When most people consider taking on a major company, they consider hiring an expensive attorney and leaving the rest up to chance. The unfortunate reality is that taking on a company with potentially unlimited legal resources almost guarantees anyone on their own will lose before they even begin. This is where class action lawsuits come into play.
Class actions empower the little guy by combining multiple individual claims into one consolidated, major case. Instead of a million people attempting to sue for the same issue and flooding the court system, everyone with the same problem comes together, and a company can no longer ignore, or stretch litigation out financially for, each party involved.
How Is a Class Action Different?
For example, assume a company charged you an extra $50. You would never hire an attorney to recoup $50. The legal fees would not make it worth your while. But the company knows this. Unfortunately, this is how they get away with doing these kinds of things. But what if they charged 100,000 other people that extra $50? That’s $5 million in damages. That’s worth the legal fees. That’s worth going to trial on contingency (where the attorney only gets paid if you win). That’s worth a company actually fearing the potential for loss.
Class actions make economic sense where individual claims do not. They render thousands of minor issues into one significant legal issue that lawyers and companies alike can no longer ignore.
Who Can Actually Bring One?
Here’s where people go wrong: You do not need to be an attorney to bring a class action, and you do not need to be independently wealthy. You need, however, to be part of a group that was harmed in the same way.
The party that gets the ball rolling first becomes the “class representative” or “lead plaintiff.” The lead plaintiff works most closely with attorneys and makes significant decisions throughout the process. However, they’re not fronting all legal fees; lawyers usually work on contingency, and any costs throughout are absorbed through victory in settlement.
However, there are limited prerequisites. The group must be so large that one joint action makes more sense than thousands of individual ones. There must be common questions of law or fact among the group – all claims must be based on essentially the same premise. Further, your claim must be typical of what other class members have experienced.
Courts want to ensure that the lead plaintiff will adequately represent everyone’s interests, so this does not mean that you need to be perfect. Still, you cannot exist in a position where you have conflicts with others’ claims, nor can you bail out on discovery or trial proceedings. Your intentions should be at the forefront of helping others in this situation. Thus, for anyone wondering how to start a class action lawsuit, the practical first step would be to contact class action lawyers who will help you determine whether your situation meets the requirements.
The Certification Barrier
Not every action becomes a class action; it requires court certification – the legalese way of saying that the court gives the go-ahead for your suit to move forward as a class action.
This is where many cases fail. The defendant will fight certification tooth and nail because a certified class action holds much greater stakes than thousands of individual lawsuits. They argue whether the class is too small, too large, diverse enough or whether individual trials would serve better.
Judges look at the existence of common questions of law or fact among all claims; if your case requires discovering each person’s specific facts separately, then it probably will not be certified. However, if there is a substantive issue from the company that acted uniformly wrong (product defect in design, standard billing procedure), then chances are much better for a successful outcome.
Why Do Companies Settle?
Major corporations with deep pockets have capable attorneys working around the clock for them. If settling a class action is more plausible than going to trial, why does this happen?
Bad publicity; when a company faces off against thousands of consumers in the media spotlight, even if they supposedly win through trial, the perception of fighting angry customers does not help their cause. The cost; good attorneys come at a great price but employing armies of attorneys over months and years ends up costing even more money. Discovery alone (the portion of litigation when both sides share documents and interrogatories under oath) can run into millions of dollars; sometimes settling is just cheaper than waging war.
If companies lose at trial, they pay substantially more than what they anticipated settling for; there is always leverage in numbers far beyond personal stakes whenever individuals lose; companies want to avoid risking that potential debt down the line.
What Will You Get?
We’ve all seen postcards saying we’re entitled to $12.53 from some random class action we never knew we were a part of – what kind of joke is that?
Here’s the truth: As mentioned above, class actions work best where personal claims would yield low results but when small damages happen to many people at once. Therefore, it makes sense that people may only have lost $50 in negligence from this hypothetical example; if everyone had massive individual damage awards, they would file individual lawsuits.
So for example: Say a group has $10 million in damages as a result of wrongful conduct; attorneys can take approximately 25-35% from said pot (in addition to expenses). Therefore maybe $6-$7 million realistically goes to class members, and if there are 500K people in that class, everyone gets $12-$14 bucks. Not life-changing money by any means but better than nothing.
Some class actions do generate larger amounts on an individual level – for example, employment cases because a more defined subset may yield less joined claims over volume or severity assessed on a case-by-case basis that must be taken under advisement.
But often, it’s not about the check you receive.
What Matters More
Class actions do what individual lawsuits cannot: They compel companies to stop acting poorly.
When a company gets hit with a massive class action in aggregate damages, it’s unlikely they’re going to want to continue this practice and pay out over and over again like it’s business as usual. Defective products get recalled. Misleading advertising gets corrected. Illegal billing practices get removed. Injunctive relief (court-ordered requirements for companies to do or stop doing something) matters more than financial restitution most times because it prevents future harm.
Consumer protection specialists love class actions because they render accountability that wouldn’t exist otherwise; a company might absorb giving one customer their money back – but one million? That’s a business problem that needs fixing.
Time
It will take forever – years – not months – for anything to happen out of a class action lawsuit. The certification process alone can take over a year; discovery takes time; motions are interspersed throughout; if there is any appeal down the line, add years.
Many plaintiffs don’t see money for at least three to five years – a decade is not out of the question for many cases; people need patience and expectations grounded in reality. This isn’t about immediate financial gain; it’s about a marathon process where everyone will have to buy into it for its duration – as well as especially lead plaintiffs who must stay engaged throughout.
When Does It Make Sense?
The ultimate question is when does it make sense to start a class action lawsuit? When one-on-one lawsuits wouldn’t provide an avenue for relief but legitimate harm exists? When there’s significant evidence of wrongdoing that vindicated many people through similar issues? When companies refuse to make it right?
Essentially when looking out for someone else besides yourself? This is key; many lead plaintiffs did it so no one else had to go through what they did. It’s powerful to stand up against wrongdoing for yourself – and thousands of others who got treated poorly in similar ways.
The legal system isn’t perfect, and detractors will always exist regarding class actions. But for non-legal professional citizens forced to suffer at the hands of corporate wrongdoing, it’s one of the few mechanisms that successfully level the playing field – transforming what should be insignificant fights into worthwhile opportunities – especially when they’re won.
