Class Action Law
In law, a class action or a representative action is a form of lawsuit where a large group of people collectively bring a claim to court and/or where a class of defendants are being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. However, in several European countries with civil law different from the English common law principle (which is used by U.S. courts), changes have in recent years been made that allow consumer organizations to bring claims on behalf of large groups of consumers.
Class action lawsuits may offer a number of advantages because they aggregate a large number of individualized claims into one representational lawsuit.
First, aggregation can increase the efficiency of the legal process, and lower the costs of litigation.
Second, a class action ensures that a defendant who engages in widespread harm – but does so minimally against each individual plaintiff – must compensate those individuals for their injuries. For example, thousands of shareholders of a public company may have losses too small to justify separate lawsuits, but a class action can be brought efficiently on behalf of all shareholders. Perhaps even more important than compensation is that class treatment of claims may be the only way to impose the costs of wrongdoing on the wrongdoer, thus deterring future wrongdoing.
Third, in "limited fund" cases, a class action ensures that all plaintiffs receive relief and that early-filing plaintiffs do not raid the fund (i.e., the defendant) of all its assets before other plaintiffs may be compensated.
