What Are Class Action Settlements?

What Are Class Action Lawsuits?

The legal system in the United States makes it challenging and expensive for individuals to sue companies or businesses for wrongdoing. This is especially true when settlement amounts would potentially only amount to hundreds of dollars. After all, who is going to go through the hassle of taking a company to court only to reach a $500 settlement?

That's where class actions come in to play. Class actions give ordinary individuals an avenue to recover losses and damages that otherwise would not be worth their time pursuing in court, letting companies get away with unfair and damaging business practices.

Class action cases range as widely as individual civil lawsuits against businesses, but the most common ones are the result of lawsuits against businesses for:

• Workplace Discrimination
• Defective or Dangerous Consumer Products
• False Advertising
• Damages from Medical Devices or Drugs
• Stocks, Securities, and Investments - Fraudulent Reporting
• Anti Trust - Pricing Collusion and Monopolies
• Wage Theft
• Exposure to Harmful Substances
• Privacy Violations

Below, we discuss these common types of class action lawsuits and settlements.

False Advertising

These are the result of deliberately marketed untruthfulness in business products or services. Here is an example of a classic class action where the chocolatier Godiva settled a class action lawsuit. In this 2022 class action lawsuit, the lawyers that filed the class action suit alleged that Godiva falsely advertised its chocolates by branding it as "Made in Belgium", thus breaking the law. The lawsuit claimed that Godiva did not actually make its chocolates in Belgium. Godiva agreed to settle and eventually made payments to qualified class action claimaints who filed claim forms on time.

Anti-Trust

These are class actions that are resulting settlements of lawsuits what is brought to challenge conduct, such as price fixing and monopolization, which has detrimental impact on business competition. In other words, business that seek to collude to gain favor in the market and to push out fair and open competition in the marketplace. An example of this was a large class action settlement involving the price fixing of pork products in the United States. This settlement was open in mid-2023 to claims and is expected to pay out in the 8-digits.

Discrimination in the Workplace

Class actions are often brought seeking damages when people suffer from discrimination based on race, color, nation origin, sex, religion, disability, age or some medical conduct. Examples are class actions are for people who suffered from emotional damages, or from lost potential wages.

Privacy Violation Class Actions

Companies are often sued as part of class action lawsuits which result in massive class action settlements for privacy law violations. These laws, such as BIPA (the Biometric Information Protection Act) exist to protect consumers and ordinary people from having their data used in ways that can violate their freedoms and rights. This data can include your personal information such as driver's license, passport number, social security number, and even things like data about your face, your fingerprints (biometric data) or even your DNA!

An example privacy class action lawsuit involves Snapchat and Facebook that settled 8 and 9 figure class action settlements as a result of allegedly violating privacy and consumer laws in the United States. These settlements are now closed but you can stay up to date on OCA for new class actions as they are reported on.

Fraudulent investment reports

A type of class action that suits for victims of crime who have been scammed as a result of their good faith investments into companies and as a result, had suffered financial loss due to falsified monetary reporting or news released by a publically traded company. The toll of financial fraud may extend well beyond lost money. Most of all victims suffer from insomnia, anxiety, nervousness and deep depression and often recover class action payouts for emotional damages.

Class actions will consist of a group of people, who have suffered similar damages. Many of them would not normally be able to afford to pursue a claim, because they feel the risk to be involved in pursuing a claim on their own whether it is financial, or time consuming due to the complexity of navigating the American legal system. That's where class actions come in. They are filed on behalf of a group of people by a law firm, which will often take the case pro bono, or free of charge, after they gather information and evidence from an initial small group of representatives of the "class".

So what should you know about class actions, how they work, and how to be confident that you can file claims for existing class actions? How do you know if you even qualify?

So What is a Class Action, Exactly?

A class action is a type of legal proceeding in which one person or representative brings a claim on behalf of a wider group of people who have been infringed in a similar way, or by the same behavior. This one person or representative can be a law firm or a group of individuals that file a suit that shows evidence of some damages done to a wider "class" or group of people. For instance, a lawsuit files on behalf of all members who purchased a product, used an app, or visited a particular store.

How do I start a Class Action?

To start a class action you consult with class action lawyers to see whether there is a case to be made -- Was a law actually infringed upon, and if so were there a large number of people affected as a result? There must usually be at least seven or more persons who have claims against the same defendant, or culprit in the case. Also, the claims must arise out the same issue according to the relevant local, state or federal laws. A couple clear example of laws that are often the subject of class actions are the TCPA law and the BIPA law, both of which were written with the intention to protect ordinary consumer rights and privacy.

Class action lawsuits will often end up settled rather than go to court, in which case they will be class action settlements with a defined fund to distribute funds to class action members, with a set of rules and qualifyers determined by the judge in the case, and agreed upon by the plaintiff and the defendants. Lawyers will often receieve a portion of the settled money (Up to 30% of the total settled amount in some cases).

What's the difference between Mass Torts and Class Actions?

Depending on how the court considers the plaintiff's case, Mass Tort and Class Action lawsuits can be distinguished. The court doesn't treat plaintiffs (or the class that is claiming damages as a victim) as a single entity, it considers them as individuals, so in the case of a mass tort, the compensation also covers individual losses and injuries according to each individual. In a class action, broadly speaking, the class is treated as a single entity and the class action members are treated more uniformly.

What's an Open Class Action? Closed Class Action?

The class action must be brought as an Open or Closed Class Action. In an Open Class everyone is included unless they expressly opt out. But in a Closed Class all members are known and all potential parties must opt in to the proceeding.

The Largest Class Action Settlement in History

There are a lot of big Class Actions in US history. The biggest one was the Tobacco Master Settlement Agreement was reached in 1998. The participants were the four largest cigarette manufacturers, five US territories and District Columbia. They demanded $206 billion settlement included $1.5 billion for unti-smoking campaign. The plaintiffs won the case and the money has been rewarded over the course of decades to 48 states in the United States.

Class Actions Today

Class action activity is a steep rise in popularity in the US as of 2022. Under US law, residents are required to pay tax on any type of income. In the event of a successful court case, the plaintiff receives monetary compensation, what is generally considered taxable. But note that not all payments are taxable. For example, bodily injury damages are not considered taxable income until you have deducted your medical expenses. If you receive compensation for damage caused by emotional distress, than most often it is taxable. Consult your lawyer or account to get the final word on how you should file taxes for your settlement payouts, this blog is not to be considered legal advice.

Let's summarize. Class actions are a type of lawsuit in which one of several persons sue on behalf of a large group of people. There are a lot of benefits for plaintiffs who wish to pursue a class a class action rather than litigate their claims separately. By becoming a participant to a class action before a lawsuit and potention settlement, you can empower yourself to be eligible to a lower cost to litigate as opposed to filing lawsuits individually in civil court. A class action lawsuit might also carry a higher likelihood of financial compensation. This is in part because class action lawsuits benefit the legal system and its judiciary by minimizing the use of court time and improving court productivity and efficiency.

Once a class action lawsuits has been settled, it may become an open Class action where qualifying members are encouraged to make themselves known by filing a claim form on the officially court sanctioned class action administrators websites, or by sending those administrators physical mail. The claim form may require information such as address, details of the product or service usage by the individual, and in some cases proof such as app IDs, accounts, receipts, or sworn signatures applicable to perjury. As always, take great care in protecting your personally identifiable information.