Published in Class Actions on June 14, 2017
While corporations and tort reform advocates lament class actions and have aggressively sought to limit your ability to bring a class action lawsuits (see the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act, which the House of Representatives passed earlier this year), the truth is that class actions provide great protections to individuals. In a previous post, we discussed how class action cases work. We will now discuss why they exist and their benefits.
In the typical class action case, there are dozens, hundreds, or even thousands of class members who have suffered a similar type of harm at the hands of a defendant (or in some cases, multiple defendants). In our previous post, we used the example of a defective phone screen that was purchased by thousands of customers. Class members in these cases typically suffer some damage that is small enough that it does not make sense to pursue an individual claim. Using our example of the cell phone, it would make little sense to pay an attorney hundreds of dollars an hour to try to win damages that may amount to less than $500.00. Using a class action, however, there is strength in numbers. The cost of seeking damages from the defendant is spread out among the class members by permitting the result obtained for a representative group of class members to apply to the entire class.
Applying this to our defective phone example, the cost to obtain a jury verdict against the phone manufacturer in a single case may be $50,000.00, which would make it foolish to file a single case. If, however, there are 500,000 defective phones and the cost remains the same, all 500,000 class members may be able to share in the damages at a cost of $50,000.00. In addition to the financial efficiencies available in class actions, class cases increase judicial efficiency. Rather than have 500,000 separate trials about defective phones, a court could hold one trial and apply the result to all class members, which reduces court costs and keeps court dockets open for other cases.
The primary benefit of class actions (as stated above) is the power they give to individuals who lack resources to bring legal action against negligent corporations, governments, and other entities. By bringing claims on behalf of large groups of plaintiffs, class action attorneys can use the efficiencies discussed above to help individuals who otherwise would not obtain any relief. Class actions also serve as a check on negligent behavior of large businesses. Without such cases, corporations would be emboldened to make decisions that result in harm to consumers if they know that the cost of pursuing legal action individually is prohibitively high.
Class actions are critical legal tools to protect those who have been harmed.