How Class Actions Work

A class action allows one or more plaintiffs to represent a larger group of people with similar claims. Here's how the process works.

What Is a Class Action?

A class action is a lawsuit in which one or more named plaintiffs sue on behalf of a larger class — a group of people who were all harmed in a similar way by the same defendant. Instead of each person filing a separate lawsuit, the class action consolidates all claims into a single case.

When Is a Class Action Appropriate?

Class actions are commonly used when:

The same company harmed many people in the same or similar way

Individual claims are too small to justify individual lawsuits (e.g., a company overcharged millions of customers by $50 each)

The legal issues are the same across all affected individuals

Common subjects include consumer fraud, defective products, data breaches, wage and hour violations, and securities fraud.

Class Certification

Before a case can proceed as a class action, the court must certify the class. Under Federal Rule of Civil Procedure 23, the court considers:

Numerosity

The class is so large that joining all members individually would be impractical.

Commonality

There are common questions of law or fact shared among the class.

Typicality

The named plaintiffs' claims are typical of the class as a whole.

Adequacy

The named plaintiffs and their attorneys will fairly and adequately represent the class.

If the court denies certification, the case continues only for the named plaintiffs individually.

If You Receive a Class Notice

If you are identified as a potential class member, you will receive a notice explaining what the case is about, your options, and deadlines for each option.

Your Options

Stay in the Class

You remain a class member and are bound by the outcome. If the class wins or settles, you share in the recovery. If the class loses, you lose your individual right to sue on the same claims.

Opt Out

You remove yourself from the class and preserve your right to file your own individual lawsuit. This is often the better choice if your damages are significantly larger than average.

Object

You stay in the class but file a formal objection if you believe the settlement is unfair. The court considers objections before approving any settlement.

Class Action vs. Individual Lawsuit

A class action is not always the best vehicle. Individual litigation may be better when:

Your damages are substantially larger than the typical class member's

Your facts are unique and require individualized proof

You want more control over the litigation strategy and settlement

The proposed class settlement offers inadequate compensation

Key Takeaway

If you receive a class action notice, read it carefully and consult an attorney before the opt-out deadline. Once the deadline passes, you are locked in — and your individual right to sue on those claims is gone.