Class Actions

If a consumer has relatively minor monetary damage, but was victim of a company-wide practice that clearly affected multiple consumers, a class action can be considered. Consumer class actions are different than say an environmental impact class action such as that depicted in the movies “Erin Brokovich” or “A Civil Action.” Consumer class actions seek recompense for a large number of consumers, with each receiving relatively small monetary awards. Lawyers’ fees are typically paid from the company directly or from the fund created for the consumers.

Class actions come in many contexts. Our firm handles consumer fraud related class actions. Other types of class actions are brought on issues of product liability and/or other type of mass tort. A typical consumer class action involves numerous consumers who have been victimized by a certain business pattern or practice on a mass basis causing them some kind of monetary damage. The amount of money damage can be substantial, but it can also be minimal. The theory behind bringing a class action for minimal monetary damages on behalf of a class is that such an action would not be worth taking to court unless the consumers’ claims are aggregated. While a consumer might not him/herself want to sue a company for return of say $1000, when combined with 60,000 other consumers, it is worth pursuing with the assistance of a New York City class action lawyer. The primary basis for a law firm to get involved in such a case is that the Firm will be paid either by a percentage of a “common fund” achieved by the lawyer, or by a “lodestar” calculation of fees i.e. number of hours X hourly rate.

It is necessary in these cases to prove to the court among other things that there are enough people to certify the action as a class action; that the claims made by the named plaintiff are common to the class and are typical of someone making a claim; that the class plaintiff will adequately represent interests of all class members and; that the class action is the best way of handling these claims. A class action plaintiff must also be aware that he or she as named plaintiff will be acting on behalf of an entire class of people, and not only in his or her own interest.

Sometimes the only way that a consumer ever finds out he/she has a claim is when a Notice is received in the mail. This Notice can be from any state in the country, but it informs the consumer that the process has gone forward elsewhere, and there is time for the consumer to attend a “fairness hearing” and lodge any objection he/she might have to the settlement of a class action. An “objector” to a class action is typically one who believes the settlement will not adequately compensate the person if it goes through. To this however, in class action settlements, there are “opt-out provisions” which allow a person to be excluded from the settlement and seek redress on his/her own. If a consumer believes he/she has damages beyond what they would stand to gain by opting in to the settlement, he/she should consult counsel before responding to the Notice of the Class Action Settlement.

A good example of a consumer class action is one based upon false advertising by a company, and in New York, that is General Business Law §350. This is the case because an advertisement by its very nature is used by a company to induce numerous consumers to buy its product or service, in reliance on the ad. And if an advertisement is false, it likely affects numerous consumers who acted in reliance on it and lost money. As such, the case may have an easier path to class certification by the Court. A class action lawyer in New York City can advise you on this process.