Class Actions

What is a Class Action, and Who Brings Them?

In a class action, one or several people file a single lawsuit on behalf of a much larger group of people, which is called the class. The plaintiff (e.g. John Doe) who is named in the class action (e.g. John Doe v. Widgets R’Us) represents the class, and is called the class representative. The people being represented by John Doe are called class members. The class representative and class members have the same or very similar legal claim based on facts which are common to them all.

For example, let’s say that when you opened your checking account, your bank promised that you will not be charged an insufficient funds (NSF) fee if your checking account becomes overdrawn. Then a few months later your checking account is overdrawn by a few dollars, and your bank charges a NSF fee of $35.

Obviously, the bank broke its promise. But would you spend the time and money to find a lawyer and file a lawsuit against the bank to recover the $35? Probably not. And would a lawyer want to take on your individual case where the disputed amount is relatively small? Probably not. So what can you do about it?

That’s where class actions come in.

Class actions allow people who’ve been cheated for a relatively small dollar amount (and are upset enough about it) to file a lawsuit on behalf of themselves and others who were also similarly cheated. And the others who were similarly cheated can become members of the class and obtain relief by merely submitting a claim form (in most instances), or even by doing nothing.

A Real Example

To give you a real life example, several years ago a few gym members brought a class action against 24 Hour Fitness. The complaint alleged that 24 Hour Fitness promised customers purchasing prepaid memberships that their annual renewal fee would not increase for the rest of their life.

But 24 Hour Fitness broke that promise by raising the renewal prices by about $50. The plaintiffs who brought the lawsuit sought to represent people who’d purchased a prepaid membership from 24 Hour Fitness.

I was a member of that class.

To give you a bit more detail — years ago, when I was signing up to join the local 24 Hour Fitness, the gym rep said that if I paid a lump sum up front for three years of membership, my annual renewal fee would be $29 for the rest of my life. I thought, “What a deal!” And I agreed, and paid the lump sum of money upfront.

Then in 2015 I received a notice from 24 Hour that my annual renewal fee would increase to $79 per year. To no surprise, the following year a class action was filed against 24 Hour alleging false advertising and fraud. Ultimately, 24 Hour settled with the class (of over 250,000 gym members) for approximately $24 million.

As a class member I received a full refund for the improper rate increase that I’d paid, and my annual fee reverted to the $29 annual fee that 24 Hour had originally agreed to. In other words, 24 Hour agreed to make class members whole by refunding the overage payments and reinstating the original terms of their membership agreement.

A very fair class settlement in my opinion.

Class Actions Keep Corporations in Check

A class action is an effective and efficient way to keep unethical and unlawful corporations in check for their bad acts. Congress and state governments have passed laws to make it easier for consumers to bring class actions, including the Class Action Fairness Act (CAFA) and Federal Rule of Civil Procedure (FRCP) 23.

In California, the Civil Procedure Code (CCP) 382 and the Consumer Legal Remedies Act (CLRA), Civil Code 1781 are both vehicles to bring a class action. Generally, the requirements to establish a class can be summed up in “ANeCTAR”:

• A ‒ Ascertainable Class (generally means a clearly defined class of people who can be identified)
• N ‒ Numerosity (generally at least 40 other people who were similarly impacted by the corporation’s bad acts)
• C ‒ Commonality (questions of law or fact common to the class must exist)
• T ‒ Typicality (the claims or defenses of the class representatives must be typical of the claims or defenses of the class)
• AR ‒ Adequacy of Representation (the class representatives and class counsel must fairly and adequately represent the interests of the class. In other words, there should be no conflict between the interests of the class representatives and the class members, and the representative and class counsel must be competent to represent the class)

It sounds like a lot of legal mumbo jumbo, but it’s a sweet weapon (ha!) we’ll use to combat the bad actors.  If you’ve been screwed by a company, chances are many others have been too. 

So if you feel you’ve been cheated, for any reason (false advertising, unexpected fee, broken promise, harassing telemarketing or “robocalls”), and outraged enough to do something about it… call (833) 729-5529

Together, let’s bring down the corporate cheats.