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What is a Class Action Lawsuit?

Tricia Christensen
Updated May 16, 2024
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A class action lawsuit is filed on behalf of a group of people who have been in some way injured by the actions of a company. It is common to see such lawsuits filed by members of the company if hiring or salary practices have been illegal. Another type is filed against a drug company for making illegal claims about their product, or for causing deaths or physical damage to those taking the drug.

When someone joins a class action lawsuit, he usually has to sign papers declaring that he then forfeits the right to sue the company as an individual. A successful suit awards damages to the plaintiffs, who are those suing the company, according to greatest damage. In most cases, not all members of the suit are entitled to equal compensation. Usually, the attorneys work on a contingency basis, which means that they will receive a portion of the award but charge their clients no fees if the suit is not successful. That portion can be high, ranging from 30% to 50% of the total award.

Awards from a class action suit are split into two portions: punitive and compensatory damages. Compensatory damages are meant to address the defendants (those being sued), and direct damage. These funds will be used to address actual damages caused by the defendants, such as illness, loss of life, and/or pain and suffering. Punitive damages are a form of punishment for the company committing the illegal acts, or causing harm. Punitive damages in large lawsuits can be particularly high, when it is demonstrated the company has shown great disregard for the health, safety or emotional well being of the plaintiffs.

These lawsuits may become jury trials or may be settled prior to a trial. A suit may also be tried in directed mediation. Settlements and mediation mean that damages are agreed to by the defendant or defendants. Jury trial lawsuits can create problems because a company leveled with heavy punitive and compensatory damages can appeal the decision. The appeal process may last for years, so plaintiffs may have to wait a very long time before seeing any money. Companies can also declare bankruptcy, which means the plaintiffs may never be awarded any compensation.

One of the most well-known class action lawsuit is explored in the film Erin Brockovich. The film is a biopic detailing the suit on behalf of the residents of Hinkley, California. They sued Pacific Gas and Electric (PG&E) for lying about using the chemical hexavalent chromium, which then seeped into the ground water and contaminated the water supply. Many residents of Hinkley then became ill with cancer or had fertility problems. Animals living in the small town also died quickly.

The suit’s lawyer, Ed Masry, was able to establish that PG&E knew about the situation and deliberately risked the lives of those living near the power plants by failing to warn the residents. Erin Brockovich, played by Julia Roberts in the film, extensively researched and documented the damages caused to Hinkley residents. Her dedication helped secure the successful verdict against PG&E. Ed Masry chose directed mediation for the lawsuit, meaning that those severely affected by exposure to chromium were given immediate monetary relief.

MyLawQuestions is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a MyLawQuestions contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By anon359724 — On Dec 20, 2013

@anon316172, Post 19: About 75 percent of Americans have now reached poverty and you yourself are a couple checks away from being homeless yourself, whether you know it or not.

Whoever has done it to the least of these has done it to me!

Cops telling church groups they can't feed the homeless and shelters told to stop supplying tents to the homeless. God help us.

By anon316172 — On Jan 27, 2013

We have a well established (1950's) community of single family homes. Our primary, middle and high schools are integrated parts of our community. It is the traditional American community of hard working families trying to raise their children in a healthy environment.

Presently, there has been a significant upsurge of "group homes" for various at-risk people from recovering addicts and alcoholics to people with development disorders. Some of these homes are unlicensed and house large numbers of people in a semi-transient status (they come and they go). Are there any regulations covering such homes? Is there any recourse to a community when people institutionalize single family residence structures and turn them into essentially rooming houses for large numbers of transient residents? Are there any efforts to visit this issue in the courts and attempt to codify standards for such group homes?

By anon249670 — On Feb 21, 2012

We are in the process of getting a large group of business owners together who have been crushed by these banks coming into our town with loss share agreements and calling notes due because they can and are making so much money.

They have no reason to loan money. They just call the notes, collect the FDIC money, get the loan out of bank, close another business. Their mindset is they are not from this town, and will be gone one day, so what does it matter.

Hopefully our group can be heard. These banks started this and it looks like our government is going to let them finish it by ruining our home and property values.

By anon171220 — On Apr 29, 2011

Is it possible to file a class action lawsuit against the animal controls in the United States on whom we have solid evidence of abuse and cruelty of our nation's animals. --Hilary

By anon142737 — On Jan 13, 2011

Just filed a class action this morning against a land developer. Wish us luck.

