WHAT IS A CLASS ACTION?
While the law of class actions has developed a mystique and aura of inscrutability, the concept and basic requirements are really quite simple. The idea is that one trial of a huge “class” of people is simpler, faster, and cheaper than lots of “individual” trials when the issues are the same and the damages are similar and easily calculated.
Consumer class actions are an effective way to attack widespread and uniform illegal business practices, where there are lots of victims (“numerosity”), where there are similar issues of law or fact (“commonality”), where the claims and defenses are all fairly identical (“typicality”), and where one or more “class representative” plaintiffs and their lawyers will adequately protect the interests of the entire class of consumers (“adequacy”).
The simple concept of the class action is set forth in the words of both the federal and the Maryland rules governing class actions. Under Rule 23(a) of the Federal Rules of Civil Procedure, and Rule 2-131 of the Maryland state Rules of Civil Procedure, there are four “Prerequisites to a Class Action”:
One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
More recently, congress passed the “Class Action Fairness Act of 2005.” The intent and effect of this law is to make it much more likely that any class action worth more than $5 million will end up in federal court.
There is a common criticism that consumer class actions deal only with small overcharges, or that they result only in “coupon settlements” where the lawyers get rich and the victims get little of value. While there certainly has been abuse, there is also great good that can come to consumers from class actions.
In one Maryland car repossession class action, some consumers obtained a waiver of the deficiency balance (the amount still owed after the repossession sale) and a refund of up to several thousand dollars.
In the foreclosure rescue scam arena, one Maryland class action has been filed on behalf of victims who have lost as much as $100,000 or more.
Even in the case of smaller claims, if consumers are allowed to aggregate their claims in a class action, then competent legal counsel can be retained to try to force an end to the illegal business practice.
Relevant Law and Resources on Class Actions:
Federal Rule of Civil Procedure 23, on Class Actions: http://www.law.cornell.edu/rules/frcp/Rule23.htm
Maryland Rule 2-131, on Class Actions:
http://michie.lexisnexis.com/maryland/lpext.dll/mdrules/9/a0/df/108?fn=document-frame.htm&f=templates&2.0#
Class Action Fairness Act of 2005: http://www.abanet.org/litigation/committees/classactions/docs/cafa_text.pdf
National Association of Consumer Advocates Revised Class Action Guidelines http://www.naca.net/_assets/media/RevisedGuidelines.pdf