Class action suits

1. Class Action
Suits
By
Upasana
Venkatasubban

2. What is a Class Action suits?
A "class action" lawsuit is one in which a
group of people with the same or similar
injuries caused by the same product
or action sue the defendant as a group.
Other names for lawsuits brought by a
number of people who suffered similar harm
or losses are "mass tort litigation" and "multi-
district litigation"
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3. Origin and Law
• The class action originated in the United States and is still
predominantly a U.S. phenomenon, but several European countries
with civil law, have made changes in recent years to allow consumer
organizations to bring claims on behalf of consumers.
• In the United States federal courts, class actions are governed by
Federal Rules of Civil Procedure Rule 23 and 28 U.S.C.A. § 1332(d).
Cases in federal courts are only allowed to proceed as class actions if
the court has jurisdiction to hear the case, and if the case meets the
criteria set out in Rule 23. In the vast majority of federal class actions,
the class is acting as the plaintiff. However, Rule 23 also provides for
defendant class actions.
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4. Rule 23 of FRCP
• Should contain certain number of joinders.
• Questions of law or fact common to the class.
• Claims or defences of the representative parties are typical of the
claims or defences of the class.
• Representative parties will fairly and adequately protect the interests
of the class.
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5. Advantages
Proponents of class actions state that they offer a number of
advantages because they aggregate a large number of individualized
claims into one representational lawsuit.
• First, aggregation can increase the efficiency of the legal process, and
lower the costs of litigation
• Second, a class action may overcome "the problem that small
recoveries do not provide the incentive for any individual to bring a
solo action prosecuting his or her rights."
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6. Advantages (Contd.)
• Third, class action cases may be brought to purposely change behavior of a
class of which the defendant is a member. - Landeros v. Flood
• Fourth, in "limited fund" cases, a class action ensures that all plaintiffs
receive relief and that early-filing plaintiffs do not raid the fund (i.e., the
defendant) of all its assets before other plaintiffs may be compensated.
• Fourth, in "limited fund" cases, a class action ensures that all plaintiffs
receive relief and that early-filing plaintiffs do not raid the fund (i.e., the
defendant) of all its assets before other plaintiffs may be compensated.
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7. Disadvantages
• Resolution of class actions generally take much longer than conventional lawsuits
due to their procedural complexities
• They must be resolved in a common manner such that differences between
individual cases are typically not emphasized
• Individuals who participate typically give up their right to file suit individually
• Class members generally play a lesser role in directing the litigation
• Even if successful, participating members of the class may only be compensated
with a minimal recovery
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8. Enron
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• Enron was established in 1985 – was an oil and
natural gas company.
• Over the years they merged and became a huge corporation -
Fortune magazine named Enron "America's Most Innovative
Company" for six consecutive years.
• At the end of 2001, it was revealed that its reported financial
condition was sustained by an institutionalized, systematic, and
creatively planned accounting fraud, known since as the Enron
scandal.

9. Enron (Contd.)
• Enron has since become a well-known example of willful corporate
fraud and corruption. The scandal also brought into question the
accounting practices and activities of many corporations in the United
States and was a factor in the enactment of the Sarbanes–Oxley
Act of 2002. The scandal also affected the greater business world by
causing the dissolution of the Arthur Andersen accounting firm.
• Insider trading
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10. Union Carbide
• Public interest litigation
• However, this innovative jurisprudence did not help the victims of the
Bhopal Gas Tragedy, who were unable to fully prosecute a class action
litigation (as understood in the American sense) against Union Carbide due
to procedural rules that would make such litigation impossible to conclude
and unwieldy to carry out.
• Public Interest Litigation has now broadened in scope to cover larger and
larger groups of citizens who may be affected by Government inaction.
Recent examples of this trend include the conversion of all public transport
in the city of Delhi from Diesel engines to CNG engines on the basis of the
orders of the Delhi High Court.
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11. Conclusion - Why Class Actions?
A benefit of the class action format is its efficiency. The class action lawsuit
brings together and disposes of thousands of claims at one time that are
impractical to litigate individually. Although class actions require much more
work than the typical civil lawsuit, class action attorneys have what it takes
to represent the plaintiffs in the class action.
Another benefit of the class action is that it seeks to ensure that all injured
plaintiffs receive something. It may be the case that the defendant is
bankrupt or for some other reason cannot afford to pay each individual the
full amount necessary to cover his or her losses. When the class wins the
lawsuit, each participant receives some payment, even if it is not an amount
to fully cover damages. Absent a class action, payment by the defendant
would be on a first-come, first-served basis
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