The Advantages and Disadvantages of Class Action Lawsuits
By: LawInfo
Published: 07/2010
Class action lawsuits allow a class of plaintiffs to sue a defendant for injuries caused by common actions or inactions. As in any important litigation decision, there are advantages and disadvantages to class action lawsuits. It is important for potential class members to understand those advantages and disadvantages so that they can best protect their rights.
Common Advantages of Class Action Lawsuits
Some of the common advantages of class action lawsuits include:
· Lower litigation costs. Litigation costs will be divided among class members. Thus, the very number of class members in the plaintiff group can provide a shared expense benefit to each individual class member;
· The opportunity for plaintiffs to seek relief for small amounts of money. The lower litigation costs will allow plaintiffs to seek relief who would not have found it financially prudent to do so in a traditional lawsuit;
· Greater judicial efficiency. A class action lawsuit is decided by one judge in one court. Thus, the litigation will take up less cumulative court time and involve fewer judges.
· Greater uniformity of recoveries among similar plaintiffs. Since only one decision by one judge, or one settlement, will be made, plaintiffs’ recoveries should be consistent.
· Greater uniformity for defendants. The one decision or one settlement benefit also creates greater certainty for defendants. A defendant and others in situations similar to the defendant’s situation are not left wondering about how to follow the law because only one decision was issued.
· The opportunity for all plaintiffs to receive damages. If a defendant is facing multiple lawsuits then the defendant may not have the ability to pay all of the plaintiffs. That means that earlier filing plaintiffs generally receive greater compensation for similar injuries than do later filing plaintiffs. A class action lawsuit erases this risk and allows injured parties to recover damages at the same time and in proportion to their injuries.
Common Disadvantages of Class Action Lawsuits
Some of the common disadvantages of class action lawsuits include:
- Lack of decision making control. Class action lawsuits are, by definition, representative rather than group litigation. That means that representatives of the affected class make the important litigation decisions – including when to settle. A plaintiff who is not a representative does not have a say in whether to settle or continue to litigation.
- Cases almost always settle for financial compensation, coupons for future services or rebates only. If a plaintiff is seeking other types of compensation than this can be problematic.
- If the plaintiff’s attorney does not argue effectively or the class representatives do not have strong claims then the legitimate claims of other class members can be hurt. If the class is unsuccessful in their lawsuit then individual class members likely do not have the right to bring individual lawsuits at a later date.
It can be difficult to decide whether or not to take part in a class action case. The advantages and disadvantages discussed above should be carefully considered by each class member prior to joining a class action lawsuit so that a class member has a realistic idea of the possible good and bad outcomes of joining a class action lawsuit.
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