Class action suits


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Class action suits

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Class action suits

  1. 1. Class Action Suits By Upasana Venkatasubban
  2. 2. What is a Class Action suits? A "class action" lawsuit is one in which a group of people with the same or similar injuries caused by the same product or action sue the defendant as a group. Other names for lawsuits brought by a number of people who suffered similar harm or losses are "mass tort litigation" and "multi- district litigation" Internal EscrowTech India Pvt Ltd
  3. 3. Origin and Law • The class action originated in the United States and is still predominantly a U.S. phenomenon, but several European countries with civil law, have made changes in recent years to allow consumer organizations to bring claims on behalf of consumers. • In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule 23 and 28 U.S.C.A. § 1332(d). Cases in federal courts are only allowed to proceed as class actions if the court has jurisdiction to hear the case, and if the case meets the criteria set out in Rule 23. In the vast majority of federal class actions, the class is acting as the plaintiff. However, Rule 23 also provides for defendant class actions. Internal EscrowTech India Pvt Ltd
  4. 4. Rule 23 of FRCP • Should contain certain number of joinders. • Questions of law or fact common to the class. • Claims or defences of the representative parties are typical of the claims or defences of the class. • Representative parties will fairly and adequately protect the interests of the class. Internal EscrowTech India Pvt Ltd
  5. 5. Advantages Proponents of class actions state that they offer a number of advantages because they aggregate a large number of individualized claims into one representational lawsuit. • First, aggregation can increase the efficiency of the legal process, and lower the costs of litigation • Second, a class action may overcome "the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights." Internal EscrowTech India Pvt Ltd
  6. 6. Advantages (Contd.) • Third, class action cases may be brought to purposely change behavior of a class of which the defendant is a member. - Landeros v. Flood • Fourth, in "limited fund" cases, a class action ensures that all plaintiffs receive relief and that early-filing plaintiffs do not raid the fund (i.e., the defendant) of all its assets before other plaintiffs may be compensated. • Fourth, in "limited fund" cases, a class action ensures that all plaintiffs receive relief and that early-filing plaintiffs do not raid the fund (i.e., the defendant) of all its assets before other plaintiffs may be compensated. Internal EscrowTech India Pvt Ltd
  7. 7. Disadvantages • Resolution of class actions generally take much longer than conventional lawsuits due to their procedural complexities • They must be resolved in a common manner such that differences between individual cases are typically not emphasized • Individuals who participate typically give up their right to file suit individually • Class members generally play a lesser role in directing the litigation • Even if successful, participating members of the class may only be compensated with a minimal recovery Internal EscrowTech India Pvt Ltd
  8. 8. Enron Internal EscrowTech India Pvt Ltd • Enron was established in 1985 – was an oil and natural gas company. • Over the years they merged and became a huge corporation - Fortune magazine named Enron "America's Most Innovative Company" for six consecutive years. • At the end of 2001, it was revealed that its reported financial condition was sustained by an institutionalized, systematic, and creatively planned accounting fraud, known since as the Enron scandal.
  9. 9. Enron (Contd.) • Enron has since become a well-known example of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations in the United States and was a factor in the enactment of the Sarbanes–Oxley Act of 2002. The scandal also affected the greater business world by causing the dissolution of the Arthur Andersen accounting firm. • Insider trading Internal EscrowTech India Pvt Ltd
  10. 10. Union Carbide • Public interest litigation • However, this innovative jurisprudence did not help the victims of the Bhopal Gas Tragedy, who were unable to fully prosecute a class action litigation (as understood in the American sense) against Union Carbide due to procedural rules that would make such litigation impossible to conclude and unwieldy to carry out. • Public Interest Litigation has now broadened in scope to cover larger and larger groups of citizens who may be affected by Government inaction. Recent examples of this trend include the conversion of all public transport in the city of Delhi from Diesel engines to CNG engines on the basis of the orders of the Delhi High Court. Internal EscrowTech India Pvt Ltd
  11. 11. Conclusion - Why Class Actions? A benefit of the class action format is its efficiency. The class action lawsuit brings together and disposes of thousands of claims at one time that are impractical to litigate individually. Although class actions require much more work than the typical civil lawsuit, class action attorneys have what it takes to represent the plaintiffs in the class action. Another benefit of the class action is that it seeks to ensure that all injured plaintiffs receive something. It may be the case that the defendant is bankrupt or for some other reason cannot afford to pay each individual the full amount necessary to cover his or her losses. When the class wins the lawsuit, each participant receives some payment, even if it is not an amount to fully cover damages. Absent a class action, payment by the defendant would be on a first-come, first-served basis Internal EscrowTech India Pvt Ltd
  12. 12. Internal EscrowTech India Pvt Ltd