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  1. Assessing a Possible Class Action Lawsuit

  2. Hiring the Right Class Action Attorney

  3. Filing the Class Action Case

  4. Insights into the Defendant's Strategies

  5. Certifying the Class Action Suit and Sending Out Notice

  6. Establishing a Valid Class Claim

  7. Approving Class Action Settlements: Fairness Hearings

  8. Paying the Class Action Attorneys

  9. Compensating the Class Action Representative(s)

Step 1: Assessing a Possible Class Action

Knowing if You Can Bring a Class Action Lawsuit

Have you ever been charged a $25 late fee because you were
a few days late with a $10 payment?

Have you sent in a rebate form for a product, only to wait months
and months before actually receiving a check?

Have you ever stayed at a hotel, only to find out at check-out
that the hotel was charging you an "energy use" fee
or some other charge that you didn't anticipate and that didn't
make sense to you?

The truth is that everybody has been the victim of illegal business
practices. As just one example, a recent government investigation
into New York City health clubs found that 96% of them were misleading
consumers about their legal rights. That means that, if you were
looking to join a health club, you would have less than a one-in-twenty
chance of finding one that actually complied with the law.

Many people just assume that, because a big business is doing
it, it must be legal. That's simply not the case. Businesses violate
the laws for a variety of reasons. Sometimes, they count on people
not knowing their rights or not wanting to spend the time or energy
to get back a small amount of money. Sometimes, they don't know
the law themselves and are breaking it unintentionally. Often,
they know they're breaking the law, and they know they're going
to be caught sooner or later. They just figure they'll still make
bigger profits breaking the law, even if someone does eventually
take them to court.

However, just because a large company is breaking the law, that
doesn't automatically mean that a class action suit is proper. Class action suits are usually appropriate only when a company has been violating the rights of or injuring a large number of people in the same (or very similar) way. One of the first things any class action
lawyer will want to know when considering a case is whether it
is possible to prove that the company has been breaking the law
in a systematic way.

In the end, the best advice is to simply "trust your gut."
If a business is acting in a way that seems unfair or just plain
smells fishy, it is usually worth having an attorney look into

Deciding if You Want to Pursue a Class
Action Lawsuit

Even if you realize that you might be the victim of an
illegal practice and that a class action might be proper, that
doesn't answer the most important questions: Is it worth bringing
a class action, and how can you tell?

There are many reasons people decide to bring a class action suit.
Some people realize that it would be too expensive to hire an
attorney to bring an individual lawsuit, and decide class action are the only
way to recover what they lost. Some people take pride in holding
large company accountable for its misconduct and fighting for
the rights of countless others who were taken advantage of. Still
others believe class actions are a way in which they can personally
make money.

All of these considerations are legitimate. However, just as
the best class action attorneys are the ones that are fighting
for what they believe in, the best class action plaintiffs are
not doing it merely to make money. Indeed, while it is true that
in most states, class action plaintiffs may be entitled to "incentive
awards" in successful cases, those awards are in no way guaranteed.
Also, it is legitimate for a defendant to question the motives
of the class action plaintiff. If he or she is only trying to
make a quick buck (as opposed to looking out for the interests
of the class), the court could very well refuse to allow the case
to proceed as a class action.

The role of the class action plaintiff (generally called the
"class representative") is to work with the class action attorney
to make sure that the interests of the other class members are
being looked out for. In practical terms, that means that a good
class action representative understands what the case is about and understands
(and agrees with) the lawyer's strategy in fighting the case.
The best class representatives want to know about the key developments
in the case, including any settlement offers.

Being a class representative does not take as much time as being
a plaintiff in an individual case, but there are things that class
representatives should be prepared to do. Once a class action
is filed, the defendant usually requires the class representative,
with his or her lawyers, to respond to "written discovery."
That means that they serve your attorneys with written requests
for information, usually about your experience with the defendant,
and for copies of relevant documents. Your lawyer will guide you
through the process of responding. Also, you might be asked to
take part in a deposition or testify at trial. A deposition is
meeting, most often in a conference room, during which the defendant's
lawyer is allowed to ask you questions under oath, with the questions
and answers being written down by a court reporter. Unlike a trial,
a judge is typically not present. Good class action lawyers will
fully prepare you for your deposition or trial testimony.

Overall, if you believe in what you're fighting for, class actions
are a great way to have a positive impact on society. Class actions
have cleaned up entire industries, shut down corrupt companies,
and recovered billions of dollars for injured victims. Personally,
we're pleased to say that the vast majority of the class plaintiffs
we have represented have both enjoyed and been proud of their
involvement. Still, the most satisfied clients are the ones who
best understand what the benefits and responsibilities of their
involvement will be. It is therefore very important to find a
good class action lawyer.

