What Are Class Action Lawsuits and How Do They Work?
In 1960, seven “leading ladies” of New Orleans joined forces and sued the French Opera Trades Ball because the charity they were working on did not properly distribute the proceeds from the opera event. Known as the French Opera Trades Ball v. Tarrant, this case marked the earliest use of a class action lawsuit in Louisiana.
Since then, Louisiana has incorporated the rules of class action litigation into the Louisiana Code of Civil Procedure. Through this code, any group of people who have a common interest in a lawsuit can get together and seek adequate compensation for wrongdoing.
Successful class action suits help victims of a suit seek justice from large corporations or other organizations engaging in wrongful actions. But, filing legal action as a class action lawsuit is complicated.
There are various state and federal rules and civil procedures that the parties involved must follow to become certified as a class. Understanding these rules and how a class action lawsuit works can help you and other injured parties properly file a suit and increase your chances for success.
Our Schwartz Law professionals have prepared a guide on class action lawsuits and the processes you need to follow if you have been involved in such a lawsuit.
What Is a Class Action Lawsuit?
A class action lawsuit is a type of lawsuit that decides many people's rights and claims in a single case. For example, in the year 2000, a court awarded users of the diet drug Fen-Phen a total amount of more than $1.5 million because the drug was causing fatal heart valve damage.
Class action suits involve plaintiffs or class members who have experienced similar damages because of the illegal actions of another party, usually a corporation or powerful industry leaders. They form a single lawsuit because, together, they have a stronger case.
Additionally, joining together makes legal costs less of a burden. The reality is that it can cost too much for individual claimants to take a powerful company to court.
A class action starts with one individual, the lead plaintiff, who gathers other people who have suffered similar damages. Every class member willingly participates in the class action.
The lead plaintiff and other members will usually select the class counsel. The class counsel or class representative is an experienced attorney or law firm representing the entire class in court.
The attorney files the necessary documents to certify the class. If approved, every individual who believes they have a right to compensation can join and become a member of the class. Once the class action is certified, other members can also opt-out or decline to participate in the lawsuit.
How Many People Should a Class Action Lawsuit Have?
There should be many class members for a court in Louisiana to take a class action lawsuit seriously.
The 2009 Louisiana Laws of Civil Procedure do not specify how many people should be in a class action lawsuit. Still, there are precedents that have set expectations in the state.
The general rule is that a class action in Louisiana needs to have at least 40 class members. The rule comes from the 1995 case of Vela v. Plaquemines Parish Government, where the court stated that if the class lawsuit has more than 40 members, it is impractical for them to sue the Parish individually.
Once the class is certified, attorneys follow state law or federal law, depending on what type of court is hearing the case. For example, minor cases may be settled in state court, while others might go to federal court or the Supreme Court.
Filing an Individual Lawsuit vs. A Class Action in Louisiana
State and federal rules state that if many people have experienced similar damages, they should file a class action lawsuit. Some of the most common scenarios for filing class action suits in Louisiana include:
- Deceptive or Unfair Trade Practices are when businesses make false statements to encourage consumers to purchase goods or services, such as false advertising.
- Product Liability and Personal Injury can happen when a company sells a defective product or one with harmful side effects.
- Consumer class actions happen when consumers experience damages because of a company's illegal or negligent practices, such as unlawful debt collection or non-compliance with consumer laws.
- Employment class actions occur when employees sue a company for violation of labor laws, such as unpaid overtime, safety violations, or workplace discrimination.
Class Action Lawsuits in Louisiana
Louisiana has seen its fair share of successful class action lawsuits since the 1960s. Some of the most noteworthy cases are:
- In 2015, a judge ordered the the energy company, BP, to pay out $20 billion to the Gulf States for the Deepwater Horizon oil spill in 2010.
- In 2008, the financial giant American International Group (AIG) had to compensate The Teachers' Retirement System (TRS) of Louisiana $115 million.
- In 2015, Takeda Pharmaceuticals paid $2.4 billion to settle more than 9,000 claims because of harm caused by its diabetes drug Actos.
In many cases, such as with Takeda Pharmaceuticals, the judge can be from Louisiana, but the case involves nationwide participants. Clearly, class actions can take many forms. There can be dozens, hundreds, or thousands of participants that cross state lines, and the lawsuit can enter into federal court.
Examples of Successful Class Actions in the United States
Class action suits are often successful in the U.S. because procedural rules adequately protect consumer and individual rights, so many courts side with the damaged group of potential claimants. Some of the largest successful class actions in the U.S include the following cases:
- In the famous Philip Morrison case, the tobacco giant compensated 46 U.S states with $206 billion for tobacco side effects.
- Volkswagen paid $14.7 to consumers who had bought cars with fake emission analyses.
- Shareholders of Enron received $7.2 billion because the company engaged in securities fraud.
- Telecommunications company, WorldCom, paid $6.1 billion to shareholders because it engaged in accounting fraud.
Should You Participate in a Class Action Lawsuit?
If you have incurred damages similar to many other people, you could participate in a class action lawsuit. There are many reasons why you might decide to become a member of a single lawsuit instead of filing an individual suit.
