What Is A Class Action Lawsuit?
A class action lawsuit is a legal proceeding where one or several plaintiffs file a lawsuit against a defendant on behalf of a class of members who have similar grievances. The individual who initiates the class action is known as the “named plaintiff.” The named plaintiff drives the litigation and assists attorneys with information for the action and makes important decisions for the entire class, such as settlement amounts. A typical class action lawsuit involves hundreds or even thousands of people. Many class action lawsuits only involve relatively small individual claims and this small claim size makes the claim not cost-effective to file a lawsuit on an individual basis. However, if hundreds or even thousands of these claims are put together in one lawsuit though, all of the claimants can get some relief. When the class action is filed the court considers four factors to determine whether it is appropriate to proceed as a class action:
- Number – whether there are enough claims to use the class action form;
- Commonality – whether the claims are sufficiently alike to use the class action form;
- Typicality – whether the class representatives’ claims are typical of all claims; and
- Adequacy – whether the representatives are up to the task of representing the class fairly and adequately.
For example, a bank could be sued in a class action if it improperly charged overdraft fees to a large number of banking customers. Class actions may also be filed against a drug maker if the drug turns out to have bad side effects that injure a number of people. However, class actions are less typical pharmaceutical claims and often less advantageous to individual plaintiffs because the results are less individualized.