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1 [1] (September 13, 2024)

handle is hein.crs/goveqps0001 and id is 1 raw text is: nforing Ati eg wstive A e sinrco 1914 Class Action Lawsuits: An Introduction September 13, 2024 The general rule in American litigation is that lawsuits are brought only on behalf of the named parties. The class action mechanism is an exception to that rule that permits one or more named plaintiffs (commonly known as class representatives) to sue a defendant on their own behalf and as representatives of a larger group of unnamed individuals or entities (the class) who have allegedly suffered the same injury. This In Focus provides a brief overview of the evolution, evaluation, and operation of class action lawsuits in federal courts. ackground Class actions aggregate the claims of numerous individuals or entities-even those who may not be aware of their potential claims when the lawsuit is filed-into a single proceeding. In ordinary multi-plaintiff lawsuits, the plaintiffs are named in the complaint and participate directly in the case. In class actions, only the class representatives are named, and they act on behalf of the entire class. Class members generally are bound by the final judgment of the court in a class action even though they did not directly participate in the litigation. The class action mechanism has roots in early English law, but the modern class action in the United States was created in Rule 23 of the Federal Rules of Civil Procedure, which governs class actions in federal courts. The Supreme Court first promulgated Rule 23 in 1937. Major amendments in 1966 remade the rule into its modern form, including permitting a class action for money damages with opt-out rights, which the Supreme Court has described as Rule 23's 'most adventuresome' innovation. While plaintiff classes are most common, Rule 23 also permits federal courts to certify classes of defendants. Because defendant class actions are rare and raise different considerations than plaintiff class actions, this discussion is limited to plaintiff class actions. Purposes of Cass Actdons Courts and commentators have recognized that the class action mechanism serves a number of beneficial purposes in the American civil justice system. As the Supreme Court has observed, a central purpose of class actions is to improve the efficiency and economy of litigation. When many persons have allegedly suffered the same injury from a defendant's conduct, aggregating the claims into a single class action lawsuit may allow courts and parties to avoid the time and expense of litigating large numbers of duplicative individual lawsuits. The Supreme Court has also emphasized the importance of class actions in enabling groups of people to vindicate their rights when each person's claim may be too small to justify the expense of an individual lawsuit. When a defendant inflicts small injuries on a large number of people, the cost of litigating will often exceed an individual plaintiff's maximum potential award, such that it would not be economical for any of the injured parties to sue on their own. Class action lawsuits can spread litigation costs and combine small potential recoveries into much larger amounts that incentivize lawyers to prosecute the case in exchange for a portion of any monetary recovery. The class action mechanism thus provides a means of compensating injured parties who might otherwise go uncompensated. Relatedly, by enabling the enforcement of legal rights against defendants who might otherwise escape liability, class actions may also serve to deter wrongdoing. In addition to promoting litigation efficiency and the enforcement of legal rights, courts have also recognized that the class action mechanism promotes finality and consistent adjudication. For example, defendants in a class action can obtain a final judgment that binds all class members at once, avoiding potentially inconsistent judgments that could result from litigating numerous individual lawsuits. Risks of Class Actions While class actions may serve beneficial purposes, courts and commentators have also recognized that the class action mechanism is subject to abuse. One concern is that class actions can exert intense pressure on defendants to settle even unmeritorious legal claims. Given the potentially massive liability that defendants may face when numerous parties' claims are aggregated in a single lawsuit, defendants may feel compelled to settle weak claims where plaintiffs have only a small chance of winning, rather than defend the lawsuit and risk financial ruin if they lose. Another concern is the risk that lawyers representing a class might put their own interests ahead of the class members' interests. Individual class members often have only a small financial stake in the outcome of the litigation and thus may not have an incentive to spend time and resources ensuring that class counsel act in the best interest of the class. Meanwhile, litigating class action lawsuits is often expensive and time consuming, and class counsel may shoulder significant costs, such as for fact discovery and expert witness fees. Class counsel typically work on a contingency-fee basis and receive nothing if they lose the case. Courts have thus cautioned that the structure of class action lawsuits creates financial incentives for the plaintiff's lawyers to negotiate settlements with defendants that prioritize obtaining attorney's fees over maximizing relief for class members.

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