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Advantages and Disadvantages of a Class Action Lawsuit

A “class action” is a lawsuit brought by a representative plaintiff on behalf of a class of persons with similar claims. The class and the lawsuit must be certified by a judge as appropriate for class action treatment. If the case is certified, the lawsuit may proceed to resolve issues common to all class members. In general, notice of the lawsuit is mailed to all potential class members and, unless they “opt out,” all who fit within the class definition are automatically part of the lawsuit.

Situations where class action treatment is typical and may be appropriate include:

  • A mass accident – usually a single event such as an airplane crash
  • Widespread personal injuries from defective products – e.g., tires or pharmaceuticals
  • Where action or refusal to comply with laws affects a group of people – e.g., racial discrimination / civil rights action

Requirements for Class Actions

Generally, in federal or state court, a single plaintiff may sue on behalf of a class if all of the following are met:

  1. A definable class exists, that can be certified
  2. The plaintiffs are members of this class
  3. The class is so numerous that trying each case individually would be impractical
  4. The class members’ claims have common issues of law and fact
  5. The representative plaintiff’s claims and defenses are typical of the class
  6. The representative plaintiff will ensure fair and adequate representation of the interests of the members of the class

Advantages of Class Action Litigation

  • A class action may provide the only means of judicial relief for individuals, especially for small claims involving complex issues that would be expensive to litigate
  • The benefits from a strengthened negotiating position
  • Generally there is no payment or risk of legal fees – if the class wins, the lawyer gets a contingency fee; if the class loses, the lawyer generally gets nothing
  • There is a tolling or suspension of the limitation periods during the lawsuit for asserted class members who have not opted out to file an individual lawsuit
  • It may serve to consolidate numerous court actions into one, thereby relieving the burden on courts and avoiding inconsistent judgments
  • Litigation costs can be lowered by aggregating small claims
  • It can attract superior legal talent to represent the representative plaintiff

Disadvantages of Class Action Litigation

  • Resolution of class actions generally take much longer than conventional lawsuits due to their procedural complexities
  • They must be resolved in a common manner such that differences between individual cases are typically not emphasized
  • Individuals who participate typically give up their right to file suit individually
  • Class members generally play a lesser role in directing the litigation
  • Even if successful, participating members of the class may only be compensated with a minimal recovery
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