Frequently Asked Questions About Class Actions
What is a class action?
A class action is a legal procedure used to prosecute a lawsuit efficiently in which a large number of people have been injured by a common act or set of actions. The class process is used, for example, in cases alleging or concerning price-fixing conspiracies (antitrust), fraudulent stock manipulation (securities), oil spills (mass tort), product defects and false advertising (consumer), and employment disputes such as the failure to pay overtime (employment). In a class case, one or two named plaintiffs stand in for the entire group of similarly aggrieved persons during the course of the litigation.
When a class action settles, the judge presiding over the case must approve the fairness and propriety of the settlement. Potential class members usually have the option of, after receiving notice, excluding themselves from a class or class settlement, and pursuing the case on their own. This is referred to as Opt-Out Class Action Litigation. The class procedure also allows individuals and small businesses to collectively prosecute meritorious cases that would have been too expensive and insufficient to litigate individually.
What kinds of cases are litigated as class actions?
Class action law is used to seek money damages and other relief arising out of antitrust and securities law violations, consumer fraud, insurance fraud, human and civil rights violations, employee benefits and employment disputes, and environmental and mass torts. Berger & Montague has been instrumental in the use and development of the class action device in all of these areas.
If I choose to be involved in a class action, is there risk or expense for me?
In most cases you need to take no steps of your own to join a class action. Indeed, usually only those who wish to exclude themselves from a class need to do anything. By participating in a class case, you accomplish several objectives. You may receive compensation for a wrong, injury, or loss you have sustained, i.e., compensation that may not have been available to you in any other forum. As a member of a class of similarly harmed persons, you help to demonstrate to the court that the alleged harm done was substantial and affected a large number of people, increasing both the likelihood of a recovery and its size.
Moreover, with rare exceptions in a handful of states, the only cost to you will be drawn from any settlement or judgment upon successful resolution of the matter. In class actions, Berger & Montague usually works on a contingency fee basis and is paid upon a successful resolution of the matter. Generally, the attorneys advance the expenses and costs of prosecuting class cases.
How are attorneys paid in class action cases?
The plaintiff’s attorneys are usually paid pursuant to an order from the court overseeing the case. The judge responsible for the class action reviews a submission made by the attorneys, called a “fee petition.” This petition sets forth in detail the work the attorneys have done on behalf of the class. After consideration, the court enters an order fixing the amount of the fees to be paid to the attorneys from the case’s judgment or settlement fund. The amount of the fees awarded is based on a number of factors, including the quality of the work, the difficulty of the case, the nature of the result, the amount of time spent on the case, and the risks involved. As a percentage of the gross settlement or recovery, the fee amount can vary greatly within a wide range depending on the factors the court takes into account and the weight it attaches to each of them.