In America today, there are situations, like wide spread discrimination, and products, like pharmaceuticals or even tobacco, that can result in the injury or pain of hundreds, if not thousands of people. Rather than filing hundreds or thousands of lawsuits, these plaintiffs will combine forces and file a class action lawsuit.
For instance, there is a widely publicized class action lawsuit pending against Wal-Mart and Sam's Club related to sexual discrimination. Thousands of women have joined together to sue Wal-Mart because they have been denied advancement, equal pay, promotions and raises. The class action suit is by women who have worked for Wal-Mart since December 26, 1998 and seeks redress on all of these claims.
Some tobacco lawsuits have also been denoted as "Class Action" – in fact several class action tobacco lawsuits were filed in Canada in 2005. In one instance a 60 year old Canadian taxi driver is trying to win up to $100,000.00 for the 50,000 citizens of Quebec, who, between 1995 and 1998 have suffered from emphysema or cancer of the lungs, larynx or throat from smoking so called light cigarettes.
You’ll note in both of these examples that there is a specific date range and in some cases a high limit dollar amount associated with the class action lawsuit. There is also a specific claim that needs to be redressed. In one case, we have sexual discrimination claims while in another we have specific diseases related to smoking tobacco within a given period of time. This specificity is important in ensuring that the plaintiffs can prove their case and win redress.
Class action lawsuits were initially used primarily in anti-trust issues and securities lawsuits, but today they can be used in any number of situations. When used in the financial world, the monies associated with any compensation are clearly defined, as are any instances of theft, larceny or fraud on a widespread basis. Newer class action lawsuits go beyond the traditional securities class action suits covering issues like technology; products and failure to warn (based on product liability) and have a more complex path to follow to demonstrate pain and suffering, loss of income and the like.
Essentially, the idea is that a group of people will have more power than an individual and in many situations, this is the case. Groups are louder than individuals, can raise more money; can garner more attention from the media and are taken more seriously. Additionally, the efficiency of class actions lawsuits is appealing to the courts as it reduces the number of cases and can bring more "justice" to more people.
There are many pitfalls to class action lawsuits – mainly if you don’t know about a class action litigation that affects you and you don’t join the action before the deadline set, you may be out of luck for receiving any compensation or aid. Additionally, depending on the attorney chosen, their percentage may be quite high which reduces the amount of money you will receive. Finally, class action lawsuits can take years to be resolved, while an individual settlement may take much less time.