What is Class Action Law?

Terry Masters
Terry Masters
Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Class action law is the legal theory and process that governs group litigation in civil courts. Multiple parties with individual claims that feature substantially similar facts are consolidated into a class, and the damages sought are increased to account for the need to compensate the entire group. A case is chosen as a class representative. The result of the litigation surrounding the representative case is binding on the entire class. Any settlement or award is shared.

Historically, the notion of class action law developed under English common law. It fell out of regular use as countries began to favor the notion of a single plaintiff with the right to his day in court under the unique facts of his case, rather than litigation that was representative in nature and would bind a party even if he was not able to participate in the case. It was only in the 1960s, as a result of the Civil Rights Movement in the U.S., that the present day plaintiff’s version of class action developed.

Class action has been popularized in the U.S. as a result of a change in class action law that required parties with cases on substantially similar facts to opt-out of inclusion in a class, rather than having to opt-in. The opt-out provision bars plaintiffs who do not proactively remove themselves from the class from bringing a separate lawsuit on the same facts at a later date. Other countries, such as the U.K., have a legal procedure for group litigation but because parties have to opt-in to the litigation, it has prevented the trend of the massive lawyer-driven, consumer-based, plaintiff’s litigation that has become indicative of class action law in the U.S.

In the U.S., class action has developed into a way for parties, usually plaintiffs, to band together to pursue litigation that may make little sense for an individual plaintiff to pursue on his own. For example, a consumer who finds himself impacted by a misrepresentation about the battery life of a product might only anticipate the cost of the battery as compensation if he were to pursue the matter to court. The cost of litigation would far exceed any benefit to the single plaintiff. If a hundred thousand consumers banded together, however, and the case is pursued under class action law, the amount at issue would be aggregated and the anticipated award would justify an attorney taking the case.

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