Class Actions

       Class action lawsuits, by their nature, typically involve large numbers of people.  The entire reason that class actions have developed was to allow large numbers of people that have been damaged a little bit to be able to make it worthwhile to have the cases come to court.  Class actions that are brought in federal court are permitted under Rule 23 and 28 of the federal rules of civil procedure.

       A class action lawsuit may be filed in federal court if the claim arises under federal law, or if the claim falls under 28 USCA § 1332(d) or § 1332(d) (2).   A federal district court will have jurisdiction of any class action case where there is more than $5,000,000 in damages and:

  • a plaintiff is a citizen of a state different from any defendant,
  • a plaintiff is a foreign state or a foreign citizen or a subject of a foreign state and a defendant is a citizen of a different state or
  • a plaintiff is a citizen of a state and a defendant is a foreign state or a foreign citizen or is a subject of a foreign state.

       It is not unusual to have a class action lawsuit that is nationwide but it is necessary that the plaintiffs show that there are similar issues and laws in different states, if different state laws apply.  Plaintiff classes are possible, but such suits must have a commonality of issues across state lines.  Through “Multi-District Litigation” cases can be consolidated similar to a class action.  These cases are not technically “class actions’ and must be tried separately, however many of the pre-trial matters and discovery are consolidated, much like a class action case.  Generally, state courts are favorable to plaintiffs and federal courts are favorable to defendants.  For this reason, many cases, class action and otherwise, start in state courts and the defendants fight to move them to federal court.

       In a class action, one or more “named plaintiffs” file suit on behalf of a the entire class.  In a class action case, the lawsuit is filed, the plaintiff then may file a motion to have the class certified.  There is frequently a mini-lawsuit before the lawsuit to determine whether or not it is appropriate to have the case proceed as a typical lawsuit or as a class action.

       Defendants frequently object to a class action because the issues in the case are not appropriate to be handled as a class action.  Another common objection is that the particular named plaintiffs are not sufficiently representative of the class as a whole.  It is also not unusual for the defendants to object that the named plaintiffs are too closely aligned with the law firm handling the class action.  Also, the court will determine whether or not the law firm is capable financially and legally to handle such a claim.

       In most cases a notice describing the class action must be sent, published, and/or broadcast to prospective class members.  There are often several notices sent to class members.  The first notice gives class members the opportunity to opt out of the class.  If a prospective class member wishes to “opt out” of the class action and pursue the case on their own they have that right.

       Also, if there is a proposed settlement then the court will generally instruct class counsel to send a settlement notice to all of the potential members of the certified class.  This settlement notice should inform them about all of the details of the proposed settlement.

       Even though certain state laws have some subtle differences, generally speaking there are four requirements to get a class action certified: Commonality, Adequacy, Numerosity and Typicality.

  • Commonality means that there are one or more legal and/or factual claims that are common to the entire class,
  • Adequacy means that the interests of the class will be adequately protected by the representative parties,
  • Numerosity means the the class is so big that individual lawsuits would be impractical and
  • Typicality means that the claims or defenses of the named plaintiffs are typical of the plaintiffs as a whole.