover money that was illegally taken from them, recognizing that they couldn't afford to pay a lawyer's hourly fees to bring an individual suit and that their individual claim isn't large enough to attract a lawyer who works on contingency.
If a class action is successful in winning relief for the class, most courts, understanding that class actions can be a powerful tool for consumers' rights in society and are to be encouraged, provide class representatives with "incentive awards." Judges are typically given broad discretion in deciding whether these awards are appropriate and in setting the amounts of the awards, which can range from hundreds of dollars to over $50,000. In deciding how much, if anything, to award to the class representatives, courts look at factors such as the amount of involvement of the class representative and the size of the recovery for the class. Typically, the Mills Firm has been able to secure an award of $20,000 for the class representative.
There are many very good class action attorneys in the United States. Because class action law is fairly specialized, you should look for an attorney with significant class action experience. Additionally, because there are many different types of class actions, look for a lawyer who has specific experience in the type of class action you wish to bring. In other words, an attorney who regularly brings consumer class actions might not be the best choice for a securities class action and vice-versa. Finally, it is a good idea to ask any lawyer you're considering a lot of questions before hiring him or her. For example, you might want to find out if he or she or a subordinate will be the "lead attorney" on your case. You should also ask how many cases the firm is currently handling - is yours going to be one of 30 or one of 300? Make sure you understand what's expected of you as the class representative, and always insist on a written representation agreement.