What is a class-action lawsuit?

In a class-action lawsuit a single lawyer (or team of lawyers) represents a group, or “class,” of injured individuals. Often, an enterprising lawyer serves as an evangelist, convincing a few of the injured individuals to retain her services. Then the lawyer approaches a judge and asks that she be allowed to represent the interests of the entire group–even those whom she has not met. If the judge thinks she will represent the group fairly, the suit goes to trial.

If the lawyer wins her case, the judge approves a plan to distribute the money. Generally the lawyer collects some portion of the award, with the rest going to the “class” of injured individuals. (Class action suits can be extremely lucrative for lawyers.) When it is impractical or impossible to distribute the money because the individual awards are small or because the injured individuals can’t be located, the court will often distribute the money to a related cause or set of individuals. (The Swiss bank suit is such a case, see previous “Explainer.”)

The class-action suit allows ordinary folks with relatively sparse resources to recover damages from large organizations. But what if some individual doesn’t want to be represented by the lawyer who is conducting a class-action suit? The individual may “opt-out” of the settlement, which means forgoing his share of the award. This individual may then sue the firm that injured him, using his own lawyer.

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Explainer thanks Professor Michael J. Bazyler of Whittier Law School for his help.