About Business Litigation Information Center
Class action lawsuits are brought by named plaintiffs, usually one or two, whose alleged injuries are the same as those of a large number of other parties. The plaintiffs do not have to be individuals; businesses may also be class plaintiffs. The purpose of a class action is to combine many similar causes of action. The cause of the common injury could be from any number of sources, such as from violations of federal regulations, product defects, securities fraud, or environmental issues. When multiple plaintiffs with similar claims are involved, litigating each case individually would be expensive and time consuming. A class action suit allows for a combined effort, potentially saving litigation costs and time spent in preparation for and in court.
If you are contemplating involvement in a class action lawsuit, a trial attorney can advise you of all the important issues.
A class is initiated by the named plaintiffs and others in a similar situation. A public notification takes place to identify additional plaintiffs who may be eligible for inclusion in the class. The notification is usually accomplished via mailings, newspaper, and/or the Internet, and includes instructions on how to become a plaintiff. The class action itself begins like any other trial; there are initial proceedings, motion hearings, and pretrial conferences with the judge. However, the unique part of a class action is the motion to certify the class, usually filed either with the initial complaint or shortly thereafter.
A plaintiff eligible for membership in the class is not required to join, and may choose to opt out of the class and any future settlement or award. Occasionally, plaintiffs will opt out of a class in order to pursue the case on their own, believing that a better result could be obtained separately from the class action. Any judgment in the class action is binding on both the named plaintiff and all others included in the class.
Securities Class Actions
Although there is no specific business class action category (a business could be a plaintiff or defendant in a class action), securities class actions have gained prominence in recent years. A securities class action usually involves a lawsuit brought by investor-plaintiffs who have suffered economic loss from the devaluation of a stock or security. The loss in the stock or security’s value typically results from the artificial inflation of its value. If individuals purchased stock during a period when the value of the stock was fraudulently inflated, then they are likely eligible to be class plaintiffs.
Class-action lawyers work on contingency, which means that they will not receive payment unless there is recovery from the defendant. Legal costs in class actions can be quite high, and under a contingency fee arrangement, the plaintiffs’ attorneys usually cover the costs until conclusion of the suit. The cost of class actions suits is higher because the amount of preparation, research, and investigation required is ordinarily much higher than in an individual lawsuit.
If your business is facing a legal issue that other similarly situated plaintiffs face, class action may be a more efficient route than individual litigation. Class actions are very complex matters and consultation with an attorney experienced in class action lawsuits is advisable. An experienced business lawyer is an excellent resource for information about a class action in your situation.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.