Class action lawsuits frequently get a bad rap as benefitting only the lawyers who bring them with little to no financial benefit for class members. Reports of class action attorneys receiving millions in fees while their clients receive only nominal compensation like merchandise coupons have tainted the public’s perception of class action lawsuits. However, class actions serve an important function in the American judicial system and provide many benefits to the American public.
Class action lawsuits allow classes of plaintiffs who have been similarly injured by a single defendant to pursue a single action against that defendant. One of the primary benefits of this single action is that it conserves resources and reduces costs. Both the class of plaintiffs and the defendant are able to greatly decrease the amount of attorney fees and other costs associated with such actions. Similarly, our courts limited resources are more efficiently allocated. A single class action prevents the inefficiency of multiple judges hearing the same case and ruling on the same issues. This also prevents the problem of inconsistent resolutions in different courts of essentially the same case.
The problem of individual recoveries that are too small to warrant the cost of bringing suit is also resolved by class actions. If a corporation engages in illegal billing practices that overcharges each customer $20, the individual customer is not going to spend the money to hire an attorney and file suit to recover the $20. However, when the corporation has hundreds of thousands of customers, it is making large amounts of money through illegal conduct. The class action allows this group of customers to combine their claims in one action. This allows the combined potential recovery to justify the cost of bringing suit.
Thus, despite the many criticisms of class actions, these lawsuits serve an important function in our judicial system and serve the interests of the American public.
For a more detailed and easily understandable of class action lawsuits see http://en.wikipedia.org/wiki/Class_action.
For examples of class actions that have been filed see the following news reports