Class Action

Definition - What does Class Action mean?

Class action refers to a lawsuit filed by one or individuals on behalf of a larger group.

Federal Rules of Civil Procedure Rule 23 and 28 U.S.C.A. § 1332(d) govern class actions in United States federal courts. When a group of people (the plaintiffs) are the victims of a wrongful act committed by an individual or entity (the defendant), the procedural device called "class action" allows them to file and prosecute a lawsuit collectively.

Justipedia explains Class Action

Generally, class action lawsuits are filed in tort cases, such as product liability or mergers and acquisition cases, where the action of a company or individual resulted in damages to several people (or entities). Specific examples of class action include:

  • A group of people who were overcharged in the form of utility charges during a certain period of time
  • A group of people who have suffered alike from any medical test, procedures, implants, etc.

To file a class action, two criteria must be present in the case, regardless of the subject matter:

  1. The disputed issue must be common to all class members; and
  2. The number of individuals affected must be significant, so as to make it impractical to bring individual cases before a court of law.

Class actions are usually rare because they are more expensive and the process is usually more complicated than in a normal lawsuit. However, considering its nature, class action can prove beneficial to people who can’t afford to carry a lawsuit on their own.

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