Class action lawsuits level the playing field by combining hundreds or thousands of claims against big businesses into a single lawsuit. They give consumers an opportunity to seek justice when their individual claim might be too small to get the attention of a business that is violating the law.
Many cases result in class action settlements. In fact, it is relatively rare for class action lawsuits to go to trial. Once a judge decides that a proposed class should be certified (thus allowing the lawsuit to proceed as a class action), most businesses prefer to settle rather than risking the huge award of damages they might be forced to pay if they lose a trial.
Class action settlements benefit victims in several ways. First, when a case settles, nobody has to take time away from their busy lives to testify in court. Second, settlements provide a benefit to all members of the class, not just those who actively participated in the lawsuit. Third, in addition to paying compensation, businesses often agree to change their unlawful practices as part of the settlement.
In these cases, a few members of the class are named in the complaint as representatives of the entire class. They play an active role in the lawsuit while most class members play a passive role. In fact, most class members are unlikely to know that the class action lawsuit exists until they are notified of their opportunity to participate in a settlement.
The class representatives sometimes called the “lead plaintiffs” because of the leading role they play) will usually receive greater compensation than other class members when the case settles. The representatives have a duty to work with the attorneys to negotiate a settlement that benefits the entire class, so they cannot be concerned solely about their own interests. At the same time, the court will generally recognize that the representatives should be rewarded for investing time and energy on behalf of the entire class.
Any proposed class action settlement must be approved by the court. The court will conduct a fairness hearing before giving preliminary approval to a proposed settlement. To approve a settlement, the court must be convinced that it will serve the best interests of the class in light of all the circumstances. The court will consider things like:
- The size of the class
- The percentage of class members who will likely share the settlement benefits
- The benefit that each participating class member will likely receive
- The benefit that class representatives will receive
- The risk that the plaintiffs will lose if the case goes to trial
- The harm caused by the business practice that is challenged in the class action
- Whether the settlement agreement calls for a change in that business practice
If the court is satisfied that the proposed settlement is fair in light of all the circumstances, it will give preliminary approval to the settlement.
After preliminary approval is obtained, an administrator sends a notice of the proposed settlement to all class members. The notice includes an explanation of the proposed settlement and provides a procedure for class members to participate in the settlement or file written objections to it. Class members can also attend the final fairness hearing if they want to make their objections in person.
At the final fairness hearing, the court considers any objections it has received. It weighs objections, if any, against the benefit of the settlement. If the court decides that the proposed settlement is fair to the class as a whole, it typically approves the proposed settlement.
Class Member Options
When class members are notified of a settlement, they have the option to participate in the settlement, taking advantage of the benefit that class members receive when the case settles, or of opting out. Class members might opt out when they believe that they have a chance to recover greater compensation by pursuing an individual lawsuit rather than participating in the class action.
In most consumer class action lawsuits, the compensation a wronged consumer might receive from an individual lawsuit is relatively small. For that reason, most consumers do not opt out of class action settlements against businesses and financial institutions.
Class members may be compensated in a variety of ways, depending on the harm that was caused. In financial cases, they might receive a refund of illegally assessed fees. In class actions against employers, they might receive back pay for overtime and other wages that were owed but never paid. In case involving false advertising or other violations of consumer protection laws, they might receive a rebate or vouchers that can be applied to future product purchases.
In addition, California class action lawyers often negotiate change in business practices that act as a safeguard against future violations of the law. Employers might agree to reclassify certain kinds of employees so that they receive overtime. Financial institutions might agree to change their accounting practices in a way that benefits customers. Businesses might agree to stop making deceptive claims in advertising and product labeling. In that way, California class actions are an important tool to protect workers and consumers from future violations of the law. When victims receive substantial class action settlements, businesses usually adjust to ensure they don’t have to pay again in the future.
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The Haeggquist and Eck Firm has helped recover over $200,000,000 on behalf of over 500,000 class members. Call us today to obtain a free consultation from one of our Super-rated lawyers.