When an ordinary person has a gripe against a big company, the chances are good that the little guy will not be able to afford to fight effectively against his deep-pocketed foe. Class-action lawsuits, however, allow a group of little guys with a common complaint to band together against the big guy. Specifically, a class-action suit allows an individual or small group to file a civil lawsuit against a company, corporation, or other institution on behalf of all those impacted by the larger entity’s wrongdoing in state or federal court.
The “class” in “class-action” refers to a group of people who have been affected by a common issue and are all represented under a single lawsuit. Common examples of class actions include consumers who purchased defective goods, employees who were victims of discrimination by their employer, investors misled by company officials, home or business owners impacted by an oil spill or other company-caused ecological disaster, or consumers who suffered injuries from defective medical devices.
There are a number of reasons these suits are an efficient mechanism for securing justice for individuals who have been harmed by companies. By banding together, plaintiffs reduce the cost of filing a suit and litigating by sharing costs. Defendants benefit through the ability to litigate in one place and resolve multiple, sometimes thousands, of claims in one suit. If the class action is successful, each member of the class gets a portion of the settlement. In the case of Erin v. Pacific Gas & Electric Co., for example, the plaintiffs received an average of $300,000 per victim after they reached a settlement. Class-action suits also limit the potential for conflicting court verdicts and create a consistent rulings for the parties to rely on.
Suits typically consist of a lead plaintiff, who represents the interests of the larger group, and the attorney, who gets paid only if he or she wins the case. During the case, the lead plaintiff participates heavily in litigating and takes on the responsibility of negotiating any settlement.
The settlement is not the only important legacy of a particular case, however. Class-action lawsuits are critical in setting precedents for future cases. The legal judgments passed down in a class-action case can shape entire industry practices and spur the passage of new laws to better protect individuals against big business.
In the past, class-action suits have led to more stringent product safety requirements, tighter medical and environmental regulations, fairer, more integrated workplaces, and greater settlements for victims of securities and retirement fraud. Classrooms would look different without the famous case Brown v. Board of Education, a class-action suit that desegregated public schools. And kids would not be safe from smoking advertisements without numerous class-action suits that resulted in the Tobacco Master Settlement Agreement, which led to marketing restrictions and prohibits targeting youth in tobacco-related advertisements. More recently, class-action suits have helped shaped abortion laws and the abolition of the military’s “Don’t ask, don’t tell” policy.
Taking on a monolithic corporation can be deeply intimidating—and corporations have every incentive to make it as difficult as possible to take them to task when they do wrong. Individuals who stand up together, however, can effect lasting change across the country.