What are class action lawsuits and why do they exist?
Jan 16, 2025
Have you ever gotten a note in the mail saying you may be owed money due to a settlement of a class action lawsuit for X or Y reason? Sometimes, you may have even been able to receive money due to a legal injury found in the case.
But what are class action lawsuits and who is behind them? Let’s take a closer look:
What are class action lawsuits?
A class action lawsuit is “a special kind of lawsuit where one person, not the lawyer, but one what we call plaintiff, sues on behalf of a larger group of people, all of whom potentially suffered the same kind of injury,” Zachary Clopton, a professor at Northwestern Pritzker School of Law, told NBC Local.
An example of a class action lawsuit is the suit that ultimately led to the historic Brown v. Board of Education decision by the Supreme Court, which ruled segregated schools were unconstitutional. In that case, a group of teachers in Topeka, Kansas, brought the suit on behalf of their Black students, as well as the rest of the Black students across the country prevented from attending white schools.
The most common form of a class action lawsuit is a plaintiff brings a case against a corporate defendant, with the case resulting in money damages if a legal injury is found. In these cases, a class action lawsuit – such as in the case of a data breach –is warranted over a lawsuit centered around an individual’s sole harm because the injury may be small, but large if taken at scale.
“So in a situation where, a big corporation harms a large number of individuals by a small amount, say you’re overcharged $20 on a bank fee, it wouldn’t make sense for each person to sue on their own,” Clopton said. “Just the cost of filing the lawsuit is worth more than $20. But if I could sue on behalf of 100,000 or a million or 10 million customers, well, then it’s possible that that lawsuit could go forward, we might eventually recover.”
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Why do class action lawsuits exist?
Class action lawsuits have a place in our society because the American legal system relies on private lawsuits to bring forth remedies for legal injuries, Clopton said.
In other countries, they too bring lawsuits for data breaches and other corporate damages, but they are brought by the government.
The American system brings both benefits and downsides, according to Clopton. First, private lawsuits do not rely on taxpayer money to be brought and “private lawyers with private motivations can find the best information (and) bring the best cases.”
However, a private lawyer could also be motivated by profit instead of helping their clients.
“So some of these cases may be brought not just because they care about my data privacy or my consumer protection, but because lawyers are trying to collect large attorney fees,” Clopton said. “That’s just the nature of the the kind of design of the American legal system. And I don’t see that changing.”
Can the government bring class action lawsuits?
In the American legal system, the federal and state government can and do still bring lawsuits on behalf of a large number of plaintiffs, or the general public.
For instance, the Tobacco Master Settlement Agreement in 1998 was brought by 46 states as well as private plaintiffs for damages resulting from big tobacco’s products.
In addition to a product harming members of the public, the government is known to bring cases involving environmental injury or pollution as well as antitrust lawsuits, which promote fair competition on the behalf of consumers.
Google’s parent company, Alphabet, is currently working being sued by the Department of Justice, which claims the company has a monopoly in the internet search market.