Class Action Lawsuits definition (US)

A class action lawsuit is a civil legal action in which one or more individuals sue a person or entity on behalf of a larger group or class of people. Class action lawsuits are commonly used to address situations in which a large number of individuals have been injured or wronged by the defendant in the same manner. For example, a large number of individuals injured by taking a harmful medication may join in a class action lawsuit against the drug manufacturer. To explore this concept, consider the following class action lawsuit definition.

What is a Class Action Lawsuit Application?

A class action lawsuit enables plaintiff or an attorney to assert the rights of a large group of people in situations in which no individual party has a great enough economic advantage to bringing a lawsuit. By bringing the common interests of a large group of people before the court, a social service may be served by drawing attention to, and receiving compensation for, a great wrong committed against many people. A class action lawsuit may be pursued in circumstances in which separate, “piecemeal” lawsuits might result in erratic, unequal results, whether settlements or judgments, imposed on the defendant. In addition, class action suits are used in situations in which multiple separate lawsuits against the same defendant might impair the ability of other class members to protect their interests.

The Class Action Settlement

A class action settlement is an agreement between the plaintiffs and the defendant after having worked out the issue outside the courtroom. Commonly, the defendant in a class action lawsuit offers the plaintiffs a settlement amount, which the plaintiffs can accept as full compensation, waiving their rights to sue in the future. The monetary amount and other terms of a settlement may be negotiated for some time before an accord is reached. Although the plaintiffs have sued the defendant as a group in a class action, the lead plaintiff bears the responsibility of accepting or rejecting a class action settlement. It is important for members of the plaintiff class to understand that any settlement offer accepted must be split between them, usually after the attorney takes his percentage plus “costs.” Costs often include everything from photocopies and postage costs, to filing fees, fees paid to expert witnesses, court reporters for depositions, and other costs. It is a good idea for the lead plaintiff, responsible for accepting or rejecting the offer on behalf of the group, to request a detailed accounting of their attorney’s costs to date, as well as the number of class members, to help determine whether a settlement offer is fair.

The Class Action Fairness Act of 2005

Over the years there has been some concern over the potential for abuse in class action litigation. As a result, Congress has enacted certain legislation to help limit such abuse. These include the Private Securities Litigation Reform Act of 1995, which was designed to limit frivolous class action lawsuits in securities transactions, and the Securities Litigation Uniform Standards Act of 1998, which governs class action lawsuits regarding securities fraud. The Class Action Fairness Act of 2005 is Congress’ answer to the abuse of class action lawsuits in which plaintiffs and defendants reside in different states, and the amount of damages sought is very large. The Class Action Fairness Act gives jurisdiction to the federal court system in any class action suit in which there are 100 or more plaintiffs, where any of the class of plaintiffs lives in a state different from any defendant, or the amount of damages sought exceeds $5 million. The Act also instructs the court to closely scrutinize settlements in class action suits, especially those involving corporate defendants.

The purpose of the Class Action Fairness Act of 2005 was to protect both sides of such large class action lawsuits by:

Eliminating “forum shopping” in which plaintiffs seek to file their lawsuit in a state most friendly to their cause. This is accomplished by mandating federal jurisdiction over class action lawsuits with “out-of-state” defendants.

Requiring high level scrutiny of the terms of every class action settlement. This includes ensuring the attorney’s fees charged to defendants are not excessive relative to the benefits offered to the plaintiff class members.


The need to closely review proposed settlement agreements in these cases came as a result of cases in which attorneys for the defendants received fees amounting to more than the defendants themselves actually obtained from such settlements. Such as the infamous case against the Bank of Boston in the Alabama state court in which the defendants, after their settlement had been approved by the judge, were shocked to discover that, not only did they not end up with money in their pockets, but actually owed their attorneys because their fees exceeded the recovery amount for the lawsuit.

How to Start a Class Action Lawsuit

It doesn’t take a large number of people to start a class action lawsuit. In fact, a single person stepping forward to represent the many who have been harmed in the same way by the same defendant, is all it takes. The person initiating such a lawsuit is referred to as the “lead plaintiff,” or “class representative,” on the court documents, and is the person who gets the legal ball rolling. The lead plaintiff hires an attorney to represent the plaintiff class, and works closely with the attorney throughout the proceedings, including attending hearings. This means that the lead plaintiff must be willing to make a big time commitment to the lawsuit. Although the lawsuit is undertaken to represent the interests of multiple plaintiffs, possibly thousands in large cases, only the lead plaintiff can approve or reject any settlement offer made by the defendant.

Inviting Other Plaintiffs to Join

In some class action suits, the identity of everyone who might have a claim against the defendant is known, for example, every female employee discriminated against by a defendant employer. In other cases, it may be necessary for the lead plaintiff or his attorney to advertise to inform people who may have been harmed by the defendant that the lawsuit is taking place, and that they can join if they desire.

The Attorney’s Fees in a Class Action Lawsuit

Attorney’s fees in a class action lawsuit in which monetary damages are sought are generally paid out of the amount awarded by the court, which is put into a “common fund” for the benefit of the plaintiffs. Most attorneys charge a percentage fee, usually 15-25 percent, which comes off the top of the settlement or award. It should be noted that whatever costs have been incurred by the attorney in pursuing the case are then charged to the common account, after which the plaintiff clients split what is left. If the class action lawsuit was pursued to obtain injunctive relief, or a declaratory judgment, the attorney is usually paid by the plaintiffs who hired him, or may be paid by the defendant if he wins the case, and the court orders it.

The Filing of a Class Action Lawsuit

The actual filing of a class action lawsuit is much like filing any other civil lawsuit. The plaintiff must first determine which court has jurisdiction to hear the matter, which can be tricky if the plaintiffs and defendant are in different states, the number of plaintiffs is expected to be more than 100, or if the amount of damages sought is very high. The complaint and summons are then filed in the correct court and served on the defendant. While actually filing the class action lawsuit is not a complicated matter, the lawsuit as it progresses is sure to become a complex endeavour which requires the aid of an experienced attorney with high communication skills.

De Micco & Friends has several mandates for Class Action Lawsuits in Europe. Because of the legal regulations, Spain is a good location.

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* Source: De Micco & Friends and