Understanding How Class Action Lawsuits Reach the Settlement Stage

A class action lawsuit is a type of lawsuit that brings hundreds or thousands of people with the same legal complaint into one lawsuit. One individual, known as the lead plaintiff, has their name on the lawsuit, but if there is a large group of people whose legal rights have been similarly affected, they can join the suit and become class members. After the suit has been filed, a series of legal actions and processes take place with the goal of reaching a class action lawsuit settlement. Most class action lawsuits are resolved through settlements, but some wind up going to trial before a resolution is reached.

How a Class Action Lawsuit Begins

A lawsuit requires a reason for its existence as the lawsuit is asking for relief from a court of law. There are any number of reasons why someone would want to seek help from a court. In the case of a class action lawsuit, the reason for the suit is one that involves a large group of people that have been affected negatively by a product and/or an organization. Some of the reasons for a class action suit can include a defective product sold on the open market or a corporation acting in a manner that adversely affected its customers.

Creating the Class Action Lawsuit

The class action lawsuit begins when an attorney begins exploring the cause for a potential lawsuit and determines a large amount of people are affected by a product or organization. The attorney files a lawsuit stating the reasons why they believe the case is eligible for class action status. The judge that presides over the case then determines if the case is eligible or not. In the event the case is eligible, the case is given class certification.

How a Class Action Lawsuit Settlement is Reached

Class action lawsuits rely on the discovery process to prove the point that people have been adversely affected by a defective product or actions taken by an organization. The lawyer who created the class action suit uses the discovery period to uncover what decisions were made that caused harm to the members of the suit. In the event the evidence shows willful neglect or poor decisions were made during a design or decision-making process, a class action lawsuit settlement may be possible.

The defendant may decide to settle the lawsuit because the evidence against them is too strong, or they may decide to go to trial because they feel they aren’t at fault. If the defendant decides to settle, the judge has to approve the settlement to make sure that the compensation being offered is fair to the class members. Once the judge issues an order of approval for the settlement, the defendant distributes payments from a fund that was set up prior to settlement approval.