What is meant by class-action litigation?
Class-action litigation (also known as group-action litigation) is where a class or group of people effectively team up to bring an action against another party, usually a large company or employer. Class actions can be brought for a number of reasons but generally require each member of the class or group to have the same potential claim against the other party so that the courts will allow the action to be brought as a group.
Reasons for bringing a class action
- Same potential claim – Naturally a class action can only be brought if the potential claims of the individuals privy to the group are relatively similar. If the claims were not similar then a court could not treat the action as a group action since different factual and legal elements would have to be looked at for each specific case; this is why parties bring different disputes against each other and so a group action is of not always suitable. However, when the facts are similar for all members of the group it makes sense to bring a class action; the court will encourage a group action as it can deal with the matter in one case rather than lots of different cases. A court will consider it a waste of its time if it has to repeatedly decide the same facts and so there is significant court guidance that if you are considering a claim and there is potential for group action you should strongly consider whether it is appropriate.
- Reduce costs – The cost of bringing a claim can be very expensive particularly if you are taking on a large entity. It therefore makes far greater sense for people to share the costs of litigation by teaming up with others in a similar position. If as a group, only one set of solicitors are instructed and the factual cases of each member are identical your legal costs will be far less than they would have been had you brought the action by yourself. The group action does not mean that you will necessarily receive any less compensation if your claim is successful; a court will usually make a ruling on how much an individual should be entitled to, and each member of the group should receive that amount.
- Publicity – Often when a group of employees are bringing action against an employer (perhaps even through a trade union) the negative publicity associated with such an action for the employer is likely to lead to an increased chance of them wishing to settle the claim and thus avoid further negative publicity. The publicity is likely to be greater with a number of employees involved in the action, rather than just the one.
For the reasons given above class actions are encouraged by the court and should be advised by a solicitor if the individuals involved have a claim based on the same facts. This will usually happen in situations such as when a group of shareholders bring a claim against the directors of a company or when the employees of a company bring a claim against the employer. It should be noted, however, that it is only when the individuals are bringing almost entirely the same claim, or element of the same claim that a group action will be allowed by the courts.