Understanding Consumer Protection Laws

What is a class action?
A class action is a legal procedure used to prosecute efficiently a lawsuit 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), and oil spills (mass tort). 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 case settles, the judge presiding over the case must approve the fairness and adequacy of the settlement. Usually, potential class members have the option, after receiving notice, of excluding themselves from a class or class settlement, and pursuing the case on their own. The class procedure allows individuals and small businesses to prosecute meritorious cases that would have been too expensive and inefficient to litigate individually.

What kinds of cases are litigated as class actions?
The class action device has ancient roots. The Supreme Court has observed that class actions were used to resolve disputes among feudal tenants and manor lords. In addition, a form of the class action was typically used in disputes involving church parishioners and Indian tribes. More recently, class actions have been used in labor disputes, cases alleging consumer fraud, securities and antitrust actions, cases alleging human and civil rights violations, employee benefits disputes, and environmental and mass torts. Donovan Litigation Group, LLC has been instrumental in the use and development of the class action device in these areas as well.

Should I, or do I need to be, involved in a class action, and is there risk or expense for me?
In most cases you need take no steps of your own to join a class action. Indeed, usually only those who wish to exclude themselves from a class case need do anything. By participating in a class case, you accomplish a number of objectives. You may receive compensation for a wrong, injury, or loss you have sustained — compensation that may not have been available to you in any other forum. Through inclusion in a class of similarly harmed persons, you also demonstrate to the court that the alleged harm done was substantial and impacted a large number of people, increasing both the likelihood of recovery and its size. Moreover, the only costs to you will be drawn from any settlement or judgment proceeds upon successful resolution of the case (though in few states, named plaintiffs may be responsible for some costs). Class counsel work on a contingency fee basis and only get paid upon successful resolution of the matter. In addition, the attorneys advance expenses and costs associated with prosecuting class cases.

How are attorneys paid in class action cases?
The attorneys are usually paid in accordance with an order from the court before which the case is pending, and only if the case is successful. 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. The court then enters an order establishing the amount of the judgment or settlement proceeds to be paid to the attorneys. The amount of the fees awarded is based upon a number of factors, including, among others, 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.

How does the court determine who will serve as Lead Plaintiff?
The Private Securities Litigation Reform Act of l995 provides that the most adequate Lead Plaintiff is the person or group of persons who, in the determination of the court, has the largest financial interest in the relief sought by the class. The “largest financial interest” can be determined by courts in a variety of ways. Some courts appoint the Lead Plaintiff based on the dollar amount of the loss due to the securities law violations alleged, and some base this decision on the percentage of net worth lost. Also, depending on the circumstances, several individuals may be appointed to serve jointly as Lead Plaintiffs.