- Posted by CERC India
- Posted in July
Class action suits: Facts you need to know
Aggregation of cases can increase efficiency of the legal process and lower litigation costs
Consider the following cases: a group of employees are subjected to racial discrimination; several patients are prescribed a drug with dangerous side effects; homes and families in a neighbourhood are harmed by a toxic spill; many consumers purchase a defective product that causes them injuries; several investors suffer fraudÂ in the purchase of shares.
The common element in all these cases is that many people have suffered injury of some sort at the hands of another party. These are all cases where class action suits could be filed.
What is a class action suit? AÂ class action suit is a type ofÂ lawsuitÂ where a group of people file a suit against a defendant who has caused common harm to the entire group or class. The group of people filing the case need not be present in the court and can be represented by one petitioner. The main benefit of these type of suits is that if several people have been injured by one defendant, each of the injured people need not file a case separately.
Class actions may be initiated either by private individuals, associations of people like societies and trusts, or by the government. On January 4, the Supreme Court allowed the National Consumer Disputes Redressal Commission to go ahead with a probe against Nestle Indiaâ€™s Maggi, thereby reviving a 2015 class action suit filed by the Indian government against the Swiss food maker.
The most common type of class action suits in India have been in the form of writ petitions filed before the Supreme Court or before the High Courts. These are commonly referred to as public interest litigations (PILs). Class actions are also initiated under the Consumer Protection Act, 1986, by individual consumers or associations â€“ for instance, the cases filed by flat ownersâ€™ associations against a builder.
Not every form of litigation is appropriate for class actions. There are certain characteristics that a lawsuit must have in order for it to be appropriate to litigate as a class action: They are:
- The claims need to be similar, though not identical, so that it is more practical for one lawsuit to resolve them than numerous lawsuits.
- The claims should involve similar sets of facts or be asking the court to resolve similar questions of law.
- Certain plaintiffs will be named as class representatives. These individuals should be able to adequately represent the interests of the entire class in a fair manner.
In class action suits, the judge decides the basic question of who wins with regard to the entire group. If the defendant wins, the class lawsuit is dismissed and the individuals in the group are prohibited from filing new or individual lawsuits over the same issue against the same defendant. If the class of plaintiffs wins, the court finds the defendant liable for the plaintiffsâ€™ injuries, and the amount of recovery is later divided among the plaintiffs.
The class action lawsuit brings together and disposes of thousands of claims at one time that are impractical to litigate individually, making the process much more efficient.
Here are the major advantages of class action suits:
- Litigation costs will be spread across many plaintiffs, so it is more feasible for them to be able to afford to litigate the case.
- A judgment against the defendant may mean that the plaintiffs will actually see the money that they are awarded.
- Class action lawsuits may be handled by more experienced and competent lawyers who have gone through similar cases in the past.
- Class actions also benefit the judicial system. The case is determined by one judge in one court, so inconsistent verdicts do not become an issue. One claim will generally take less time than many similar claims tried at different times.
- Even if each individual claim is not for that much money, a class action lawsuit allows plaintiffs to pursue a worthy cause.
- Class action suits may be brought to purposely change behaviour of a class of which the defendant is a member.
Sources:Â www.business-standard.com, litigation.findlaw.com, www.hg.org Â