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Class Action Lawsuits: Considerations for a Layman

Updated on September 29, 2012
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If you watch any daytime TV, than you've likely seen advertisements asking you such questions as: "Have you been exposed to asbestos at work?" or "Do you have an account with _________ company?" The commercial will then tell you that you may be entitled to compensation, and that you should call a toll-free number for more information. These commercials are usually notices to the public to invite people to join a class action lawsuit.

What is a Class Action Law Suit?

In a simple lawsuit, one person, the plaintiff, will sue someone else, the defendant. The purpose of the suit is to get something from the other side such as money, property, or a declaration of rights. A class action has the same purpose, except that instead of one plaintiff, there are many. In some cases, it may be hundreds of plaintiffs, in others, the number of plaintiffs can be in the millions.

Most of the time, the defendant will be either one big corporation (for example, this class action against Toyota), the government, or several large corporations or entities. The class action will be suing the defendant(s) for a wrong done to the entire class--not different and varying harms that are personal to each plaintiff. Usually, there will be one person who is the representative of the class (for instance, one of the most famous class actions of all time, Roe v. Wade).

Should I Participate?

If you qualify for participation in a class action lawsuit, the question becomes whether you should actually join in the cause. There are several things you should consider before jumping on the bandwagon.

  • DAMAGES - You will not become rich. If you have actually suffered a real harm, the payout will not be close to the amount of your damages. Class actions, like nearly 90% of cases, settle before or during the trial. This amount will likely be less than some sort of final judgment, and part of your share will not only be distributed among the rest of the group, but the amount of money you receive will be published to the other members of the class.
  • LAWSUIT EXPENSES - Just because you are receiving less money doesn't mean that you should not participate. Lawsuits are expensive--in particular against large companies who employ entire teams of very smart, driven attorneys. By joining a class action, your expenses will be nominal or nothing. This means that you could receive compensation where you NEVER would have gotten it otherwise. This is why in class actions the attorneys get paid a lot of money. The expenses of the lawsuit are enormous. In some cases, the attorneys will actually lose money unless they charge a high fee to the entire class for their time and efforts.
  • SOLVENCY OF THE DEFENDANT - Sometimes a class action will kill a company, literally. If you have a claim, and decline to join the class action because you want to sue individually, the defendant may be out of cash entirely. This means that you will receive nothing without the class action. If you meet the requirements for a class action, you may want to talk to an attorney prior to joining to see if you should wait or participate. The meeting with the attorney will likely be relatively inexpensive, and you will save a lot of time and money by knowing the answer to this question before taking any action.
  • PAPERWORK - Joining is not as simple as signing your name. You will have to provide details, fill out forms, and possibly give interviews to the attorneys in charge. You will have to do some work to get paid in the end. Don't take this lightly.
  • THE GREATER GOOD - A class action provides the layman with a tool for taking on the "big guys." It is very powerful, and should not be taken lightly. Look at the cause of action you have, and decide for yourself whether you support the cause being pursued by those in your same situation. Will a product cost more because of a judgment? Are the ethical outcomes of the litigation something you can support? Look at the big picture, and really evaluate whether pursuing the suit is in the best interests of yourself AND others. If you are not going to be making a lot of money, this is the least you can do for the rest of those people similarly situated.

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