Keep Our Families Safe

Justice for Society: What Class Action Lawsuits are Really About 

Don’t believe the hype: class action lawsuits serve a very positive and important roll in our society, streamlining justice, ensuring a day in court to those who might not be able to afford it, and holding companies accountable for their policies and products.

Don’t believe me?  Think about the $5.3 billion settlement to be paid by German companies that profited from Nazi slave labor practices. And the $508 million settlement the federal government will pay to compensate 1,100 women who were denied work at the US Information Agency (USIA) solely because of their gender. 

But what is a class action lawsuit exactly? Class actions are lawsuits in which the claims and rights of many people are decided in a single court proceeding. This keeps many people from having to file similar individual lawsuits and enables our courts to resolve similar claims in an economical and efficient fashion.

They also permit many individuals who have suffered relatively small injuries (that cumulatively result in huge windfalls for wrongdoer corporations) to help get bad products off the market, or change fraudulent or unfair business practices. For instance, class actions got the dangerous Dalkon Shield  IUD contraceptive off the market. They have also stopped such fraudulent business practices as mortgage companies= imposing excessive escrow charges.

But how do they work?

The first step is certification. Generally, when someone decides to take legal action against a company that has done him harm and discovers that many other people also want to hold the company accountable for the same reason, the court will be asked to allow these plaintiffs to join together to form a Aclass@ to pursue legal action. 

The judge must find that the class share a common interest in the legal issues. If the judge finds this and other factors present, he or she will certify the suit as a class action and the original plaintiff (or plaintiffs) then become the representatives suing on behalf of the group. 

Why would someone want to pursue a class action suit?  The main reason is to streamline the legal process.  If everyone who wishes to sue a single defendant gathers into a group, that group pays fewer attorneys to argue the case (because now it is one case, instead of many); the defendant being sued expends less time and money (because they are defending suits in one court instead of many); and the interests of those who may not have the time or energy to pursue a lawsuit on their own can still be represented in court.

 These class action suits have another advantage B they serve society=s interest by deterring wrongful conduct. In the Nazi slave labor case, a message was sent to companies that they should never profit from immoral and illegal actions. And in the USIA case, the government was forced to compensate those they discriminated against B teaching the government a valuable lesson.  

Sometimes judges allow attorneys to hammer out settlement agreements in which plaintiffs and defendants decide their obligations and payments on their own, eliminating the need for a trial. 

But such settlements should be rigorously reviewed for fairness by judges, because some may actually benefit wrongdoers, instead of deterring them. For instance, in the past wrongdoers sometimes have simply issued plaintiffs coupons that give discounts on their products, instead of fully compensating the plaintiffs (and society). In these instances, it is possible the company may have paid a small price to buy its way out of a huge liability. 

So how do we maintain the beneficial institution of class action lawsuits, while making sure that abuses of the system do not occur? We need to make sure we have enough judges to ensure that they have the time to closely supervise these cases and their outcomes.  And judges should make sure settlement agreements are open to public scrutiny, so that we can guarantee that agreements give victims proper compensation and that defendants are punished for their misbehavior. 

So as you can see, class action lawsuits can serve a dual purpose of ensuring efficient justice for plaintiffs and society.