Class Action Lawsuits: Why and When to File One

Class action lawsuits enable large groups of people, who were all harmed by the same conduct, to bring a single action against the wrongdoer. Class actions are particularly useful when the amount of damages to a single person is not high enough to justify the filing of an individual lawsuit. For example, a bank customer may be harmed when the bank reorders his or her debit transactions to maximize the number of overdraft fees the bank can charge. If the bank’s reordering caused the customer to incur two overdraft fees instead of one, the customer’s damages would be the amount of one overdraft fee, which is usually around $30, depending on the bank. It would not make economic sense to file a lawsuit over $30, but if you group together all of the bank customers who were charged an additional overdraft fee, the total damages at issue is much larger and a lawsuit is more economically viable.

In a class action, a single person or a small group of people called the class representative(s), acting on behalf of the larger group of all persons harmed, files a class action petition against the defendant or defendants who caused the harm. However, merely filing a class action petition does not automatically mean that the court will allow the case to proceed as a class action. Before allowing the case to proceed as a class action, the court must certify the proposed class. In Missouri, there are four prerequisites that must be met in order for a class to be certified, as set forth in Missouri Rule 52.08(a):

  1. The class must be numerous, or have so many people that it would not be practical to join them all in a single lawsuit.
  2. There must be common questions of law or fact amongst the class members.
  3. The class representatives’ claims or defenses must be typical of those of the class members.
  4. The class representatives must fairly and adequately protect the interests of the class.

One of the more misunderstood prerequisites is the second, requiring common questions of law or fact amongst the class members. Sometimes referred to as “commonality,” this prerequisite requires that there be a significant factual or legal issue that affects all of the class members. Thus, commonality would be lacking where there are multiple people who were all harmed by the same person, but who were all harmed in different ways. The bank overdraft fees class action described above provides a good example of commonality. In an overdraft class action, all of the class members have been charged overdraft fees as a result of the bank’s reordering of debit transactions. They were all harmed by the bank in the same way and each of the individuals’ claims involves the same facts and the same legal issues.

If you have been harmed and think that there are others that have similarly been harmed, consider the four prerequisites listed above, including the commonality requirement. If you think there are others with your same legal and factual issues, it may be worthwhile to speak to an attorney about a possible class action lawsuit, even if your individual damages are relatively small.