#1: Stand Against Powerful Wrongdoing
Class actions are usually directed toward powerful companies. These companies have a strong financial stance, so they can afford a world-class defense team.
As a result, it can be challenging for a single individual to go against a powerful corporation, both in terms of cost and time. But a group of people have more resources, and they might have a stronger case together, so a class action lawsuit is an excellent tool to stand against corporate wrongdoing.
#3: Lower Costs for Legal Fees
Every lawsuit is costly, and the longer it takes for the court to decide, the more you will have to pay. The costs include hourly attorney fees, court fees, and depositions. These fees become more affordable when many people can pay for one lawsuit.
Not only that, but together you can also afford better attorneys, which increases your chances of winning.
#3: Distributed Financial Damages
When a large corporation faces many individual lawsuits, they can settle and pay each individual until they go bankrupt. The rest of the affected people go without payment. Class action suits ensure that every class member gets an equal amount of compensation if the case is won.
#4: A More Efficient Suit
It's a lot more challenging and costly for the judicial system to handle many individual lawsuits. Every individual could get a different outcome, clogging up court schedules and making the verdicts inconsistent.
Class action suits improve the efficiency of the judicial system and ensure a uniform verdict that applies to all class members. They also serve as an excellent basis for future claims because the prior results of one case determine how similar future claims unfold.
If you need legal advice on a class action lawsuit, contact Schwartz Law Firm for a free consultation today.
How Do Class Action Lawsuits Work?
If you decide to join a class action suit, here are the steps attorneys at Schwartz Law will likely guide you through.
Hire a Law Firm
A group of people who have experienced similar injuries or damages can get together for class actions. The first step is for one person to hire attorneys who can act as class representatives.
At Schwartz Law, we are experienced in working with class action lawsuits in Louisiana and beyond. We can offer you a free case evaluation, where our attorneys help you determine whether you have a case that will be valid in court.
After this initial evaluation, you can decide whether you want to proceed with the case and make Schwartz Law your direct class action counsel.
When you decide to move forward with the case with Schwartz Law, we will prepare a letter of engagement. The letter of engagement or Authority to Represent is a written statement that outlines the attorney's duties and every party's rights.
The letter also outlines the attorney payment process. Your Schwartz Law attorney may request pre-payment fees or work on a contingency fee basis, which means they will be paid a percentage of the compensation award if the case is won.
File a Lawsuit
The next step is for class representatives or Schwartz Law attorneys to file the lawsuit. The lawsuit should name at least one class representative acting on behalf of a group of people.
The defendant, a large corporation or institution, has the right to respond to the lawsuit and allege that class action requirements haven't been met or that the outcome of the lawsuit would be better handled on an individual basis. It is then up to our experienced attorney to argue otherwise and get the class action certified.
Get Class Certification
In addition to the lawsuit, your Schwartz Law attorney will also file a motion to certify the class. The attorney needs to do the following:
- Prove that the class has a proper legal claim
- Assign a lead plaintiff, who is usually the first person to file the lawsuit
- Prove that the class is large enough and that the members suffered damages or injury
The court will then analyze all the documents and the case. Following class action law, the judge will determine whether the class action is valid or not. If the class action is certified, every member gets a class notice to inform them of the approval.
Allow Class Members to Opt In or Out
Once a class action is certified, and the notice has been sent, every class member can choose to join in or opt out. Membership is usually automatic, but if a class member does not want to participate in the class action anymore, they can send a letter to the class representative and opt out.
Proceed with the Case or Negotiate a Settlement
With a certified class action where everyone wants to participate, the attorney can proceed with the case. They can argue in front of a judge, negotiate with the defendant, call witnesses, and so on.
The defendant can offer a settlement immediately. Our Schwartz Law attorneys are experienced and they can try to negotiate the settlement for a higher sum or accept it. If the defendant and the class members cannot agree on a settlement, the case could proceed to court, where a judge or jury decides on the compensation amount.
Notify Class Action Members of the Outcome
When the case is over by court decision or settlement, our attorney will notify every class member of the outcome. If the class action was successful, many previous class members who opted out might want to join back in.
It's important to know that new members cannot join in once the class is certified and the case is settled. The outcome only applies to the class members from the beginning.
Pay and Distribute the Damages
In successful class action lawsuits, the defendant has to pay compensation for all damages. This is usually a total sum of money distributed amongst attorneys and class members.
Attorneys will get a percentage of the compensation, and the rest of the money is divided equally amongst all other class members. In some cases, the lead plaintiff, the first person to bring the lawsuit to court, might get a higher amount than others.
Hire an Experienced Class Action Attorney from Schwartz Law
Class action lawsuits are a type of lawsuit where many people sue a defendant, usually a large corporation or industry giant. The entire group has similar claims and seeks compensation from the same defendant.
For a class action lawsuit to succeed, the class members need to hire an experienced attorney to handle all motions, communicate with the court, and negotiate with the defendant.
If you're looking for attorneys who will help you pave the path to a successful class action lawsuit, look no further than Schwartz Law Firm. We have over 20 years of experience and are ready to take on your class action suit. Request a free consultation now and start your journey toward justice.