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Step 2: Hiring the Right Class Action Attorney

There are many excellent class action attorneys in the United
States. Because class action law is fairly specialized, you should
look for a lawyer with significant class action experience. Additionally,
because there are many different types of class actions, look
for a lawyer who has specific experience in the type of class
action you wish to bring. In other words, an attorney who regularly
brings consumer class actions might not be the best choice for
a securities class action and vice-versa. Finally, it is a good
idea to ask any lawyer you're considering a lot of questions before
hiring him or her. If you feel that you don't communicate well
with the lawyer or it just does not seem like a good fit, talk
to someone else.

The following is a list of "tips" for finding the
right class action attorneys:

  • Ask them about their experience with class actions, including
    the type of class action you want to bring.

  • Ask how much of their practice is devoted to class actions;
    it is generally preferable to hire a lawyer who regularly handles
    class actions rather than one who only dabbles in or handles
    class actions occasionally.

  • Ask the lawyer you are interviewing if he or she will be
    the one spending the majority of the time on the case or if
    another lawyer will be the lead attorney.If another lawyer will
    take the lead on your case, interview him or her as well.

  • Ask what their strategy would be in litigating case and if
    they expect a quick settlement or if they think the case will
    go to trial?

  • Find out how many cases the firm is currently handling and
    if they will be able to devote sufficient time and effort to
    your case.

  • If the attorney you speak to cannot represent you, ask for
    a referral.

  • ALWAYS insist on a written representation agreement.

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Step 3: Filing the Case

After you have hired a class action attorney, his or her first step will be
to investigate the class action case and prepare a "complaint." A
class action complaint is the legal document that starts a case. It explains
the factual basis for the lawsuit and explains why, assuming those
facts are true, the defendant broke the law. In the complaint,
your class action lawyer will identify the case as a "Class Action"
and explain why the court should recognize it as a class action
instead of an individual suit.

One of your attorney's key considerations will be where to file
the class action lawsuit. Most class actions are filed in state court,
but sometimes they may be filed in federal court. Also, they are
usually filed in the state where the wrongful conduct occurred.
Sometimes, however, they must be filed in other states (for example,
if a contract governing the transaction in dispute requires it.)

Although the filing of a class action complaint is a relatively easy thing
to do, no ethical class action attorney will file a class action
suit before having very good reason to think the defendant is
breaking the law. The reason for this is that class actions can
be powerful weapons.

Class action suits are more likely to generate media attention
and can cause a great deal of concern to the defendant. Those
are good things when the defendant has broken the law. However,
a class action lawyer who hasn't done his homework can cost an
innocent defendant thousands of dollars.

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Step 4: Insights into the Defendant's

Sophisticated defendants generally take two primary approaches
to fighting class actions First, they will challenge the substance
of the suit. For example, they might argue that they didn't violate
the law or that nobody was hurt by their illegal conduct. Second,
and equally important, they will try to convince the court that
the case should not be a class action and that each member of
the proposed class should have to hire his or her own lawyer and
file his or her own lawsuit.

Many people assume that class action settle immediately, especially
when there's no question that the law has been broken. This is
true at times. In one of our more prominent cases, the defendant's
attorney called up the day after receiving our complaint, admitting
his client violated the law and offering to settle. Far more frequently,
however, a defendant will fight the case for some time in hopes
of either winning outright or wearing down the resolve of the
class representatives and the lawyers.

A defendant who decides to fight will often file what is called
a "motion to dismiss." Motions to dismiss ask the court
to throw the case out immediately. These motions can often determine
the success or failure of the whole case and tend to be very hard
fought on both sides. The class representative usually has little
active involvement at this stage. Instead, the lawyers present
legal arguments to the court without any testimony from witnesses,
including the class representatives.

Assuming the case survives any motion to dismiss, the defendant
will then typically argue that the case should not be allowed
to proceed as a class action, based on the rules for what constitutes
a legitimate class action. The class action lawyers will present
evidence that it is fair and efficient for the case to continue
in the form of a class action, and the defendant will present
whatever contrary evidence and arguments it can come up with.
Ultimately, it is up to the court to decide if the case will proceed
as a class action.

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Step 5: Certifying the Class Action and Sending
Out Notice

If the court decides that the case can proceed as a class action,
the court "certifies" the case as a class action and
assigns a "definition" to the class. For example, the
court might define the class as every person who bought a particular
brand of computer in Indiana from 1996 through the present. That
means every person fitting within the class definition is automatically
entitled to be in the class if he or she wants to.

Once the class is defined, the parties are ordered to send notice
to the class. Notice can be sent in a number of ways. Usually
it is sent by mail to all of the class members that can be identified
by the parties. At times, notice is published in newspapers or
magazines (either instead of, or in addition to, notice by mail).
Also, courts have begun recognizing that, in appropriate contexts,
notice can be sent via e-mail or even posted on a prominent Web

The content of the notice, which generally must approved by the
court prior to being sent out, briefly explains what the class action case
is about, what has happened in the case so far, and if a settlement
has been reached. Most importantly, the notice usually provides
each class member with the right to stay in the class, exclude
himself or herself from the action, or file an objection.

