Class actions generally happen when a number of people have suffered the same or similar injuries. Often many of the individuals' injuries were relatively minor, such that they might not pursue legal redress on their own, but together, the value of the claims of the class add up. In class actions, people are often seeking justice for injuries caused by defective products or damages from consumer fraud, corporate misconduct, securities fraud, and employment practices.
Opting In: Notifying Class Members
Every person who would be affected by the court's decision in the class action is entitled to notice that the action has started. The court will order that the class representative, through his or her attorneys, make reasonable attempts to notify any unknown class members by general media such as television, an advertisement in a magazine or newspaper, or a posted flyer. People who are notified then have the opportunity to join in the action, called "opting in," or to decide not participate as a member of the class, or "opting out."
Class Action Outcomes
In a class action, the court's decision applies to every participant who has opted into the class. All individuals who fit within the court's original definition of a class member are bound by the final court decision, even if they never actually go to court or otherwise participate in the lawsuit. The judge decides the basic question of who wins with regard to the entire group. If the defendant wins, the class lawsuit is dismissed and the individuals in the group are prohibited from filing new or individual lawsuits over the same issue against the same defendant. If the class of plaintiffs wins, the court finds the defendant liable for the plaintiffs' injuries, and the amount of recovery is later divided among the plaintiffs.
Payment to the participants in the class action usually follows a "plan of distribution." With the help of the parties and their attorneys, the judge develops the plan to distribute the amount that the plaintiff class won in the lawsuit minus the attorneys' fees and litigation costs. Each member of the class may receive certain percentage of the total amount fund, or may receive a certain dollar figure. When the parties in a class action lawsuit decide to settle, the presiding judge must approve the settlement, making sure it is fair to all parties.