Class action Lawsuit? What is it exactly?
In English courts of law
The class action has developed from what used to be called group litigation, which was prevalent in medieval Britain from the early 1200’s. The medieval lawsuits involved a group of individuals suing or actually suing for actions under common law. These groups usually involved existing hierarchies and structures for example parishes, towns, villages and so forth. Contrary to modern day legal action the medieval English courts didn’t question the rights of the actual plaintiffs to take legal action (sue) and represent a larger group of people.
Around the time of 1390 and into the 1700’s this type of group litigation was demoted from being totally normal to an exception to the rule of normal litigation. As businesses developed and become larger the corporation concept was developed and this meant all of the wealthy supporters of the corporate entity became suspicious of any non incorporated legal entities. This in turn led to the formation of the voluntary association.
The massive changes caused by the wars of the roses and following that the star chamber meant that there was times when the common law courts were often rendered useless. During these hard times the Court of Chancery emerged and basically took charge of all group litigation matters. In 1850 the British Government had started to regulate and enact a variety of statutes on case by case basis to cope with problems faced by various sorts of organisations and as a result of this and the fact that equity pleading was also going out of fashion, group litigation in Britain was essentially not in use after this time.
This was essentially the case for many years in the UK until the appearance of the consumer rights act in 2015 which made it much easier for large groups of people to seek recompense from companies that have been accused of price fixing or cartel behavior.
It works by introducing ‘opt out’ actions whereby all the people affected are automatically a member of the class which is suing. Many consumer groups have commented saying it is a big step forward in helping groups of people secure compensation.
In the past, when groups of customers or companies wanted to take action on companies who were deemed to be fixing the prices of products/services it was very hard to sue as a group in the UK. Affected consumers needed to actually optin to the action or instead make a claim in their own name. This is because individual losses were negligible amounts , risks of legal action were high and so were the actual legal costs. As a result the only notable case during this tie was when which? magazine sued JJB sports who had taken part in price fixing with some of their replica football shirts. This action was eventually settled and the conumers who took part in it recieved £20 compensation for paing up to £39.99 for certain England and Man U football shirts during 2000 and 2001. Others who were not part of the claim but bought the shirts were also compensated.
Class Action in the USA – how it works
In the USA class action suits can be filed in federal and civil courts. The 2005 class action fairness act stated what the criteria are for cases that fall under federal jurisdiction.
Any claim that is over $5m or cases that involve plaintiffs or defendants from different states fall into this category. This is called diversity jurisdiction. Also, federal courts can actually decline hearing cases that include primary defendants who are state officials or even governments and can also decide not to hear cases involving plaintiff cases with less than one hundred individuals.
This is a rule in the federal rules of civil procedure and gives detailed instructions to plaintiffs, attorneys and judges and defendants in conducting a class action lawsuit. All states has its own rules of procedure for class actions but essentially they all closely resemble rule 23. Some of the main criteria of this rule are:
Appointing counsel – Judges are in charge of selecting counsel for the plaintiffs, the lawyer files the case but the judge will then assess if they are experienced enough in class action lawsuits, are very clever in the related area and will represent the people well
Certification – Judges will certify plaintiffs as a class. This means they agree the plaintiffs would not be able to sue on their own, they share a shared complaint and have a similar defense to one another. This is a main tenet of class action lawsuits. Only twenty to forty % of lawsuits that are filed as class actions actually receive certification.
Define the class – During the certification procedure the judge will setout a scope of the class. eg, anyone who had a hip replacement made by x company between 2010-2011, and they may subdivide beyond that also.
opting out – If the person is accepted as being in the ‘class’ they are included in the case and then bound by the judges judgement. If they want to file a separate suit they can then opt-out of the class action.
Notification – Judges will command that plaintiffs are all informed/notified of the class action by post, email, or phone depending on the class action scope.
Damages distribution – The judges and attorneys will come up with a plan to allot the damages fairly between the plaintiffs. The judge must approve any settlement. He/she can also dictate how much the attorneys are paid.
Class action lawsuits are very efficient and onerous in equal measure, the next section will outline pros and cons of this type of lawsuit.
Pros and Cons of Class Action Lawsuits
Class actions have a big advantage over individual lawsuits because they ensure if the case is won that everyone gets an equal share of the proceeds. Wheres if an individual was to sue a company for xx million and win, the company may be bankrupt before anyone else can get a payout. Class actions also ensure that attorneys are highly qualified and skilled in the correct areas, and most likely a sole person could not afford to pay for this quality of lawyer on their own, but a class action means its a shared cost.
A disadvantage to class action lawsuits if that if the plaintiffs in fact lose the case, then they are not able to launch a solo lawsuit on their own at a later date, their power is effectively spent. Hence if a plaintiff believes their damages are ore than the rest of the class, eg if they suffered far more as a result of xx action by yy company/individual then they can opt-out of the class action and pursue their own case for higher damages than a class action would allow.
The critics of this type of lawsuit say that attorneys will often file silly legal cases just to gain a quick settlement and a fat payday for themselves. In many such cases the amount of damages paid to individual plaintiffs can be very small (see the case below for a prime example of this) but the attorneys can leave the court with a big % of the total claim value which is often a lot of money.
Financing a class action lawsuit
Legal financing , also known as litigation finance in England and Wales is the means by which a litigant can fund their litigation (or even a law firm) through a 3rd party funding company.
In the same way as a legal defense fund does, legal financing companies provide loans for lawsuits and are often used by those without legal defense funds. In the UK sites like bestloans.net or moneysupermarket.com have providers that offer loans that can be used for lawsuit financing.
The loan taken can usually be used for different parts of the legal action, though if you take a personal loan to fund the suit then you can clearly use it for any part of the action like litigation or personal matters. Conversely, money that is gained through a legal defense fund may only be used to fund the litigation and actual legal costs.
Clearly, some private loan providers to assist legal action may want guarantees for the legal finance, this could be in the form of setting the loan against the value of your home or other valuable property. Thus, great care should be exercised before taking out a legal finance loan, because in the event the lawsuit is not successful, you could lose your home and other assets.
Past Case results for Class Action Lawsuits
– May 7, 2010
On March 12, 2010, the Court granted plaintiffs’ motion for final approval of the class action settlement and entered it Order thereon. Copies of the Court’s Order related to final approval are available on this website for your review. The Court’s final approval order is now final. Accordingly, class members who submitted valid claims will receive their settlement vouchers, pursuant to paragraaph 3.6 of the Settlement Agreement, via e-mail by May 22, 2010.
Plaintiffs Holly Barker and Brian Carness have filed lawsuits against defendants Skype Communications, S.a.r.l. (“Skype Communications”), Skype Technologies S.A., Skype, Inc. and eBay Inc., on its own behalf and as successor by merger to Skype Delaware Holdings, Inc. (collectively, the “Defendants”) challenging the Skype Credit expiration policy. Plaintiffs allege that Skype User Accounts and Skype Credit constitute “gift certificates” that cannot expire or be subject to inactivity fees under various states’ laws and that Defendants unlawfully applied the Skype Credit expiration policy against their Skype Credit balances after 180 days of inactivity in supposed violation of these various states’ laws, including applicable “gift certificate,” consumer protection and/or unfair and deceptive practices laws.