If a class member wants to take part in the class action lawsuit, he
or she does not need to do anything. If a class member wants to
be excluded from the class, he or she is typically required to
send in a letter stating his or her desire to opt out of the case.
If the notice is sent after the parties have agreed on (and the
court has approved) a settlement, class members may be required
to send in a "claim form" verifying that they are members
of the class and requesting particular compensation provided for
in the notice.

Most people stay in class actions after getting notice, but some
decide to opt out. The most important reason people opt out may
be that they have already filed - or plan to file - similar lawsuits
against the defendant. In that situation, people who neglect to
opt out may be inadvertently giving up their right to take part
in any other case or, in the case of a settlement, they may be
releasing their claims against the defendant.

Keep in mind that the class action attorneys representing the class are there
to answer questions. If you are confused about what to do or if
you just need more information, don't hesitate to call them or
send off a quick e-mail.

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Step 6: Establishing a Valid Class Action Claim

Once the class has been certified and the class members have had
an opportunity to opt out of the case, the plaintiff begins to
prove his or her case. The first thing the class action lawyers do is engage
in a process called "discovery." In practical terms
this means the sides have a chance to ask each other written questions
(called "interrogatories"), oral questions (called "depositions"),
request important documents, and interview potential witnesses.

At the end of this process, the defendant will often make a
final effort to have the case thrown out by asking for "summary
judgment." Simply put, the defendant asks the court to take
another look at the case now that the evidence has been gathered,
arguing that the case is without legal merit.

Assuming the case survives summary judgment (and has not been
settled), a trial date is scheduled. It is important to note that
most cases never reach trial. That is especially true with class
actions. Because they are so hard-fought before trial, both sides
generally have a very good idea of the strengths and weaknesses
of their positions prior to trial. And because the stakes are
often so high, the parties usually have a lot of incentive to
act reasonably and try hard to reach a fair result without having
to go through the risk and expense of trials.

There are times when a class action lawsuit will go to trial. Because
it isn't realistic to have every person in the class testify (sometimes
there are millions of people in a single class), generally only
a few of the class members will testify at trial. Often the parties
will hire experts to talk more generally about the experiences
of the class.

After the class action trial, the parties have the right to file appeals -
asking a higher court to review the case to make sure the law
was properly applied by the trial court.

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Step 7: Approving Class Action Settlements: Fairness

If a class action suit settles - whether before trial, or afterward
to avoid appeals - the court takes on an active role in making
sure the class action settlement is fair to all class members. Usually the
court will hold two fairness hearings. The first is a "preliminary
approval" hearing, in which the court examines the settlement
and makes sure that what the class is receiving is fair in comparison
to what it might get if it won at trial, balanced against the
expense and the risk of losing at trial.

If the court decides that the settlement is fair, it then sets
a second hearing - called a "final fairness" hearing.
The difference between this and the preliminary approval hearing
is that the final fairness hearing takes place after notice has
been sent to the class. The court looks at how many people stayed
in the class, how many opted out, and how many people filed objections.
This is also an opportunity for members of the class to attend
a hearing and testify about their views (positive or negative)
about the settlement. The class notice states the time and place
of the final fairness hearing and states how a class member can
indicate that he or she wishes to attend the final fairness hearing.

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Step 8: Paying the Class Action Attorneys

One of the most debated - and least understood - parts of class
action litigation is how the lawyers for the class get paid if
the case is successful.

If the class action case settles, generally, as part of the settlement, the
sides will agree that the plaintiff's class action attorney is entitled to
reasonable fees, not to exceed an agreed upon amount. Members
of the public often assume that this figure is what the class action attorney
will necessarily get, but that is not always true. Instead, it
is usually a maximum limit on how much the class action lawyers
can be paid.

In fact, it is generally up to the court to set the compensation
for the class action lawyers. The court does this, usually as
part of the final fairness hearing, by hearing evidence as to
how much work went into the case, how risky the litigation was,
and what the results were. Usually, the court will evaluate the
fairness of requested fees based on two approaches. First, the
court uses a "percentage of recovery" approach, determining
the percent of the requested fees as compared to the total value
of the class recovery. Unlike personal injury cases, where attorneys
traditionally get one-third of what they recover for their clients,
courts generally limit class action attorneys' fees to an amount
around one-quarter of the what they recover for the entire class.
Next, as a "cross-check," courts will look at the total
amount of attorney time and expenses to make sure that using a
percentage approach would not result in a windfall.

If the class action case does not settle, but rather is won at trial, the
court holds a similar hearing to evaluate the fairness of the
requested fees.

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Step 9: Compensating the Class Action Representatives

At the final hearing, after the case has either been settled or
won at trial, the court is often asked to set the appropriate
amount of money to be given to the class representatives, apart
from the relief that each class member is to receive, to reward
and compensate them for taking the time to pursue the case. This
is called an "incentive award." The amount of incentive
awards vary depending on factors such as the size of the suit,
the amount of the class representatives' involvement, and the
risks (if any) he or she incurred in prosecuting the suit. The
size of these awards vary and can range from hundreds of dollars
to over $50,000.

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