Winning Relief for the Class: Class Actions, a Powerful Tool for Consumers’ Rights

Winning Relief for the Class: Class Actions, a Powerful Tool for Consumers’ Rights

Thursday, 30 January 2014

Class action litigation is a highly specialized area of the law.  Class action lawsuits are typically settled out of court and many more are dismissed following a successful defense motion to dismiss.  The small percentage of class actions that proceed to trial involve multiple attorneys working as a team on a single case in which many clients share a common claim or factual dispute.

Generally, a class action (class) is initiated by one or more ordinary citizens who allege they have been damaged and they believe it is probable that other citizens have experienced similar damage(s).  Damages, as a legal term could include complaints such as involuntary muscle spasms following the ingestion of a prescription drug, annoying recorded messages from an aggressive solicitor, a $29.00 wireless mouse that doesn’t function properly without installing fresh batteries every two weeks, etc.

There are not many attorneys of any caliber, much less a specialized attorney, who would take on any of the hypothetical complaints listed above to represent a single client.  However, if hundreds or thousands of complaints are combined and adjudicated as one case, the attorney may invest his/her own funds to advance the complaint.

Examples of out of pocket expenses include retaining an outside data management administrator to develop questionnaires, claim forms and data bases to organize and manage information gathered from potential class action participants.  The forms may be mass mailed to known parties or posted on the internet, newspapers and magazines.  In any case, a third party administrator would likely be utilized.  Other expenses may include the following:

  • Retain and depose top Consultants and Experts within a specialized field so the information is on record.  Information gleaned from pre-trial depositions educates the class attorney, allowing them to properly frame direct questions as well as cross examine defense experts.
  • Interview and collect depositions from a minimum of 100 potential class action members, to be presented before the District Judge deciding if class action elements have been met. Judges are more likely to certify a case as a class action if a minimum of 100 initial complaints are filed, but it also depends on the nature of the case.
  • Travel expenses, telephonic interviews, court reporters and other transcription services are just a few other examples.
  • Accumulated billable hours by the class action attorneys are recorded and summarized periodically.  There is not a specific range of hourly rates available because there are so many sub-specialties in the field, such as electronic malfunction, pharmaceutical clinical trial procedures, etc.

Most people have probably entertained thoughts of suing a business or entity but it’s just a passing thought.  For the infinitesimal fraction of the population who take such thoughts to the next level, they must first find the right attorney and convince the attorney that damages may be proven and that other ordinary citizens are likely to join the class.

If the class is certified to move forward by a judge, the original plaintiff(s) take on the role as lead or named plaintiff(s) and all other citizens who subsequently join the suit are referred to as class members.

There are four typical categories of class action lawsuits:

  • Product Liability/Personal Injury
  • Employees challenging employer
  • Investors challenging Security advisor(s)
  • Consumers seeking to recover exorbitant or illegal fees paid to a business or entity

Courts may also exercise discretion in certifying atypical classes, such as the $250 million text spam national action against Papa John’s, approved in November 2012,  Agne v. Papa John’s International Inc.  Nine months after the case was certified in U.S. District Court, Papa John’s settled with class members for $16.335 million.  The participating class members each received a $50 check and a voucher code for one free large one-topping Papa John’s pizza.  The lead plaintiff was awarded $25,000.00, which is in the customary range, if not a little higher than the average payout.

The lead plaintiff or plaintiffs are awarded substantially greater compensation for damages than the ordinary class members for several reasons.  Among other things, a lead plaintiff is expected to show up in court every day and sit beside counsel to participate and assist with the case.  Most likely the lead will have participated in producing a relevant questionnaire for prospective class members to complete prior to joining the class.

Maneuvering a class action through the legal system requires an experienced lead counsel with the ability to organize a large diversified team.  Senior ranking members of the team are more likely than junior members to work on contingency and generally they will not be compensated unless the class is found in plaintiff’s favor.  The lead plaintiff(s) and class members do not pay the attorneys.  The class attorneys seek a compensation award through the court following a favorable ruling or settlement.

In typical class cases, the value of attorney compensation is based on incurred out-of-pocket expenses, in addition to an equitable incentive award for shining light on injuries that otherwise would not have been exposed to the public. The benchmark award is between 25% – 35% of the total judgment.  If plaintiffs prevail yet no cash value is awarded, plaintiff’ attorneys may seek payment from the original plaintiffs who hired them or from the defendants.

Defense attorneys are paid whether they win or lose.  They are paid by the defendants, most often through an umbrella insurance policy which covers liable claims and a myriad of other circumstances that could devastate a business’s bottom line.  Liable insurance must be carried by most companies to protect investors, lien holders, stock holders, partners and others, in the event of a devastating judgment.

There are many websites dedicated to alerting the public of current and settled class action lawsuits that are still accepting claim applications. The deadlines for submitting applications are strictly adhered to.  A few class actions which will end public participation soon are posted below, with links to the appropriate site.

Organix Hair Care, Skin Care Class Action Lawsuit Settlement

(Golloher v. Todd Christopher) Deadline 3/17/2014. Up to $28 cash may be available to those who purchased relevant products between October 25, 2008, and October 10, 2013.  Complaint: The packaging and labels of certain Organix hair and skin products misled consumers into believing the products were wholly organic.  The defendant denies the allegations but has agreed to refund consumers to avoid costly litigation.

American Express Gift Card Class Action Lawsuit Settlement

(Kaufman v. American Express) Deadline 3/6/2014. Up to $40 cash may be available to those who purchased, received, held or used an American Express gift card between January 1, 2002, and October 15, 2013.  Complaint:  Class members were not informed that split-tender transactions were not available with the gift cards.  Also monthly fees and check issuance fees were assessed.  American Express denies allegations of wrongdoing but has agreed to settle to avoid expensive litigation.

Nasal Ease Class Action Lawsuit Settlement

(Hoover v. Hi-Tech Pharmacal Co. Inc.) Deadline 2/25/2014.  A refund of the full purchase price of the product is available with a receipt.  Without a receipt a refund of $15 is available to those who purchased Nasal Ease (in the U.S.) between April 1, 2010, and Feb. 25, 2014.  Complaint:  False advertising.  The ingredients in the product have not been scientifically proven to treat allergies or their symptoms.  The parent company denies all allegations but has agreed to compensate consumers to avoid litigation.

If you are interested in class action law, the American Bar Association published a great article written by attorney Kate R. Isley, who joined Pierce Atwood LLP as an associate in the firm’s Litigation Practice Group in October 2011.  Her article, titled, “How I Began My Class Action Practice” offers an insightful introduction into class action law from a defense litigator’s viewpoint.
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Featured photo for class action lawsuits found here.

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