Group Filing: What You Need to Know About Class Action Lawsuits

You receive a letter in the mail. It’s from a law firm. You’re part of a class-action lawsuit. Now what? Most people have no idea how to handle this kind of situation. Here’s what you need to know and how to respond.


Determine What The Action Is About

All class action suits are brought before a civil court of law in the U.S. They must be about something in particular, and the damages must be quantifiable in dollars and cents. In other words, these cases pay monetary damages.

For example, if you read about, and similar lawyers, you’ll notice that this type of lawyer seeks a judgment that results in you being paid money if you win. Contrast this with a criminal lawsuit, where there are no monetary damages paid. Instead, the punishment is typically imprisonment.

What Side Are You On?

Most of the time, you’re going to find yourself on the plaintiff side. Unless you’re running a company that does business with a lot of people, and those people feel they’ve been wronged by you, it’s unlikely that you will ever be the defendant.

Opting In/Opting Out

Opting in is almost always automatic. It means that you’re part of the lawsuit, and you’re entitled to the damages awarded in the suit. If you opt out, you won’t be entitled to any of the winnings, if any. Additionally, the court will almost always bar you from suing the company for the same claim in the future.

So, before you opt out, consider that companies cannot be sued twice for the same issue. The issue would generally be barred under the doctrine of ‘res judicata’. This a doctrine which prevents the same issue from being tried twice.

It’s also a way to eliminate unnecessary or wasteful lawsuits which try to bring legal cases against a party when the case has already been decided.

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The Process

Class action lawsuits can be filed at either the state or federal level. The Class Action Fairness Act of 2005 spells out the process for cases that are at the federal level. Individual states decide the process at the state level, but they usually follow similar general principles.

First, the judge must certify that the plaintiffs are, indeed, a class that can sue at law. In order for a class action to be valid, the judge must rule that it is impractical for each individual involved to sue individually.

All participants in the lawsuit must share a common complaint, and the defendants must share a similar defense for all plaintiffs.

For example, if all plaintiffs experienced the same, or similar, malfunction on a particular make and model of vehicle, these individuals could potentially become part of a class action lawsuit. The individuals would have to have experienced the same or similar problem, and would likely need to fill out a questionnaire or be interviewed.

In some cases, lawsuits can be initiated without interviewing. This happens when it’s clear that you’re part of the class action groups. For example, if you belong to a wholesale buyer’s club, and the action is being brought against the company for company-wide practices which inherently affect all members, you would automatically be included by virtue of your membership.

So long as this criteria is met, the case may be tried as a class action suit. But, the odds of a class action suit are slim. Only 20 to 40 percent of all cases that come before the court qualify.

Once the judge has certified the plaintiffs, he or she must define the scope of the characteristics of the class taking action. For example, if all plaintiffs have purchased the same make and model of vehicle, this would be considered a class. Judges can also divide the broad class into subclasses when it’s appropriate.

For example, a subclass of car owners might consist of people who purchased the vehicle between various years, with owners of 2005 models being grouped together, and owners of 2006 models being grouped together.

Or, a judge might group by where the people live or miles driven, based on the circumstances of the case.

Notification is then made. The judge must order all plaintiffs be notified by mail about the class action suit.

The next step is opting in or out. Usually, if you meet the normal criteria, you are automatically opted into a lawsuit. But, you may opt out if you wish. If you do, you usually waive any future claim against the company being sued.

The court then appoints a lawyer for the case. Usually, this is the lawyer who originally filed. Finally, if the plaintiffs win, the judge will order distribution of money to be paid out to the plaintiffs. The judge also determines how much the lawyers are paid for their services.