Class Action Litigation

Depending upon the type of class action, resolution of the lawsuit binds all members of the class certified by the Court.

Many cases start as the result of complaints by one or a handful of persons or companies to counsel or to governmental bodies.

Others follow upon government investigations and criminal indictments.

What are Some Examples of Class Action Lawsuits?

Examples of class action lawsuits include claims such as:

Antitrust- Merchants and consumers who allege payment of inflated prices for products caused by the anti-competitive activities of large corporations; and

Securities- investors who allege they are victimized by fraud committed in connection with the purchase or sale of stocks and other securities.

What are the Public Policy Reasons That Support Class Action Lawsuits?

Class action lawsuits are designed to advance several important public policy goals. A class action is often the sole means of enabling persons, even those with serious injuries, to remedy injustices committed by powerful corporations and institutions. As stated by former United States Supreme Court Justice William O. Douglas, "The class action is one of the few legal remedies the small claimant has against those who command the status quo."

Often, individuals and corporations may have suffered only limited damages and the cost of individual lawsuits would be far greater than the value of each claim. The total damages, however, to the class, could be quite large. The wrongdoer would have the incentive to continue its fraudulent conduct but for having to disgorge unlawfully gained profits returned via a class action.

Who Can Serve as a Class Representative?

In a class action lawsuit, one or more individuals or entities may serve as a class representative (also called a “named plaintiff”) on behalf of a larger group of people or businesses who suffered similar harm.

A class representative is a person or company whose claims are typical of the broader group and who agrees to help pursue the case on behalf of all affected parties.

Under federal law, a class representative must generally meet several basic requirements:

1. They Must Be a Member of the Class
The representative must have experienced the same type of injury or harm as the other members of the proposed class. For example, they may have purchased a product at an inflated price, paid an unlawful fee, or owned securities affected by alleged misconduct.

2. Their Claims Must Be Typical of the Class
The representative’s claims should arise from the same conduct by the defendant and be based on the same legal theories as the claims of other class members.

3. They Must Be Able to Fairly Represent the Class
The representative must be willing to assist in the case, work with counsel, and act in the best interests of the entire class.

Class representatives may include:

• Individual consumers

• Employees

• Small or large businesses

• Institutional investors

• Pension funds or public entities

In many cases, businesses or institutional investors serve as class representatives when they have suffered significant financial harm from antitrust violations, securities fraud, or other unlawful conduct.

Why Be A Class Representative?

Government enforcement of antitrust laws, and resulting criminal fines and penalties, tend to put money back in to the Federal Treasury – but often do not actually compensate direct purchasers impacted by cartel activity.  This is where the private sector comes in.  In fact, most antitrust suits are brought by businesses and individuals seeking damages for violations of the Sherman or Clayton Act. Private parties can also seek court orders preventing anticompetitive or fraudulent conduct (injunctive relief) or bring suits under state laws.  Private parties injured by certain violations can bring claims for up to three times their actual damages plus court costs and attorneys’ fees.  These parties are known as Class Representatives.

What is in it for a Class Representative?

Justice. Standing up for all similarly situated, overcharged or defrauded purchasers.

Recoupment of your loss.  Upon successful resolution of a matter, Class Representatives can receive not only the pro rata percentage of the loss they incurred, but also often a court awarded cash incentive or service award.

What is a Typical Percentage of Returned Overcharge?

It depends on a host of factors including the strength of the case, the strength of counsel, the ability of settling offenders to pay and economic analysis of class-wide impact and damages, among other factors.

What is an Incentive or Service Award?

An additional cash incentive award determined completely at the discretion of the Court.  These awards have run the range from $5,000 to as much as $200,000 and more.

What are the Financial Costs Associated with Being a Class Representative? 

Generally speaking, nothing. Class action cases are typically handled on a contingency fee basis. This means class representatives generally do not pay attorneys’ fees or litigation costs out of pocket. When a class action settles, the prosecuting counsel are typically paid as the court determines, either as a percentage of the common settlement fund created on behalf of all class members, or directly by defendants by means of a settlement agreement that provides for attorneys’ fees separate and apart from what is being paid into the common fund.  So, upon successful resolution of a matter, some part or provision of the settlement will be paid to prosecuting counsel.  Why not get the benefit of what that money is already paying for? Why not insure that your claims will be filed properly and maximized? Why not seek an incentive award?

What Should a Would-Be Class Representative Do at the Out-Set When Anticipating Becoming Involved in a Matter?

Preserve all documents and data pertaining to purchases of the products in question and relating to interactions with sellers of the products, whether they exist electronically or in hard copy.  As a Class Representative, or an absent class member, you will need these to make sure that your recovery is maximized. You will need to retain records relevant to the class period in order to do so. If anticipating being involved in litigation, it becomes your duty to preserve these documents.  The firm provides data preservation solutions after determining who the custodians of relevant paper and electronic documents are, and we help you make sure this information is properly preserved.

What are the Duties of a Class Representative?

To choose good counsel.

To stay abreast of the case by keeping informed via updates from counsel.

To review certain key filings, such as the complaint, prior to filing.

To preserve and produce purchase data and related documents as requested.

To provide testimony as requested, typically regarding your purchases of the price-fixed product, sometimes in the form of a deposition.

Want to Learn More?

If you believe you, your company, or organization may have been harmed by anticompetitive conduct, securities fraud, or other unlawful practices, you may be able to serve as a class representative and help recover damages on behalf of a broader group.

For more information, please contact Grabar Law Office to discuss whether serving as a class representative may be appropriate in your situation.

To learn more, contact us today!