Strength in Numbers

The phrase “class action” often pops up in news headlines, both shaping and shaped by current events.

The scandal over the London Interbank Offered Rate, or LIBOR, the interest rate between British banks that in turn influences global interest rates, has inspired a class action, for example. So did the 2010 Gulf of Mexico oil spill. Advocates for women and the disabled have used class actions to take on the retail giant Wal-Mart Stores Inc. Groupon Inc. this year reached an $8.5 million class action settlement tied to sales and marketing practices for its vouchers. According to an update disseminated in July, the court hearing for final approval of that settlement is slated for Sept. 7.

Class actions can be a lot more complex than headlines can tell, however, with participants who can number in the thousands. According to two local attorneys who have worked in class litigation, class actions began as a way to bring a common concept to the law: There is strength in numbers.

“You don’t have to have 100 trials about the very same thing,” said Angela Drake, a Stockton attorney who practices with Springfield-based Lowther Johnson Attorneys at Law LLC and has 26 years of experience in class litigation. “When you group them together, that gives a certain amount of power to the people who have a claim.”

Much like collective bargaining gave labor unions the strength to negotiate with entire industries, class actions can allow individuals or businesses to face larger companies or other entities on an even ground. In some cases, the claims wouldn’t be dealt with otherwise.

“Your claim might be $1,000,” Drake said. “It’s very difficult for that to make sense to pursue on an individual basis.”

Class action criteria
Drake said a state or federal judge must certify a class before a class action can proceed according to four tenets:

• Commonality. The first factor is that all of the members of a group must be wrongly affected by the same business practice, government action or other event, Drake said.
• Typical impact. The effect or experience resulting in the practice or event must be typical across the board. For example, an investing firm that lost millions of dollars because of the tweaking of the LIBOR wouldn’t be joined in a class action with an employee who lost thousands of dollars.
• Affected group size. For a class action to proceed, the affected group has to be relatively large. Drake said there’s no set number for a class action, but more than 25 individuals or entities is a general baseline.
• Class representative. Someone who can reasonably speak for others in a class must step forward. “That one person is sort of like a champion of the cause,” Drake said.

Class action outcomes
Last month, Bolivar-based law firm Douglas, Haun & Heidemann PC filed a class action against the Missouri Department of Corrections on behalf of deaf and hard-of-hearing inmates.

In that case, Deonte Dudley, acting as class representative, claims the department failed to provide access to reasonable communication services to inmates such as him. He wants an injunction to force the department to change its behavior – a court response called injunctive relief.

Other class actions seek monetary relief instead, and when thousands of plaintiffs join together, the total dollar amount can become astronomical.

Douglas, Haun, & Heidemann also was part of a class action against Merck & Co., the maker of pain-reliever Vioxx, which was pulled from the market several years ago because of concerns that it raised the risk of heart attack and stroke.

Former users, including several hundred in the Springfield area, banded together in a case that settled in 2007 for $4.85 billion, one of the largest civil settlements ever.

In such large cases, several law firms can join together, much like the class members, to handle the workload and financial requirements. The court appoints a lead counsel out of that group, which interacts with the judge and works out how legal fees would be split.

“The amount of paper you have to deal with in class action is probably one of the largest challenges,” said Craig Heidemann, an attorney in both the Vioxx case and Dudley’s case. “You have to convince the judge you know what you’re doing.” According to MSNBC, there were six plaintiff attorneys involved with the Vioxx case, including counsel from Seeger Weiss LLP in New York City and Herman, Herman & Katz LLC in New Orleans.

Not cut-and-dried casework
Cases don’t always make it past class certification, however.

“Just because it’s filed that way doesn’t mean it’s going to end up that way,” Drake said.

That’s what happened to a class action against Wal-Mart that claimed the chain’s management structure had a pervasive bias against women. The U.S. Supreme Court threw the case out last year, saying the thousands of female plaintiffs didn’t have enough in common to be grouped together.

If the class is certified, next the plaintiffs usually try to contact as many members of the class as possible to check if they want to opt out of the case. The plaintiffs can try through mail, e-mail, phone – even Facebook – though they don’t have to reach every last member. If members don’t respond by opting out – or if they don’t respond at all – they’re hitched to the class by default.

“Due process requires that you just do your very best,” Heidemann said.

Those who are described by the class – meaning that they fit the parameters – don’t usually have to take specific steps to join the class, though the notice of the lawsuit will inform class members what action – if any –they must take to participate, according to Lawyers.com. The site noted, too, that it’s rare for a class action to start on an opt-in bases, but in those cases, class members must file a claim form or request to join the lawsuit.

Despite all of this work, class actions that make it this far then typically settle out of court, Heidemann and Drake agreed. The victorious law firms typically will draw their fees as a percentage  – sometimes 30 percent to 40 percent, Drake said – of the settlement. When a case isn’t successful, class representatives have to cover attorneys’ costs on their own.  

“When I look back on the ones I’ve been involved in, I think maybe two of them went to trial,” Drake said.

Only those who opt out of a class action are free to pursue their own cases, so win or lose, the class members who didn’t take that are bound by the result.

 “It can be a very complicated area,” Drake said. “But it’s a fairly simple concept.”