Class Action
A lawsuit where one or more plaintiffs sue on behalf of a large group of people with similar claims — consolidating what would otherwise be thousands of individual cases.
A class action lawsuit allows a small number of named plaintiffs (class representatives) to represent a larger group (the class) of similarly situated individuals against a common defendant. To proceed as a class, a court must "certify" the class, finding that: the class is large enough to make individual suits impractical (numerosity), there are common legal or factual questions (commonality), the named plaintiffs' claims are typical of the class (typicality), and the representatives will adequately protect the class (adequacy).
Class actions are common in: securities fraud (shareholders suing a company for misrepresentations affecting stock price), consumer product defects, data breaches, wage and hour violations, and environmental contamination. They serve an important aggregation function — when each individual's harm is small ($20 overcharge) but the total across millions of consumers is large, class actions are the only economically viable enforcement mechanism.
Class members typically receive notice and can opt out if they wish to pursue individual claims. Settlement distributions to class members are often modest ($5–$50 checks); the primary beneficiaries are often attorneys whose fees must be approved by the court. Mandatory arbitration clauses with class action waivers increasingly block consumer class actions.
Real-World Example
Five million credit card customers were notified of a class action settlement over hidden fees; each received a $12 credit, while the plaintiff's attorneys received court-approved fees of $4.8 million.