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.