About Class Actions

A "class action" is a legal procedure whereby many claimants, who have been harmed in a similar manner and by a similar party, pool together and press their claim as one. Class action suits are most appropriate in cases where it would be too expensive for plaintiffs to press their claims individually.

In the normal course, a "representative plaintiff" is nominated. This plaintiff is one whose case will speak for that of the whole class. His or her case would then be tried in a court of law on behalf of the class. Any issues which are resolved favorably to the representative plaintiff would benefit all class members, not just the individual plaintiff. As well, any issues which are found adverse to the representative plaintiff would similarly affect the whole class.

There are advantages to joining a class action suit. Generally, the benefits are as follows:

1. The plaintiffs’ resources are pooled, making it more difficult for a large defendant to "dollar you out". Many small plaintiffs have found that large defendants are willing to spend more money in defence of a claim than what it would take to pay the claim out. This is a concept known as "dollaring you out". It makes it so that you cannot economically press your lawsuit. You will spend more money pressing your claim than what you stand to gain in the end. In a class action proceeding with pooled resources, it is difficult, if not impossible, to be "dollared out".
   
   
2. The class obtains strong leverage to negotiate a settlement. Whereas large defendants are generally not too concerned about a single claim, they are very concerned about the economic consequences of losing a class action lawsuit involving dozens or hundreds of claims. They also realize the cost of defending such a claim will be significant. They further realize that the class action will not "go away"by throwing up a couple of legal hurdles. All of these factors create a strong incentive for the defendant to think seriously about proposing a proper settlement offer. Settlement terms that are negotiated and creatively structured are generally much more attractive to a large defendant than having the solution thrust upon them by an independent third party (a court of law).
   
   
3. Gathering of information. In a class action, all members benefit from any and all information gathered. When lawsuits are undertaken individually, there is a strong incentive for individual plaintiffs and their counsel to hoard any helpful information they obtain. For example, counsel might not wish to share the fruits of their investigative work with other counsel who have not done the work. There is natural competition and, by definition, everyone is in it for themselves. In a class action proceeding, all information is shared. The information can not be lost due to settling out one claim with a confidentiality stipulation. By joining a class action, you are joining a group of like-minded people who are in it together.
   
   
4. The relative ease of being a plaintiff. Unless you are a representative plaintiff, there is usually very little expected of you in a class action proceeding, save for providing information about yourself and your injury from time to time. It is rare for a general class member to have to give evidence under oath. This is very different from pressing a claim yourself. If you did so, it would be your responsibility to instruct your lawyer at every juncture. As well, you and your lawyer would have to deal with all of the defence tactics used to defend your claim. In a class action, much of this work and energy is done on your behalf. This is not to say that you do not get any input, but rather that the day-to-day difficulties of pressing a lawsuit are generally borne by the class action counsel and the representative plaintiff.

A class action lawsuit is generally an attractive alternative to launching an individual lawsuit where the cost of pressing the individual claim would approach or exceed the cost of the claim itself. Consumer fraud claims and stock fraud claims are examples. As well, there are times when significant individual claims are so complex that it would not make economic sense to press the claim individually. For example, claims involving receipt of tainted blood, defective medical devices, harmful pharmaceuticals, or product design problems require detailed expert opinions and are expensive. A pooling of resources is necessary to properly investigate and litigate these claims.

By writing this article, we don’t mean to imply that all class action suits are appropriate or beneficial in all cases. For example, if the claim itself does not have merit or is impossible to prove, the class action procedure will not make the underlying substantive problems disappear. A class action lawsuit is merely a procedure which assists average persons of ordinary means to "have their day in court".

There is presently no class action legislation in Alberta. Alberta claimants must join class actions suits which have been commenced in other jurisdictions. In Canada class action legislation exists in British Columbia, Ontario and Quebec. All American states share in the U.S. federal class action legislation. It is not uncommon for numerous class action suits relating to the same matter to be commenced simultaneously in several jurisdictions.

At Docken & Company we routinely become part of a class counsel team carrying on litigation in appropriate jurisdictions in Canada and the U.S.