Class Action Lawsuits: The Basics
A class action is a type of lawsuit in which one or more individuals file on behalf of a larger group. The affected group is certified by a judge as a “class.” Class members have one important thing in common: they all claim that they’ve been harmed by a similar cause or source.
The class members are represented by a small group of plaintiffs (those filing the lawsuit), known as “class representatives.” The plaintiff(s) may file against a single defendant or a small group of defendants. A defendant is the party against whom a lawsuit is brought and can include individuals, businesses, nonprofits, or government entities.
Class Action Lawsuits: Examples
A very well-known class action was filed against BP for the company’s 2010 Deepwater Horizon oil spill in the Gulf of Mexico. A few plaintiffs filed 100,000 claims on behalf of fishermen, property owners, and others similarly harmed. BP settled for $20 billion in 2016.
Other major class-action lawsuits:
- Bristol-Myers Squibb, 3M and Baxter Healthcare’s $3.4 billion settlement for damage to women’s health from silicone breast implants (1995)
- Enron’s $7.2 billion settlement for securities fraud (2008)
- DuPont and Chemours $671 million settlement for groundwater contamination from a chemical used to make Teflon
Class Actions Lawsuits: The Process
Judges decide whether or not to certify a class action based on a set of specific considerations, such as:
- Whether those filing the lawsuit are typical of the group as a whole
- Whether the harm shared in common outweighs the individual differences among the cases
- Whether resolving the cases individually could result in conflicting outcomes
- Whether the compensation sought is appropriate for everyone involved.
Once a class action is certified, all potential class members are notified by mail or another reasonable method. These notices include a description of the facts and options to opt out of the class action.
Participating in class actions is free for the plaintiffs. Class action lawyers are usually only paid if they get a court award or settlement for the class members.
Some plaintiffs may opt out if they would rather file their own lawsuit at a later date, in which case they won’t receive any compensation from the class-action.
Once the class members are known, the class action proceeds much like any other trial.