The class action lawsuit is a powerful tool for plaintiffs, particularly consumers. The costs associated with filing a lawsuit are too high to justify filing for a small claim, because the cost of the lawsuit would be greater than the potential payout. Class actions address this issue by allowing many plaintiffs with the same, or similar complaints to file one lawsuit together. With enough class members, the combined claims are often more than enough to justify filing a lawsuit. It also provides the plaintiffs with greater leverage against their defendants, who tend to be large corporations with a team of lawyers at their disposal.
Big businesses have been arguing against class actions and trying to make it more difficult for class actions to make it to the courts. One of the ways they have done this is by requiring consumers to sign contracts that include arbitration clauses in which the consumer agrees to settle all disputes with the company in arbitration, which does not allow class actions. Continue reading