By anon124826 — On Nov 07, 2010

How many people does a class action lawsuit require?

By anon124697 — On Nov 07, 2010

All negative equity homeowners are legally entitled to a similar financial advantage that was given to over 25 percent of the negative equity homeowners who were modified to remain negative equity homeowners because of the precedent set by the financial industry, called standing.

I am not an attorney, but I am looking for help in changing our environment to conform to our existing laws.

By anon109744 — On Sep 08, 2010

We need a class action lawsuit against social security. Roosevelt promised it would be optional - breach of contract. As well as with the younger generation, there will be no service provided for what we pay.

By anon66409 — On Feb 19, 2010

Class action lawsuit lawyers are the bottom of the barrel pieces of trash ever to walk the face of the earth period.

By anon51417 — On Nov 05, 2009

Is there any legal ramifications for homeowners if they do not disclose to their realtor/title company when they subsequently sell their home if they have received any monies for damages for construction defects on the home in question if they signed in on a "class action" suit?

If they also have to show that they used said monies to repair all defects, if a portion of the money awarded was used

to pay their attorneys, who pays the additional cost of repairs -- the homeowner?

By larryl — On Jun 01, 2009

More than 2000 of us, mostly working class Hispanic citizens, live on an old Spanish Land Grant, the Baca Float #3 in Santa Cruz County, AZ. For more than 200 years, residents and workers (miners in the early days) east of the Santa Cruz River have reached the highway (now I-19) west of the River via a road that is presently called Santa Gertrudis Lane. Daily many of us have crossed this Lane to go to our jobs, reach the U.S. Post Office, and to shop in Nogales and Tucson. In addition to the prescriptive easements that we hold under AZ law, we hold deeded easements to the Lane.

Nevertheless, over the past 8 years our easements have been blocked on two occasions by construction of a gate, both times by or at the behest of Lane residents. The first time, 8 years ago, I started the Baca Float Coalition, a community action group that represented more than 3300 property owners, and we (technically, the Salero Land and Cattle Company) took the unusual step of purchasing a strip of land on the Lane. We then were able to open the gate and had a gentleman's agreement with Lane residents that the gate would be kept open.

Late last summer, the Lane residents (the Santa Gertrudis Lane LLC) induced the Union Pacific Railroad, which crosses the Lane, to construct a gate barring our access--a gate *not* on UP land, but several hundred yards away, on our easement. We were able to meet once with UP representatives and, after this meeting, made numerous follow up contacts pointing out our easement rights, asking for keys to the gate, and so forth. The UP simply stonewalled: No response whatsoever.

Yesterday, after much careful planning that included contacting Sheriff Estrada (his deputies were present) and sending certified letters to Lane residents and the UP citing our easement rights and pertinent case law, approximately 75 of my fellow citizens and I cut a lock on and opened this gate. Many of these citizens had expressed great fear that they would be arrested (the gate cutter was indeed cited by the UP). UP personnel were present and physically attempted to force the gate to be kept closed. The entire matter was on the front page of the AZ Daily Star on Friday, May 29, and will appear in the Nogales International, probably on Tuesday.

About 90 years ago, a right of way across our easement on the Lane was sold to the railroad (now the UP) (our deeded easements were in 1935). As stated, last summer the UP constructed the afore-mentioned gate across this easement. The UP has today announced that it will now construct a new gate, this time on their right of way and block our access. *Not incidentally, the up u.s. dot - crossing inventory information posting* as of yesterday appears to show the S.G. Lane to be a public crossing.

A critical aspect of our claim as a class action matter is that the aggrieved party is easily identified: those of us who own land on the Baca Float, originally a Spanish Land Grant, a grant validated in the Gadsden Purchase.

By froggie — On Apr 20, 2009

When a homeowner's association board of trustees is only following rules as they see fit, what is the homeowner's recourse?

By Hattie — On Mar 09, 2009

In a class-action lawsuit, can you sue the government, or a member of the government? I refer to the UK.

By anon26246 — On Feb 10, 2009

How many people minimum does it take for a class action law suit? Karen Ross

By anon4393 — On Oct 16, 2007

Do the Plaintiffs who have won a lawsuit pay IRS or state taxes on the money awarded?

If the lawsuit is filed as a class action suit against an insurance company for not paying for losses for Hurricane Katrina and the money awarded covers just the losses with no punitive damages, do the plaintiffs have to pay federal taxes on this as income?

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a MyLawQuestions contributor, Tricia...
Learn more
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