What is a class action? Everything You Need To Know

Sometimes, companies or business entities cause harm to consumers through their harmful business practices by selling products with flaws or defects or by engaging in fraudulent practices that cause consumers to suffer financially.

In cases such as these, affected individuals have several options to explore. However, there is one option that can get them the justice they deserve without having to spend a fortune on legal fees: class action. The following article discusses everything you need to know about class action.  

What is a class action?

If you have wondered, “What is a class action?” wonder no more. A class action refers to a lawsuit that an individual or a small group of individuals files on behalf of a larger group of individuals who have suffered similar harm due to a defendant’s misconduct. It is important to know what is a class action before you embark on the journey to seeking redress.

Categories Of Class Actions

Now that you know what a class action is, it is time to explore the different categories of class actions. There are four categories of class actions. These include consumer class actions, securities class actions, breach of contract class action actions, and personal injury and product liability class actions.

Consumer Class Actions

Consumer class actions are lawsuits brought against companies or business entities that have caused harm to consumers through false advertising, deceptive practices, and releasing defective products.

Securities Class Actions

Securities class actions are lawsuits filed by investors that have suffered financial loss after buying or selling a company’s publicly traded securities. In most cases, these investors suffer economic injury because these companies make untrue statements or omit important information. 

Breach Of Contract Class Actions

Breach of contract class actions are lawsuits filed by individuals against a company that has violated its contractual obligations and, in the process, caused harm or financial loss to the individuals. 

Personal Injury And Product Liability Class Actions

Personal injury and product liability class actions are legal proceedings where groups of individuals that have suffered similar damages or injuries due to a company’s actions or negligence join forces to file a lawsuit. With knowledge of what is a class action and an understanding of the categories of class actions, you can determine which category your claim falls under.

Class Action Certification

Before class members can pursue a class action, the court certifies the class and ensures it meets the following prerequisites: numerosity, commonality, typicality, and adequacy of representation.

  1. Numerosity: There must be a large group of individuals that have suffered similar damages or sustained similar injuries because of a company’s wrongdoing(s) and have a shared right to pursue legal action collectively.
  2. Commonality: The individual claims must arise from the same circumstance, occurrence, or event.
  3. Typicality: The lead plaintiff(s) (an individual or individuals from the group that serves class representatives) must advance the interests of the entire class.
  4. Adequacy: The court must be satisfied that the lead plaintiff(s) can represent the interests of the entire class. The court must also ensure that the lead plaintiff(s) has no conflict of interest with other class members.

Class Action Process

After the lead plaintiff(s) file a class action lawsuit, the court determines whether or not to certify the class. If the court certifies the class, the case goes through a discovery process where the plaintiffs and defendants gather evidence.

Subsequently, the lead plaintiff(s) and the defendants may settle out of court, or if both parties fail to reach a settlement, the case will proceed to trial. If the settlement is successful, the court approves it and notifies class members of their right to claim compensation. If the case proceeds to trial, the court’s decision applies to the whole group.

Purpose And Benefits Of Class Actions

Class actions seek to address grievances and obtain justice on behalf of a larger group. They consolidate individual claims into one class action, which, in turn, lowers litigation costs, reduces court backlog, and results in greater judicial efficiency since the litigation will involve fewer judges and take less cumulative court time. Moreover, class actions provide a platform where class members with limited resources can file lawsuits against powerful companies and get the justice they deserve.

Harness The Power Of Class Action

The article above has explored everything you need to know about class action, from what its definition to the class action process. We are confident that it has equipped you with the knowledge to navigate this process and obtain the compensation you deserve for the harm you have suffered.

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