Class Action Filing Info News

We throw the term "class action suit" around all the time, we commonly hear about these suits in the media (and in the fliers that come through our mail boxes). But what exactly is involved in filing a class action suit, and how does the class action legal process work?

Why a class action suit?
This is the question you and your counsel must ask, because the court will "ask" it, and you will have the burden of proof before your case can even get into the courtroom.

Basically, a class action suit is undertaken when one or more individuals represent a group or class with similar claims against a defendant or group of defendants.

The obvious benefit of a class action suit is that there may be many plaintiffs, each owed a small amount of compensation, none of which in isolation would be worth hiring a lawyer to bring suit. If a group brings suit for a large amount to be divided up, it is easier to find lawyers willing to take on the case and a logical court venue. Also, if the entity being sued has limited assets and a lot of people have been harmed by that entity, a class action suit can ensure that judgements are not given out on a first- come-first-serve basis, leaving later plaintiffs in the lurch.

A class action suit can serve as a social governing process for the common good: consistent industry behavior standards can be enforced this way. Alternatively, if many smaller lawsuits are brought against a defendant, with varying outcomes, it becomes harder to monitor standards in future behavior of the offending entity or corporation. Class action suits result in efficiency of court process and court costs, both for consumer and, ultimately, the tax payer. Strategically, class action suits can serve to pressure a defendant into settling when they see the writing on the wall, and this helps to reduce the court systems' burdens.

The general benefits to filing a class action suit are clearly tied to the legal requirements for doing so.

Which court?
The governing law for filing a class action lawsuit in the United States is the Federal Rules of Civil Procedure 23 (FRCP). State laws tend to track the federal statutes and one can file a class action suit in either state or federal court. However, the Class Action Fairness Act of 2005 (28 U.S.C. Sections 1332(d), 1453 and 1711-1715) has placed new restrictions on where a suit can be filed. Under the new law, class action suits for over five million dollars can only be filed in the federal courts. Also, unless at least two-thirds of the members of all proposed plaintiffs, including the primary representatives of the class, are citizens of the state in which the case is to be filed, a class action can't be filed in that state but must be filed in the federal system.

Your case must be certified
A class action suit is not an inexpensive process. Unlike other kinds of cases where trial preparation can wait until closer to trial date – with the hope of settling – in a class action suit counsel must prepare their entire trial plan before filing the first pleadings. The reason for this is that the court must closely examine a case to determine whether to grant a motion for class certification, and the requirements are very restrictive, resting the burden of proof on the plaintiff's attorneys.

Basically the certification process is divided into two basic steps: first, the case must meet four requirements of FRCP Rule 23(a) (or its state equivalent). Then it must be determined to fall within the purvey of one of three subsection requirements of FRCP Rule 23(b).

The four requirements under Rule 23(a)are:

1. The number of defendants must be large enough that it is impractical to try it as a simple joinder case (multiple defendants);
2. The class must have common questions of fact or law;
3. The claims or defenses of the representatives need to be typical of the claims or defenses of rest of the class; and
4. The representatives must be able to fairly and adequately protect the interests of the class. (This includes making sure counsel is adequate to handle the case, and eliminating any conflicts of interest or unwieldy geographical factors.)

Once a case has passed muster under the first four requirements, it must satisfactorily answer three questions under Rule 23(b):

1. Are there inconsistent or varying adjudications? The court weighs whether, if it allowed the prosecution of separate actions in the matter, there would be a risk of creating a resulting incompatible standard of conduct for the defendant. The court also looks at how the class action suit will impact the interests of other potential plaintiffs relative to the same defendant, in other cases.
2. Does declaratory or injunctive relief apply? The court must determine whether the defendant acted – or refused to act – on grounds generally applicable to the class, making final declaratory or injunctive relief appropriate with respect to the class as a whole.
3. Do Common Questions Predominate? Here, the court determines whether the questions of law or fact that are common to the class members predominate any questions impacting only individual members. It also wants to know whether a a class action is really the best possible method for a fair and efficient resolution. To these ends, the court looks at the interests of the members of controlling separate actions; the extent of any existing litigation; the desirability of concentrating the litigation in the particular forum, and the difficulties likely to be encountered in management of the action.

Order and Notice of Class Action Suit
Once the court has determined that a class action case qualifies for certification, it issues an order and appoints class counsel under FRCP Rule 23(g). It will also direct appropriate notice to the class members, that is, "...the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." The notice must include the nature of the action; the definition of the class certified; the class claims, issues or defenses; that a class member may enter an appearance through counsel if the member so desires; that the court will exclude from the class any member who requests exclusion, stating when and how members may elect to be excluded; and the binding effect of a class judgement on class members under Rule 23(c)(3).

Through this process of notification, parties can decide whether or not they will be considered as part of the class action suit or wish to otherwise act individually with their own counsel. Of course such decisions must be made within timely parameters.

Also, if settlement offers are made, notices are sent out regarding that also, and regarding attorney fees to be paid out of any settlement proceeds.

Conduct of Actions
Although there are formulas governing class action suits, there are also other factors in the legal process that make each class action suit unique.

For example, the court is authorized to make orders during the suit governing many factors. These can range from prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument, to imposing conditions on parties or interveners. The court may give orders that notice must be given to class action members regarding any step in the proceeding, or allowing members the opportunity to intervene or otherwise come into the action. The court may issue orders requiring amendments of pleadings, and other procedural matters. Some of these factors can be predicted or anticipated by your counsel, others will be unexpected.

Basically, once things get rolling, your class action suit will proceed as other lawsuits do, with statutory motions, responses, countermotions, discovery, orders, etc.

Settlement
Unlike other court cases, where parties may "settle out of court", in a class action suit any settlement proceedings are governed by the court. The court must review and approve any offers or agreements, and, again, through a definitive notification process, the court will govern the method by which class members are notified and attorney fees are sorted out. There will also be hearings – formal and informal – to determine whether a settlement is fair, adequate and reasonable before final decisions are made.