FAQ On Class Actions

Although class actions are often discussed in the media, many people are unfamiliar with what they are and how they work. Here are answers to some of the most frequently asked questions about class actions. Please note that this general information might not apply to your particular situation, and you should always consult an experienced lawyer about any specific problem or question that you may have.

Q: How much do I have to pay a lawyer in order to bring a class action?

A: Nothing. Class action lawyers typically represent plaintiffs on a contingent basis. That means that they receive attorneys fees only if they obtain a favorable result in the case, either by winning a trial or through settlement. In addition, class action lawyers typically advance the costs of litigation, including filing fees, transcript costs, travel expenses, copying and courier charges, and expert fees. The lawyers for the plaintiffs are paid their fees and reimbursed their expenses out of the monies recovered for the class at the end of the case.

Q: What exactly is a class action?

A: A class action is a procedure recognized in federal court and in most state courts for handling lawsuits that affect large numbers of people. A plaintiff in a class action sues not just on his or her own behalf, but on behalf of all persons "similarly situated" who have been injured as a result of the same misconduct. The plaintiff becomes a "class representative" who sues on behalf of the class of injured people and represents their interests as well as his/her own. The courts have special rules to ensure that the class representative will fairly represent the interests of the other class members, and to ensure that any settlement of the case will be fair for all class members.

Q: What types of cases become class actions?

A: In general, class actions arise where the wrongful conduct of one or a small group of entities, such as governments or corporations, act in a way which impacts a large number of people. For example, if two corporations conspire to fix the prices of their products, that would be an antitrust violation that affects all the people who purchased the product at unlawfully inflated prices. Similarly, a publicly traded corporation which lies to the public about its financial condition in order to keep the price of its stock up has typically committed securities fraud, harming all those investors who purchased the stock on the strength of the misrepresentations and then suffered a loss when the stock price dropped. Many other situations are appropriate for class actions as well.

Q: What does it take to be a class representative?

A: A plaintiff must meet certain basic requirements in order to be certified by the court as class representative. The plaintiff's situation must be typical of the situation in which other class members find themselves. He/she must have read the complaint and have at least a basic understanding of the nature of the dispute. Finally, the plaintiff must be represented by competent and experienced class action counsel. Most class representatives are not experts or professionals, but are normal, everyday people who have suffered a loss due to the defendants' wrongdoing. Organizations such as small businesses and employee benefit plans also often serve as class representatives.

Q: What are the duties of a class representative?

A: Although the duties of a class representative are important, they are not very burdensome. The most important thing is that a class representative act in the best interests of the class as a whole. A class representative must cooperate with his/her counsel in providing information and documents that are relevant to the case. The class representative's lawyer will ensure that these tasks do not become unduly burdensome or intrude into private and irrelevant matters.

A class representative will normally have to sit for a deposition. This means that lawyers for the defendants will ask him or her questions under oath, which must be answered honestly and accurately. The lawyer works with the class representative to make sure he or she is thoroughly prepared for the occasion. Preparing for and taking the deposition usually takes a day.

In addition, it is necessary for the class representative to keep up with the progress of the case and to read the updates provided by class counsel. In the event the case goes to trial, the class representativeyou may be required to testify.

Q: Do I get paid for my time and effort as a class representative?

A: You do not get paid a fee for agreeing to be a class representative. However, in some class actions it is appropriate to ask for - and courts have granted - incentive awards to compensate the class representative for the time and effort expended on behalf of the class. However, there is no guarantee that such an award will be granted in any given case. In class actions involving securities fraud, such incentive awards are not permitted, but the class representative is entitled to compensation for the time spent in assisting class counsel in preparing the case.

Q: How is a class action handled by the court?

A: Procedurally, class actions are not too different from any civil case. The plaintiff files a complaint, which must be answered by the defendants. The parties engage in discovery, a process by which each side gets to uncover all of the documents and information in the possession of the other side related to the case. At times, the lawyers will file motions with the court to seek to dismiss some or all of the claims, narrow the issues, or in general to resolve procedural disputes. Normally, the defendants will seek to have the complaint dismissed prior to trial, on the grounds that the facts could not possibly support a finding against them. If those motions fail, the case ultimately goes to trial or is settled.

However, class actions do tend to be larger and involve more complicated issues than most other civil cases. This means that although many of the procedural steps are the same as other civil cases, the judge will be more involved in the handling of the case than normal, conducting more frequent status conferences to ensure that the case is proceeding, and to resolve procedural disputes.

In addition, a case cannot proceed as a class action unless the court certifies the class. The Plaintiff must demonstrate that this case is appropriate to be handled as a class action and that the plaintiff is an adequate class representative. The plaintiff must show, among other things, that the number of injured parties is sufficiently large, that the claims of the individual plaintiff present common issues of fact and law with those of the class, and that the individual claims are typical of those of the class.

Q: How do I know that a settlement will be fair?

A: The terms of any settlement of a class action must be submitted in detail to the court, with evidence demonstrating why the settlement is fair and reasonable and in the best interests of the class. In addition, all class members are notified of the terms of the proposed settlement and are given an opportunity to object to the terms of the settlement and to appear in court to present their objections in person (if they so choose). The court examines all the evidence and objections and only then decides whether to approve the settlement.

Q: How does the amount of attorneys fees get decided?

A: Plaintiff's counsel must submit detailed records to the court in support of their petition for attorneys fees. Most courts award attorneys fees as a percentage of the total settlement fund, but they also look to the nature of the relief achieved in the settlement, the quality of the legal work, the amount of time reasonably spent by the lawyers, and other factors.

Q: How long does a class action take?

A: That depends on the nature of the case, the judge, and the conduct of the defendants. A few class actions are settled very early in the process. Some courts have case loads that permit quick handling of the case with short time periods for the taking of discovery, filing of motions, and preparation for trial. On the other hand, the litigation can be significantly delayed when the judge fails to promptly decide motions and other disputes. Sometimes a case will be dismissed and only reinstated on appeal. Finally, the amount of time will vary greatly depending upon what jurisdiction the case is proceeding in. While every case is different, it is not unusual for a class action to take 2-4 years from the filing of the complaint to a final resolution.

Q: I received a printed notice that says I am a class member in a case. What do I have to do?

A: Although class notices sometimes seem complicated, it is important to read them carefully. They will usually explain specifically what you have to do. Usually, if you approve of the settlement and want to receive your share of it, you simply have to file a Proof of Claim by the due date listed in the notice. If you object to the settlement, or want to "opt out" of the settlement and pursue an individual claim against the defendant, the notice will tell you how to do that.

Q: What happens if there is money left over in the settlement fund?

A: On occasion, there is some money left over after all of the initial checks are mailed. The remaining money is then disbursed according to the terms of the settlement agreement. Sometimes, it provides that the remaining money go to a charity or nonprofit organization approved by the court.

If you have a specific question about one of our cases, contact us.