Class Actions

Question 1

What is a class action

Answer 1

A class action is also known as a group proceeding or representative proceeding.
It is where a group of at least 7 people who all have claims against the same party join together in a proceeding against that party.

Question 2

Eligibility of class actions

Answer 2

• Seven or more people must have claims against the same person
• These claims must relate to the same or similar circumstances
• The same issues need to be decided

Question 3

How do class actions work

Answer 3

Normally initiated by a single person who ‘represents’ the group. This person is known as the lead plaintiff. The people who form part of the group are known as group members.
- Group members do not actively participate in the proceeding and are not named in court decisions.

Question 4

Strengths of class actions

Answer 4

• Group members are not responsible for costs, but if successful they will share the winnings. –> This increases access to justice to those who may not be able to pay for those fees.
• More efficient as courts deal with multiple cases at the same time –> saving time and resources.
• People can pursue claims they may not be able to by themselves, due to the small size of the individual claims.
• Class actions reduce costs of defendants, as the defendants respond to multiple claims at the same times, all with similarities.
• It is a more convenient way for group members who wish to pursue a claim but do not want the burden and inconvenience of having to actively participate in proceedings.

Question 5

Appropriateness of class actions

Answer 5

• Whether there are seven or more people who have a claim against the defendant which arises out of the same or similar circumstances
• Whether a plaintiff law firm or litigation funder is prepared to fund the claim to avoid the lead plaintiff from having the burden of costs
• Whether there is someone willing and able to be lead plaintiff.
• The nature and size of the claims. –> Small claims may not be worth the effort and cost.
• Whether one group member has suffered significantly more than other group members and may be prepared to conduct their own proceeding and fund it.

Question 6

Weaknesses of class actions

Answer 6

• There is a large cost on the lead plaintiff if the class action fails and there is no litigation funder.
• The size of the class action takes up significant amount of resources and time
• Litigation funders have been criticised for taking a large percentage of the total amount awarded to the group members.
• Some group members may not get adequate or up-to-date information about the proceeding.
• Multiple class actions may be commenced by different law firms relating to the same issue. Increasing costs for the defendant.