Monday, September 2, 2013

Class Action and Mass Tort Actions

Class actions are procedural device to determine the rights and remedies of large numbers of people whose cases involve common questions of law, fact and harm suffered in areas including insurance, banking, securities, workers' rights, maritime and unfair trade and consumer protection.

Unlike "class actions", in which the plaintiff seeks court approval to litigate on behalf of a group of identically situated persons, mass tort actions involve similarly situated people whose claims are brought in one "mass tort " complaint seeking the efficiencies and economic leverage that class action's provide. 

What Are Class Actions 

A class action is a civil lawsuit brought by one person on behalf of a larger group of people who have suffered a similar harm or have a similar claim.  Class actions can be brought in federal or state courts and are used when too many people have been affected by the subject of the claim for each to file separate lawsuits frequently involving injuries resulting from hazardous products and drugs like tobacco, asbestos, Agent Orange, breast implants, and contraceptives.  

Class actions are also used in securities (e.g., fraudulent financial statements or releasing false information about stocks and other forms of market manipulation) and employment (e.g., wage/hour laws violations and mass dismissals) cases or to stop illegal or harmful practices like oil spills, manufacturing pollution, or Constitutional protection violations. 

Mechanics of Class Action Proceedings 

A lawsuit becomes a class action when a plaintiff, called the "Lead Plaintiff", files a lawsuit claiming that a harm has been suffered and requesting that the case be certified as a class action.  

To have the case certified, the Lead Plaintiff must demonstrate that:
• a legal claim exists against the defendant(s);
• a significantly large group of people have been injured in a similar way and their respective claims involve similar issues of fact and law as that of the Lead Plaintiff; and
•the Lead Plaintiff is typical of the class members, has a reasonable plan and ability to adequately represent the class, and has no conflict with other class members.  

If certified as a class action, the court will order that the class of affected people be notified including through direct mailings.  Class membership is usually automatic and, unless they choose to "opt out", everyone affected by the wrongdoing will be part of the case.

Unless they have evidence to offer, class members generally are not involved in the case nor the settlement negotiations.  Instead, the Lead Plaintiff consults with the class action attorneys to develop the case's strategy (including and accepting settlement offers) and other class members only may choose to accept or opt out of the settlement.
Class Action Recoveries 

Because few class actions proceed to trial, and often settle following class certification, a large portion of the proceeding involves forging a settlement. 

The court decides how to divide any recovery and the attorneys are given costs and fees, often calculated as a percentage of the entire recovery.  The Lead Plaintiff receives an amount partly determined by his participation, and the rest of the recovery is then divided among the class members.

Mass Tort Actions 

Unlike "class actions", in which the plaintiff seeks court approval to litigate on behalf of a group of identically situated persons, many disputes involve similarly situated people whose claims are brought in one "mass action" complaint seeking the same efficiencies and economic leverage as if a class had been certified. 

Because they operate outside class action's detailed procedures, mass torts actions can pose special difficulties.  For example, unlike a class action settlement, which follows a predictable path of negotiation with class counsel and representatives, court scrutiny, and notice, a uniform method for settling all mass tort claims may not exist.  

Some states permit plaintiff's counsel to settle all mass tort plaintiffs claims according to a majority vote while others require each plaintiff to approve the settlement of that plaintiff's respective claims.