CLASS ACTION FAQ

What makes a particular case a possible class action?

In general a class action must have three things:

1. 1.There must be more people in the class than could reasonably and efficiently be brought into court as individual plaintiffs.  There is no exact number for this “numerosity” requirement, but usually the minimum is thought of as at least 40 o r 50 class members, and certainly can range upward into the thousands.
   

2. 2.The claims of the class must be similar or generally in common such that the class members are in similar situations with respect to the issues being decided.  This is so that when a decision is made by the court it will apply  to all the class members, not just to isolated individuals.
   

3. 3.The claims of the class representatives must be typical of the claims of the class as a whole, such that the class representatives have an interest in asserting and prosecuting those claims, and the evidence applicable to class representatives, and decisions made regarding class representative claim, is typical to what would also be fair for the class as a whole.
   

What is the role of a class representative?  Do they get more money?

A class representative serves a vital function in the class action case by acting on behalf of the other class members.  There may by only one class representative, or several.  In our practice, we usually try to have three or four class representatives for each case.  The class representative owes a duty to the class to advocate what’s best for the class, not for himself or herself individually.  The class representative will work closely with the attorneys on the case to coordinate communications with other class members, evaluate facts and investigation materials, and discuss potential settlements.  A class representative performs a valuable service for the class as a whole.  The courts allow class representatives to receive “service rewards” based on their contributions of time and effort.  Such service awards are not guaranteed, and must be approved by the court.  However, in our practice we routinely obtain service awards for our class representatives that can range from a few to several thousand dollars, depending on the value of the case, time expended by the class representative, and the practice of the particular court where the case is pending.  In general, while there may be a financial reward to being a class representative, the better approach is to view this role as one undertaken primarily for the sake of accomplishing justice for a large group of people in s situation similar to that of the class representative.

How are the lawyers paid in a class action case?

Our firm, like most others who handle class action cases, does not charge the class a fee for legal services, but instead works on a contingency fee basis whereby our legal fees and expenses are only recovered as a percentage of what is ultimately obtained for the class.  If we are not successful in obtaining a result, we don’t get paid.  If we are successful, we typically take 25% to 33% of the total settlement or verdict  as our fee.  In some cases the law provides that a prevailing plaintiff class may recover its legal fees and costs from the defendant.  In those situations we will negotiate with the defendant for reimbursement of our fees, or apply to the court for an award of attorneys fees and costs.  Obviously any firm that handles class action litigation on a contingency fee has a lot of risk in spending hundred or even thousands of potentially uncompensated time  and in fronting thousands of dollars in litigation costs that may never be recovered.  That is way we closely evaluate cases before proceeding, to assure ourselves that the case is meritorious and will not leave the class disappointed, and our firm in economic distress by spending our time working without compensation.  We often reject class action cases because they are so difficult, time consuming, and fraught with risk that only the good ones should be pursued!

How do other class members join the class?  Do they have a choice?

After a class action case is filed, we will make a motion with the court for the class certification.  It that motion we will need to demonstrate to the court that the case is appropriately prosecuted as a class action, and that notice should be sent out to all potential and “putative” class members, giving them an opportunity to participate.  Usually the notice is sent out to individual class members by a denominated “claims” administrator” selected by our firm and approved by the court.  This is an organization that specializes  in compiling and organizing names and addresses, doing mass mailings of the notice materials, and tracing returned mailings.  The “Notice” sent to all potential class members contains a brief description of the case, the claims, and the identity of the court and the lawyers.  Class members may contact the lawyers to discuss the case in further detail.  Also, the notice to the class may either be an “opt-in” notice (this requires an affirmative act on the part of the class member to join the case) or an “opt-out” notice (this means that you are automatically included as part of the class unless an affirmative act of “opting out” is undertaken.)  In employment cases under the federal Fair Labor Standards Act the class is an “opt-in” class, and employees getting notice are not part of the class until they return the “opt-in consent to join” form that is included with the notice materials.  Similarly, the statue of limitations will continue to run on their claims until they return the “consent to join” form to the court.  Alternatively, in most other class actions (consumer fraud cases for example) class members are automatically part of the class without doing anything - and if they do nothing they continue to be part of the class.  If, on the other hand, a class member chooses to be removed from the class, he or she can return the “opt-out” or exclusion form that will be part of the notice materials.

What is the effect of opting out of a class action?

If a potential class member opts out of a class he or she will not receive any of the recovery that is shared among all class members.  The individual who opts out of the class would be free to pursue an individual case against the defendant with a separate lawyer, since class counsel will not represent individual “opt out” plaintiffs.  In the vast majority of situations it is not economically feasible for an individual to pursue a separate action, and thus opting out of the class will leave the individual without legal representation or any realistic expectation of a recover.

How is the money distributed or allocated among class members?

All class action settlements (and the vast majority of class action cases that are certified by the court ultimately are settled before trial) must be approved by the court.  The court will approve a distribution and allocation plan contained in a settlement agreement worked out by the parties.  These may vary considerably depending on the nature of the case, the amounts in controversy, and the practicalities of distribution to large numbers of class members.  Once the settlement has been approved by the court notice of the settlement is again sent to class members, who have an opportunity to object to the settlement if they so choose, and to appear before the court and present arguments as to why in their view the settlement is not fair, reasonable and adequate.  Once finally approved, many settlements will also be subject to a “claims made” provision whereby individual class members must return a form indicating that they are making a claim, verifying information as to their class member status, and their address for receipt of settlement proceeds.  Once completed, the claims administrator will then forward to each authorized class member their proportionate share of the recovery.