Class Action Litigation Basics

What is a class action?

A class action is a type of lawsuit in which one or several persons or companies bring an action on behalf of a larger group of persons or companies.

While the subject matter of class action litigation can vary widely, two factors are almost always present in every class action:

​1.  The issues in dispute are common to all members of the class, and

2.  The persons or companies affected are so numerous as to make it impracticable to bring all of their claims separately before the court

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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.

Telephone Consumer Protection Act, 47 U.S.C. § 227- Did you know that it is unlawful to market via use of computer robo-dialing cellular phone numbers, via text message, or by sending unsolicited faxes unless the unsolicited advertisement is from a sender with an established business relationship with the recipient? Federal law provides for a private right of action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation.  The court can triple this $500 per occurrence damage award to $1,500 per occurrence in its discretion.

What are 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.

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.

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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 ratapercentage of the loss they incurred, but also often a court awarded cash incentive.

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 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. 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.

To learn more, contact us today!